Roper Technologies, Inc. · NASDAQ:ROP
Roper Technologies — Investor Day (March 2023)
125 slides from Roper Technologies's investor day presentation, Mar 21, 2023
Slide 1: Roper Technologies
Roper TECHNOLOGIES
Slide 2: Investor Day, March 21, 2023
Investor Day March 21, 2023 2
Slide 3: 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 4: Reg. G disclosure
Reg. G disclosure Today’s presentation will discuss results primarily on an adjusted (Non-GAAP) and continuing operations basis. See appendix for reconciliations. 4
Slide 5: Today's messages
Roper Technologies Today’s messages Disciplined & High-quality Demonstrated analytical approach portfolio of ability to improve to capital market leaders our businesses deployment Our culture is a Clear & compelling Low risk competitive long-term growth orientation advantage algorithm 5
Slide 6: Agenda
Agenda Welcome & Zack Moxcey 8:30AM overview Neil Hunn Decentralized Satish Maripuri 9:10AM operating model Business case Mike Corkery, Deltek 9:30AM studies Chris Cartrett, Aderant Earl Thompson, Verathon Amy Zupon, Vertafore Q&A panel Group Executives 10:30AM Business Presidents Break 11:00AM Proc
Slide 7: Roper team members in attendance
Roper team members in attendance Shellye Amy Woods Chris Cartrett Jason Conley Mike Corkery Harold Flynn Tim Haddock Neil Hunn Archambeau Brinkley President, Aderant EVP & CFO Group Executive & Group Executive VP, Development President & CEO Board Director Board Chair President, Deltek Satish Maripu
Slide 8: Overview
Overview Neil Hunn, President & CEO 8
Slide 9: We compound cash flow by acquiring and growing niche, market-leading technology businesses
We compound cash flow by acquiring and growing niche, market-leading technology businesses. 9
Slide 10: Who we are
Roper Technologies Who we are Market-leading businesses in defensible niches Decentralized operating environment Process-driven capital deployment Cash return on investment Trust & mutual respect High-performance culture Minimize risk Keep it simple 10
Slide 11: Who we are
Who we are Vertical & mission critical solutions Compete on customer intimacy High customer value = high gross margins Market-leading Decentralized Process-driven businesses in operating capital deployment Resilient & highly recurring defensible niches environment revenue Asset-light Cash return on
Slide 12: Who we are
Who we are Local resource allocation Nimble execution High performance expectations Market-leading Decentralized Process-driven Corporate coaching businesses in operating capital deployment defensible niches environment Build for long-term competitive advantage Growth based incentives Cash return on
Slide 13: Who we are
Who we are Center-led Business pickers 1 2 3 Low risk Market-leading Decentralized Process-driven Highly disciplined & analytical businesses in operating capital deployment defensible niches environment Learning process Free cash flow + investment grade leverage funded Cash return on investment Trus
Slide 14: Market-leading businesses in defensible niches
Market-leading businesses in defensible niches 1 2 31 Decentralized Process-driven 3 2 operating capital deployment environment 14
Slide 15: Our journey
Our journey 1992-2000 2001-2004 2005-2010 2011-2020 2021-2022 2023 ▶ Industrial TransCore Exited Portfolio Water Medical Vertical software Consistent & enduring principles: CRI High-trust autonomous model Centralized capital deployment Niche market leaders Long-term builder mentality Disciplined & a
Slide 16: CRI discipline
CRI discipline ‘@) Cash ® Return on GC) Investment Net Income ® D&A © Maintenance Capex Net Working Capital ® Net PP&E * Accumulated Depreciation
Slide 17: Asset-light journey
High Asset-light Cash earnings / Revenue Vertical software journey Tech-enabled products Diversified industrial 2004 Steel Low Negative Low High (NWC + gross fixed assets) / Revenue 17
Slide 18: Multi-year portfolio optimization
