01—Abstract
Summary
Summary of the 10-K filed February 25, 2019. Cited figures are marked; the original filing is the authoritative source.
Roper Technologies, Inc. reported net revenues of $5.19 billiona for 2018, up 12.7% from $4.61 billion in 2017, with organic growth of 9.4%, a net effect from acquisitions and divestitures of 2.9%, and a foreign exchange benefit of 0.4%.
Operating income rose to $1.40 billionb from $1.21 billion, and net earnings were $944.4 million, or $9.05 per diluted share, compared with $971.8 million in 2017. The 2017 result included a one-time net income tax benefit of $215.4 million from the Tax Act, so 2018 net earnings declined year over year even as operations grew. Cash provided by operating activities rose to $1.43 billion from $1.23 billion.
The balance sheet carries substantial acquisition-related intangibles: goodwill of $9.35 billionc and other intangible assets of $3.84 billion against total assets of $15.25 billion and stockholders' equity of $7.74 billion. Total consolidated indebtedness was $4.9 billion at year-end, and $1.6 billion was undrawn under the senior unsecured credit facility. Roper acquired seven businesses in 2018 for an aggregate purchase price of $1.28 billion, most notably PowerPlan.
It also agreed to sell its Gatan business to Thermo Fisher for approximately $925.0 milliond and its Imaging businesses to Teledyne for $225.0 million, with the Imaging sale closing on February 5, 2019. Management reported that internal control over financial reporting was effective as of December 31, 2018, and PricewaterhouseCoopers LLP issued an unqualified opinion.
The Board increased the quarterly dividend to $0.4625 per share from $0.4125, marking the twenty-sixth consecutive year of dividend increases. Backlog was $1.69 billion at year-end, and the filing states that it expects to recognize about 60% of remaining performance obligations within 12 months.
02—Key points
Key Highlights
- Net revenues rose 12.7% to $5.19 billion in 2018, driven by 9.4% organic growth and a 2.9% net effect from acquisitions and divestitures.
- Operating income increased to $1.40 billion from $1.21 billion, and segment operating margin rose to 30.8% from 29.3%.
- Net earnings declined to $944.4 million ($9.05 diluted EPS) from $971.8 million, because 2017 included a one-time $215.4 million net income tax benefit from the Tax Act.
- Goodwill of $9.35 billion and intangible assets of $3.84 billion made up a large share of total assets of $15.25 billion, which the filing notes exposes the company to potential future write-offs.
- Total consolidated indebtedness was $4.9 billion at year-end 2018, with $1.6 billion undrawn on the senior unsecured credit facility.
- Cash provided by operating activities increased to $1.43 billion from $1.23 billion, and the company agreed to sell Gatan (about $925.0 million) and the Imaging businesses ($225.0 million).
- The quarterly dividend was raised to $0.4625 per share from $0.4125, the twenty-sixth consecutive annual increase.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Roper Technologies kept $0.18.
- Revenue$5.19B100.0%
- Cost of revenue−$1.91B36.8%
- Gross profit$3.28B63.2%
- Operating costs−$1.88B36.3%
- Operating income$1.40B26.9%
- Interest, other & tax−$452.0M8.7%
- Net income$944.4M18.2%
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 25, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $5.19B$4.61B | +12.7% |
| Cost of Revenue | $1.91B$1.74B | +9.7% |
| Gross Profit | $3.28B$2.86B | +14.5% |
| R&D Expenses | $376.90M$281.10M | +34.1% |
| SG&A Expenses | $1.88B$1.65B | +13.8% |
| Operating Income | $1.40B$1.21B | +15.4% |
| Interest Expense | $182.10M$180.60M | +0.8% |
| Net Income | $944.40M$971.80M | −2.8% |
| EPS (Basic) | $9.15$9.51 | −3.8% |
| EPS (Diluted) | $9.05$9.39 | −3.6% |
| Shares Outstanding (Basic) | 103.20M102.20M | +1.0% |
| Shares Outstanding (Diluted) | 104.40M103.50M | +0.9% |
05—Questions
Frequently Asked Questions
How did Roper's revenue and profit change in 2018?
Net revenues increased 12.7% to $5.19 billion from $4.61 billion, with organic growth of 9.4%. Operating income rose to $1.40 billion from $1.21 billion. Net earnings fell to $944.4 million from $971.8 million, mainly because 2017 included a one-time $215.4 million net income tax benefit from the Tax Act.
How much debt does Roper carry and how much capacity does it have?
Roper had $4.9 billion in total consolidated indebtedness at December 31, 2018, including $4.1 billion of senior unsecured notes and $865 million of revolver borrowings. It had $1.6 billion undrawn under its senior unsecured credit facility, and the filing states it was in compliance with all debt covenants.
What divestitures did Roper announce?
Roper agreed to sell Gatan to Thermo Fisher Scientific for approximately $925.0 million in cash, expected to close in 2019. It also agreed to sell its remaining scientific imaging businesses (Princeton Instruments, Photometrics, Lumenera and others) to Teledyne for $225.0 million, and that sale closed on February 5, 2019.
What acquisitions did Roper complete in 2018?
Roper completed seven business acquisitions in 2018 with an aggregate purchase price of $1,279.0 million, net of cash acquired. The largest was PowerPlan, acquired June 4, 2018 for $1,111.4 million net of cash acquired, which provides financial and compliance management software.
What is the outlook for the company's tax rate and dividend?
Roper expects its effective tax rate for 2019 to be between 21% and 23%. The Board raised the quarterly dividend paid January 23, 2019 to $0.4625 per share from $0.4125, and the filing describes this as the twenty-sixth consecutive year of dividend increases.
06—Continue