UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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| | | | |
x☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017.
March 31, 2022. |
| | | | |
o ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number 1-12273
ROPER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
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| | | | | | | | | | |
Delaware | | 51-0263969 |
(State or other jurisdiction of incorporation or organization) | | 51-0263969
(I.R.S. Employer Identification No.) |
| | | |
6901 Professional Pkwy. East,Parkway, Suite 200 | | |
Sarasota, | Florida | | 34240 |
(Address of principal executive offices) | |
34240
(Zip Code) |
(941) 556-2601
(Registrant'sRegistrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: | | | | | | | | | | | | | | |
Title of Each Class | | Trading Symbol(s) | | Name of Each Exchange On Which Registered |
Common Stock, $0.01 Par Value | | ROP | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ☒ Yes o☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
þ☒ Yes o☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company"company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
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☒ | Large accelerated filer | ☐ | Accelerated filer |
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☐ | Non-accelerated filer | ☐ | Smaller reporting company |
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| |
þ Large accelerated filer ☐ | o Accelerated filer
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o Non-accelerated filer (Do not check if a smaller reporting company)
| o Smaller reporting company
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| |
| oEmerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark ifwhether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o☐ Yes þ☒ No
The number of shares outstanding of the Registrant'sregistrant’s common stock as of October 27, 2017April 29, 2022 was 102,362,184.105,912,655.
ROPER TECHNOLOGIES, INC.
REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017MARCH 31, 2022
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(in thousands,millions, except per share data)
| | | | | | | | | | | | | | | | | |
| | | Three months ended March 31, |
| | | | | 2022 | | 2021 |
Net revenues | | | | | $ | 1,526.6 | | | $ | 1,376.1 | |
Cost of sales | | | | | 496.5 | | | 440.1 | |
Gross profit | | | | | 1,030.1 | | | 936.0 | |
| | | | | | | |
Selling, general and administrative expenses | | | | | 609.0 | | | 561.4 | |
Income from operations | | | | | 421.1 | | | 374.6 | |
| | | | | | | |
Interest expense, net | | | | | 52.6 | | | 60.6 | |
| | | | | | | |
Other income (expense), net | | | | | (1.9) | | | 27.1 | |
| | | | | | | |
| | | | | | | |
Earnings before income taxes | | | | | 366.6 | | | 341.1 | |
| | | | | | | |
Income taxes | | | | | 79.0 | | | 71.2 | |
| | | | | | | |
Net earnings from continuing operations | | | | | 287.6 | | | 269.9 | |
| | | | | | | |
Earnings from discontinued operations, net of tax | | | | | 15.6 | | | 19.1 | |
Gain on disposition of discontinued operations, net of tax | | | | | 1,717.3 | | | — | |
Net earnings from discontinued operations | | | | | 1,732.9 | | | 19.1 | |
| | | | | | | |
Net earnings | | | | | $ | 2,020.5 | | | $ | 289.0 | |
| | | | | | | |
Net earnings per share from continuing operations: | | | | | | | |
Basic | | | | | $ | 2.72 | | | $ | 2.57 | |
Diluted | | | | | $ | 2.70 | | | $ | 2.55 | |
| | | | | | | |
Net earnings per share from discontinued operations: | | | | | | | |
Basic | | | | | $ | 16.41 | | | $ | 0.18 | |
Diluted | | | | | $ | 16.24 | | | $ | 0.18 | |
| | | | | | | |
Net earnings per share: | | | | | | | |
Basic | | | | | $ | 19.13 | | | $ | 2.75 | |
Diluted | | | | | $ | 18.94 | | | $ | 2.73 | |
| | | | | | | |
Weighted average common shares outstanding: | | | | | | | |
Basic | | | | | 105.6 | | | 105.0 | |
Diluted | | | | | 106.7 | | | 106.0 | |
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Net revenues | $ | 1,159,912 |
| | $ | 945,144 |
| | $ | 3,380,888 |
| | $ | 2,779,125 |
|
Cost of sales | 433,492 |
| | 366,651 |
| | 1,281,204 |
| | 1,073,593 |
|
Gross profit | 726,420 |
| | 578,493 |
| | 2,099,684 |
| | 1,705,532 |
|
| | | | | | | |
Selling, general and administrative expenses | 415,673 |
| | 311,103 |
| | 1,236,423 |
| | 940,073 |
|
Income from operations | 310,747 |
| | 267,390 |
| | 863,261 |
| | 765,459 |
|
| | | | | | | |
Interest expense, net | 45,523 |
| | 26,800 |
| | 137,201 |
| | 81,076 |
|
Other income/(expense), net | (659 | ) | | (534 | ) | | 5,263 |
| | (1,997 | ) |
| | | | | | | |
Earnings before income taxes | 264,565 |
| | 240,056 |
| | 731,323 |
| | 682,386 |
|
| | | | | | | |
Income taxes | 74,292 |
| | 72,977 |
| | 203,423 |
| | 205,822 |
|
| | | | | | | |
Net earnings | $ | 190,273 |
| | $ | 167,079 |
| | $ | 527,900 |
| | $ | 476,564 |
|
| | | | | | | |
Net earnings per share: | | | | | | | |
Basic | $ | 1.86 |
| | $ | 1.65 |
| | $ | 5.17 |
| | $ | 4.71 |
|
Diluted | $ | 1.84 |
| | $ | 1.63 |
| | $ | 5.11 |
| | $ | 4.65 |
|
| | | | | | | |
Weighted average common shares outstanding: | | | | | | | |
Basic | 102,303 |
| | 101,372 |
| | 102,091 |
| | 101,231 |
|
Diluted | 103,680 |
| | 102,522 |
| | 103,397 |
| | 102,424 |
|
| | | | | | | |
Dividends declared per common share | $ | 0.35 |
| | $ | 0.30 |
| | $ | 1.05 |
| | $ | 0.90 |
|
See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)
(in thousands)millions)
| | | Three months ended September 30, | | Nine months ended September 30, | | | | Three months ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | | | | 2022 | | 2021 |
Net earnings | $ | 190,273 |
| | $ | 167,079 |
| | $ | 527,900 |
| | $ | 476,564 |
| Net earnings | | | $ | 2,020.5 | | | $ | 289.0 | |
| | | | | | | | | | |
Other comprehensive income/(loss), net of tax: | | | | | | | | |
Other comprehensive income (loss), net of tax: | | Other comprehensive income (loss), net of tax: | | |
Foreign currency translation adjustments | 67,535 |
| | 9,054 |
| | 147,462 |
| | (35,673 | ) | Foreign currency translation adjustments | | | (22.9) | | | 14.6 | |
Total other comprehensive income/(loss), net of tax | 67,535 |
| | 9,054 |
| | 147,462 |
| | (35,673 | ) | |
Total other comprehensive income (loss), net of tax | | Total other comprehensive income (loss), net of tax | | | (22.9) | | | 14.6 | |
| | | | | | | | | | |
Comprehensive income | $ | 257,808 |
| | $ | 176,133 |
| | $ | 675,362 |
| | $ | 440,891 |