Multi-year portfolio optimization Revenue $6.0B $5.4 $0.9 $5.4 $5.0B $0.1 $0.6 $1.0 $0.9 $4.0B $3.6 $3.0B 34% Divested $2.0B $1.0B - FY’19 2019 2021 2022 FY’19 Acquired Organic FY’22 As reported Divestitures Divestitures Divestitures Current Portfolio Continuing Ops 18
Slide 19: Multi-year portfolio optimization
Revenue mix ($ Billions) $5.4 $5.4 Multi-year Industrial & Medical & water project-oriented products portfolio businesses 34% 25% optimization Medical & water Vertical software 75% products High quality & more resilient 20% Vertical software 46% 2019* 2022** * Includes divestitures and discontinued
Slide 20: Improved quality & increased scale
Improved quality & increased scale Vertical software Medical & water products Industrial & project-oriented businesses 25% 32% 34% 44% $3.8B $5.4B 46% $5.4B *2019* **2022** 2016* 24% 20% 75% Organic growth -1% +3% +9% Software % of revenue 32% 46% 75% Cyclical revenue 44% 34% ~0% EBITDA margin 35% 3
Slide 21: Roper's revenue composition
Roper’s revenue composition $5.4B $4.0B $2.9B 100% $0.2B Perpetual licenses 90% $1.3B $0.9B Medical & water $0.5B Services and other products On-prem annual 80% maintenance $0.4B Reoccurring 70% 60% 50% $4.0B $2.9B $2.1B 40% Vertical software Recurring SaaS subscription 30% 20% 10% 0% Total revenue
Slide 22: Double-digit revenue growth profile
Double-digit revenue growth profile Organic revenue growth Total revenue growth 20% Pandemic year 13% 11-12% 11% 11% 9% 8% 6% 5-6% 3% 2019 2020 2021 2022 2023E (mid-point) EBITDA margin 38% 39% 40% 40% ~40% 22
Slide 23: Long-term compounding
Long-term compounding 2007 - 2022 Market capitalization Free cash flow EBITDA +15% Revenue +8% +11% +12% CAGR CAGR CAGR CAGR 23
Slide 24: Long-term outperformance
Cumulative total shareholder return ROPER TECH +2,567% Long-term outperformance S&P 500 Business model & strategy designed for +548% long-term value creation 24
Slide 25: Market-leading businesses in defensible niches
Market-leading businesses in defensible niches 1 Decentralized Process-driven capital deployment 3 2 operating environment 25
Slide 26: Market-leading businesses in defensible niches
Who we are Market-leading businesses in 2 defensible niches 1 Vertical & mission critical solutions 1 3 Compete on customer intimacy High customer value = high gross margins Resilient & highly recurring revenue Asset-light 26
Slide 27: Roper's portfolio
Roper’s portfolio Annual revenue Business $500M+ $250M to $500M $100M to $250M Less than $100M 27
Slide 28: What our businesses do
What our businesses do Application Network Technology software software enabled products Acute care healthcare Construction data Medical Education Food supply chain Water Government contracting Freight matching Legal Life insurance & annuities Property & casualty insurance Media & entertainment Util
Slide 29: Secular tailwinds support long-term business growth
Secular tailwinds support long-term business growth Vertical software Medical & water Digital transformation Aging of America AI / ML Single-use medical devices SaaS migration Conservation 29
Slide 30: The power of customer intimacy
The power of customer intimacy Rooted in deep understanding of markets Informs innovation roadmap Enables development of highly specific solutions Increases market adoption Leads to high value capture 30
Slide 31: High customer value = high gross margins
70% High customer value = high 50% gross margins FY'07 FY'22 Gross margin 31
Slide 32: Resilient & highly recurring revenue
~80% Resilient & 70%+ highly recurring revenue % of total % of vertical software Recurring & reoccurring as a % of 2022 revenue 32
Slide 33: Asset-light
Asset-light (NWC + gross fixed assets) / Revenue 28.4% 30.0% 20.0% 10.0% 0.0% (6.0)% -10.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 33
Slide 34: Decentralized operating environment
Decentralized operating environment Satish Maripuri, Group Executive 34
Slide 35: Decentralized operating environment
Market-leading businesses in defensible niches 2 31 Decentralized Process-driven operating capital deployment environment 35
Slide 36: Decentralized operating environment
