Roper Technologies, Inc. · NASDAQ:ROP
Roper Technologies — Q4 2019 Earnings Presentation
28 slides from Roper Technologies's earnings presentation, Jan 30, 2020
Slide 1: Q4 2019 Financial Results
A DIVERSIFIED TECHNOLOGY COMPANY Q4 2019 FINANCIAL RESULTS JANUARY 30, 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 Q4 Results are Adjusted for the Following Items: (1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustment to Acquired Deferred Revenue (3) Gain on Sale Rela
Slide 4: Roper Conference Call
ROPER CONFERENCE CALL • 2019 Highlights & Financial Results • 2019 Segment Detail & 2020 Segment Outlook • 2020 Guidance • Q&A PAGE 4
Slide 5: Q4 2019 Enterprise Highlights
Q4 2019 ENTERPRISE HIGHLIGHTS • Revenue +2% to $1.40B; Organic +1% – Positive Organic Growth in Three of Four Segments – Short Cycle and Upstream O&G Declined, as Expected • Gross Margin +60 Bps to 64.1% • EBITDA +4% to $518M; EBITDA Margin +100 Bps to 37.0% • DEPS +5% to $3.39 • Free Cash Flow of $
Slide 6: Q4 Income Statement Metrics
Q4 INCOME STATEMENT METRICS Q4’18 Q4’19 Revenue $1,378 $1,400 +2%; Organic +1% Gross Profit $874 $898 +3% Gross Margin 63.5% 64.1% +60 bps EBITDA $496 $518 +4% EBITDA Margin 36.0% 37.0% +100 bps Interest Expense $47 $49 Tax Rate 22.8% 21.6% Net Earnings $336 $356 DEPS $3.22 $3.39 +5% In $ millions,
Slide 7: Q4 Segment Results
Q4 SEGMENT RESULTS APPLICATION SOFTWARE NETWORK SOFTWARE & SYSYEMS 29% of Roper Revenue 31% of Roper Revenue +4% vs PY +21% vs PY Revenue $411 Revenue $431 +2% Organic +3% Organic EBITDA $164 40.0% Margin EBITDA $196 45.5% Margin • Deltek Organic Growth Tempered by Perpetual • Network Software Organ
Slide 8: Full Year Income Statement Metrics
FULL YEAR INCOME STATEMENT METRICS FY’18 FY’19 Revenue $5,199 $5,377 +3%; Organic +3% Gross Profit $3,287 $3,438 +5% Gross Margin 63.2% 63.9% +70 bps EBITDA $1,806 $1,925 +7% EBITDA Margin 34.7% 35.8% +110 bps Interest Expense $182 $187 Tax Rate 21.5% 18.7% Net Earnings $1,233 $1,371 DEPS $11.81 $13
Slide 9: 2019 Cash Flow Performance
2019 CASH FLOW PERFORMANCE • Q4 Free Cash Flow: $453M FULL YEAR FREE CASH FLOW in $ millions – 32% of Revenue +11% CAGR • FY Operating Cash Flow: $1.50B* – +5% vs Prior Year – 28% of Revenue $1,438 • FY Free Cash Flow: $1.44B* $1,371 – +5% vs Prior Year $1,175 – 27% of Revenue 2017 2018 2019* Cash R
Slide 10: Consistent Cash Flow Compounding
CONSISTENT CASH FLOW COMPOUNDING EBITDA FREE CASH FLOW FREE CASH FLOW % OF EBITDA +14% +14% CAGR CAGR $1,925 $1,806 $1,605 $1,438 73% 73% 76% 75% $1,315 $1,371 $1,175 $961 2016 2017 2018 2019 2016* 2017 2018 2019* 2016* 2017 2018 2019* • Double Digit Compounding Over Last Four Years * Adjusted for C
Slide 11: Asset-Light Business Model
ASSET-LIGHT BUSINESS MODEL NET WORKING CAPITAL (1) (2) AS % OF Q4 ANNUALIZED REVENUE Q4’16 Q4’17 Q4’18 Q4’19 (I) Inventory 4.6% 4.2% 4.1% 3.6% 2.7% (R) Receivables 16.3% 16.0% 16.7% 17.8% (P) Payables & 10.9% 12.0% 11.9% 11.6% Accruals (3.3)% (3.4)% (D) Deferred 7.2% 11.4% 12.2% 15.1% (5.3)% Revenue
Slide 12: Strong Financial Position
STRONG FINANCIAL POSITION 12/31/18 12/31/19 V to PY Cash $364 $710 Gross Debt $4,942 $5,275 Net Debt $4,578 $4,566 ($12) TTM EBITDA $1,806 $1,925 +$119 Gross Debt-to-EBITDA (TTM) 2.7x 2.7x Net Debt-to-EBITDA (TTM) 2.5x 2.4x Drawn on $2.5B Revolver $865 $0 Significant Capacity for Continued Capital D
Slide 13: Segment Detail & Outlook
SEGMENT DETAIL & OUTLOOK
Slide 14: Application Software
APPLICATION SOFTWARE FY 2019 HIGHLIGHTS FY 2019 RESULTS 30% of Roper Revenue • MSD Organic Revenue Growth at Deltek – Increased SaaS Adoption in GovCon and Revenue $1,589 +9% vs PY Professional Services End Markets +4% Organic – Successful Integration of ComputerEase +10% vs PY and Avitru Acquisitio
Slide 15: Network Software & Systems