| Comprehensive income | | | $ | 1,997.6 | | | $ | 303.6 | |
See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)millions)
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
ASSETS: | | | |
| | | |
Cash and cash equivalents | $ | 605,616 |
| | $ | 757,200 |
|
Accounts receivable, net | 603,874 |
| | 619,854 |
|
Inventories, net | 209,306 |
| | 181,952 |
|
Unbilled receivables | 157,852 |
| | 129,965 |
|
Other current assets | 115,408 |
| | 87,530 |
|
Total current assets | 1,692,056 |
| | 1,776,501 |
|
| | | |
Property, plant and equipment, net | 141,279 |
| | 141,318 |
|
Goodwill | 8,793,956 |
| | 8,647,142 |
|
Other intangible assets, net | 3,502,687 |
| | 3,655,843 |
|
Deferred taxes | 32,459 |
| | 30,620 |
|
Other assets | 84,236 |
| | 73,503 |
|
| | | |
Total assets | $ | 14,246,673 |
| | $ | 14,324,927 |
|
| | | |
LIABILITIES AND STOCKHOLDERS' EQUITY: | | | |
| | | |
Accounts payable | $ | 163,719 |
| | $ | 152,067 |
|
Accrued compensation | 168,931 |
| | 161,730 |
|
Deferred revenue | 534,562 |
| | 488,399 |
|
Other accrued liabilities | 261,457 |
| | 219,339 |
|
Income taxes payable | 46,575 |
| | 22,762 |
|
Current portion of long-term debt, net | 401,534 |
| | 400,975 |
|
Total current liabilities | 1,576,778 |
| | 1,445,272 |
|
| | | |
Long-term debt, net of current portion | 4,932,721 |
| | 5,808,561 |
|
Deferred taxes | 1,163,371 |
| | 1,178,205 |
|
Other liabilities | 114,819 |
| | 104,024 |
|
Total liabilities | 7,787,689 |
| | 8,536,062 |
|
| | | |
Commitments and contingencies (Note 9) |
|
| |
|
|
| | | |
Common stock | 1,043 |
| | 1,036 |
|
Additional paid-in capital | 1,591,039 |
| | 1,489,067 |
|
Retained earnings | 5,062,926 |
| | 4,642,402 |
|
Accumulated other comprehensive loss | (177,277 | ) | | (324,739 | ) |
Treasury stock | (18,747 | ) | | (18,901 | ) |
Total stockholders' equity | 6,458,984 |
| | 5,788,865 |
|
| | | |
Total liabilities and stockholders' equity | $ | 14,246,673 |
| | $ | 14,324,927 |
|
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
ASSETS: | | | |
| | | |
Cash and cash equivalents | $ | 3,237.5 | | | $ | 351.5 | |
Accounts receivable, net | 755.3 | | | 839.4 | |
Inventories, net | 202.7 | | | 176.1 | |
Income taxes receivable | 19.2 | | | 27.7 | |
Unbilled receivables | 110.0 | | | 95.3 | |
Other current assets | 160.9 | | | 142.5 | |
Current assets held for sale | — | | | 788.6 | |
Total current assets | 4,485.6 | | | 2,421.1 | |
| | | |
Property, plant and equipment, net | 98.9 | | | 102.8 | |
Goodwill | 14,094.9 | | | 14,094.5 | |
Other intangible assets, net | 6,454.1 | | | 6,588.5 | |
Deferred taxes | 101.4 | | | 101.1 | |
Other assets | 400.9 | | | 405.9 | |
| | | |
Total assets | $ | 25,635.8 | | | $ | 23,713.9 | |
| | | |
LIABILITIES AND STOCKHOLDERS' EQUITY: | | | |
| | | |
Accounts payable | $ | 167.8 | | | $ | 150.8 | |
Accrued compensation | 208.2 | | | 309.8 | |
Deferred revenue | 1,120.3 | | | 1,130.2 | |
Other accrued liabilities | 413.0 | | | 440.7 | |
Income taxes payable | 793.0 | | | 132.0 | |
Current portion of long-term debt, net | 799.5 | | | 799.2 | |
Current liabilities held for sale | — | | | 159.1 | |
Total current liabilities | 3,501.8 | | | 3,121.8 | |
| | | |
Long-term debt, net of current portion | 6,654.8 | | | 7,122.6 | |
Deferred taxes | 1,476.1 | | | 1,479.5 | |
Other liabilities | 451.2 | | | 426.2 | |
| | | |
Total liabilities | 12,083.9 | | | 12,150.1 | |
| | | |
Commitments and contingencies (Note 10) | 0 | | 0 |
| | | |
Common stock | 1.1 | | | 1.1 | |
Additional paid-in capital | 2,363.9 | | | 2,307.8 | |
Retained earnings | 11,410.4 | | | 9,455.6 | |
Accumulated other comprehensive loss | (206.0) | | | (183.1) | |
Treasury stock | (17.5) | | | (17.6) | |
Total stockholders' equity | 13,551.9 | | | 11,563.8 | |
| | | |
Total liabilities and stockholders' equity | $ | 25,635.8 | | | $ | 23,713.9 | |
See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
millions) | | | | | | | | | | | |
| Three months ended March 31, |
| 2022 | | 2021 |
Cash flows from operating activities: | | | |
Net earnings from continuing operations | $ | 287.6 | | | $ | 269.9 | |
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities: | | | |
Depreciation and amortization of property, plant and equipment | 11.0 | | | 13.1 | |
Amortization of intangible assets | 148.1 | | | 146.3 | |
Amortization of deferred financing costs | 3.1 | | | 3.4 | |
Non-cash stock compensation | 35.9 | | | 31.6 | |
| | | |
Gain on sale of assets, net of tax | — | | | (21.6) | |
Income tax provision, excluding tax associated with gain on sale of assets | 79.0 | | 65.7 |
Changes in operating assets and liabilities, net of acquired businesses: | | | |
Accounts receivable | 82.0 | | | 54.3 | |
Unbilled receivables | (15.4) | | | (17.8) | |
Inventories | (27.7) | | | (2.1) | |
Accounts payable | 17.9 | | | 13.3 | |
Other accrued liabilities | (125.1) | | | (59.0) | |
Deferred revenue | 29.4 | | | 60.9 | |
| | | |
Cash income taxes paid | (27.4) | | | (17.2) | |
Other, net | (24.6) | | | (14.9) | |
Cash provided by operating activities from continuing operations | 473.8 | | | 525.9 | |
Cash provided by operating activities from discontinued operations | 1.5 | | | 33.7 | |
Cash provided by operating activities | 475.3 | | | 559.6 | |
| | | |
Cash flows from (used in) investing activities: | | | |
Acquisitions of businesses, net of cash acquired | (53.2) | | | — | |
Capital expenditures | (7.1) | | | (7.1) | |
Capitalized software expenditures | (7.5) | | | (7.2) | |
| | | |
Proceeds from sale of assets | — | | | 27.1 | |
Other, net | — | | | (0.1) | |
Cash (used in) provided by investing activities from continuing operations | (67.8) | | | 12.7 | |
Proceeds from disposition of discontinued operations | 3,006.2 | | | — | |
Cash used in investing activities from discontinued operations | (0.2) | | | (2.0) | |
Cash provided by investing activities | 2,938.2 | | | 10.7 | |
| | | |
Cash flows from (used in) financing activities: | | | |
| | | |
| | | |
Borrowings (payments) under revolving line of credit, net | (470.0) | | | (495.0) | |
| | | |
| | | |
Cash dividends to stockholders | (65.3) | | | (58.8) | |
Proceeds from stock-based compensation, net | 21.0 | | | 4.4 | |
Treasury stock sales | 5.5 | | | 4.7 | |
| | | |
Other | — | | | (0.1) | |
Cash flows used in financing activities from continuing operations | (508.8) | | | (544.8) | |
Cash flows used in financing activities from discontinued operations | (11.4) | | | (0.4) | |
Cash flows used in financing activities | (520.2) | | | (545.2) | |
