01—Abstract
Summary
Summary of the 10-K filed February 27, 2023. Cited figures are marked; the original filing is the authoritative source.
Roper Technologies, Inc. reported net revenues of $5.37 billiona for 2022, up from $4.83 billion in 2021, with organic revenue growth of 9.4% for the company as a whole.
Income from operations rose to $1.52 billionb from $1.24 billion, and net earnings from continuing operations were $985.6 million. Total net earnings were $4.54 billion, driven largely by a $3.36 billion gain on disposition of discontinued operations, mainly from the Indicor Transaction, in which the company sold a 51% stake in its industrial businesses to Clayton, Dubilier & Rice, LLC and retained a 49% minority interest valued at $535.0 million. The company reorganized into three reportable segments: Application Software ($2.64 billion, 49.1% of revenues), Network Software ($1.38 billion, 25.7%), and Technology Enabled Products ($1.35 billion, 25.2%).
Recurring software revenue was $2.94 billionc of total revenue. Backlog rose 25.3% to $2.91 billion. The company acquired Frontline Education for $3.74 billion in October 2022 and completed six additional bolt-on acquisitions.
On the balance sheet, total debt fell to $6.66 billiond from $7.92 billion as the company repaid $800.0 million of senior notes and $470.0 million on its revolver. Cash and cash equivalents rose to $792.8 million, and goodwill totaled $15.95 billion, representing 59% of total assets of $26.98 billion. Operating cash flow from continuing operations was $606.6 million, down from $1.66 billion in 2021, reflecting $953.8 million of cash taxes paid on the 2021 divestitures and the Indicor Transaction.
02—Key points
Key Highlights
- Net revenues of $5,371.8 million in 2022, up 11.1% from $4,833.8 million, with organic revenue growth of 9.4%.
- Net earnings of $4,544.7 million, including a $3,356.3 million gain on disposition of discontinued operations; net earnings from continuing operations were $985.6 million.
- Backlog increased 25.3% to $2,912.6 million at December 31, 2022.
- Indicor Transaction: 51% of the industrial businesses sold to CD&R, with a retained 49% minority equity interest recorded at $535.0 million under the fair value option.
- Total debt declined to $6,661.7 million (net of issuance costs) from $7,921.8 million, following $800.0 million in senior note repayments and $470.0 million in revolver repayments.
- Frontline Education acquired on October 4, 2022 for a purchase price of $3,738.0 million, with $2,197.6 million recorded as goodwill.
- Operating cash flow from continuing operations fell to $606.6 million from $1,655.8 million, mainly due to $953.8 million of cash taxes paid on divestitures.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Roper Technologies kept $0.85.
- Revenue$5.37B100.0%
- Cost of revenue−$1.62B30.1%
- Gross profit$3.75B69.9%
- Operating costs−$2.23B41.5%
- Operating income$1.52B28.4%
- Interest, other & tax$3.02B56.2%
- Net income$4.54B84.6%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 27, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $5.37B$4.83B | +11.1% |
| Cost of Revenue | $1.62B$1.43B | +13.5% |
| Gross Profit | $3.75B$3.41B | +10.1% |
| R&D Expenses | $529.80M$484.80M | +9.3% |
| SG&A Expenses | $2.23B$2.07B | +7.5% |
| Operating Income | $1.52B$1.24B | +22.8% |
| Interest Expense | $192.40M$233.90M | −17.7% |
| Net Income | $4.54B$1.15B | +294.2% |
| EPS (Basic) | $42.92$10.95 | +292.0% |
| EPS (Diluted) | $42.55$10.82 | +293.3% |
| Shares Outstanding (Basic) | 105.90M105.30M | +0.6% |
| Shares Outstanding (Diluted) | 106.80M106.50M | +0.3% |
05—Questions
Frequently Asked Questions
Why did net earnings increase so sharply in 2022?
Net earnings were $4,544.7 million, compared with $1,152.6 million in 2021, largely because of a $3,356.3 million gain on disposition of discontinued operations, net of tax. This gain mainly came from the Indicor Transaction ($1,638.8 million) and the TransCore and Zetec divestitures ($1,717.5 million). Net earnings from continuing operations were $985.6 million, up from $805.3 million.
What is the company's exposure to its Indicor investment?
Roper retained a 49% minority equity interest in Indicor, LLC, valued at $535.0 million at closing. The company has limited consent and board rights but does not control Indicor. It must make quarterly Unit Adjustment payments to CD&R, which it intends to pay in-kind, and it values the Unit Adjustment at approximately $115 million. Subsequent fair value changes will be recognized in non-operating income beginning in the first quarter of 2023.
How is the company's revenue distributed across its businesses?
Application Software generated $2,639.5 million (49.1% of net revenues), Network Software $1,378.5 million (25.7%), and Technology Enabled Products $1,353.8 million (25.2%). Recurring software revenue totaled $2,939.4 million. No single customer accounted for 10% or more of any segment or total net revenues in 2022.
What are the main risks to the company's balance sheet?
Goodwill of $15,946.1 million equals 59% of total assets of $26,980.8 million and is compared against stockholders' equity of $16,037.8 million. Future impairments could materially affect results. Total debt is $6,661.7 million, and the credit facility requires a Total Debt to Total Capital Ratio of 0.65 to 1.00 or less. The company also reports exposure to unfavorable foreign exchange rates, since 11% of total revenues came from non-U.S. dollar functional-currency operations.
What did the company say about its dividend?
In November 2022, the Board increased the quarterly dividend paid January 23, 2023 to $0.6825 per share from $0.62, an increase of 10%. This was the thirtieth consecutive year of dividend increases. Dividends declared were $2.54 per share in 2022, compared with $2.31 in 2021.
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