Q3 2015 Financial Results - Roper Technologies Q3 2015...Q3 2015 Segment Performance Excellent...

Roper Technologies, Inc.

Q3 2015 Financial Results October 26, 2015

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A Diversified Growth Company

2

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 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 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.

We refer to certain non-GAAP financial measures in this presentation. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found within this presentation.



3

Reg. G Disclosure

Today’s Conference Call will Discuss Income Statement Results Primarily on an Adjusted (Non-GAAP) Basis. The Q3 2015 Adjusted Results Exclude the Following Items:

(1) Purchase Accounting Adjustment to Acquired Deferred Revenue (Data Innovations, SHP, SoftWriters, Strata, On Center)

(2) Acquisition-Related Inventory Step-Up Charge (RF IDeas)

See Appendix for Reconciliation from GAAP to Adjusted Results



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Roper Conference Call

» Q3 Enterprise Financial Results

» Segment Detail & Outlook

» Q4 and FY 2015 Guidance

» Q&A

Q3 2015 Enterprise Highlights

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Outstanding Operational Execution; Great Capital Deployment

» Record Third Quarter Results

» Revenue: $886M; Book to Bill: 1.01x – Growth Led by Medical +12% and RF Technology +6% – Declines in Industrial and Energy as Expected – Organic (2%), FX Headwind (3%), Acquisitions +5%

» Gross Margin +130 Bps to 60.7%

» EBITDA Margin +80 Bps to 34.4%

» Net Earnings +4% to $163M; DEPS $1.61

» Free Cash Flow of $220M; 137% Conversion

» Deployed $435M in Acquisitions During Q3; Aderant Acquisition Completed in October

Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results.



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Q3 Income Statement

Q3’14 Q3’15 Orders $893 $894 Book-to-Bill: 1.01x

Revenue $885 $886 Gross Profit $525 $538 Gross Margin 59.4% 60.7% +130 Bps

Operating Income $247 $255 +3%

Operating Margin 27.9% 28.7% +80 Bps

Interest Expense $20 $20 Other Income/(Expense) $1 $0

Earnings Before Tax $228 $234 Tax Rate 31.3% 30.4%

Net Earnings $156 $163 +4%

DEPS $1.55 $1.61 +4%

In $ Millions

Note: Amounts may not total due to rounding


Compounding Cash Flow

We Believe Cash is the Best Measure of Performance

YTD Operating Cash Flow In $ Millions

$579

$660

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2014 2015

» Q3 Operating Cash Flow: $227M • 141% Conversion

» Q3 Free Cash Flow: $220M • 137% Conversion

• 25% of Revenue

» YTD Free Cash Flow: $632M • 15% Increase

• 130% Conversion

Note: Free Cash Flow = Operating Cash Flow – Capital Expenditures


+ 14%

Asset-Light Business Model

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Roper Governance Process Drives Working Capital Focus

09/30/14 09/30/15

(I) Inventory 6.0% 5.6%

(R) Receivables 17.8% 16.9%

(P) Payables & Accruals

18.0% 18.2%

Total (I+R-P) 5.8% 4.2%

Working Capital* as % of Q3 Annualized Net Sales

* Defined as Inventory + A/R + Unbilled Receivables – A/P – Accrued Liabilities; Sales and Working Capital Related to Acquisitions Completed in Each Quarter Removed from Calculation

2014 2015

5.8%

4.2%

(160 Bps)

Note: Percentages may not sum correctly due to rounding



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Strong Financial Position


09/30/14 09/30/15

Cash $564 $701

Undrawn Revolver $1,345 $910

Cash and Undrawn Revolver $1,909 $1,611

Gross Debt $2,370 $2,799

Shareholders’ Equity $4,648 $5,129

Gross Debt to Capitalization 33.8% 35.3%

TTM EBITDA $1,173 $1,239

Gross Debt-to-EBITDA (TTM) 2.0x 2.3x

In $ Millions

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Segment Detail & Outlook

Energy Ind Tech RF Medical

$47 $57 $91

$136

$145

$186

$254

$302

* Excludes Corporate Expenses

EBITDA Margin

33% 31% 36% 45%

Q3 2015 Segment Performance

Excellent Segment Margins; Medical and RF > 2/3 of EBITDA

In $ Millions

11 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results.