Who we are Decentralized operating environment 2 Local resource allocation Nimble execution High performance expectations Corporate coaching Build for long-term competitive advantage Growth based incentives 36
Slide 37: Local decision making enables nimble execution
High level of autonomy & accountability Local decision Businesses focused on competing & winning making enables in their growing niche markets nimble execution Strategic choice & resource allocation decisions at business level Careers built within an individual business, not across multiple business
Slide 38: Building a culture of high performance
Building a culture of high performance Continuous Autonomous Passionate Strategic learner competitor builder operator Act like Transparent | Humble | High integrity an owner 38
Slide 39: Evolution of our governance system
How we are helping businesses improve organic revenue growth Increased performance expectation of businesses and leaders Evolution of Upgraded field leadership talent Focus on systemic capability building our governance system Institutionalizing processes while maintaining autonomy for our businesse
Slide 40: Governance & engagement model
Engagement rhythm Frequent coaching Monthly Group Executive reviews Governance Quarterly operating reviews & engagement Semi-annual talent offense review model Annual operating plan reviews Periodic strategy reviews KPIs and incentives Organic growth Operating CRI & cash algorithm leverage flow grow
Slide 41: Enabling high performance
2003 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 > ESG & DEI Cyber & data security Enabling high Talent offense performance Strategy enablement Strategy development Group executives CRI 41
Slide 42: Strategy development: Where to play, how to win
2016 2017 2018 2019 2020 2021 2022 2023 > Strategy development Where to play How to win Creating a plan Making a choice 43
Slide 43: Strategy enablement
2016 2017 2018 2019 2020 2021 2022 2023 > Strategy enablement Translates long- term strategy into Focus on building Rooted in lean near-term priorities enduring capabilities principles Strategy development 44
Slide 44: Talent offense
2017 2018 2019 2020 2021 2022 2023 > Talent offense Selection Engagement Development Rigorous & consistent application yields sustainable competitive advantage Strategy enablement development 45
Slide 45: Cyber & data security
018 2019 2020 2021 2022 2023 > Cyber & data security Enterprise Risk-based Corporate Business unit knowledge approach expertise prioritization sharing Enterprise-wide commitment Talent offense ment 46
Slide 46: ESG & DEI
019 2020 2021 2022 2023 > ESG & DEI Authentic Long-term Part of Positive impact focus commitment operating fabric from solutions Enables long-term competitive advantage Cyber & data security 47
Slide 47: Growth-based incentives
Incentives based on business- specific organic EBITDA growth Growth-based No budgets incentives Create an open, honest, Ensure alignment across performance-based culture the organization Foundation of trust & transparency 48
Slide 48: How we compete & win
How we compete & win 1 3 2 Market Model Culture Vertical & mission Compete on customer Local resource allocation critical solutions intimacy High performance Market leadership Nimble execution expectations High customer value = high Build for long-term gross margins competitive advantage Resilient &
Slide 49: Business case studies
Business case studies Mike Corkery, Chris Cartrett, Earl Thompson & Amy Zupon Business Presidents 50
Slide 50: Powering project success
Powering project success Mike Corkery Group Executive & President, Deltek 51
Slide 51: Deltek: purpose built software for project-based businesses
2022 recurring vs. non-recurring revenue Recurring Non-recurring 18% Purpose built 82% software for project- 2022 revenue by geography based businesses ~$800M North America Europe Rest of World 2% 10% Strong organic growth & successful integration of bolt-on acquisitions Total 2022 revenue 88% Inves
Slide 52: Purpose built for project-based industries
