01—Abstract
Summary
Summary of the 10-K filed February 25, 2013. Cited figures are marked; the original filing is the authoritative source.
Roper Industries, Inc. reported 2012 net sales of $2.99 billiona, up from $2.80 billion in 2011, with net earnings of $483.4 million, or $4.86 per diluted share, compared with $427.2 million, or $4.34 per diluted share, in 2011.
The filing attributes the sales increase to organic sales growth of 4% and acquisitions contributing 4%, partly offset by a 1% unfavorable foreign exchange effect. Growth was driven in large part by the August 22, 2012 all-cash acquisition of Sunquest Information Systems, Inc. for $1.416 billionb, which the company says complements and expands its medical platform. The balance sheet became more leveraged.
Total debt rose to $2.02 billionc at December 31, 2012 from $1.09 billion a year earlier, and the filing describes total debt as 35.4% of total capital, up from 25.4%. Management notes a $1.5 billion revolving credit facility entered in July 2012, of which $100 million was drawn at year-end, and $1.4 billion of undrawn availability. The company issued $400 million of 1.850% notes due 2017 and $500 million of 3.125% notes due 2022 in November 2012.
Goodwill of $3.87 billiond represented 55% of total assets of $7.07 billion, a concentration the filing flags as a risk if future write-offs occur. Cash provided by operating activities was $677.9 million in 2012, and the company expects capital expenditures of 1.0% to 1.5% of annual net sales going forward.
The Board raised the quarterly dividend to $0.165 per share from $0.1375, and backlog rose to $947.2 million at December 31, 2012 from $828.3 million. The filing reports no impairment from annual goodwill reviews.
02—Key points
Key Highlights
- Net sales rose to $2.99 billion in 2012 from $2.80 billion in 2011, an increase of 7%, with organic growth of 4% and acquisitions contributing 4%.
- Diluted EPS was $4.86 in 2012, up from $4.34 in 2011; net earnings were $483.4 million versus $427.2 million.
- The Sunquest Information Systems acquisition on August 22, 2012 for $1.416 billion in cash was the largest of six 2012 business combinations.
- Total debt increased to $2.02 billion at year-end 2012 from $1.09 billion, and the filing reports debt at 35.4% of total capital versus 25.4% a year earlier.
- Goodwill totaled $3.87 billion, or 55% of total assets of $7.07 billion, and the company identifies write-off risk if operating performance or valuations decline.
- Medical and Scientific Imaging segment sales grew 15% to $703.8 million, and RF Technology segment sales were $848.3 million, roughly flat year over year.
- The quarterly dividend was increased to $0.165 per share from $0.1375, and backlog grew to $947.2 million at December 31, 2012 from $828.3 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Roper Technologies kept $0.16.
- Revenue$2.99B100.0%
- Cost of revenue−$1.32B44.2%
- Gross profit$1.67B55.8%
- Operating costs−$914.1M30.5%
- Operating income$757.6M25.3%
- Interest, other & tax−$274.2M9.2%
- Net income$483.4M16.1%
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 25, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $2.99B$2.80B | +7.0% |
| Cost of Revenue | $1.32B$1.28B | +3.1% |
| Gross Profit | $1.67B$1.52B | +10.3% |
| R&D Expenses | $125.90M$121.70M | +3.5% |
| SG&A Expenses | $914.13M$855.02M | +6.9% |
| Operating Income | $757.59M$660.54M | +14.7% |
| Interest Expense | $67.53M$63.65M | +6.1% |
| Net Income | $483.36M$427.25M | +13.1% |
| EPS (Basic) | $4.95$4.45 | +11.2% |
| EPS (Diluted) | $4.86$4.34 | +12.0% |
| Shares Outstanding (Basic) | 97.70M95.96M | +1.8% |
| Shares Outstanding (Diluted) | 99.56M98.39M | +1.2% |
05—Questions
Frequently Asked Questions
What drove Roper's revenue growth in 2012?
Net sales grew 7% to $2.99 billion. The filing attributes this to organic sales growth of 4% and acquisitions adding 4%, partly offset by a 1% negative foreign exchange effect. Medical and Scientific Imaging sales rose 15%, aided by $94.3 million of acquired sales, while RF Technology sales were essentially flat.
How did the Sunquest acquisition affect the company?
Roper acquired 100% of Sunquest Information Systems on August 22, 2012 for $1.416 billion in cash to expand its medical platform. Sunquest contributed $69.4 million of revenue and $8.8 million of earnings from the acquisition date through year-end. Roper expensed $6.5 million of transaction costs, and the acquisition was largely financed with debt.
How much debt does Roper carry, and how is it structured?
Total debt was $2.02 billion at December 31, 2012, up from $1.09 billion. It includes $1.9 billion of senior notes, $100 million drawn on a $1.5 billion revolving credit facility, and $11.6 million of senior subordinated convertible notes. A $500 million senior note matures in August 2013 and is classified as current. The most restrictive covenant limits the consolidated total leverage ratio to 3.5.
What are the main risks flagged in the filing?
Key risks include indebtedness limiting operating flexibility, foreign exchange exposure (27% of net sales came from outside the U.S.), growth through acquisitions and integration, product liability, cyclicality in industrial and energy markets, and the possibility of goodwill write-offs given goodwill of $3.87 billion. The filing also notes asbestos-related litigation claims, though it says no significant resources have been required to respond to them.
What did Roper do with its dividend and cash flow in 2012?
The Board raised the quarterly dividend to $0.165 per share from $0.1375, and dividends declared for 2012 totaled $0.5775 per share. Cash from operations was $677.9 million, which was largely used for acquisitions, with $1.47 billion in acquisition payments during the year, and capital expenditures were $38.4 million.
06—Continue