Revenue

EBITDA*


A Diversified Growth Company • Organic Revenue (10%), FX (5%)

• Oil & Gas Markets Remained Weak as Expected

• Other Served Markets Flat

• Excellent Margin Performance as Businesses Executed Well in Difficult Environment

Energy Systems & Controls

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($M) Q3’15 V to PY

Revenue $145 (15)%

Op Profit $42 (14)%

OP Margin 29.3% +60 Bps

Q3 2015

Q4 2015

• Expect Continued End Market Weakness; Some Seasonal Improvement

• Strong Growth in Nuclear Test Business on Improving Market Conditions

• Cost Actions Taken Earlier This Year and Strong Execution Continue to Benefit Margins


14%

Segment Q3’15 % of Roper EBITDA*




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Industrial Technology

• Organic Revenue (5%), FX (4%)

• Neptune Grew Mid Single Digits, Excluding the Completion of the Toronto Project

• Oil & Gas Markets Weak as Expected; Margins Remained Strong

• Continued Growth in Material Analysis

• Completed Divestiture of Abel Pumps on Oct. 2nd

• Oil & Gas Remains Weak; Growth in Other Markets

• Improved Margin Performance

($M) Q3’15 V to PY

Revenue $186 (10)%

Op Profit $52 (16)%

OP Margin 28.1% (210) Bps



20%

Q3 2015

Q4 2015


17% 17%



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RF Technology

• Organic Revenue +4%, FX (1%), Acq./Div. +3% • Growth Continued in Toll and Traffic

‒ Multiple Infinity Digital Lane SystemTM Projects Continue in Florida and Texas

• Subscriber Additions at Freight Match • Acquired RF IDeas in September; Expect

Double Digit Growth

($M) Q3’15 V to PY

Revenue $254 +6%

Op Profit $77 +10%

OP Margin 30.3% +120 bps

Q3 2015

Q4 2015


• Software Businesses Grow Mid Single Digits with Excellent Leverage and Cash Flow Performance

• Backlog and Proposal Activity Remains Strong for Toll and Traffic

• Strong Segment Margin Performance Continues Led by Software/SaaS Businesses

• Aderant Acquired Oct 21st, Leading Global Software Solutions Provider to the Legal Profession


27%


27%

Aderant Acquisition

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Another Great Niche Software Business

» Comprehensive End-to-End Platform of Mission Critical Software Solutions for Law Firms

» Marquee Customer Base with 3,000+ of the World’s Largest Law and other Professional Services Firms

» Products include Time Capture, Billing, Docketing, Finance, Accounting and Business Intelligence

» Headquartered in Atlanta, Georgia with 400+ Employees

» 2016E Revenue of ~$125 million

Meets All Acquisition Criteria

Excellent Management Team

High Recurring Revenue; 95%+ Customer Retention

Strong Cash Flow Characteristics

Asset Light (Negative Working Capital)

Deep Domain Expertise

Multiple Growth Opportunities



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Medical Solutions

($M) Q3’15 V to PY

Revenue $302 +12%

Op Profit $110 +19%

OP Margin 36.6% +230 bps


Q3 2015

Q4 2015


• Medical Businesses Organic Revenue +5% • Segment Organic Revenue +2%, Acq. +13%, FX (3%) • Continued Growth at MHA with Customer Additions

‒ AHP Acquisition Adds New Channel • Recurring Revenue Increased at Sunquest • Medical Device Businesses Growth Driven by New

Product Introductions and Sales Execution • Recent Acquisitions Performing Very Well • Signed Agreement to Acquire CliniSys Group, Ltd., a

Leading European Hospital Laboratory Software Provider, Expected to Close Early 2016

• Mid Single Digit Organic Growth in Medical Businesses

• Continued Outstanding Margin and Cash Flow Performance

• Atlas Medical Acquisition, Expands Laboratory Connectivity Solutions



41% 41%

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Guidance Update



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Guidance Update

» Full Year Adjusted DEPS: $6.69 - $6.75

• Previously $6.61 - $6.75

• Midpoint Increased $0.04

» Q4 Adjusted DEPS: $1.83 – $1.89

» Full Year Operating Cash Flow: $925M - $940M

Q3 2015 Summary

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Well Positioned for Record 2016 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results.