Purpose built for project-based industries Connecting & automating the project lifecycle that fuels our customers’ businesses Win Manage Develop Deliver Measure Finding the right Optimizing Finding & Connecting resources Understanding specific opportunities resource allocation cultivating top talent
Slide 53: Industry leaders choose Deltek
Industry leaders choose Deltek 98% Top 5 4 of 5 95% 10K+ Of the top 100 Of the largest global Of the world’s top Of the top 100 Small businesses federal contractors accounting & marketing & architecture & powered by Deltek consulting firms communications engineering solutions networks design firms 5
Slide 54: 40 years of global leadership
Innovative solutions 40 Years of global leadership Award-winning customer success 3,400 employees dedicated to project-based businesses Expertise trusted by 30,000+ customers in 80 countries Great place to work Acquired by Roper in 2016 55
Slide 55: Market conditions favorable to growth
Market conditions favorable to growth Deltek Others Deltek 2023 estimated annual market share US government contracting 31% 61% 67% Architecture & engineering 83% 90% Construction SMB 69% 39% 33% 17% Consulting 10% GovCon A&E Construction Consulting Creative +8% +10% +10% +10% 10% 2023 estimated ERP
Slide 56: Building the business
Building the business 2017 2018 2019 2020 2021 2022 2023 ▶ Strategy development Team / talent Strategy enablement Product development – quality / velocity Bolt-on M&A – product extensions Bolt-on M&A – adjacent markets Enhance GTM – SMB 57
Slide 57: Strategic M&A fueling growth
Government contracting Strategic M&A 2017 2022 fueling growth Creative TIP Technologies is 7th 2017 2018 acquisition under Roper Architects & engineers $425m ~ 2018 2021 Capital deployed Construction 2019 58
Slide 58: Deltek has become even stronger as part of Roper
Deltek has become even stronger as part of Roper At acquisition Now Revenue ($M) ~$500M ~$800M Organic recurring MSD HSD revenue growth profile Recurring revenue % of total 70% 82% EBITDA margin ~35% ~40% Gross retention 93% 97% Note: gross retention excludes data subscription business. 59
Slide 59: Project Nation
Project Nation
Slide 60: Technology enabling the business of law
Technology enabling the business of law Chris Cartrett President, Aderant 61
Slide 61: Aderant: purpose built software for law firms
Recurring vs. non-recurring Recurring & reoccurring Non-recurring 21% 79% Purpose built software for large Geographic mix & medium law firms ~$200M NA EMEA APAC 5% Strategic evolution 11% while gaining share Total 2022 revenue 84% Accelerated organic growth, & expanded reach through ERP vs. add-on m
Slide 62: Trusted leader in legal software solutions
Trusted leader in legal software solutions Practice management eBilling Time entry, billing compliance The industry’s #1 Legal tech’s fastest- 100,000+ monthly time & billing solution growing application active users (MAUs) Applicant tracking Resource allocation Calendaring & docketing #1 recruiting
Slide 63: The world's best firms rely on Aderant solutions
The world’s Large law market best firms rely on continues to grow Aderant solutions 2,500+ Unique clients 97% AmLaw Top 200 +5% +10% Legal services Law firm 21 86% revenue Countries Served Global 100 64
Slide 64: Leading law firms rely on Aderant
Leading law firms rely on Aderant 65
Slide 65: Firms are moving in our direction
Firms are moving U.S. market share increased from 31% in 2015 to 48% in 2022 in our direction 220+ 39 Firms replaced their AmLaw Top 200 firms legacy system with moved to Aderant Expert Aderant Expert in the last 5 years from largest competitor 48% 31% 97 0 AmLaw Top 200 firms on Firms moved from or
Slide 66: Experience the commitment
Experience the Commitment Support Innovation 100% Zero failed enterprise 92 Net promoter score (NPS) 35+ New products released implementations is consistently above 90 67
Slide 67: Building the business
