Slide 1: Q3 2022 Financial Results
Q3 2022 FINANCIAL RESULTS OCTOBER 26, 2022 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) and Continuing Operations Basis. Q3 Results are Adjusted for the Following Items: (1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustments to Commission Expense (3) T
Slide 4: Roper Conference Call
ROPER CONFERENCE CALL • Q3 Enterprise Highlights & Financial Results • Segment Detail & Outlook • Q4 & FY 2022 Enterprise Guidance • Q&A PAGE 4
Slide 5: Q3 Summary
Q3 SUMMARY • Excellent Quarterly Results – +10% Organic Revenue Growth; Broad-Based Across All Segments – Strong Strategic and Operational Execution from Business Leaders • Completed Frontline Education Acquisition • Increasing Full Year Guidance • Balance Sheet Well Positioned for Continued Capital
Slide 6: Frontline Acquisition Overview
FRONTLINE ACQUISITION OVERVIEW INVESTMENT HIGHLIGHTS +7% • Purchase Price: $3.375B (Net of ~$350M Taxvs PY _____ Benefit); ~19x 2023 Estimated EBITDA +7% • High-Quality Business Model Organic • HSD Organic Revenue Growth Outlook MEETS ALL ACQUISITION CRITERIA • 90%+ Recurring Revenue Mix Leader in
Slide 7: Enhanced Portfolio Quality
ENHANCED PORTFOLIO QUALITY Continuing Operations Only Organic Revenue Growth Total Revenue Growth 20% COVID Year 13% 11% 11%+ 8% 9%+ 6% 3% 2019 2020 2021 2022E EBITDA Margin 38% 39% 40% 40% Vertical Software Medical & Water Products (~75% of Revenue) (~25% of Revenue) Results are presented on an Adj
Slide 8: Q3 Financial Highlights
Q3 FINANCIAL HIGHLIGHTS • Revenue +10%; Organic Revenue +10% • EBITDA +12%; EBITDA Margin +80 Bps to 41.1% • DEPS +18% to $3.67 • Free Cash Flow +9% to $353M; +17% Excluding Cash Tax Impact of Section 174* REVENUE EBITDA FREE CASH FLOW*** Sec. 174 +10% +12% vs PY vs PY +9% vs PY $916 $1,006 $1,232 $
Slide 9: Strong Financial Position
STRONG FINANCIAL POSITION • Closed Frontline Acquisition on October 4th – Financed by Cash and Revolving Credit Facility • Current Revolver Balance $2.2B (as of October 26th) – Expect to Pay Down Full Revolver Balance with Industrial Sale Proceeds (Late Q4) • $4B+ of M&A Capacity Through the End of
Slide 10: Segment Detail & Outlook
SEGMENT DETAIL & OUTLOOK
Slide 11: Application Software
APPLICATION SOFTWARE REVENUE Q3 HIGHLIGHTS +7% • +7% Organic Revenue Growth Driven by Continued Strong vs PY _____ Recurring Revenue +7% • Great Bookings Quarter for Vertafore’s Suite of P&C Organic Insurance Solutions • Continued Positive SaaS Momentum from New Customers and Existing Customer Migra
Slide 12: Network Software
NETWORK SOFTWARE REVENUE Q3 HIGHLIGHTS +10% • +10% Organic Revenue Growth Driven by Continued vs PY _____ Recurring Momentum +10% • Another Fantastic Freight Matching Quarter (DAT and Organic Loadlink); Strong Growth from Net Customer Adds and Increased Revenue Per Customer $235 $266 $316 $347 • Out
Slide 13: Technology Enabled Products
TECHNOLOGY ENABLED PRODUCTS REVENUE Q3 HIGHLIGHTS +14% • +15% Organic Revenue Growth vs PY _____ • Businesses Continued to Execute Well; Progress Clearing +15% Organic Some Supply Chain Challenges in the Quarter • Great Performance from Neptune; Record Orders and $275 $292 $316 $360 Backlog; Continu