(Continued) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
| | | | | | | |
| Nine months ended September 30, |
| 2017 | | 2016 |
Cash flows from operating activities: | | | |
Net earnings | $ | 527,900 |
| | $ | 476,564 |
|
Adjustments to reconcile net earnings to cash flows from operating activities: | | | |
Depreciation and amortization of property, plant and equipment | 36,776 |
| | 27,954 |
|
Amortization of intangible assets | 221,518 |
| | 149,149 |
|
Amortization of deferred financing costs | 5,463 |
| | 4,080 |
|
Non-cash stock compensation | 67,598 |
| | 60,480 |
|
Gain on sale of assets | (9,393 | ) | | — |
|
Changes in operating assets and liabilities, net of acquired businesses: | | | |
Accounts receivable | 30,074 |
| | (1,660 | ) |
Unbilled receivables | (27,186 | ) | | 3,684 |
|
Inventories | (19,577 | ) | | (5,916 | ) |
Accounts payable and accrued liabilities | 48,276 |
| | 17,273 |
|
Deferred revenue | 50,554 |
| | 19,692 |
|
Income taxes | (48,370 | ) | | (52,728 | ) |
Other, net | (17,900 | ) | | (5,199 | ) |
Cash provided by operating activities | 865,733 |
| | 693,373 |
|
| | | |
Cash flows from investing activities: | | | |
Acquisitions of businesses, net of cash acquired | (88,070 | ) | | (277,587 | ) |
Capital expenditures | (35,898 | ) | | (26,933 | ) |
Capitalized software expenditures | (8,043 | ) | | (1,528 | ) |
Proceeds from sale of assets | 10,614 |
| | 866 |
|
Other, net | (6,932 | ) | | 1,564 |
|
Cash used in investing activities | (128,329 | ) | | (303,618 | ) |
| | | |
Cash flows from financing activities: | | | |
Payments under revolving line of credit, net | (880,000 | ) | | (180,000 | ) |
Principal payments on convertible notes | — |
| | (4,010 | ) |
Cash premiums paid on convertible note conversions | — |
| | (13,308 | ) |
Cash dividends to stockholders | (106,480 | ) | | (90,632 | ) |
Proceeds from stock-based compensation, net | 32,932 |
| | 13,895 |
|
Treasury stock sales | 3,194 |
| | 2,576 |
|
Other | 179 |
| | (7,816 | ) |
Cash used in financing activities | (950,175 | ) | | (279,295 | ) |
| | | |
Effect of foreign currency exchange rate changes on cash | 61,187 |
| | (6,701 | ) |
| | | |
Net (decrease)/increase in cash and cash equivalents | (151,584 | ) | | 103,759 |
|
| | | |
Cash and cash equivalents, beginning of period | 757,200 |
| | 778,511 |
|
| | | |
Cash and cash equivalents, end of period | $ | 605,616 |
| | $ | 882,270 |
|
See accompanying notes to condensed consolidated financial statements.
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated StatementStatements of Changes in Stockholders' EquityCash Flows (unaudited) - Continued
(in thousands)millions)
| | | | | | | | | | | |
| Three months ended March 31, |
| 2022 | | 2021 |
| | | |
Effect of foreign currency exchange rate changes on cash | (7.3) | | | (2.4) | |
| | | |
Net increase in cash and cash equivalents | 2,886.0 | | | 22.7 | |
| | | |
Cash and cash equivalents, beginning of period | 351.5 | | | 308.3 | |
| | | |
Cash and cash equivalents, end of period | $ | 3,237.5 | | | $ | 331.0 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive loss | | Treasury stock | | Total |
Balances at December 31, 2016 | $ | 1,036 |
| | $ | 1,489,067 |
| | $ | 4,642,402 |
| | $ | (324,739 | ) | | $ | (18,901 | ) | | $ | 5,788,865 |
|
| | | | | | | | | | | |
Net earnings | — |
| | — |
| | 527,900 |
| | — |
| | — |
| | 527,900 |
|
Stock option exercises | 4 |
| | 40,397 |
| | — |
| | — |
| | — |
| | 40,401 |
|
Treasury stock sold | — |
| | 3,040 |
| | — |
| | — |
| | 154 |
| | 3,194 |
|
Currency translation adjustments | — |
| | — |
| | — |
| | 147,462 |
| | — |
| | 147,462 |
|
Stock based compensation | — |
| | 66,010 |
| | — |
| | — |
| | — |
| | 66,010 |
|
Restricted stock activity | 3 |
| | (7,475 | ) | | — |
| | — |
| | — |
| | (7,472 | ) |
Dividends declared | — |
| | — |
| | (107,376 | ) | | — |
| | — |
| | (107,376 | ) |
Balances at September 30, 2017 | $ | 1,043 |
| | $ | 1,591,039 |
| | $ | 5,062,926 |
| | $ | (177,277 | ) | | $ | (18,747 | ) | | $ | 6,458,984 |
|
See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)
(in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive loss | | Treasury stock | | Total stockholders’ equity |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
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| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Balances at December 31, 2021 | $ | 1.1 | | | $ | 2,307.8 | | | $ | 9,455.6 | | | $ | (183.1) | | | $ | (17.6) | | | $ | 11,563.8 | |
| | | | | | | | | | | |
Net earnings | — | | | — | | | 2,020.5 | | | — | | | — | | | 2,020.5 | |
Stock option exercises | — | | | 38.7 | | | — | | | — | | | — | | | 38.7 | |
Cash settlement of share-based awards in connection with disposition of discontinued operations | — | | | (11.1) | | | — | | | — | | | — | | | (11.1) | |
Treasury stock sold | — | | | 5.4 | | | — | | | — | | | 0.1 | | | 5.5 | |
Currency translation adjustments | — | | | — | | | — | | | (22.9) | | | — | | | (22.9) | |
Stock-based compensation | — | | | 40.8 | | | — | | | — | | | — | | | 40.8 | |
Restricted stock activity | — | | | (17.7) | | | — | | | — | | | — | | | (17.7) | |
Dividends declared ($0.62 per share) | — | | | — | | | (65.7) | | | — | | | — | | | (65.7) | |
Balances at March 31, 2022 | $ | 1.1 | | | $ | 2,363.9 | | | $ | 11,410.4 | | | $ | (206.0) | | | $ | (17.5) | | | $ | 13,551.9 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
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| | | | | | | | | | | |
| | | | | | | | | | | |
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Balances at December 31, 2020 | $ | 1.1 | | | $ | 2,097.5 | | | $ | 8,546.2 | | | $ | (147.0) | | | $ | (18.0) | | | $ | 10,479.8 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Net earnings | — | | | — | | | 289.0 | | | — | | | — | | | 289.0 | |
Stock option exercises | — | | | 19.2 | | | — | | | — | | | — | | | 19.2 | |
Treasury stock sold | — | | | 4.6 | | | — | | | — | | | 0.1 | | | 4.7 | |
Currency translation adjustments | — | | | — | | | — | | | 14.6 | | | — | | | 14.6 | |
Stock-based compensation | — | | | 32.4 | | | — | | | — | | | — | | | 32.4 | |
Restricted stock activity | — | | | (14.8) | | | — | | | — | | | — | | | (14.8) | |
Dividends declared ($0.5625 per share) | — | | | — | | | (59.2) | | | — | | | — | | | (59.2) | |
Balances at March 31, 2021 | $ | 1.1 | | | $ | 2,138.9 | | | $ | 8,776.0 | | | $ | (132.4) | | | $ | (17.9) | | | $ | 10,765.7 | |
See accompanying notes to Condensed Consolidated Financial Statements.
