Published:
Roper Industries Announces Record Second Quarter Results
SARASOTA, Fla., July 24 /PRNewswire-FirstCall/ -- Roper Industries, Inc.
(NYSE: ROP) reported record results for its second quarter ended June 30,
2008.
Net earnings were $76 million, a 24% increase over the second quarter of
2007, and diluted earnings per share (DEPS) were $0.80 compared to $0.66 in
the second quarter of 2007. Both periods include the dilutive effect of the
Company's senior subordinated convertible notes. DEPS exceeded the high end
of the Company's guidance range as margins expanded despite a $3.5 million
pre-tax special charge recorded in the Industrial Segment.
Net sales in the quarter were $594 million, an increase of 12% versus the
comparable period in 2007. Net orders increased 14% to $606 million.
Operating margins expanded 100 basis points to 21.3% in the quarter, despite
the 60 basis point impact from the special charge in the Industrial Segment.
"Roper performed exceptionally well in the second quarter," said Brian
Jellison, Roper's Chairman, President and CEO. "We are pleased to deliver
DEPS above the high end of our guidance range with margin expansion and strong
cash performance. Second quarter results reflect the successful transition of
the Company's tolling project in theMiddle East from the installation phase
to the operational phase. Excluding this project, our internal order and
revenue growth was 8% in the second quarter with 2% benefit from foreign
currency. As reported, second quarter internal orders were up 5% and internal
sales were up 6%, and for the first half of 2008, internal orders were up 7%
and internal sales were up 8%."
Mr. Jellison continued, "Our CBORD acquisition performed well in its first
full quarter, helping raise margins in the RF segment and contributing to our
14% order growth. Our businesses recently achieved several important new
business wins, including theCity of Toronto selecting Neptune to provide
water meters and an automated meter reading system in a multi-year agreement
valued at approximately $190 million. Contract discussions with the city have
begun, and orders for this project could begin as early as the fourth quarter
of 2008. In addition, theState of Florida's Turnpike Enterprise adopted
TransCore's eGo sticker tag technology and has placed an initial order for 1.5
million tags. Looking ahead, opportunities in the second-half of the year are
very encouraging and Roper remains well-positioned to continue growing despite
the challenging economic environment."
Operating cash flow in the second quarter increased to $96 million,
representing more than 16% of revenue. EBITDA increased to $151 million in
the quarter and EBITDA margin expanded 80 basis points to 25.4%. Gross
margins expanded 200 basis points to 51.4% as the Company more than offset
material and energy cost pressures with operational efficiencies and higher
margin new products.
Acquisitions
During the quarter, the Company completed the acquisition of an air
shutoff valve business in the U.K., expanding its global reach for protective
technologies in the Energy Systems & Controls segment. Subsequent to the end
of the quarter, Roper's Commercial Technology Group within the RF segment
acquired the assets, intellectual property and internet domain names of a
business which will more than double the Company's freight matching subscriber
base while providing new growth paths for the business. Roper invested $97
million in these two high margin businesses and expects them to contribute
over $11 million of EBITDA in 2009.
Balance Sheet Strengthened
On July 7, 2008, Roper entered into a new unsecured credit facility which
replaced its amended and restated secured credit facility, dated December 13,
2004 which would have expired next year. The new facility comprises (i) a two
year $350 million non-amortizing term loan facility and (ii) a five year $750
million revolving credit facility as well as additional borrowing capacity
beyond the term loan and revolving credit facility amounts.
On July 7, 2008, Moody's Investors Service upgraded the Company to
investment grade and assigned a rating of Baa3 to the new credit facility.
Moody's also upgraded Roper's senior subordinated notes.
"We were pleased to complete this refinancing, move to an unsecured credit
facility, achieve an investment grade rating and add considerable financial
flexibility despite the volatile and difficult credit markets," said Mr.
Jellison.
In the third quarter, the Company expects to record a $3 million non-cash
pre-tax charge for early termination of its amended and restated secured
credit facility, dated December 13, 2004, reflecting the facility's
unamortized fees.
One-Time Charge
Second quarter results include a special pretax charge of $3.5 million.