NETWORK SOFTWARE & SYSTEMS FY 2019 HIGHLIGHTS FY 2019 RESULTS 29% of Roper Revenue • Completed Successful Acquisition and Onboarding of Foundry and iPipeline; Strong +14% vs PY Revenue $1,539 Performance from Both Businesses +5% Organic • Excellent DAT Growth from Continued +17% vs PY EBITDA $681 Ne
Slide 16: Measurement & Analytical Solutions
MEASUREMENT & ANALYTICAL SOLUTIONS FY 2019 HIGHLIGHTS FY 2019 RESULTS 30% of Roper Revenue • Strong Execution Across Medical Product Businesses: Grew HSD (6)% vs PY Revenue $1,596 – Another Terrific Year for Northern Digital +2% Organic (NDI) from Continued Adoption of Precision Measurement Applicat
Slide 17: Process Technologies
PROCESS TECHNOLOGIES FY 2019 HIGHLIGHTS FY 2019 RESULTS 12% of Roper Revenue • Upstream O&G Businesses Declined HSD (5)% vs PY due to Deteriorating Market Conditions Revenue $653 (4)% Organic • CCC Growth from New Construction and (4)% vs PY System Replacement Projects EBITDA $238 36.4% Margin • Gre
Slide 18: 2020 Guidance
2020 GUIDANCE
Slide 19: Establishing 2020 Guidance
ESTABLISHING 2020 GUIDANCE • Full Year Adjusted DEPS: $13.30 - $13.60 – Organic Revenue Growth: +6 - 7% • +3 - 4% Excluding TransCore – Tax Rate: ~22% • Q1 Adjusted DEPS: $2.94 - $3.00 – Organic Revenue Growth: +2 - 3% – Majority of TransCore NYC Project Contribution in Q2 - Q4 Guidance excludes imp
Slide 20: Year End Summary
YEAR END SUMMARY • Another Excellent Year for Roper – EBITDA +7% to $1.93B; Margin +110 Bps to 35.8% – DEPS +10% to $13.05 – Free Cash Flow +5% to $1.44B; 27% of Revenue – Deployed $2.4B Toward High-Quality Software Acquisitions; Completed Divestitures of Gatan and Scientific Imaging Businesses • We
Slide 21: Appendix
APPENDIX
Slide 22: Reconciliations I
RECONCILIATIONS I Adjusted Revenue, Gross Profit and EBITDA Reconciliation ($M) Q4 2018 Q4 2019 V% FY 2016 FY 2017 FY 2018 FY 2019 V% Adjusted Revenue Reconciliation GAAP Revenue $ 1,376 $ 1,395 1% $ 3,790 $ 4,607 $ 5,191 $ 5,367 3% Purchase accounting adjustment to acquired deferred A A revenue 1 5
Slide 23: Reconciliations II
RECONCILIATIONS II Adjusted Revenue Growth Reconciliation Network Measurement Q4 2019 Application Software & & Analytical Process Software Systems Solutions Technologies Roper Organic Growth 2% 3% 1% (6%) 1% Acquisitions/Divestitures 2% 18% (14%) - 1% Foreign Exchange - - - (1%) - Total Adjusted Rev
Slide 24: Reconciliations III
RECONCILIATIONS III Adjusted Revenue Growth Reconciliation Network Measurement FY 2019 Application Software & & Analytical Process Software Systems Solutions Technologies Roper Organic Growth 4% 5% 2% (4%) 3% Acquisitions/Divestitures 5% 9% (7%) - 1% Foreign Exchange (1%) - (1%) (1%) (1%) Rounding 1
Slide 25: Reconciliations IV
RECONCILIATIONS IV Adjusted Net Earnings Reconciliation ($M) D Q4 2018 Q4 2019 V% FY 2018 FY 2019 V% GAAP Net Earnings $ 257 $ 871 239% $ 944 $ 1,768 87% Purchase accounting adjustment to acquired deferred A A revenue 1 4 6 8 Amortization of acquisition-related intangible assets E 64 81 248 288 Tran
Slide 26: Reconciliations V
RECONCILIATIONS V Adjusted DEPS Reconciliation D Q4 2018 Q4 2019 V% FY 2018 FY 2019 V% GAAP DEPS $ 2.46 $ 8.28 237% $ 9.05 $ 16.82 86% Purchase accounting adjustment to acquired deferred A A revenue 0.01 0.04 0.06 0.08 Amortization of acquisition-related intangible assets E 0.61 0.77 2.38 2.74 Trans
Slide 27: Footnotes
FOOTNOTES A. 2019 acquisition-related fair value adjustment to deferred revenue related to the acquisitions of PowerPlan, Foundry and iPipeline as shown below. Forecasted acquisition-related fair value adjustments to acquired deferred revenue of Foundry and iPipeline as shown below ($M, except per s
Slide 28: A Diversified Technology Company
A DIVERSIFIED TECHNOLOGY COMPANY