Roper Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
September 30, 2017All currency and share amounts are in millions, except per share data
1. Basis of Presentation
The accompanying condensed consolidated financial statementsCondensed Consolidated Financial Statements for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 are unaudited. In the opinion of management, the accompanying unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position, results of operations, comprehensive income and cash flows of Roper Technologies, Inc. and its subsidiaries ("Roper"(“Roper,” the “Company,” “we,” “our” or the "Company"“us”) for all periods presented. The December 31, 20162021 financial position data included herein was derived from the audited consolidated financial statements included in the Company's 2016Company’s 2021 Annual Report on Form 10-K ("(“Annual Report"Report”) filed on February 27, 201722, 2022 with the Securities and Exchange Commission ("SEC"(“SEC”) but does not include all disclosures required by U.S. generally accepted accounting principles ("GAAP"(“GAAP”).
Roper'sRoper’s management has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statementsCondensed Consolidated Financial Statements in conformity with GAAP. Actual results could differ from those estimates.
During 2021, the Company signed definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses. As of March 31, 2022, Roper has completed all 3 divestitures. The financial results for these businesses are presented as discontinued operations for all periods presented. Unless otherwise noted, discussion within these notes to the Condensed Consolidated Financial Statements relate to continuing operations. Refer to Note 5 for additional information on discontinued operations.
The results of operations for the three and nine months ended September 30, 2017March 31, 2022 are not necessarily indicative of the results to be expected for the full year. You should read these unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements in conjunction with Roper'sRoper’s audited consolidated financial statements and the notes thereto included in its Annual Report. Certain prior period amounts have been reclassified to conform to current period presentation.
2. Recent Accounting Pronouncements
The Financial Accounting Standards Board ("FASB"(“FASB”) establishes changes to accounting principles under GAAP in the form of accounting standards updates ("ASUs"(“ASUs”) to the FASB's Accounting Standards Codification.Codification (“ASC”). The Company considers the applicability and impact of all ASUs. Any recent ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company'sCompany’s results of operations, financial position or cash flows.
Recently Adopted Accounting Pronouncements
In July 2015, the FASB issued an update providing guidance to simplify the measurement of inventory. This update, effective for fiscal years beginning after December 15, 2016, requires that inventory within the scope of the update be measured at the lower of cost and net realizable value. The update did not have a material impact on the Company's results of operations, financial condition or cash flows.
Recently Released Accounting Pronouncements
In January 2017, the FASB issued an update simplifying the test for goodwill impairment. This update, effective on a prospective basis for goodwill impairment tests performed in fiscal years beginning after December 15, 2019, eliminates Step 2 from the goodwill impairment test. Under the amendments in the update, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the update to have a material impact on its results of operations, financial condition or cash flows.
In August 2016, the FASB issued an update clarifying the classification of certain cash receipts and cash payments in the statement of cash flows. This update, effective for annual reporting periods after December 15, 2017, including interim periods within those annual periods, addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The Company does not expect the update to have a material impact on its results of operations, financial condition or cash flows.
In February 2016, the FASB issued an update on lease accounting. This update, effective for annual reporting periods after December 15, 2018, including interim periods within those annual periods, provides amendments to current lease accounting. These amendments include the recognition of lease assets and lease liabilities on the balance sheet and disclosing other key information about leasing arrangements. Early adoption is permitted. The Company is evaluating the impact of the update on its results of operations, financial condition and cash flows.
In May 2014, the FASB issued updates on accounting and disclosures for revenue from contracts with customers. These updates, effective for annual reporting periods after December 15, 2017, create a single, comprehensive revenue recognition model for all contracts with customers. The model is based on changes in contract assets (rights to receive consideration) and liabilities (obligations to provide a good or service). Revenue will be recognized based on the satisfaction of performance obligations, which occurs when control of a good or service transfers to a customer and enhanced disclosures will be required regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Either a retrospective or cumulative effect transition method is permitted. The Company has elected to adopt using the modified retrospective transition method. The Company has substantially completed its assessment to identify differences between the existing standard and new standard on its customer contracts. Based on this assessment, the Company expects the impact of the new standard is due primarily to the acceleration of recognition of revenues and associated costs for certain of our software license contracts. Under existing guidance, these contracts are recognized ratably over the contractual term of post-contract support services in the event vendor-specific objective evidence is unavailable. The new standard requires recognition at once upon the transfer of control of the software license. The Company estimates the opening balance sheet adjustment as of January 1, 2018 under the modified retrospective transition method will be less than 1% of the Company's 2017 annual revenues, prior to the effects of income taxes. The FASB has issued, and may issue in the future, interpretive guidance which may cause the evaluation to change. The Company believes it is following an appropriate timeline to allow for proper recognition, presentation and disclosure upon adoption effective the beginning of fiscal year 2018.
3. Earnings Per ShareWeighted Average Shares Outstanding
Basic earnings per share were calculated using net earnings and the weighted average number of shares of common stock outstanding during the respective period. Diluted earnings per share were calculated using net earnings and the weighted average number of shares of common stock and potential common stock outstanding during the respective period. Potentially dilutive common stock consisted of stock options and the premium over the conversion price on Roper's senior subordinated convertible notes based upon the trading price of Roper'sRoper’s common stock. The effects of potential common stock were determined using the treasury stock method. Weighted average shares outstanding are shown below (in thousands):below:
|
| | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Basic shares outstanding | 102,303 |
| | 101,372 |
| | 102,091 |
| | 101,231 |
|
Effect of potential common stock: | | | | | | | |
Common stock awards | 1,377 |
| | 1,112 |
| | 1,306 |
| | 1,131 |
|
Senior subordinated convertible notes | — |
| | 38 |
| | — |
| | 62 |
|
Diluted shares outstanding | 103,680 |
| | 102,522 |
| | 103,397 |
| | 102,424 |
|
| | | | | | | | | | | | | | | | | |
| | | Three months ended March 31, |
| | | | | 2022 | | 2021 |
Basic shares outstanding | | | | | 105.6 | | | 105.0 | |
Effect of potential common stock: | | | | | | | |
Common stock awards | | | | | 1.1 | | | 1.0 | |
Diluted shares outstanding | | | | | 106.7 | | | 106.0 | |
For the three and nine months ended September 30, 2017,March 31, 2022, there were 475,098 and 487,2980.840 outstanding stock options, respectively, that were not included in the determination of diluted earnings per share because doing so would have been antidilutive, as compared to 1,063,100 and 1,066,1000.647 outstanding stock options that would have been antidilutive in the respective 2016 periods.2021 period.
