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Roper Industries Announces Second Quarter Results
Record Second Quarter Orders, Revenue, Net Earnings and EBITDA
Orders Increase 8% to $763 Million
$1.4 Billion Acquisition Announced; Guidance Raised

SARASOTA, Fla., July 30, 2012  /PRNewswire/ -- Roper Industries, Inc. (NYSE: ROP) reported financial results for the second quarter ended June 30, 2012. 

Net earnings for the second quarter were $115 million, an 8% increase over the second quarter of 2011 and excluding a foreign currency remeasurement gain on intercompany debt in the prior year, net earnings were up 13%. Diluted earnings per share were $1.15.  Revenue increased 4% to $725 million. Orders grew 8% to $763 million and represented a book-to-bill ratio of 1.05. 

Operating income increased to $179 million and operating margin was 24.7%, a 130 basis point increase over the prior year.  Operating cash flow was $119 million, bringing first half operating cash flow to $261 million.  EBITDA for the first half reached $419 million, with second quarter EBITDA of $214 million.   Second quarter EBITDA margin was 29.5%. 

"We are pleased with the performance of our businesses in the second quarter," said Brian Jellison, Roper's Chairman, President and CEO.  "We achieved record second quarter revenue and earnings, as our businesses continued to execute well in the current uncertain economic environment.  Organic growth was consistent with our expectations in the quarter, and our focus on breakeven ratios, cost discipline and operating leverage resulted in exceptional margin performance." 

New Credit Facility

On July 27, 2012, Roper entered into a new $1.5 billion senior unsecured five-year revolving credit facility, which replaced the company's previous senior unsecured five-year credit facility, dated July 7, 2008.  The new credit facility doubles the amount of revolving credit available to the company. 

Acquisition of Sunquest

Separately, Roper announced today that it has signed an agreement to acquire Sunquest Information Systems, Inc. in an all-cash transaction valued at $1.415 billion, including approximately $25 million in cash tax benefits.  Headquartered in Tucson, Arizona, Sunquest provides a comprehensive suite of clinical and anatomic laboratory software solutions.  Sunquest's software solutions are used by more than 1,700 hospitals worldwideHospital laboratories, which provide information that drives the majority of diagnostic decisions, rely on Sunquest software solutions to integrate vital data and improve workflow.  Sunquest also provides a growing suite of software solutions beyond the hospital laboratory with a focus on point-of-care patient safety and physician outreach.

"We continue to transform the enterprise with the addition of Sunquest," said Mr. Jellison.  "Sunquest meets all of our key acquisition criteria and is an ideal fit with both our Medical and Software platforms.  The company has attractive cash return characteristics and generates significant recurring revenue through long term customer relationships and high retention rates."  Roper expects the addition of Sunquest to deliver $140 million or more of EBITDA in 2013, excluding the impact of fair value accounting on Sunquest's deferred revenue.

2012 Outlook and Guidance

Roper is increasing its full year adjusted diluted earnings per share guidance to $4.84 - $5.00 from $4.75 - $4.91, reflecting a ($0.04) reduction due to currency and $0.12 - $0.14 accretion from the acquisition of Sunquest.  The company's guidance excludes acquisition-related expenses, debt extinguishment charges and the impact of any future acquisitions.  The company's guidance includes the recognition of Sunquest's deferred revenue, a portion of which will be excluded under GAAP's purchase accounting rules which will require the deferred revenue to be reduced to fair value upon the acquisition.

Use of Non-GAAP Financial Information

In order to provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, the company supplements its consolidated financial statements presented on a GAAP basis with certain non-GAAP financial information.  Reconciliation of non-GAAP measures to their most directly comparable GAAP measures are included in the accompanying financial schedules or tables.  The company's adjusted diluted earnings per share guidance is a non-GAAP measure which includes the impact of Sunquest's deferred revenue, a portion of which will be excluded under GAAP's purchase accounting rules, which require the deferred revenue to be reduced to fair value upon the acquisition.  The company is not currently able to estimate the impact of the required fair value adjustment

Table 1:  Q2 Revenue and Orders Growth


Revenue

Orders

Organic Growth

3%

7%

Acquisitions

3%

3%

Foreign Currency

(2%)

(2%)

Total Growth

4%

8%

 

Table 2:  EBITDA and EBITDA Margin


Q2 2012

Q1 2012

1H 2012

Net Earnings

$114.8

$108.3

$223.1

Add:  Interest Expense

15.1

15.5

30.6

Add:  Income Taxes

48.3

46.0

94.3

Add:  Depreciation & Amortization

35.8

35.5

71.3

EBITDA (A)

$214.0

$205.3

$419.3





Revenue (B)

$724.9







EBITDA Margin (A)/(B)

29.5%



 

