01—Abstract
Summary
Summary of the 10-K filed February 20, 2015. Cited figures are marked; the original filing is the authoritative source.
Roper Industries, Inc. (ROP) reported net sales of $3.55 billiona for 2014, up from $3.24 billion in 2013, an increase of 10%, with organic sales growth of 7% and acquisitions contributing 3%.
Net earnings rose to $646.0 millionb ($6.40 diluted earnings per share) from $538.3 million ($5.37 diluted) in 2013. Income from operations was $999.5 million, and the company describes itself as a diversified technology company operating across four segments: Medical and Scientific Imaging ($1.08 billion in sales), RF Technology ($950.2 million), Industrial Technology ($827.1 million) and Energy Systems and Controls ($691.8 million). Medical and Scientific Imaging posted the strongest margin gain, with operating margin rising to 34.8% from 29.7%.
Cash flow from operating activities was $840.4 millionc, and the company used $298.1 million in financing activities, mainly for debt repayments and dividends. Total debt was $2.2 billion at December 31, 2014, down from $2.5 billion a year earlier, and there were no outstanding borrowings under the $1.5 billion revolving credit facility. Acquisitions used $305.4 million in cash during 2014, including Foodlink Holdings, Innovative Product Achievements and Strategic Healthcare Programs.
The quarterly dividend was raised to $0.25d per share from $0.20, and the filing reports goodwill of $4.71 billion, which equaled 56% of total assets of $8.41 billion. The filing also discloses a subsequent event: after year-end and before the filing date, the company acquired Strata Decision Technology LLC and Softwriters Inc. for an aggregate of $360 million in cash. Risk factors highlighted by the filing include indebtedness, foreign exchange exposure (23% of net sales from non-U.S. functional currency operations), goodwill concentration, and acquisition integration.
02—Key points
Key Highlights
- Net sales rose 10% to $3.55 billion in 2014, with organic growth of 7% and acquisitions adding 3%.
- Net earnings increased to $646.0 million, or $6.40 per diluted share, from $538.3 million, or $5.37 per diluted share, in 2013.
- Medical and Scientific Imaging segment net sales grew 20% to $1.08 billion, and its operating margin improved to 34.8% from 29.7%.
- Total debt declined to $2.2 billion at year-end 2014 from $2.5 billion, with no borrowings outstanding under the $1.5 billion revolving credit facility.
- Cash provided by operating activities was $840.4 million in 2014, compared with $802.6 million in 2013.
- The quarterly dividend was increased to $0.25 per share from $0.20, effective with the January 23, 2015 payment.
- Subsequent to year-end, the company acquired Strata Decision Technology LLC and Softwriters Inc. for an aggregate $360 million in cash.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Roper Technologies kept $0.18.
- Revenue$3.55B100.0%
- Cost of revenue−$1.45B40.8%
- Gross profit$2.10B59.2%
- Operating costs−$1.10B31.1%
- Operating income$999.5M28.2%
- Interest, other & tax−$353.4M10.0%
- Net income$646.0M18.2%
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 20, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $3.55B$3.24B | +9.6% |
| Cost of Revenue | $1.45B$1.36B | +6.8% |
| Gross Profit | $2.10B$1.88B | +11.6% |
| R&D Expenses | $147.90M$145.70M | +1.5% |
| SG&A Expenses | $1.10B$1.04B | +5.9% |
| Operating Income | $999.47M$842.36M | +18.7% |
| Interest Expense | $78.64M$88.04M | −10.7% |
| Net Income | $646.03M$538.29M | +20.0% |
| EPS (Basic) | $6.47$5.43 | +19.2% |
| EPS (Diluted) | $6.40$5.37 | +19.2% |
| Shares Outstanding (Basic) | 99.92M99.12M | +0.8% |
| Shares Outstanding (Diluted) | 100.88M100.21M | +0.7% |
05—Questions
Frequently Asked Questions
How much did Roper's sales and earnings grow in 2014?
Net sales were $3.55 billion, up 10% from $3.24 billion in 2013, and net earnings were $646.0 million, up from $538.3 million. Diluted earnings per share were $6.40, compared with $5.37 in 2013.
Which business segment performed best in 2014?
Medical and Scientific Imaging had the largest sales increase, up 20% to $1.08 billion, with acquisitions adding $91 million and organic sales rising 10%. Its operating margin reached 34.8%, compared with 29.7% in 2013.
How did the company's debt and liquidity change?
Total debt fell to $2.2 billion at December 31, 2014 from $2.5 billion, mainly through debt repayments made with operating cash flow. The company had $1.5 billion of undrawn revolving credit capacity and $535 million of cash held at foreign subsidiaries.
What acquisitions did Roper make?
During 2014 it acquired Foodlink Holdings, Innovative Product Achievements and Strategic Healthcare Programs for an aggregate $303 million in cash. After year-end, it acquired Strata Decision Technology and Softwriters for $360 million in cash.
What are the main risks identified in the filing?
The filing highlights its indebtedness and covenant obligations, foreign exchange exposure (23% of 2014 net sales from non-U.S. functional currency companies), international operating risks, acquisition integration, and goodwill of $4.71 billion, which represented 56% of total assets.
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