Building the business 2015 2016 2017 2018 2019 2020 2021 2022 2023 ▶ Strategy development – land grab Product portfolio expansion Bolt-on M&A SaaS journey / migration Strategy evolution – cross sell / upsell Executive team / talent Process strengthening & maturity 68
Slide 68: Aderant has become even stronger as part of Roper
Aderant has become even stronger as part of Roper At acquisition Now Market position #2 #1 Revenue ~$100M ~$200M Organic recurring MSD LDD growth profile Recurring & reoccurring 71% 79% revenue % of total SaaS % of bookings 0% 80% EBITDA margin 47% 50% Net retention 102% 113% 69
Slide 69: Improving & extending patients' lives
Improving & extending patients’ lives Earl Thompson President, Verathon 70
Slide 70: Verathon: global leader in airway management
Revenue streams Consumables Capital Service 6% 41% 53% Global leader in airway management & bladder volume Revenue by geography measurement devices ~$350M USA EMEA ROW 8% Delivering accelerated growth 13% through market expansion & product generation excellence Total 2022 revenue 79% Scaling for gro
Slide 71: Leading products with strong brand preference: video laryngoscopes
Leading products with strong brand preference Video laryngoscopes GlideScope Rigid devices, utilizing video camera technology, used to help intubate patients. They allow for visualization of the vocal cords and related airway structures when placing the endotracheal tube. 72
Slide 72: Leading products with strong brand preference: single-use bronchoscopes
Leading products with strong brand preference Single-use bronchoscopes BFlex Single-use, flexible devices used to visualize the airway and tracheobronchial tree. They are used for diagnosis and management of various airway and lung diseases. These include assisting and confirming tube placement, suc
Slide 73: Leading products with strong brand preference: bladder volume measurement
Leading products with strong brand preference Bladder volume measurement devices BladderScan A purpose-built ultrasound machine which measures bladder volume accurately with point and click technology. This empowers healthcare providers to make catheterization decisions when a patient is not able to
Slide 74: Our current markets & positions
Our current markets & positions The markets we participate in have a combined served available market size of $1B+, growing double digits Visualization Imaging Video laryngoscopy Single-use bronchoscopy Bladder volume measurement Market growth HSD Strong DD LSD Verathon Global market leader Global #
Slide 75: Leading healthcare providers choose Verathon
Leading healthcare providers choose Verathon 95% 4.8M 6M of U.S. hospitals use SU video laryngoscope Patients are intubated Verathon products consumables shipped annually with GlideScope annually #2 175M BFlex bronchoscopes U.S. Annual patient exams market position vectoring using BladderScan to #1
Slide 76: Building the business
Building the business 2009 2012 2015 2018 2021 2023 ▶ Founder transition Quality management system NPD capability… Product generation excellence Operations & lean journey Operating system / processes Strategy development & enablement Culture / engagement Team / talent Infrastructure / ERP Supply cha
Slide 77: Accelerating growth
Served available market Accelerating growth $1B+ $448M SAM The journey to double-digit growth SAM 2019 2X 2023 2X Video laryngoscopy +SU bronchoscopy bladder volume Market expansion measurement Doubled served available market (SAM) through entry into single-use bronchoscopy Total Verathon revenue ~$
Slide 78: Verathon has become even stronger as part of Roper
Verathon has become even stronger as part of Roper 2014 Now Revenue ~$190 ~$350 Organic LSD LDD growth profile Reoccurring <15% 53% revenue New products <1 per year ~3 per year introduced Employee N/A 93% engagement 79
Slide 79: The leader in modern insurance technology
The leader in modern insurance technology Amy Zupon President, Vertafore 80
Slide 80: Vertafore: purpose built software for P&C insurance distribution
