Roper Technologies, Inc. · NASDAQ:ROP
Roper Technologies — Q1 2020 Earnings Presentation
28 slides from Roper Technologies's earnings presentation, Apr 28, 2020
Slide 1: Q1 2020 Financial Results
A DIVERSIFIED TECHNOLOGY COMPANY Q1 2020 FINANCIAL RESULTS APRIL 28, 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 Q1 Results are Adjusted for the Following Items: (1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustment to Acquired Deferred Revenue See Appendix for Reco
Slide 4: Executive Summary
EXECUTIVE SUMMARY • Strong Q1 Growth: Revenue, EBITDA, Cash Flow • Exceptional Cash & Liquidity Position • Operational Status and Response to COVID-19 • Q2 & FY 2020 Segment Outlook; Business Model Discussion • Guidance Update and Planning Assumptions • Summary and Capital Deployment Outlook • Roper
Slide 5: Q1 2020 Enterprise Highlights
Q1 2020 ENTERPRISE HIGHLIGHTS • Revenue +5% to $1.35B; Organic +4% – Positive Organic Growth in Three of Four Segments • Gross Margin +50 Bps to 63.5% • EBITDA +7% to $467M; EBITDA Margin +50 Bps to 34.5% • Earnings Before Taxes +7% to $408M • DEPS: $3.05 • Free Cash Flow +13% to $353M – 26% of Reve
Slide 6: Q1 Income Statement Metrics
Q1 INCOME STATEMENT METRICS Q1’19 Q1’20 Revenue $1,288 $1,353 +5%; Organic +4% Gross Profit $811 $859 +6% Gross Margin 63.0% 63.5% +50 bps EBITDA $438 $467 +7% EBITDA Margin 34.0% 34.5% +50 bps Interest Expense $44 $45 Earnings Before Taxes $382 $408 +7% Q1’19 Included $43M ($0.41 Tax Rate 9.7% 21.1
Slide 7: Compounding Cash Flow
COMPOUNDING CASH FLOW • Q1 Operating Cash Flow: $364M Q1 FREE CASH FLOW in $ millions – +10% vs Prior Year +14% CAGR – 27% of Revenue • Q1 Free Cash Flow: $353M – +13% vs Prior Year $353 – 26% of Revenue $312 – 76% of EBITDA $270 • TTM Free Cash Flow: $1.48B – 27% of Revenue Q1 2018 Q1 2019* Q1 2020
Slide 8: Net Working Capital
NET WORKING CAPITAL NET WORKING CAPITAL (1) (2) AS % OF Q1 ANNUALIZED REVENUE 2018 2019 2020 Q1’18 Q1’19 Q1’20 (I) Inventory 4.5% 4.5% 3.8% (2.7)% (R) Receivables 16.4% 16.6% 17.4% (3.3)% (4.4)% (P) Payables & 11.5% 10.8% 10.3% Accruals (D) Deferred 12.1% 13.5% 15.3% Revenue Total (I+R-P-D) (2.7)% (
Slide 9: Strong Financial Position
STRONG FINANCIAL POSITION 3/31/19 3/31/20 Cash $392 $1,000 Gross Debt $4,503 $5,277 Net Debt $4,110 $4,277 TTM EBITDA $1,855 $1,954 Gross Debt-to-EBITDA (TTM) 2.4x 2.7x Net Debt-to-EBITDA (TTM) 2.2x 2.2x Drawn on $2.5B Revolver $410 $0 Significant Capacity for Capital Deployment In $ millions. Numbe
Slide 10: Exceptional Cash Flow Generation and Liquidity
EXCEPTIONAL CASH FLOW GENERATION AND LIQUIDITY • Portfolio of High Margin, Asset-Light, Independent Businesses Across Diverse End Markets Leads to Consistent and Sustainable Cash Flow Generation • $1B Cash Balance and $0 Drawn on $2.5B Revolver • Successfully Completed Amendment to Revolver Covenant
Slide 11: Governance System and Organizational Response to COVID-19
GOVERNANCE SYSTEM AND ORGANIZATIONAL RESPONSE TO COVID-19 • Health and Safety of Employees is Number One Priority • All Businesses with Manufacturing Facilities Deemed “Essential” and Remain Operational; All Businesses Work-From-Home Proving Highly Effective • Decentralized Operations and Low Fixed
Slide 12: Application Software
APPLICATION SOFTWARE Q1 HIGHLIGHTS OUTLOOK CONSIDERATIONS 30% of Roper Revenue • ~10% Perpetual Licenses +6% vs PY – Balanced Across Net New, Cross Sell, Revenue $405 +5% Organic and Existing Customer Expansions – License Bookings Activity Adjusting to EBITDA $156 38.6% Margin Customer Recovery and
Slide 13: Application Software Business Drivers
APPLICATION SOFTWARE BUSINESS DRIVERS • Deltek – Government Contractor Market Demonstrating Continued Durability – Professional Services Markets Could be Challenged • Aderant, PowerPlan & CBORD – Some Large New System Bookings Expected to Push; Smaller Add-On Products Likely to Continue at Lower Lev
Slide 14: Network Software & Systems
NETWORK SOFTWARE & SYSTEMS Q1 HIGHLIGHTS OUTLOOK CONSIDERATIONS 33% of Roper Revenue • Network Software (~60% of Segment) +27% vs PY – ~85% Recurring (Primarily SaaS) Revenue $441 +9% Organic – Strong Network Effects – Diversified and Durable End Markets EBITDA $185 42.0% Margin (Healthcare, Life In