4. Business Acquisitions and DivestituresDisposition
On January 3, 2022, Roper completed three business acquisitionsacquired the outstanding membership interests of Horizon Lab Systems, LLC, a provider of laboratory information management systems in the nine months ended September 30, 2017, withtoxicology, environmental, public health and agricultural markets for an aggregate purchase price of $87 million.$49.8. This acquisition has been integrated into our Clinisys business and its results are reported in the Application Software reportable segment. The results of operations of the acquired businesses did not have a material impact on Roper's consolidatedbusiness are included in Roper’s Condensed Consolidated Financial Statements since the date of acquisition. Pro forma results of operations.
Acquisition of Phase Technology - On June 21, 2017, Roper acquiredoperations and the assets of Phase Technology, a business engaged inrevenue and net income subsequent to the design, manufacture, marketing and sales of test instruments. Phase Technology is reported inacquisition date has not been presented because the Energy Systems & Controls segment.
Acquisition of HandshakeSoftware, Inc. - On August 4, 2017, Roper acquired 100%effects of the shares of Handshake Software, Inc., a provider of search products, portals and services for legal professionals. Handshake Software is reported in the RF Technology segment.acquisition were not material to our financial results.
Acquisition of Workbook Software A/S - On September 15, 2017, Roper acquired 100% of the shares of Workbook Software A/S, a provider of software solutions for customer relationship management, project management and finance/accounting. Workbook Software is reported in the RF Technology segment.
The Company recorded $58 million$25.6 in goodwill and $36 million$23.3 of other identifiable intangibles in connection with the acquisitions; however, purchase price allocations are preliminary pending final tax-related adjustments.this acquisition. The amortizable intangible assets include customer relationships of $24 million (15$20.9 (15.1 year weighted average useful life) and technology of $8 million (7$2.4 (5.3 year weighted average useful life).
Disposition
On October 4, 2017, three wholly owned subsidiaries of Roper entered into an agreement to acquire all of the outstanding shares of Onvia, Inc. ("Onvia") common stock for $9.00 per share in an all-cash tender offer for a total transaction value of approximately $70 million. Onvia provides enterprise, mid-market and small business customers with sales lead generation technologies into federal, state and local government markets. The acquisition will be funded with cash on hand and Roper expects the transaction to close in the fourth quarter of 2017.
Sale of Product Line - On May 15, 2017,March 17, 2021, Roper completed the sale of a product lineminority investment in our Energy Systems & Controls segmentSedaru, Inc. for $10.4 million.$27.1. The pretax gain on the sale was $9.4 million,$27.1, which is reported in Other income/“Other income (expense), netnet” in the condensed consolidated statementsCondensed Consolidated Statement of earnings.Earnings.
5. Discontinued Operations
During 2021, the Company signed definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses as described below.
•On March 17, 2022, Roper closed on the divestiture of our TransCore business to an affiliate of Singapore Technologies Engineering Ltd., for approximately $2,680.0 in cash. The sale resulted in a pretax gain of $2,073.7 and income tax expense of $550.5, which are reported within “Gain on disposition of discontinued operations, net of tax” in the Condensed Consolidated Statements of Earnings. TransCore was previously included in the Network Software & Systems reportable segment.
•On January 5, 2022, Roper closed on the divestiture of our Zetec business to Eddyfi NDT Inc. for approximately $350.0 in cash. The sale resulted in a pretax gain of $255.3 and income tax expense of $60.9, which are reported within “Gain on disposition of discontinued operations, net of tax” in the Condensed Consolidated Statements of Earnings. Zetec was previously included in the Process Technologies reportable segment.
•On November 1, 2021, Roper closed the divestiture of our CIVCO Radiotherapy business to an affiliate of Blue Wolf Capital Partners LLC. CIVCO Radiotherapy business was previously included in the Measurement & Analytical Solutions reportable segment.
The Company concluded these disposal activities, in the aggregate, represented a strategic shift that will have a major effect on the Company’s operations and financial results. These divestitures significantly enhance our mix of high-margin, recurring revenue businesses and notably reduce our working capital requirements. Accordingly, the financial results of the TransCore, Zetec and CIVCO Radiotherapy businesses are presented in the Condensed Consolidated Financial Statements as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses are presented in the
Condensed Consolidated Balance Sheet as assets and liabilities of discontinued operations classified as held for sale at December 31, 2021.
The following tables summarize the major classes of assets and liabilities related to the discontinued operations of the TransCore, Zetec and CIVCO Radiotherapy businesses, as reported in the Condensed Consolidated Balance Sheets at December 31, 2021:
| | | | | | | | |
Accounts receivable, net | | $ | 74.7 | |
Inventories, net | | 47.8 | |
Unbilled receivables | | 158.2 | |
| | |
Goodwill | | 405.5 | |
Other intangible assets, net | | 31.0 | |
Other current assets | | 71.4 | |
Current assets held for sale | | $ | 788.6 | |
| | |
| | |
| | |
| | |
| | |
| | |
Accounts payable | | $ | 40.3 | |
Accrued compensation | | 27.0 | |
Deferred taxes | | 29.5 | |
Other current liabilities | | 62.3 | |
Current liabilities held for sale | | $ | 159.1 | |
| | |
| | |
| | |
| | |
The following table summarizes the major classes of revenue and expenses constituting net income from discontinued operations attributable to the TransCore, Zetec and CIVCO Radiotherapy businesses:
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2022 | | 2021 |
Net revenues | | | | | $ | 100.4 | | | $ | 152.5 | |
Cost of sales | | | | | 71.2 | | | 94.7 | |
Gross profit | | | | | 29.2 | | | 57.8 | |
| | | | | | | |
Selling, general and administrative expenses (1) | | | | | 19.9 | | | 31.9 | |
Income from operations | | | | | 9.3 | | | 25.9 | |
| | | | | | | |
Other income (expense), net | | | | | 0.1 | | | (0.1) | |
| | | | | | | |
Earnings before income taxes (2) | | | | | 9.4 | | | 25.8 | |
| | | | | | | |
Income taxes | | | | | (6.2) | | | 6.7 | |
| | | | | | | |
Earnings from discontinued operations, net of tax | | | | | 15.6 | | | 19.1 | |
| | | | | | | |
Gain on disposition of discontinued operations, net of tax | | | | | 1,717.3 | | | — | |
| | | | | | | |
Net earnings from discontinued operations | | | | | $ | 1,732.9 | | | $ | 19.1 | |
(1) Includes stock-based compensation expense of $0.9 and $1.3 for the three months ended March 31, 2022 and 2021, respectively. In connection with the sale of TransCore and Zetec, we recognized expense of $4.5 associated with accelerated vesting of share-based awards. The charges associated with accelerated vesting were recorded as a component of “Gain on disposition of discontinued operations, net of tax” within the Condensed Consolidated Statements of Earnings.