Recurring vs. non-recurring Recurring Reoccuring Non-recurring 10% 10% Purpose built 80% software for the P&C Revenue by geography insurance & benefits distribution channel ~$635M US Canada 2% Strategic investments under Total 2022 revenue Roper ownership 98% Enabling long-term growth Customer type
Slide 81: Vertafore serves the entire insurance distribution channel
Vertafore serves the entire insurance distribution channel States / regulators Licensing & compliance solutions that make states easier to work with End insured Agencies / brokers MGAs Carriers Purchaser of Agency management Policy administration Distribution management & insurance products systems
Slide 82: Vertafore at a glance
Vertafore Award winning products at a glance Great industry – growing with favorable trends Operates from a unique position Recognized industry leader as leading market player Industry complexity creates barrier to entry Have a strong team in place to execute Great place to work Investing in R&D to
Slide 83: Vertafore operates from a strong market position
Vertafore operates from a strong market position 100 96 20 ~85% of the top 100 brokers of the top P&C 100 state governments use of managing general partner with Vertafore carriers leverage Vertafore for regulatory agents leverage Vertafore solutions management Vertafore solutions 66 7 ~50% 1.2M+ of
Slide 84: More industry players than anyone else
More industry players than anyone else 85
Slide 85: Insurance market trends support continued growth
Insurance market trends support continued growth Independent agents are a fixture in the insurance distribution channel & continue to grow in importance Consistent growth in Agents expanding Growing in size insurance premiums their share of distribution (employment) US P&C net premiums written ($B)
Slide 86: Building the business
Building the business 2020 2021 2022 2023 ▶ Strategy development Strategy enablement Customer success enablement Accelerate R & D / innovation Bolt-on M&A Team / talent Enhance GTM-SMB 87
Slide 87: Enhancing customer engagement model
Enhancing customer engagement model New model for long-term growth – not short-term bookings Evolving needs of customers A different engagement model Large agencies, MGAs, and carriers are Vertafore is moving from a transactional becoming more sophisticated in their “vendor” model to a partnership m
Slide 88: Increased product investment
Increased product investment Investing in R&D to drive long-term profitable growth for Vertafore Increasing investment in R&D Focused in 3 primary areas User experience Cash R&D ($M) Simplifying the workflows & $104 modernizing the experience Advancing technology Migration to AWS, enhancing APIs & m
Slide 89: Driving strategic M&A for growth
Driving strategic M&A for growth Disciplined M&A with partnership from Roper’s industry leading M&A experts Acquisitions under Roper Vertafore partners with Roper to drive M&A agenda based on overall strategy Acquired November 2021 Partnership in diligence between Roper & 50%+ growth since acquisiti
Slide 90: Vertafore has become even stronger under Roper
Vertafore has become even stronger under Roper At acquisition Now Revenue ($M) ~$550M ~$635M Organic growth profile MSD MSD+ EBITDA margin (%) 49% 50% Releases per year 79 113 Gross / net retention 91% / 105% 92% / 108% Employee 93% 95% engagement1 91
Slide 91: Panel Q&A
Panel Q&A Neil Hunn, Group Executives & Business Presidents 92
Slide 92: Break
Break 15 minutes 93
Slide 93: Process-driven capital deployment
Process-driven capital deployment Jason Conley, EVP & CFO 94
Slide 94: Market-leading businesses in defensible niches
Market-leading businesses in defensible niches 2 31 Decentralized Process-driven operating capital deployment environment 95
Slide 95: Process-driven capital deployment
Who we are Process-driven capital deployment Center-led 3 Business pickers Low risk Highly disciplined & analytical Learning process Free cash flow + investment grade leverage funded 96
Slide 96: Center-led capital deployment