Slide 14: 2022 Enterprise Guidance
2022 ENTERPRISE GUIDANCE
Slide 15: Guidance Update
GUIDANCE UPDATE • Raising Full Year 2022 Guidance – Adjusted DEPS: $14.09 - $14.13 • Previously $13.46 - $13.62 – Organic: 9%+ • Previously +8 – 9% • Establishing Q4 2022 Guidance – Adjusted DEPS: $3.72 - $3.76 Guidance excludes impact of unannounced future acquisitions or divestitures. Also exclude
Slide 16: Summary
SUMMARY • Outstanding Third Quarter – Revenue +10%; Organic Revenue +10% – EBITDA +12%; EBITDA Margin +80 Bps to 41.1% – Free Cash Flow +9% to $353M; +17% Excluding Cash Tax Impact of Section 174* • Completed Frontline Education Acquisition – Adds Another Leading Vertical Software Business to the En
Slide 17: Appendix
APPENDIX
Slide 18: Income Statement Metrics
INCOME STATEMENT METRICS Q3’21 Q3’22 Revenue $1,232 $1,350 +10%; Organic +10% Gross Profit $872 $942 Gross Margin 70.7% 69.7% EBITDA $497 $555 +12% EBITDA Margin 40.3% 41.1% Interest Expense $58 $41 Tax Rate 22.0% 21.8% Net Earnings $332 $392 +18% DEPS $3.12 $3.67 +18% In $ millions, except DEPS. Re
Slide 19: Roper's Revenue Composition
ROPER’S REVENUE COMPOSITION We disaggregate our revenues by reportable segment into four categories: (i) recurring revenue comprised of SaaS subscriptions and software maintenance; (ii) reoccurring revenue comprised of transactional and volume-based fees related to software licenses; (iii) non-recur
Slide 20: Reconciliations I
RECONCILIATIONS I Adjusted Revenue, Gross Profit, and EBITDA Reconciliation ($M) (From Continuing Operations) Q3 2019* Q3 2020 Q3 2021 Q3 2022 V% to '21 GAAP Revenue $ 912 $ 1,002 $ 1,232 $ 1,350 10% Purchase accounting adjustment to acquired deferred revenue 3 3 - - Adjusted Revenue $ 916 $ 1,006 $
Slide 21: Reconciliations II
RECONCILIATIONS II Adjusted Revenue Growth Reconciliation (From Continuing Operations) Technology Q3 2022 Application Network Enabled Software Software Products Roper Organic 7% 10% 15% 10% Acquisitions/Divestitures 2% 1% - 1% Foreign Exchange (2%) (2%) (1%) (2%) Total Adjusted Revenue Growth 7% 10%
Slide 22: Reconciliations III
RECONCILIATIONS III Adjusted Net Earnings Reconciliation ($M) (From Continuing Operations) Q3 2021 Q3 2022 V% GAAP Net Earnings $ 211 $ 277 31% Purchase accounting adjustment to acquired commission expense (1) (1) A Transaction-related expenses for completed B acquisitions - 2 C Amortization of acqu
Slide 23: Reconciliations IV
RECONCILIATIONS IV Forecasted Adjusted DEPS Reconciliation (From Continuing Operations) Q4 2022 FY 2022 Low End High End Low End High End GAAP DEPS $ 2.48 $ 2.52 $ 9.41 $ 9.45 Purchase accounting adjustment to acquired commission expense A (0.01) (0.01) (0.04) (0.04) Transaction-related expenses for
Slide 24: Footnotes
FOOTNOTES A. 2022 actual results and 2022 forecast of estimated acquisition-related fair value adjustments to commission expense related to the acquisition of Vertafore as shown below ($M, except per share data). These adjustments are taxed at 21%. Q3 2021A Q3 2022A Q4 2022E FY 2022E Pretax $ (1) $
Slide 25: Roper Technologies
Roper TECHNOLOGIES