01—Abstract
Summary
Summary of the 10-Q filed May 3, 2024. Cited figures are marked; the original filing is the authoritative source.
Roper Technologies, Inc. reported net revenues of $1,680.7 milliona for the three months ended March 31, 2024, up from $1,469.7 million a year earlier, an increase of 14.4%.
Organic revenue growth was 8.1%, with acquisitions contributing 6.0 points. Income from operations rose to $481.3 millionb from $401.0 million, and net earnings increased to $382.0 million from $283.1 million. Diluted earnings per share from net earnings were $3.54 versus $2.65.
Results were helped by a $57.0 millionc net gain on equity investments, driven mainly by a $64.4 million fair value increase in the Indicor investment. The quarter's key balance sheet event was the February 26, 2024 acquisition of Procare Software for a purchase price of $1,860.0 million, net of cash acquired and certain liabilities assumed. The acquisition was funded largely by borrowings under the unsecured credit facility, which stood at $1,750.0 million at March 31, 2024, up from $360.0 million at December 31, 2023.
Total debt, net of deferred financing costs, rose to $7,722.0 milliond from $6,330.1 million, and net debt / total net capital increased to 29.7% from 26.0%. Cash provided by operating activities from continuing operations was $531.5 million. Backlog, defined as remaining performance obligations expected to be recognized within 12 months, was $2,932.4 million, up 2% from $2,872.5 million a year earlier, with growth from acquisitions partially offset by a decline in the Technology Enabled Products segment.
The company also disclosed a pending antitrust and deceptive trade practices lawsuit against its subsidiary PowerPlan, Inc., in which the plaintiff claims damages of approximately $66 million. Management believes the ultimate liability should not have a material adverse effect on the company's financial position, results of operations, or cash flows.
02—Key points
Key Highlights
- Net revenues rose 14.4% to $1,680.7 million, with organic revenue growth of 8.1% and acquisitions contributing 6.0 points.
- Net earnings increased to $382.0 million from $283.1 million, aided by a $57.0 million net gain on equity investments, mainly the $64.4 million Indicor fair value change.
- Diluted EPS from net earnings was $3.54, compared with $2.65 in the prior-year quarter.
- Acquired Procare Software on February 26, 2024 for $1,860.0 million net of cash acquired, adding $1,208.2 million of goodwill and $762.0 million of other identifiable intangibles.
- Total debt, net of deferred financing costs, increased to $7,722.0 million from $6,330.1 million, with $1,750.0 million drawn on the unsecured credit facility; net debt / total net capital rose to 29.7% from 26.0%.
- Backlog increased 2% to $2,932.4 million, driven by acquisitions, partly offset by a decline in Technology Enabled Products.
- Segment operating profit rose to $542.8 million from $456.2 million, with Application Software reporting an operating profit of $239.6 million, up from $193.2 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Roper Technologies kept $0.23.
- Revenue$1.68B100.0%
- Cost of revenue−$499.7M29.7%
- Gross profit$1.18B70.3%
- Operating costs−$699.7M41.6%
- Operating income$481.3M28.6%
- Interest, other & tax−$99.3M5.9%
- Net income$382.0M22.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 3, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.68B$1.47B | +14.4% |
| Cost of Revenue | $499.70M$451.10M | +10.8% |
| Gross Profit | $1.18B$1.02B | +15.9% |
| SG&A Expenses | $699.70M$617.60M | +13.3% |
| Operating Income | $481.30M$401.00M | +20.0% |
| Interest Expense | $53.20M$37.40M | +42.2% |
| Net Income | $382.00M$283.10M | +34.9% |
| EPS (Basic) | $3.57$2.66 | +34.2% |
| EPS (Diluted) | $3.54$2.65 | +33.6% |
| Shares Outstanding (Basic) | 107.00M106.30M | +0.7% |
| Shares Outstanding (Diluted) | 107.90M107.00M | +0.8% |
05—Questions
Frequently Asked Questions
What drove the increase in Roper's first-quarter 2024 revenue?
Net revenues grew 14.4% to $1,680.7 million. Acquisitions contributed 6.0 percentage points and organic growth was 8.1%. Application Software organic revenue grew 5.7%, Network Software grew 4.5%, and Technology Enabled Products grew 17.1%.
How much did the Procare acquisition cost and how was it financed?
Roper acquired Genesis Ultimate Holding Co., parent of Procare Software, LLC, on February 26, 2024 for a purchase price of $1,860.0 million, net of cash acquired and certain liabilities assumed. Cash used in investing activities from continuing operations was $1,878.6 million, and financing activities were primarily net borrowings on the unsecured credit facility, which totaled $1,390.0 million in net revolver borrowings for the quarter.
Why did net earnings grow faster than operating income?
Income from operations rose to $481.3 million from $401.0 million. Net earnings also benefited from a $57.0 million net gain on equity investments, compared with a $1.2 million loss a year earlier, primarily from a $64.4 million fair value increase in the Indicor investment, partly offset by a $7.6 million equity-method loss on the Certinia investment. Higher interest expense, which rose to $53.2 million from $37.4 million, partly offset these gains.
What is the status of the PowerPlan litigation?
Lucasys Inc. v. PowerPlan, Inc. is pending in the U.S. District Court for the Northern District of Georgia. The plaintiff alleges anticompetitive practices and claims damages of approximately $66 million, seeking treble damages plus other relief. PowerPlan strongly denies the allegations, both parties have moved for summary judgment, and oral argument is scheduled for May 2024.
What does the filing say about future debt reduction and cash flow?
Roper anticipates that its businesses will generate positive operating cash flows that will permit reduction of outstanding debt under the repayment schedule. The pace of debt reduction will depend on the financing and operating needs of new acquisitions, the performance of existing companies, and geopolitical and economic conditions. Management states that existing cash, operating cash flow, and credit facility availability should be sufficient for foreseeable operating requirements.
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