Table 3:  Adjusted Net Earnings


Q2 2012


Q2 2011


V%

Net Earnings

$114.8


106.3


8%

Less: Remeasurement Gain, net of tax

-


(4.7)



Adjusted Net Earnings

114.8


101.6


13%

 

Conference Call to be Held at 8:30 AM (ET) Today

A conference call to discuss these results has been scheduled for 8:30 AM ET on Monday, July 30, 2012.  The call can be accessed via webcast or by dialing +1 888-811-5456 (US/Canada) or +1 913-312-0706, using confirmation code 4480339.  Webcast information and conference call materials will be made available in the Investors section of Roper's website (www.roperind.com) prior to the start of the call.  Telephonic replays will be available for up to two weeks by calling +1 719-457-0820 and using the access code 4480339.

About Roper Industries

Roper Industries is a diversified growth company and is a constituent of the S&P 500, Fortune 1000, and the Russell 1000 indices. Roper provides engineered products and solutions for global niche markets, including water, energy, transportation, medical, education, and SaaS-based information networks. Additional information about Roper is available on the company's website at www.roperind.com.

The information provided in this press release contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, among others, statements regarding operating results, the success of our internal operating plans, and the prospects for newly acquired businesses to be integrated and contribute to future growth, profit and cash flow expectations.  Forward-looking statements may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes" or "intends" and similar words and phrases.  These statements reflect management's current beliefs and are not guarantees of future performance.  They involve risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement. Such risks and uncertainties include our ability to close the Sunquest acquisition, integrate our acquisitions and realize expected synergies.  We also face other general risks, including our ability to realize cost savings from our operating initiatives, general economic conditions, unfavorable changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, difficulties in making and integrating acquisitions, risks associated with newly acquired businesses, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, environmental compliance costs and liabilities, risks and cost associated with asbestos related litigation and potential write-offs of our substantial intangible assets, and risks associated with obtaining governmental approvals and maintaining regulatory compliance for new and existing products.  Important risks may be discussed in current and subsequent filings with the SEC.  You should not place undue reliance on any forward-looking statements.  These statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

 

Roper Industries, Inc. and Subsidiaries




Condensed Consolidated Balance Sheets (unaudited)



(Amounts in thousands)













June 30,


December 31,

ASSETS

2012


2011





CURRENT ASSETS:




  Cash and cash equivalents

$      518,898


$         338,101

  Accounts receivable, net

439,184


439,134

  Inventories, net

209,626


204,758

  Unbilled receivable

74,011


63,829

  Deferred taxes

40,335


38,004

  Other current assets

43,323


31,647

    Total current assets

1,325,377


1,115,473





PROPERTY, PLANT AND EQUIPMENT, NET

108,089


108,775





OTHER ASSETS:




  Goodwill

2,873,361


2,866,426

  Other intangible assets, net

1,065,124


1,094,142

  Deferred taxes

61,419


63,006

  Other assets

68,811


71,595

    Total other assets

4,068,715


4,095,169





TOTAL ASSETS

$   5,502,181


$      5,319,417









LIABILITIES AND STOCKHOLDERS' EQUITY








CURRENT LIABILITIES:




  Accounts payable

$      139,379


$         141,943

  Accrued liabilities

306,945


322,904

  Income taxes payable

-


8,895

  Deferred taxes

8,862


10,548

  Current portion of long-term debt

57,424


69,906

    Total current liabilities

512,610


554,196





NONCURRENT LIABILITIES:




  Long-term debt

1,011,817


1,015,110

  Deferred taxes

483,652


482,603

  Other liabilities

80,091


72,412

    Total liabilities

2,088,170


2,124,321





STOCKHOLDERS' EQUITY:




  Common stock

996


987

  Additional paid-in capital

1,153,620


1,117,093

  Retained earnings

2,259,422


2,063,110

  Accumulated other comprehensive earnings

19,753


33,800

  Treasury stock

(19,780)


(19,894)

    Total stockholders' equity

3,414,011


3,195,096





TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$   5,502,181


$      5,319,417

Roper Industries, Inc. and Subsidiaries





Condensed Consolidated Statements of Earnings (unaudited)





(Amounts in thousands, except per share data)

























Three months ended


Six months ended



June 30,


June 30,



2012

2011


2012


2011










Net sales


$ 724,872


$ 699,871


$ 1,435,938


$ 1,345,180

Cost of sales


327,264


322,808


647,137


618,021










Gross profit


397,608


377,063


788,801


727,159










Selling, general and administrative expenses


218,824


213,093


439,713


421,189










Income from operations


178,784


163,970


349,088


305,970










Interest expense


15,077


16,196


30,560


32,892

Other income/(expense)


(574)


7,243


(1,064)