(2) During the three months ended March 31, 2022, there was no depreciation of property, plant and equipment or amortization of intangible assets given the asset classification as held for sale during the period. During the three months ended March 31, 2021 depreciation and amortization was $1.9.
6. Stock Based Compensation
The Roper Technologies, Inc. 20162021 Incentive Plan ("2016 Plan"(“2021 Plan”) is a stock-based compensation plan used to grant incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights or equivalent instruments to Roper'sRoper’s employees, officers, directors and directors. The 2016 Plan replaces the Roper Technologies, Inc. Amended and Restated 2006 Incentive Plan ("2006 Plan"), and no additional grants will be made from the 2006 Plan.consultants.
The following table provides information regarding the Company'sCompany’s stock-based compensation expense (in thousands):expense:
| | | Three months ended September 30, | | Nine months ended September 30, | | | | Three Months Ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | | | | 2022 | | 2021 |
Stock-based compensation | $ | 23,734 |
| | $ | 21,388 |
| | $ | 67,598 |
| | $ | 60,480 |
| Stock-based compensation | | | $ | 35.9 | | | $ | 31.6 | |
Tax effect recognized in net income | 8,307 |
| | 7,486 |
| | 23,659 |
| | 21,168 |
| |
Tax effect recognized in net earnings from continuing operations | | Tax effect recognized in net earnings from continuing operations | | | 7.5 | | | 6.6 | |
Stock Options - In the ninethree months ended September 30, 2017, 592,798March 31, 2022, 0.365 options were granted with a weighted average fair value of $40.67$115.83 per option. During the same period in 2016, 633,0002021, 0.498 options were granted with a weighted average fair value of $34.45$94.69 per option. All options were issued at grant date fair value, which is defined by both the 2016 Plan and the 2006 Plan aswith an exercise price equal to the closing price of Roper'sRoper’s common stock on the date of grant.grant, as required by the 2021 Plan.
Roper records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. Historical data is used to estimate the expected price volatility, the expected dividend yield, the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option.
The following weighted average assumptions were used to estimate the fair value of options granted during current and prior year periods using the Black-Scholes option-pricing model:
| | | Nine months ended September 30, | | Three months ended March 31, |
| 2017 | | 2016 | | 2022 | | 2021 |
Risk-free interest rate (%) | 2.03 | | 1.38 | Risk-free interest rate (%) | 2.05 | | | 0.94 | |
Expected option life (years) | 5.26 | | 5.20 | Expected option life (years) | 5.63 | | 5.61 |
Expected volatility (%) | 18.76 | | 21.63 | Expected volatility (%) | 24.52 | | | 25.16 | |
Expected dividend yield (%) | 0.67 | | 0.70 | Expected dividend yield (%) | 0.54 | | | 0.56 | |
Cash received from option exercises for the ninethree months ended September 30, 2017March 31, 2022 and 20162021 was $40.4 million$38.7 and $15.9 million,$19.2, respectively.
Restricted Stock AwardsGrants - During the ninethree months ended September 30, 2017, 389,117 restricted stock awards wereMarch 31, 2022, the Company granted 0.219 shares with a weighted average grant date fair value of $203.02$455.84 per restricted share. During the same period in 2016, 395,980 restricted stock awards were2021, the Company granted 0.207 shares with a weighted average grant date fair value of $169.03$404.14 per restricted share. All grants were issued at grant date fair value.
During the ninethree months ended September 30, 2017, 138,140March 31, 2022, 0.116 restricted awardsshares vested with a weighted average grant date fair value of $143.29$329.75 per restricted share and a weighted average vest date fair value of $215.77$457.31 per restricted share.
Employee Stock Purchase Plan - Roper'sRoper’s employee stock purchase plan (“ESPP”) allows employees in the U.S. and Canada to designate up to 10% of eligible earnings to purchase Roper'sRoper’s common stock at a 5%10% discount toon the averagelower of the closing price of the stock aton the beginningfirst and endlast day of aeach quarterly offering period. Common stock sold to employees pursuant to the stock purchase planESPP may be either treasury stock, stock purchased on the open market, or newly issued shares.
During the ninethree months ended September 30, 2017March 31, 2022 and 2016,2021, participants in the employee stock purchase planESPP purchased 15,5110.013 and 15,0760.013 shares respectively, of Roper'sRoper’s common stock for total consideration of $3.19 million$5.5 and $2.58 million,$4.7, respectively. All shares were purchased from Roper'sRoper’s treasury shares.
6.
7. Inventories
The components of inventory were as follows (in thousands):follows:
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Raw materials and supplies | $ | 131.5 | | | $ | 112.7 | |
Work in process | 36.0 | | | 30.2 | |
Finished products | 72.1 | | | 69.3 | |
Inventory reserves | (36.9) | | | (36.1) | |
Inventories, net | $ | 202.7 | | | $ | 176.1 | |
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Raw materials and supplies | $ | 131,817 |
| | $ | 113,632 |
|
Work in process | 29,172 |
| | 24,290 |
|
Finished products | 87,561 |
| | 81,263 |
|
Inventory reserves | (39,244 | ) | | (37,233 | ) |
| $ | 209,306 |
| | $ | 181,952 |
|
7.8. Goodwill and Other Intangible Assets
The carrying value of goodwill by segment was as follows (in thousands):follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Application Software | | Network Software & Systems | | Measurement & Analytical Solutions | | Process Technologies | | Total |
Balances at December 31, 2021 | $ | 8,889.3 | | | $ | 3,797.0 | | | $ | 1,160.6 | | | $ | 247.6 | | | $ | 14,094.5 | |
Additions | 25.6 | | | — | | | — | | | — | | | 25.6 | |
| | | | | | | | | |
Other | — | | | (0.5) | | | — | | | — | | | (0.5) | |
Currency translation adjustments | (6.6) | | | (12.1) | | | (5.0) | | | (1.0) | | | (24.7) | |
Balances at March 31, 2022 | $ | 8,908.3 | | | $ | 3,784.4 | | | $ | 1,155.6 | | | $ | 246.6 | | | $ | 14,094.9 | |
|
| | | | | | | | | | | | | | | | | | | |
| RF Technology | | Medical & Scientific Imaging | | Industrial Technology | | Energy Systems & Controls | | Total |
Balances at December 31, 2016 | $ | 4,687,670 |
| | $ | 3,185,071 |
| | $ | 363,978 |
| | $ | 410,423 |
| | $ | 8,647,142 |
|
Additions | 38,349 |
| | — |
| | — |
| | 19,169 |
| | 57,518 |
|
Other | 22,385 |
| | 3,264 |
| | — |
| | — |
| | 25,649 |
|
Currency translation adjustments | 20,528 |
| | 19,922 |
| | 13,656 |
| | 9,541 |
| | 63,647 |
|
Balances at September 30, 2017 | $ | 4,768,932 |
| | $ | 3,208,257 |
| | $ | 377,634 |
| | $ | 439,133 |
| | $ | 8,793,956 |
|
Other relates primarily to tax purchase accounting and working capital adjustments for 2016 acquisitions.
