Roper Technologies, Inc. · NASDAQ:ROP
Roper Technologies — Q3 2020 Earnings Presentation
28 slides from Roper Technologies's earnings presentation, Oct 27, 2020
Slide 1: Q3 2020 Financial Results
A DIVERSIFIED TECHNOLOGY COMPANY Q3 2020 FINANCIAL RESULTS OCTOBER 27, 2020 SIMPLE IDEAS. POWERFUL RESULTS.
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT The information provided in this presentation contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements may include, among others, statements regarding operating results, the success of our internal operating plans,
Slide 3: Reg. G Disclosure
REG. G DISCLOSURE Today’s Conference Call Will Discuss Results Primarily on an Adjusted (Non-GAAP) Basis. The Q3 Results are Adjusted for the Following Items: (1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustments to Acquired Deferred Revenue and Related Commissi
Slide 4: Roper Conference Call
ROPER CONFERENCE CALL • Q3 Enterprise Highlights and Financial Results • Segment Detail & Outlook • Q4 & FY 2020 Enterprise Guidance • Q&A PAGE 4
Slide 5: Q3 2020 Enterprise Highlights
Q3 2020 ENTERPRISE HIGHLIGHTS • Modest Revenue and EBITDA Growth for the Enterprise Despite the Pandemic Environment – Software Recurring Revenue Growth Offset by Expected Perpetual Licenses and Services Declines – Strong Demand for Laboratory Software Solutions and Verathon’s Video Intubation Techn
Slide 6: Recent Capital Deployment Summary
RECENT CAPITAL DEPLOYMENT SUMMARY NEW PLATFORM STRATEGIC ADD-ONS • Leading Provider of SaaS Solutions for • EPSi Enhances Strata’s Leading SaaS the Property & Casualty (“P&C”) Hospital Decision Support Offering Insurance Industry • WELIS and IFS Expand iPipeline’s Suite • Reported in Application Sof
Slide 7: Q3 Income Statement Metrics
Q3 INCOME STATEMENT METRICS Q3’19 Q3’20 Revenue $1,358 $1,369 +1%; Organic (3)% Gross Profit $877 $879 Gross Margin 64.6% 64.2% (40) Bps EBITDA $498 $501 +1% EBITDA Margin 36.7% 36.6% (10) Bps Interest Expense $49 $55 Earnings Before Taxes $436 $432 (1)% Tax Rate 20.6% 22.2% Net Earnings $346 $336 D
Slide 8: Net Working Capital
NET WORKING CAPITAL NET WORKING CAPITAL (1) (2) AS % OF Q3 ANNUALIZED REVENUE 2018 2019 2020 Q3’18 Q3’19 Q3’20 (I) Inventory 4.4% 4.4% 4.1% (2.2)% (3.1)% (R) Receivables 16.6% 16.9% 17.4% (P) Payables & 11.5% 10.9% 12.4% (6.3)% Accruals (D) Deferred 11.7% 13.5% 15.3% Revenue Total (I+R-P-D) (2.2)% (
Slide 9: Compounding Cash Flow
COMPOUNDING CASH FLOW 2020 YTD CASH FLOW RECONCILIATION YTD FREE CASH FLOW Q1’20 Q2’20 Q3’20 YTD GAAP Operating Cash Flow $364 $449 $138 $951 +13% Tax Pmts. Delayed Due to C-19: Income Taxes $(124) +$124 $0 Taxes Paid for 2019 Gatan Sale +$192 +$192 $1,110 Adjusted Operating Cash Flow $364 $325 $454
Slide 10: Strong Cash Flow Conversion
STRONG CASH FLOW CONVERSION FREE CASH FLOW FREE CASH FLOW % OF REVENUE % OF EBITDA 27% 28% 76% 75% 78% 25% 26% 73% 2017 2018 2019* 2 0 2 0 YT D * 2017 2018 2019* 2 0 2 0 YT D * * Adjusted for income tax payments deferred due to COVID-19 (2020) and cash taxes paid related to divestitures (2019 & 2020
Slide 11: Balance Sheet Update
BALANCE SHEET UPDATE 9/30/19 9/30/20 Cash $323 $302 Gross Debt $6,198 $9,704 Net Debt $5,875 $9,402 TTM EBITDA $1,903 $1,947 Does Not Include Pro Forma EBITDA Net Debt-to-EBITDA (TTM) 3.1x 4.8x Impact from Completed Acquisitions Undrawn on Revolver $1,575 $1,840 Proven Track Record of Deleveraging A
Slide 12: Capitalized on Unprecedented Credit Market Strength & Low Interest Rates
CAPITALIZED ON UNPRECEDENTED CREDIT MARKET STRENGTH & LOW INTEREST RATES • Recent $5.8B of Capital Deployment Financed by Cash on Hand, Revolving Credit Facility, and New Debt • Strong Investor Demand for $2.7B Bond Offering – Blended Interest Rate ~1.3% (Fixed) – Blended Duration of 7 Years – No Ch
Slide 13: Segment Detail & Outlook
SEGMENT DETAIL & OUTLOOK
Slide 14: Application Software