» Delivered Excellent Third Quarter Results

» Revenue: $886M; Book to Bill: 1.01x

» Gross Margin +130 Bps to 60.7%

» Operating Margin: 28.7%; EBITDA Margin: 34.4%

» DEPS $1.61

» Free Cash Flow: $220M; 25% of Revenue and 137% Conversion

» Full Year DEPS and Cash Flow Guidance Increased

» Deployed $435M in Acquisitions During Q3

» Aderant Acquisition Completed in October; Signed Agreement to Acquire CliniSys

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Appendix



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Reconciliations I

Q3 2015 Revenue Growth Reconciliation



Medical & Scientific Imaging

RF Technology Roper

Organic Growth (5)% (10)% 2% 4% (2)%

Acquisitions/Divestitures - - 13% 4% 5%

Foreign Exchange (4)% (5)% (3)% (1)% (3)%

Rounding (1)% - - (1)% -

Total Revenue Growth (10)% (15)% 12% 6% -

Q3 2015 Orders Growth Reconciliation



Medical & Scientific Imaging

RF Technology Roper

Organic Growth (6)% (11)% 7% (1)% (2)%

Acquisitions/Divestitures - - 14% 3% 5%

Foreign Exchange (4)% (5)% (4)% (1)% (3)%

Rounding - - - -

Total Orders Growth (10)% (16)% 17% 1% -



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Reconciliations II

(in Thousands) Q3 2015

Margin Reconciliation Industrial Technology


Medical & Scientific Imaging RF Technology

GAAP Revenue $186,147 $144,609 $299,621 $253,556

Add: DI / SHP / SoftWriters / Strata Adj 0 0 1,956 0

Add: On Center, RF IDeas Adj 0 0 0 256

Adjusted Revenue 186,147 144,609 301,577 253,812

GAAP Gross Profit 92,245 84,891 222,655 133,692


Add: On Center, RF IDeas Adj 0 0 0 2,219

Adjusted Gross Profit 92,245 84,891 224,611 135,911

GAAP Operating Profit 52,298 42,300 108,399 74,604


Add: On Center, RF IDeas Adj 0 0 0 2,219

Adjusted Operating Profit 52,298 42,300 110,355 76,823

Add Amortization 2,260 3,956 23,496 11,296

EBITA 54,558 46,256 133,851 88,119

Add Depreciation 2,718 1,172 2,568 2,522

EBITDA 57,276 47,428 136,419 90,641



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Reconciliations III

(All Numbers are In Thousands)

Adjustments

Q3’15 TTM GAAP

SHP / FoodLink Purchase

Accounting Adjustment to

Acquired Deferred Revenue

IPA Acquisition Related

Inventory Step-up Charge

DI / SWI / Strata Purchase



On Center Purchase



RF IDeas Acquisition

Related Inventory Step-

up Charge

Q3’15 TTM Adjusted

Net Sales $3,584,900 $3,398 - $4,356 $256 - $3,592,910

Gross Profit $2,151,296 $3,398 $425 $4,356 $256 $1,963 $2,161,694

Operating Profit $1,032,990 $3,398 $425 $4,356 $256 $1,963 $1,043,388

Net Earnings $673,406 $2,209 $276 $2,831 $166 $1,276 $680,164

Taxes 277,547 1,189 149 1,525 90 687 281,187

Interest 79,667 - - - - - 79,667

Depreciation 38,902 - - - - - 38,902

Amortization 158,981 - - - - - 158,981

EBITDA $1,228,503 $3,398 $425 $4,356 $256 $1,963 $1,238,901

Q3’15 TTM Reconciliation of GAAP to Adjusted; Revenue, Gross Profit, and EBITDA

(1) For the six adjustments, the company used a 35% tax rate as these adjustments are US-based items and 35% is the statutory tax rate in the United States.



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Reconciliations IV

(All Numbers are In Thousands)

Adjustments

Q3’14 TTM GAAP

SHP / FoodLink Purchase Accounting

Adjustment to Acquired Deferred Revenue

IPA Acquisition Related Inventory Step-up Charge

Q3’14 TTM Adjusted

Net Sales $3,492,522 $946 - $3,493,468

Gross Profit $2,069,378 $946 $424 $2,070,748

Operating Profit $973,813 $946 $424 $975,183

Net Earnings $625,800 $615 $276 $626,691

Taxes 268,943 331 148 269,422

Interest 79,467 - 79,467

Depreciation 39,929 - 39,929

Amortization 157,403 - 157,403

EBITDA $1,171,542 $946 $424 $1,172,912

Q3’14 TTM Reconciliation of GAAP to Adjusted; Revenue, Gross Profit, and EBITDA

(1) For the two adjustments, the company used a 35% tax rate as these adjustments are both US-based items and 35% is the statutory tax rate in the United States.

Roper Technologies, Inc.

Q3 2015 Financial Results - Roper Technologies Q3 2015...Q3 2015 Segment Performance Excellent...

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