Other intangible assets were comprised of (in thousands):of:
| | | Cost | | Accumulated amortization | | Net book value | | Cost | | Accumulated amortization | | Net book value |
Assets subject to amortization: | | | | | | Assets subject to amortization: | | | | | |
Customer related intangibles | $ | 3,272,081 |
| | $ | (712,718 | ) | | $ | 2,559,363 |
| Customer related intangibles | $ | 7,532.0 | | | $ | (2,108.0) | | | $ | 5,424.0 | |
Unpatented technology | 462,152 |
| | (144,025 | ) | | 318,127 |
| Unpatented technology | 906.4 | | | (431.8) | | | 474.6 | |
Software | 184,761 |
| | (56,882 | ) | | 127,879 |
| Software | 149.5 | | | (122.4) | | | 27.1 | |
Patents and other protective rights | 24,656 |
| | (20,399 | ) | | 4,257 |
| Patents and other protective rights | 9.6 | | | (2.1) | | | 7.5 | |
Trade names | 6,591 |
| | (653 | ) | | 5,938 |
| Trade names | 12.8 | | | (6.1) | | | 6.7 | |
Assets not subject to amortization: | | | | | | Assets not subject to amortization: | |
Trade names | 578,279 |
| | — |
| | 578,279 |
| Trade names | 648.6 | | | — | | | 648.6 | |
In process research and development | 62,000 |
| | — |
| | 62,000 |
| |
Balances at December 31, 2016 | $ | 4,590,520 |
| | $ | (934,677 | ) | | $ | 3,655,843 |
| |
| Balances at December 31, 2021 | | Balances at December 31, 2021 | $ | 9,258.9 | | | $ | (2,670.4) | | | $ | 6,588.5 | |
| Assets subject to amortization: | | | | | | Assets subject to amortization: | |
Customer related intangibles | $ | 3,313,342 |
| | $ | (863,741 | ) | | $ | 2,449,601 |
| Customer related intangibles | $ | 7,527.0 | | | $ | (2,205.3) | | | $ | 5,321.7 | |
Unpatented technology | 539,892 |
| | (193,223 | ) | | 346,669 |
| Unpatented technology | 893.6 | | | (445.6) | | | 448.0 | |
Software | 185,305 |
| | (77,894 | ) | | 107,411 |
| Software | 149.4 | | | (125.2) | | | 24.2 | |
Patents and other protective rights | 26,034 |
| | (22,007 | ) | | 4,027 |
| Patents and other protective rights | 9.6 | | | (2.1) | | | 7.5 | |
Trade names | 6,638 |
| | (1,466 | ) | | 5,172 |
| Trade names | 16.3 | | | (7.0) | | | 9.3 | |
Assets not subject to amortization: | | | | | | Assets not subject to amortization: | |
Trade names | 588,349 |
| | — |
| | 588,349 |
| Trade names | 643.4 | | | — | | | 643.4 | |
In process research and development | 1,458 |
| | — |
| | 1,458 |
| |
Balances at September 30, 2017 | $ | 4,661,018 |
| | $ | (1,158,331 | ) | | $ | 3,502,687 |
| |
| Balances at March 31, 2022 | | Balances at March 31, 2022 | $ | 9,239.3 | | | $ | (2,785.2) | | | $ | 6,454.1 | |
Amortization expense of other intangible assets was $220,683$145.8 and $147,773$145.1 during the ninethree months ended September 30, 2017March 31, 2022 and 2016,2021, respectively.
An evaluation of the carrying value of goodwill and indefinite-lived intangibles is required to be performed on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. There have been no events or changes in circumstances which indicate an interim impairment review is required in 2017.2022. The Company will perform the annual analysis during the fourth quarter of 2017.2022.
8.9. Fair Value of Financial Instruments and Debt
Roper'sRoper’s debt at September 30, 2017March 31, 2022 included $4.3 billion$7,500 of fixed-rate senior notes with the following fair values (in millions):values:
|
| | | |
$400 million 1.850% senior notes due 2017 | $ | 400 |
|
$800 million 2.050% senior notes due 2018 | 802 |
|
$500 million 6.250% senior notes due 2019 | 539 |
|
$600 million 3.000% senior notes due 2020 | 612 |
|
$500 million 2.800% senior notes due 2021 | 504 |
|
$500 million 3.125% senior notes due 2022 | 513 |
|
$300 million 3.850% senior notes due 2025 | 311 |
|
$700 million 3.800% senior notes due 2026 | 723 |
|
| | | | | |
$500 3.125% senior notes due 2022 | 503 | |
$300 0.450% senior notes due 2022 | 299 | |
$700 3.650% senior notes due 2023 | 710 | |
$500 2.350% senior notes due 2024 | 493 | |
$300 3.850% senior notes due 2025 | 305 | |
$700 1.000% senior notes due 2025 | 650 | |
$700 3.800% senior notes due 2026 | 717 | |
$700 1.400% senior notes due 2027 | 635 | |
$800 4.200% senior notes due 2028 | 831 | |
$700 2.950% senior notes due 2029 | 675 | |
$600 2.000% senior notes due 2030 | 534 | |
$1,000 1.750% senior notes due 2031 | 864 | |
The fair values of the senior notes are based on the trading prices of theeach series of notes, which the Company has determined to be Level 2 in the FASB fair value hierarchy.
9.10. Contingencies
Roper, in the ordinary course of business, is the subject of, or a party to various pending or threatened legal actions, including product liability, intellectual property, data privacy and employment practices that, in general, are based upon claims of the kind that have been customarya nature consistent with those over the past several years and which the Company is vigorously defending.years. After analyzing the Company'sCompany’s contingent liabilities on a gross
basis and, based upon past experience with resolution of its product liability and employment practicessuch legal claims and the availability and limits of the primary, excess, and umbrella liability insurance coverages that are available with respect to pending claims, management believes that adequate provision has been made to cover any potential liability not covered by insurance, and that the ultimate liability, if any, arising from these actions should not have a material adverse effect on Roper'sRoper’s consolidated financial position, results of operations or cash flows. However, no assurances can be given in this regard.