APPLICATION SOFTWARE Q3 HIGHLIGHTS Q3 RESULTS 33% of Roper Revenue • Recurring Revenue Growth and High Retention Rates Continued; Perpetual Licenses and +11% vs PY Services Pressured as Expected Revenue $451 (1)% Organic • Cloud Adoption Accelerated Leading to Higher Levels of Recurring Revenue EBIT
Slide 15: Network Software & Systems
NETWORK SOFTWARE & SYSTEMS Q3 HIGHLIGHTS Q3 RESULTS 31% of Roper Revenue • Strong Customer Retention and Recurring Revenue Growth Continued Across Vertical +9% vs PY Revenue $430 Market SaaS Businesses +1% Organic • ConstructConnect Growth from Increased EBITDA $180 41.8% Margin Demand for New Platf
Slide 16: Measurement & Analytical Solutions
MEASUREMENT & ANALYTICAL SOLUTIONS Q3 HIGHLIGHTS Q3 RESULTS 27% of Roper Revenue • Extraordinary COVID-Related Demand for Verathon Video Intubation Solutions (8)% vs PY Revenue $368 • Other Medical Products Declined as Hospital +2% Organic Capital Budgets Remain Constrained Given EBITDA $131 35.7% M
Slide 17: Process Technologies
PROCESS TECHNOLOGIES Q3 HIGHLIGHTS Q3 RESULTS 9% of Roper Revenue • Upstream O&G Businesses Declined ~40% • Project Delays and Reduced Field Service (25)% vs PY Revenue $120 Access for CCC (25)% Organic • Cornell Declines in Rental Markets; Growth EBITDA $34 28.4% Margin Across Other End Markets • Z
Slide 18: 2020 Guidance
2020 GUIDANCE
Slide 19: Guidance Update
GUIDANCE UPDATE • Raising Full Year 2020 Guidance – Adjusted DEPS: $12.55 - $12.65 • Previously $11.90 - $12.40 – Full Year Revenue and EBITDA +2 to +3% – Organic Revenue Flat to Slightly Down • Establishing Q4 2020 Guidance – Adjusted DEPS: $3.39 - $3.49 – Q4 Organic Revenue Similar to Q3 – Tax Rat
Slide 20: Summary
SUMMARY • Continued Strong Execution in Challenging Environment – Revenue +1% to $1.37B; (3)% Organic – EBITDA +1% to $501M; EBITDA Margin 36.6% – Free Cash Flow +14% to $442M • Asset-Light, Niche Market Leading Businesses Remain Focused on Driving Long-Term Organic Growth • Diversified Portfolio En
Slide 21: Appendix
APPENDIX
Slide 22: Reconciliations I
RECONCILIATIONS I Adjusted Revenue Growth Reconciliation Network Measurement Q3 2020 Application Software & & Analytical Process Software Systems Solutions Technologies Roper Organic (1%) 1% 2% (25%) (3%) Acquisitions/Divestitures 12% 8% (11%) - 3% Foreign Exchange 1% - 1% - - Rounding (1%) - - - 1%
Slide 23: Reconciliations II
RECONCILIATIONS II Adjusted Revenue, Gross Profit and EBITDA Reconciliation ($M) Q3 2019 Q3 2020 V% YTD 2020 FY 2017 FY 2018 FY 2019 Adjusted Revenue Reconciliation GAAP Revenue $ 1,354 $ 1,366 1% $ 4,022 $ 4,607 $ 5,191 $ 5,367 Purchase accounting adjustment to acquired deferred A revenue 3 3 7 57
Slide 24: Reconciliations III
RECONCILIATIONS III Adjusted Earnings Before Taxes Reconciliation ($M) Q3 2019 Q3 2020 V% GAAP Earnings Before Taxes $ 338 $ 303 (10%) Purchase accounting adjustment to acquired deferred A revenue and commission expense 3 3 Transaction-related expenses for completed B acquisitions and divestiture 2
Slide 25: Reconciliations IV
RECONCILIATIONS IV Adjusted DEPS Reconciliation C Q3 2019 Q3 2020 V% GAAP DEPS $ 2.64 $ 2.21 (16%) Purchase accounting adjustment to acquired deferred A revenue and commission expense 0.02 0.02 Transaction-related expenses for completed B acquisitions and divestiture 0.02 0.08 Amortization of acquis
Slide 26: Reconciliations V
RECONCILIATIONS V Forecasted Adjusted DEPS Reconciliation C Q4 2020 FY 2020 Low End High End Low End High End GAAP DEPS $ 2.36 $ 2.46 $ 8.92 $ 9.02 Purchase accounting adjustment to acquired deferred revenue and commission expense A 0.03 0.03 0.07 0.07 Restructuring charge associated with certain Pr
Slide 27: Footnotes
FOOTNOTES A. 2020 actual results and forecast of estimated acquisition-related fair value adjustments to deferred revenue and commission expense related to the acquisitions of Foundry, iPipeline, and Vertafore as shown below ($M except per share data). Q3 2019A Q3 2020A Q4 2020E FY 2020E Pretax $ 3
Slide 28: A Diversified Technology Company
A DIVERSIFIED TECHNOLOGY COMPANY