Roper corporate team led Center-led Enables deployment to best capital and highest use deployment Strong reputation; buyer of choice 97
Slide 97: Business pickers: high quality, low risk
Business pickers: high quality, low risk Company criteria Market criteria CRI Market Durable organic Growing niche Favorable leadership growth / recurring market competitive landscape revenue EBITDA Strong Low company-specific Low cycle Low existential margins management existential risk exposure ri
Slide 98: Highly disciplined & analytical
Highly Effective sourcing & filtering disciplined & Rigorous & systematic diligence process analytical CRI-based valuation methodology 99
Slide 99: Deal process overview
Deal process overview Vast universe of private equity assets Effective sourcing & filtering Relationships with sellers built over decades Rigorous & systematic diligence process Business picker orientation enables focus CRI-based valuation methodology Honed go-to-market capability & process 100
Slide 100: Deal process overview
Deal process overview Weekly M&A briefings; go / no-go on diligence Establish “got to believes” or thesis for each attractive deal Due diligence Effective sourcing & filtering Market & strategic Business specific Market size, market growth, Commercial (GTM, implementation, competition position, comp
Slide 101: Deal process overview
Deal process overview Identifies value accretive opportunities Effective sourcing & filtering Prevents bias & ensures objectivity Rigorous & systematic diligence process 20-year track record of success CRI-based valuation methodology 102
Slide 102: Learning process
Learning process Deal 1 Deal 2 Deal 3 Deal 4 Sourcing Sourcing Sourcing Sourcing Curating Curating Curating Curating Diligence Diligence Diligence Diligence Negotiation Negotiation Negotiation Negotiation Onboarding Onboarding Onboarding Onboarding Capture learning & apply to workflow 103
Slide 103: Acquisition profiles
DIAIT} Freight & Analytics Acquisition @NDI profiles = Strata FOUNDRY. imagination engineered
Slide 104: Acquisition detail
Acquisition detail Acquired in 2004 (part of TransCore) #1 load board for freight spot market Internal carve-out from TransCore Growth beyond network; data monetization E-Commerce investment enables scaled GTM Cash flow CAGR since acquisition = +16% Note: cash flow growth since acquisition is on a p
Slide 105: Acquisition detail
Acquisition detail Acquired in 2011 ($204M) #1 precision measurement solution Management investing for long-term growth Strategic choice: prioritized medical end market Medical focus unlocked new applications & faster growth Cash flow CAGR since acquisition = +16% Note: cash flow growth since acquis
Slide 106: Acquisition detail
Acquisition detail Acquired in 2015 ($140M); EPSi bolt-on in 2020 ($365M) #1 hospital decision support & cost accounting solution Long-term solution investments driving innovation Customer cross sell & monetization of network data Bolt-on brings new logos and conversion upsell Cash flow CAGR since a
Slide 107: Acquisition detail
Acquisition detail Acquired in 2019 ($543M) #1 postproduction media & entertainment solution Long-term investments in product innovation Support for transition to subscription model Cash flow CAGR since acquisition = +21% Note: cash flow growth since acquisition is on a pre-tax basis. 108
Slide 108: Large universe of M&A opportunities
Large universe of M&A opportunities Private equity generates a large & high-quality pipeline of acquisition candidates ~1,200 Annual software targets 235 Reviewed 93 NDAs 71 Management meetings 25 Indications of interest 16 Full diligence 6 Transactions closed 0 500 1000 1500 109
Slide 109: Free cash flow & investment grade leverage
Free cash flow & Net Debt / LTM EBITDA (Actual) investment grade 5.0x 4.7x leverage 4.5x 4.2x 4.0x 3.3x Invest in organic growth 3.5x 2.8x 2.7x 3.0x 2.5x Strategic use of our balance sheet to 2.5x 2.5x improve compounding 2.0x Commitment to solid investment grade 1.5x Enables nimble & opportunistic
Slide 110: Roper's consistent asset-light focus