During the quarter, the Company determined that a certain vendor-supplied
component was causing a malfunction in select water meters produced by the
Company's Neptune business. The Company has recorded this charge to reflect
the total estimated cost of repairs while it engages in an ongoing negotiation
with the vendor.
Guidance Increased
Roper is increasing, and narrowing the range of, its full year DEPS
guidance to $3.16-$3.22 from $3.13-$3.21, and establishing third quarter DEPS
guidance of $0.81-$0.83. The Company also raised full year EBITDA guidance to
exceed $610 million and established operating cash flow guidance of at least
$390 million. As customary, the Company's guidance excludes future
acquisitions and debt extinguishment charges described above while including
the dilutive effect of the Company's senior subordinated convertibles notes
based on the stock price on June 30, 2008.
Conference Call to be Held at 10:00 AM (ET) Tomorrow
A conference call to discuss these results has been scheduled for 10:00 AM
ET on Friday, July 25, 2008. The call can be accessed via webcast or by
dialing (800) 811-8824 or +1 (913) 981-5526, using access code 3156040.
Webcast information and conference call materials will be made available in
the "Investor" 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 3156040.
Reconciliation to Non-GAAP Measures
Table 1: EBITDA (Millions)
Q2 Q2
2007 2008 2008E
Net Earnings $61 $76 $299+
Add: Interest Expense 13 10 51+
Add: Income Taxes 32 40 158+
Add: Depreciation 8 8 34+
Add: Amortization 16 17 68+
EBITDA 130 151 610+
Table 2: Sales Growth
Q1 Q2 Q2 YTD
2008 2008 2008
Organic Growth 7% 4% 5%
Foreign Currency 3% 2% 3%
Sub-Total: Internal Growth 10% 6% 8%
Acquisitions / Divestitures 4% 6% 5%
Rounding (1%) - -
Total Sales Growth 13% 12% 13%
About Roper Industries
Roper Industries is a market-driven, diversified growth company with
trailing twelve month revenues of $2.2 billion, and is a component of the
Fortune 1000, S&P MidCap 400 and the Russell 1000 Indexes. Roper provides
engineered products and solutions for global niche markets, including water,
energy, radio frequency and research/medical applications. Additional
information about Roper Industries 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 and
profit 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, 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 2008 2007
CURRENT ASSETS:
Cash and cash equivalents $146,186 $308,768
Accounts receivable 403,596 359,808
Inventories 192,426 174,138
Deferred taxes 30,851 27,800
Unbilled receivable 50,362 60,218
Other current assets 26,903 20,405
Total current assets 850,324 951,137
PROPERTY, PLANT AND EQUIPMENT, NET 112,032 107,513
OTHER ASSETS:
Goodwill 1,985,654 1,706,083
Other intangible assets, net 745,849 613,505
Deferred taxes 25,235 23,854
Other assets 43,389 51,092
Total other assets 2,800,127 2,394,534
TOTAL ASSETS $3,762,483 $3,453,184
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $118,718 $115,809
Accrued liabilities 227,880 194,055
Income taxes payable 15,567 24,121
Deferred taxes - 2,442
Current portion of long-term debt 494,205 331,103
Total current liabilities 856,370 667,530
NONCURRENT LIABILITIES:
Long-term debt 651,512 727,489
Deferred taxes 254,896 221,411
Other liabilities 42,185 46,948
Total liabilities 1,804,963 1,663,378
STOCKHOLDERS' EQUITY:
Common stock 918 910
Additional paid-in capital 779,727 757,318
Retained earnings 1,071,165 944,886
Accumulated other comprehensive earnings 127,574 108,732
Treasury stock (21,864) (22,040)
Total stockholders' equity 1,957,520 1,789,806
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,762,483 $3,453,184
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,
2008 2007 2008 2007
Net sales $594,414 $530,636 $1,137,409 $1,009,063
Cost of sales 289,084 268,241 555,689 508,520