7,954










Earnings from continuing operations before









   income taxes


163,133


155,017


317,464


281,032










Income taxes


48,320


48,706


94,342


85,742










Net Earnings


$ 114,813


$ 106,311


$  223,122


$  195,290














































Earnings per share:









  Basic


$     1.18


$     1.11


$        2.29


$        2.04

  Diluted


$     1.15


$     1.08


$        2.24


$        1.99










Weighted average common and common









  equivalent shares outstanding:









    Basic


97,460


95,911


97,249


95,644

    Diluted


99,619


98,412


99,500


98,282










Roper Industries, Inc. and Subsidiaries









Selected Segment Financial Data (unaudited)









(Amounts in thousands and percents of net sales)













































Three months ended June 30,


Six months ended June 30,



2012


2011


2012


2011



Amount


%


Amount


%


Amount


%


Amount


%

Net sales:

















  Industrial Technology


$  203,944




$  183,455




$   399,080




$   353,437



  Energy Systems & Controls


154,737




145,750




303,339




275,383



  Medical & Scientific Imaging


150,921




151,078




313,732




296,365



  RF Technology


215,270




219,588




419,787




419,995



    Total


$  724,872




$  699,871




$1,435,938




$1,345,180





































Gross profit:

















  Industrial Technology


$  102,770


50.4%


$    92,068


50.2%


$   201,433


50.5%


$   177,782


50.3%

  Energy Systems & Controls


86,135


55.7%


80,412


55.2%


166,543


54.9%


150,558


54.7%

  Medical & Scientific Imaging


96,212


63.7%


95,006


62.9%


202,398


64.5%


186,260


62.8%

  RF Technology


112,491


52.3%


109,577


49.9%


218,427


52.0%


212,559


50.6%

    Total


$  397,608


54.9%


$  377,063


53.9%


$   788,801


54.9%


$   727,159


54.1%



































Operating profit*:

















  Industrial Technology


$    62,076


30.4%


$    51,729


28.2%


$   119,583


30.0%


$     97,918


27.7%

  Energy Systems & Controls


40,202


26.0%


37,704


25.9%


75,859


25.0%


66,748


24.2%

  Medical & Scientific Imaging


35,679


23.6%


35,352


23.4%


79,041


25.2%


70,389


23.8%

  RF Technology


58,161


27.0%


52,911


24.1%


108,514


25.8%


97,861


23.3%

    Total


$  196,118


27.1%


$  177,696


25.4%


$   382,997


26.7%


$   332,916


24.7%



































Net Orders:

















  Industrial Technology


$  202,120




$  189,322




$   406,122




$   390,064



  Energy Systems & Controls


157,775




151,134




311,151




285,339



  Medical & Scientific Imaging


148,386




150,047




316,722




300,312



  RF Technology


255,195




217,182




458,867




434,269



    Total


$  763,476




$  707,685




$1,492,862




$1,409,984






















































  *  Operating profit is before unallocated corporate general and administrative expenses.  These expenses 





       were $17,334 and $13,726 for the three months ended June 30, 2012 and 2011, respectively and







       $33,909 and $26,946 for the six months ended June 30, 2012 and 2011, respectively.







 

Roper Industries, Inc. and Subsidiaries




Condensed Consolidated Statements of Cash Flows (unaudited)


(Amounts in thousands)

















Six months ended




June 30,




2012


2011







Net earnings


$    223,122


$    195,290

Non-cash items:





Depreciation


18,950


18,865

Amortization


52,289


50,266

Stock-based compensation expense


19,704


15,808

Income taxes


(18,615)


2,175

Changes in assets and liabilities:





Receivables


(12,565)


(22,747)

Inventory


(5,452)


(25,312)

Accounts payable


(1,827)


10,905

Accrued liabilities


(18,544)


6,541

Other, net


3,721


(9,274)

  Cash provided by operating activities


260,783


242,517






Business acquisitions, net of cash acquired


(36,872)


(204,612)

Capital expenditures


(20,532)


(19,390)

Other, net


544


(238)

  Cash used by investing activities


(56,860)


(224,240)






Principal debt payments


(13,215)


(23,536)

Revolver payments, net


-


(75,000)

Dividends


(26,673)


(21,002)

Excess tax benefit from share-based payment


11,070


3,729

Proceeds from exercise of stock options


28,314


12,914

Redemption premium on convertible debt


(19,149)


-

Other, net


16


952

  Cash used by financing activities


(19,637)


(101,943)






Effect of exchange rate changes on cash


(3,489)


9,299






Net increase (decrease) in cash and equivalents


180,797


(74,367)

Cash and equivalents, beginning of period


338,101


270,394






Cash and equivalents, end of period


$518,898


$196,027






SOURCE Roper Industries, Inc.

Investor Relations: +1-941-556-2601, investor-relations@roperind.com