Roper’s consistent asset-light focus Share price (NWC + gross fixed assets) / Revenue Sale of TransCore & industrial businesses $500 $450 28.4% 30.0% $400 $432.09 Gross Investment % Revenue $350 20.0% $300 Share Price $250 10.0% $200 $150 0.0% $100 $62.54 (6.0)% $50 $- -10.0% 2007 2008 2009 2010 201
Slide 111: Proven & repeatable capital deployment process
Proven & repeatable capital deployment process @ FCF generation @ Capital deployment =— FCF margin $15,000 30% 25% $10,000 20% 15% $5,000 10% 5% $0 0% 2003-07 2008-12 2013-17 2018-22 Primarily industrial Global financial crisis Oil & gas downturn Pandemic Higher interest rates Neptune, TransCore acq
Slide 112: Sustainable & low-risk acquisition approach
Sustainable & low-risk acquisition approach Highly analytical, Focused on buying Centralized capital disciplined, the best available deployment & process-driven businesses approach Learning Funded by Large universe of process enables excess free cash acquisition continuous flow & investment opportun
Slide 113: Wrap-up
Wrap-up Neil Hunn, President & CEO 114
Slide 114: Market-leading businesses in defensible niches
Market-leading businesses in defensible niches 1 Decentralized Process-driven 3 2 operating capital deployment environment 115
Slide 115: By the numbers
By the numbers 2023E Revenue Revenue growth Revenue growth + FCF margin Double- Rule ~ $6B digit of 40+ Margins Business mix Recurring & reoccurring 70%+ Gross margin ~75% Vertical software ~80% Of vertical software 40%+ EBITDA margin ~25% 70%+ Of total Medical & water products 30%+ FCF margin 116
Slide 116: Roper's evolution
Roper’s evolution ~15 years ago Now Portfolio Niche, market-leading businesses Niche, market-leading businesses Revenue ~$2B ~$6B EBITDA margin % ~25% ~40% Organic growth profile LSD+ MSD+ Software % of revenue ~5% ~75% Cyclical revenue % ~50% ~0% NWC % of revenue ~10% ~(17)% Higher growth & higher
Slide 117: Long-term compounding growth algorithm
Long-term compounding growth algorithm Market-leading businesses in defensible niches Double-digit revenue growth MSD+ organic growth 1 Patient & disciplined capital deployment + 45%+ operating leverage High margin niche leaders Improve what we own = 3 2 Mid-teens free cash flow compounding Process-
Slide 118: Today's messages
Roper Technologies Today’s messages Disciplined & High-quality Demonstrated analytical approach portfolio of ability to improve to capital market leaders our businesses deployment Our culture is a Clear & compelling Low risk competitive long-term growth orientation advantage algorithm 119
Slide 119: Technologies
TECHNOLOGIES
Slide 120: Appendix
Appendix 121
Slide 121: Reconciliations I
Reconciliations I Adjusted revenue and EBITDA reconciliation ($M) (including discontinued operations) FY 2007 FY 2022 CAGR GAAP revenue $2,102 $6,388 Purchase accounting adjustment to acquired deferred revenue - - Adjusted revenue $2, 102 $6,388 8% GAAP net earnings $250 $4,545 Taxes 134 1,345 Inter
Slide 122: Reconciliations II
Reconciliations II Adjusted revenue and EBITDA reconciliation ($M) (including discontinued operations) FY 2016 FY 2019 GAAP revenue $3,790 $5,367 Purchase accounting adjustment to acquired deferred revenue 15 11 Adjusted revenue $3,805 $5,377 Organic (1%) 3% Acquisitions / divestitures 7% 1% Foreign
Slide 123: Reconciliations III
Reconciliations III Adjusted EBITDA reconciliation ($M) (including discontinued operations) FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 GAAP net earnings $659 $972 $944 $1,768 $950 $1,153 Taxes 282 63 254 460 260 338 Interest expense 112 181 182 187 219 234 Depreciation 37 50 50 49 53 54 Amortiz
Slide 124: Reconciliations IV
Reconciliations IV Adjusted revenue and EBITDA reconciliation ($M) (from continuing operations) FY 2019* FY 2020 FY 2021 FY 2022 V% to ‘21 3-Year CAGR GAAP revenue $3,558 $4,022 $4,834 $5,372 Purchase accounting adjustment to acquired deferred revenue 11 12 1 - Adjusted revenue $3,568 $4,034 $4,835
Slide 125: Roper Technologies
Roper TECHNOLOGIES