Gross profit 305,330 262,395 581,720 500,543
Selling, general and
administrative expenses 178,789 154,439 346,913 299,736
Income from operations 126,541 107,956 234,807 200,807
Interest expense 10,286 13,366 22,511 26,838
Other income/(expense) (636) (1,230) 1,141 (1,480)
Earnings from continuing
operations before income
taxes 115,619 93,360 213,437 172,489
Income taxes 39,946 32,131 74,182 59,826
Net Earnings $75,673 $61,229 $139,255 $112,663
Earnings per share:
Basic $0.85 $0.69 $1.56 $1.28
Diluted $0.80 $0.66 $1.48 $1.21
Weighted average common and
common equivalent shares
outstanding:
Basic 89,476 88,359 89,256 88,139
Diluted 94,398 92,915 93,918 92,851
Roper Industries, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in thousands and percents of net sales)
Three months ended June 30,
2008 2007
Amount % Amount %
Net sales:
Industrial Technology $183,247 $161,333
Energy Systems & Controls 144,716 126,036
Scientific & Industrial Imaging 91,153 93,683
RF Technology 175,298 149,584
Total $594,414 $530,636
Gross profit:
Industrial Technology $86,837 47.4% $76,584 47.5%
Energy Systems & Controls 79,874 55.2% 66,809 53.0%
Scientific & Industrial Imaging 49,090 53.9% 51,166 54.6%
RF Technology 89,529 51.1% 67,836 45.3%
Total $305,330 51.4% $262,395 49.4%
Operating profit*:
Industrial Technology $47,591 26.0% $40,546 25.1%
Energy Systems & Controls 35,577 24.6% 29,903 23.7%
Scientific & Industrial Imaging 15,330 16.8% 17,680 18.9%
RF Technology 41,682 23.8% 30,603 20.5%
Total $140,180 23.6% $118,732 22.4%
Net Orders:
Industrial Technology $165,873 $163,102
Energy Systems & Controls 139,247 122,693
Scientific & Industrial Imaging 88,973 86,207
RF Technology 212,394 160,809
Total $606,487 $532,811
Six months ended June 30,
2008 2007
Amount % Amount %
Net sales:
Industrial Technology $356,864 $315,839
Energy Systems & Controls 273,103 230,011
Scientific & Industrial Imaging 187,596 185,711
RF Technology 319,846 277,502
Total $1,137,409 $1,009,063
Gross profit:
Industrial Technology $171,504 48.1% $150,013 47.5%
Energy Systems & Controls 148,548 54.4% 120,252 52.3%
Scientific & Industrial Imaging 102,678 54.7% 102,387 55.1%
RF Technology 158,990 49.7% 127,891 46.1%
Total $581,720 51.1% $500,543 49.6%
Operating profit*:
Industrial Technology $92,860 26.0% $78,656 24.9%
Energy Systems & Controls 63,818 23.4% 49,721 21.6%
Scientific & Industrial Imaging 35,345 18.8% 37,068 20.0%
RF Technology 69,711 21.8% 55,672 20.1%
Total $261,734 23.0% $221,117 21.9%
Net Orders:
Industrial Technology $350,884 $325,864
Energy Systems & Controls 267,583 230,756
Scientific & Industrial Imaging 186,673 182,579
RF Technology 359,350 286,608
Total $1,164,490 $1,025,807
* Operating profit is before unallocated corporate general and
administrative expenses. These expenses were $13,639 and $10,776 for the
three months ended June 30, 2008 and 2007, respectively, and $26,927 and
$20,310 for the six months ended June 30, 2008 and 2007, respectively.
Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
Six months ended
June 30,
2008 2007
Net earnings $139,255 $112,663
Depreciation 16,190 15,685
Amortization 32,582 30,587
Other, net (20,731) (23,383)
Cash provided by operating activities 167,296 135,552
Business acquisitions, net of cash acquired (399,708) (100,761)
Capital expenditures (14,336) (12,725)
Other, net (2,271) (2,759)
Cash used by investing activities (416,315) (116,245)
Debt borrowings, net 84,071 23,621
Dividends (12,907) (11,437)
Other, net 12,559 16,998
Cash provided by financing activities 83,723 29,182
Effect of exchange rate changes on cash 2,714 2,137
Net increase (decrease) in cash and equivalents (162,582) 50,626
Cash and equivalents, beginning of period 308,768 69,478
Cash and equivalents, end of period $146,186 $120,104
SOURCE Roper Industries, Inc.
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