01—Abstract
Summary
Summary of the 10-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Roper Technologies, Inc. reported net revenues of $6,177.8 milliona for 2023, up 15.0% from $5,371.8 million in 2022, with organic revenue growth of 7.8% for the company as a whole.
Net earnings from continuing operations were $1,368.4 millionb, and total net earnings were $1,384.2 million, compared with $4,544.7 million in 2022, a year that included large gains from the divestitures of TransCore and the majority stake in Indicor. Operating cash flow from continuing operations rose to $2,037.4 million from $606.6 million, driven mainly by lower cash taxes paid following the 2022 divestitures. Diluted earnings per share from continuing operations were $12.74, versus $9.23 in 2022.
The company's three segments all grew in 2023. Application Software revenue was $3,186.9 millionc, Network Software was $1,439.4 million, and Technology Enabled Products was $1,551.5 million. Segment operating margins were 25.8%, 43.9%, and 33.4%, respectively.
Backlog rose 8.4% to $3,156.6 milliond. Acquisitions included Syntellis for $1,381 million and Replicon for $447.5 million. In January 2024, Roper agreed to acquire Procare for approximately $1,860 million, with closing expected in the first quarter of 2024.
Balance-sheet leverage remains a key consideration. Total debt, net of deferred financing costs, was $6,330.1 million at year-end 2023, and goodwill of $17,118.8 million represented 61% of total assets of $28,167.5 million.
The company holds a 47.3% minority interest in Indicor, which is carried at fair value at $675.9 million after a $140.9 million fair value gain in 2023. The quarterly dividend was raised to $0.75 per share from $0.6825, a 10% increase.
02—Key points
Key Highlights
- Net revenues rose 15.0% to $6,177.8 million in 2023, with organic revenue growth of 7.8% for the company overall.
- Net earnings from continuing operations increased to $1,368.4 million from $985.6 million, and diluted EPS from continuing operations reached $12.74 versus $9.23.
- Segment revenue: Application Software $3,186.9 million, Network Software $1,439.4 million, Technology Enabled Products $1,551.5 million; Network Software posted the highest segment operating margin at 43.9%.
- Operating cash flow from continuing operations was $2,037.4 million, up from $606.6 million, mainly due to lower cash taxes paid after 2022 divestitures.
- Backlog increased 8.4% to $3,156.6 million at December 31, 2023.
- Total debt was $6,330.1 million net of deferred financing costs, with $360.0 million drawn on a $3,500.0 million revolver; the company agreed to acquire Procare for approximately $1,860 million.
- Quarterly dividend increased 10% to $0.75 per share, the thirty-first consecutive annual increase.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Roper Technologies kept $0.22.
- Revenue$6.18B100.0%
- Cost of revenue−$1.87B30.3%
- Gross profit$4.31B69.7%
- Operating costs−$2.56B41.5%
- Operating income$1.75B28.2%
- Interest, other & tax−$361.2M5.8%
- Net income$1.38B22.4%
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 22, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $6.18B$5.37B | +15.0% |
| Cost of Revenue | $1.87B$1.62B | +15.5% |
| Gross Profit | $4.31B$3.75B | +14.8% |
| R&D Expenses | $646.10M$529.80M | +22.0% |
| SG&A Expenses | $2.56B$2.23B | +15.0% |
| Operating Income | $1.75B$1.52B | +14.5% |
| Interest Expense | $164.70M$192.40M | −14.4% |
| Net Income | $1.38B$4.54B | −69.5% |
| EPS (Basic) | $12.98$42.92 | −69.8% |
| EPS (Diluted) | $12.89$42.55 | −69.7% |
| Shares Outstanding (Basic) | 106.60M105.90M | +0.7% |
| Shares Outstanding (Diluted) | 107.40M106.80M | +0.6% |
05—Questions
Frequently Asked Questions
How did Roper's revenue and profitability change in 2023?
Net revenues grew 15.0% to $6,177.8 million, and net earnings from continuing operations rose to $1,368.4 million from $985.6 million. Organic revenue growth was 7.8%, with acquisitions and divestitures contributing 7.3 percentage points. Total net earnings were $1,384.2 million, down from $4,544.7 million in 2022, which included large divestiture gains.
Why did reported net earnings fall so sharply compared with 2022?
The 2022 results included $3,559.1 million of net earnings from discontinued operations, primarily gains on the TransCore sale and the 51% Indicor stake sale. In 2023, net earnings from discontinued operations were only $15.8 million.
What are the main leverage and goodwill risks for investors?
Total debt was $6,330.1 million at year-end 2023. Goodwill of $17,118.8 million equaled 61% of total assets and exceeded stockholders' equity of $17,444.8 million only slightly below it, so a significant impairment would materially affect results. Interest expense, net, declined to $164.7 million from $192.4 million.
What is the status of the Procare acquisition and the Indicor investment?
Roper agreed on January 22, 2024 to acquire Procare for approximately $1,860 million, expected to close in the first quarter of 2024. Roper holds a 47.3% minority interest in Indicor, valued at $675.9 million, and recorded a $140.9 million fair value gain in 2023; the valuation is sensitive to assumptions, and a hypothetical 10% decrease would cause a charge of approximately $67.6 million.
What are the key pending legal matters?
PowerPlan faces an antitrust suit (Lucasys Inc. v. PowerPlan) in which the plaintiff claims damages of approximately $66 million, with trial anticipated in the second half of 2024 if summary judgment is denied. Management believes the ultimate liability should not have a material adverse effect on the company's financial position.
06—Continue