Slide 15: Network Software & Systems Business Drivers
NETWORK SOFTWARE & SYSTEMS BUSINESS DRIVERS • DAT & ConstructConnect – Subscription Revenue Model – Elements of Counter-Cyclicality as Customers Rely on Network to Generate New Business in Tight Markets • iTradeNetwork – Active Participation Across Food Supply Chain Network; Expect Minimal Disruptio
Slide 16: Measurement & Analytical Solutions
MEASUREMENT & ANALYTICAL SOLUTIONS Q1 HIGHLIGHTS OUTLOOK CONSIDERATIONS 27% of Roper Revenue • Verathon (9)% vs PY – Unprecedented GlideScope Systems Revenue $365 +3% Organic and Consumables Demand – Video Intubation Serves Patients and EBITDA $123 33.6% Margin Protects Healthcare Providers Treating
Slide 17: Process Technologies
PROCESS TECHNOLOGIES Q1 HIGHLIGHTS OUTLOOK CONSIDERATIONS 11% of Roper Revenue • Oil & Gas Related (~60% of Segment, (10)% vs PY ~6% of Roper Revenue) Revenue $142 (10)% Organic – Upstream • Expect < $100M of Revenue in EBITDA $46 32.4% Margin 2020, Down ~50% in Q2 • No Recovery Expected in 2020 • U
Slide 18: Updated 2020 Guidance Framework
UPDATED 2020 GUIDANCE FRAMEWORK ORGANIC Q2 FULL YEAR KEY FACTORS REVENUE • High Level of Recurring Revenue Application • Timing of License Sales, Expect Delays - MSD - LSD to + LSD Software • Pacing of Services and Implementation Work (Remote vs Onsite) Network • High Level of Recurring Revenue Soft
Slide 19: Summary
SUMMARY • Another Excellent Quarter for Roper – Revenue +5% to $1.35B; Organic +4% – EBITDA +7% to $467M; EBITDA Margin +50 Bps to 34.5% – Free Cash Flow +13% to $353M; 26% of Revenue; 76% of EBITDA • All Businesses Remain Operational; Work-From-Home Proving Highly Effective • Exceptional Balance Sh
Slide 20: Businesses Contributing to COVID-19 Battle
BUSINESSES CONTRIBUTING TO COVID-19 BATTLE • Sunquest: Providing Disease Surveillance and Outbreak Management SaaS Solution Pre-Configured for COVID-19 • CliniSys: Collaborated with Technology Partners to Rapidly Establish National Testing Network in Belgium • Data Innovations: Provided Rapid Softwa
Slide 21: Appendix
APPENDIX
Slide 22: Reconciliations I
RECONCILIATIONS I Adjusted Revenue Growth Reconciliation Network Measurement Q1 2020 Application Software & & Analytical Process Software Systems Solutions Technologies Roper Organic Growth 5% 9% 3% (10%) 4% Acquisitions/Divestitures 2% 19% (12%) - 2% Foreign Exchange - - - (1%) - Rounding (1%) (1%)
Slide 23: Reconciliations II
RECONCILIATIONS II Adjusted EBITDA Reconciliation ($M) Q1 2019 Q1 2020 V% GAAP Revenue $ 1,287 $ 1,351 5% Purchase accounting adjustment to acquired deferred A revenue 1 2 Adjusted Revenue $ 1,288 $ 1,353 5% GAAP Net Earnings $ 370 $ 240 Taxes 50 64 Interest Expense 44 45 Depreciation 12 13 Amortiza
Slide 24: Reconciliations III
RECONCILIATIONS III Adjusted Earnings Before Taxes Reconciliation ($M) Q1 2019 Q1 2020 V% GAAP Earnings Before Taxes $ 419 $ 305 (27%) Purchase accounting adjustment to acquired deferred A revenue - 2 Amortization of acquisition-related intangible assets B 82 101 Gain on sale of Scientific Imaging b
Slide 25: Reconciliations IV
RECONCILIATIONS IV Adjusted DEPS Reconciliation C Q1 2019 Q1 2020 V% GAAP DEPS $ 3.53 $ 2.28 (35%) Purchase accounting adjustment to acquired deferred A revenue - 0.02 Amortization of acquisition-related intangible assets B 0.62 0.75 Gain on sale of Scientific Imaging businesses (0.86) - Rounding 0.
Slide 26: Reconciliations V
RECONCILIATIONS V Adjusted Segment Reconciliation ($M) Measurement & Analytical Application Software Network Software & Systems Process Technologies Solutions Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 GAAP Revenue $ 381 $ 405 $ 346 $ 438 $ 402 $ 365 $ 158 $ 142 Add: PowerPlan;
Slide 27: Footnotes
FOOTNOTES A. 2020 actual results and forecast of estimated acquisition-related fair value adjustments to deferred revenue related to the acquisitions of Foundry and iPipeline as shown below ($M except per share data). Q1 2019A Q1 2020A Q2 2020E FY 2020E Pretax $ 1 $ 2 $ 1 $ 4 After-tax $ - $ 2 $ 1 $
Slide 28: A Diversified Technology Company
A DIVERSIFIED TECHNOLOGY COMPANY