01—Abstract
Summary
Summary of the 10-K filed February 26, 2016. Cited figures are marked; the original filing is the authoritative source.
Roper Technologies, Inc. (filed as Roper Industries, Inc. until its April 24, 2015 name change) reported 2015 net sales of $3.58 billiona, up from $3.55 billion in 2014, with net earnings of $696.1 million, or $6.85 per diluted share, compared with $646.0 million, or $6.40, in 2014.
The company described the 1% sales increase as the result of acquisitions contributing 4%, negative organic growth of 0.3%, and a negative foreign exchange impact of 3%. Income from operations rose to $1.03 billionb from $999.5 million, and operating cash flow was $928.8 million. The company completed eight business combinations in 2015 for an aggregate purchase price of $1.8 billion in cash, and sold Abel Pumps for a pretax gain of $70.9 million.
Leverage increased materially. Total consolidated indebtedness was $3.29 billionc at December 31, 2015, versus $2.2 billion a year earlier, driven by a $900 million senior notes issuance in December 2015 and revolver borrowings used for acquisitions. Goodwill rose to $5.82 billion and represented 57% of total assets of $10.2 billion.
The company disclosed $1.7 billiond of undrawn availability under its senior unsecured credit facility and stated it was in compliance with all debt covenants. Management expects the effective tax rate to rise in 2016, and the Board increased the quarterly dividend to $0.30 per share from $0.25. By segment, Medical & Scientific Imaging grew net sales 12.5% to $1.215 billion with an operating margin of 36.4%, while Energy Systems & Controls declined 15% to $587.7 million and Industrial Technology declined 10% to $745.4 million, both reflecting weakness in oil and gas markets.
Net orders rose 0.3% to $3.55 billion and backlog rose 2.8% to $1.07 billion. A subsequent event after year-end was the acquisition of CliniSys Group Ltd. for £170 million in cash.
02—Key points
Key Highlights
- Net sales rose 1% to $3.58 billion in 2015, with acquisitions adding 4% and negative organic growth of 0.3% and a 3% negative foreign exchange impact.
- Diluted EPS was $6.85 in 2015 versus $6.40 in 2014; net earnings were $696.1 million versus $646.0 million.
- Medical & Scientific Imaging was the standout segment, with net sales up 12.5% to $1.215 billion and an operating margin of 36.4%.
- Energy Systems & Controls (down 15%) and Industrial Technology (down 10%) declined, driven by lower oil and gas-related sales.
- Total consolidated indebtedness rose to $3.29 billion from about $2.2 billion, funding eight 2015 acquisitions costing $1.8 billion in cash.
- Goodwill of $5.82 billion represented 57% of total assets of $10.2 billion, and the company reported no impairment from its 2015 annual review.
- The quarterly dividend was increased to $0.30 per share from $0.25, and the company completed a $900 million senior notes offering in December 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Roper Technologies kept $0.19.
- Revenue$3.58B100.0%
- Cost of revenue−$1.42B39.6%
- Gross profit$2.16B60.4%
- Operating costs−$1.14B31.7%
- Operating income$1.03B28.7%
- Interest, other & tax−$331.9M9.3%
- Net income$696.1M19.4%
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 26, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $3.58B$3.55B | +0.9% |
| Cost of Revenue | $1.42B$1.45B | −2.1% |
| Gross Profit | $2.16B$2.10B | +3.0% |
| R&D Expenses | $164.20M$147.90M | +11.0% |
| SG&A Expenses | $1.14B$1.10B | +3.1% |
| Operating Income | $1.03B$999.47M | +2.8% |
| Interest Expense | $84.22M$78.64M | +7.1% |
| Net Income | $696.07M$646.03M | +7.7% |
| EPS (Basic) | $6.92$6.47 | +7.0% |
| EPS (Diluted) | $6.85$6.40 | +7.0% |
| Shares Outstanding (Basic) | 100.62M99.92M | +0.7% |
| Shares Outstanding (Diluted) | 101.60M100.88M | +0.7% |
05—Questions
Frequently Asked Questions
How did Roper's debt position change in 2015?
Total consolidated indebtedness rose to $3.29 billion at December 31, 2015, up from about $2.2 billion at the end of 2014, mainly from debt used for 2015 acquisitions. The company issued $600 million of 3.00% notes due 2020 and $300 million of 3.85% notes due 2025 in December 2015, and it had $1.7 billion of undrawn availability under its credit facility.
What drove the growth in net sales and earnings in 2015?
Net sales grew 1% to $3.58 billion, with acquisitions contributing 4%, offset by negative organic growth of 0.3% and a negative foreign exchange impact of 3%. Net earnings increased to $696.1 million, helped by a $70.9 million pretax gain on the sale of Abel Pumps, which was partly offset by a $9.5 million impairment on a minority investment.
Which business segments performed best and worst in 2015?
Medical & Scientific Imaging performed best, with net sales up 12.5% to $1.215 billion and an operating margin of 36.4%, led by Verathon and Managed Health Care Associates. Energy Systems & Controls fell 15% to $587.7 million and Industrial Technology fell 10% to $745.4 million, both due to lower sales in oil and gas markets.
What does the company's goodwill position mean for investors?
Goodwill totaled $5.82 billion at December 31, 2015, which the filing says represented 57% of total assets of $10.2 billion and exceeded stockholders' equity of $5.3 billion. The company stated that no impairment resulted from its 2015 annual review, but it warned that a write-off of a significant portion of goodwill would negatively affect results and total capitalization.
What did Roper say about its outlook for 2016?
The company expects its effective tax rate to increase in 2016 due to rising revenues and pretax income in higher-tax jurisdictions, primarily the U.S. It also expects to reduce debt and associated interest expense, though the pace will depend on acquisition financing needs and the performance of existing companies. Capital expenditures are expected to be between 1.0% and 1.5% of annual net sales.
06—Continue