Roper’s subsidiary, Vertafore, Inc., was named in 3 putative class actions, 2 in the U.S. District Court for the Southern District of Texas (Allen, et al. v. Vertafore, Inc., Case 4:20-cv-4139, filed December 4, 2020) and Masciotra, et al. v. Vertafore, Inc., (originally filed on December 8, 2020 as Case 1:20-cv-03603 in the U.S. District Court for the District of Colorado and subsequently transferred), and 1 in the U.S. District Court for the Northern District of Texas (Mulvey, et al. v. Vertafore, Inc., Case 3:21-cv-00213-E, filed January 31, 2021). In July 2021, the court granted Vertafore’s motion to dismiss the Allen Case. In March 2022, the U.S. Fifth Circuit Court of Appeals affirmed the lower court’s dismissal of the Allen case. In July 2021, the plaintiff in the Masciotra case voluntarily dismissed his action without prejudice. The Allen case and the Mulvey case each purport to represent approximately 27.7 million individuals who held Texas driver’s licenses prior to February 2019. In November 2020, Vertafore announced that as a result of human error, three data files were inadvertently stored in an unsecured external storage service that appears to have been accessed without authorization. The files, which included driver information for licenses issued before February 2019, contained Texas driver license numbers, as well as names, dates of birth, addresses and vehicle registration histories. The files did not contain any Social Security numbers or financial account information. These cases seek recovery under the Driver’s Privacy Protection Act, 18 U.S.C. § 2721. In addition, Roper was advised that the Texas Attorney General is investigating the data event.
Roper’s subsidiary, Verathon, Inc. (“Verathon”), is defending a patent infringement action pending in the United States District Court for the Western District of Washington (Berall v. Verathon, Inc., Case No. 2:2021mc00043). Plaintiff claims that video laryngoscopes and certain accessories sold by Verathon from approximately 2006 through 2016 infringe U.S. Patent 5,827,178 (the “‘178 Patent”). The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, and pre-
and post-judgment interest. Verathon contends that the products at issue do not infringe the ‘178 Patent and that the ‘178 Patent is invalid. Verathon is vigorously defending the matter.
Roper or itsour subsidiaries have been named defendants along with numerous industrial companies in asbestos-related litigation claims in certain U.S. states. NoTo date, no significant resources have been required by Roper to respond to these cases andasbestos claims. In the first quarter of 2022, Roper believescompleted a transaction in which it has valid defensestransferred the remainder of our exposure for asbestos claims to such claims and, if required, intends to defend them vigorously. Givena third party. In connection with this transaction, Roper incurred a one-time charge of $4.1, which is recorded as a component of “Other income (expense), net” within the stateCondensed Consolidated Statements of these claims, it is not possible to determine the potential liability, if any.Earnings.
Roper's consolidated financial statements include accruals for potential product liability and warranty claims based on its claims experience. Such costs are accrued at the time revenue is recognized. A summary of the warranty accrual activity for the nine months ended September 30, 2017 is presented below (in thousands):
|
| | | |
Balances at December 31, 2016 | $ | 10,548 |
|
Additions charged to costs and expenses | 9,418 |
|
Deductions | (8,941 | ) |
Other | 149 |
|
Balances at September 30, 2017 | $ | 11,174 |
|
10.11. Business Segments
Revenues and operating profit by industry segment are set forth in theThe following table (dollars in thousands):presents selected financial information by reportable segment:
|
| | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | | | Nine months ended September 30, | | |
| 2017 | | 2016 | | Change | | 2017 | | 2016 | | Change |
Revenues | | | | | | | | | | | |
RF Technology | $ | 480,572 |
| | $ | 303,565 |
| | 58.3 | % | | $ | 1,370,688 |
| | $ | 872,536 |
| | 57.1 | % |
Medical & Scientific Imaging | 343,639 |
| | 338,027 |
| | 1.7 | % | | 1,042,638 |
| | 1,010,826 |
| | 3.1 | % |
Industrial Technology | 200,442 |
| | 178,317 |
| | 12.4 | % | | 576,713 |
| | 528,179 |
| | 9.2 | % |
Energy Systems & Controls | 135,259 |
| | 125,235 |
| | 8.0 | % | | 390,849 |
| | 367,584 |
| | 6.3 | % |
Total | $ | 1,159,912 |
| | $ | 945,144 |
| | 22.7 | % | | $ | 3,380,888 |
| | $ | 2,779,125 |
| | 21.7 | % |
Gross profit: | | | | | | | | | | | |
RF Technology | $ | 298,883 |
| | $ | 169,123 |
| | 76.7 | % | | $ | 830,096 |
| | $ | 492,493 |
| | 68.5 | % |
Medical & Scientific Imaging | 247,138 |
| | 247,432 |
| | (0.1 | )% | | 753,096 |
| | 740,725 |
| | 1.7 | % |
Industrial Technology | 102,092 |
| | 90,950 |
| | 12.3 | % | | 293,410 |
| | 266,679 |
| | 10.0 | % |
Energy Systems & Controls | 78,307 |
| | 70,988 |
| | 10.3 | % | | 223,082 |
| | 205,635 |
| | 8.5 | % |
Total | $ | 726,420 |
| | $ | 578,493 |
| | 25.6 | % | | $ | 2,099,684 |
| | $ | 1,705,532 |
| | 23.1 | % |
Operating profit*: | | | | | | | | | | | |
RF Technology | $ | 134,148 |
| | $ | 94,785 |
| | 41.5 | % | | $ | 342,690 |
| | $ | 272,905 |
| | 25.6 | % |
Medical & Scientific Imaging | 115,506 |
| | 118,979 |
| | (2.9 | )% | | 356,614 |
| | 347,706 |
| | 2.6 | % |
Industrial Technology | 62,255 |
| | 52,800 |
| | 17.9 | % | | 174,117 |
| | 150,850 |
| | 15.4 | % |
Energy Systems & Controls | 36,351 |
| | 31,777 |
| | 14.4 | % | | 99,454 |
| | 83,728 |
| | 18.8 | % |
Total | $ | 348,260 |
| | $ | 298,341 |
| | 16.7 | % | | $ | 972,875 |
| | $ | 855,189 |
| | 13.8 | % |
Long-lived assets: | | | | | | | | | | | |
RF Technology | $ | 81,863 |
| | $ | 30,984 |
| | 164.2 | % | | | | | | |
Medical & Scientific Imaging | 43,858 |
| | 38,793 |
| | 13.1 | % | | | | | | |
Industrial Technology | 32,198 |
| | 35,584 |
| | (9.5 | )% | | | | | | |
Energy Systems & Controls | 9,461 |
| | 10,720 |
| | (11.7 | )% | | | | | | |
Total | $ | 167,380 |
| | $ | 116,081 |
| | 44.2 | % | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended March 31, | | | | | | |
| 2022 | | 2021 | | Change % | | | | | | |
Net revenues: | | | | | | | | | | | |
Application Software | $ | 631.5 | | | $ | 576.6 | | | 9.5 | % | | | | | | |
Network Software & Systems | 368.7 | | | 314.2 | | | 17.3 | % | | | | | | |
Measurement & Analytical Solutions | 392.4 | | | 369.6 | | | 6.2 | % | | | | | | |
Process Technologies | 134.0 | | | 115.7 | | | 15.8 | % | | | | | | |
Total | $ | 1,526.6 | | | $ | 1,376.1 | | | 10.9 | % | | | | | | |
Gross profit: | | | | | | | | | | | |
Application Software | $ | 437.8 | | | $ | 398.7 | | | 9.8 | % | | | | | | |
Network Software & Systems | 302.4 | | | 256.4 | | | 17.9 | % | | | | | | |
Measurement & Analytical Solutions | 217.6 | | | 218.2 | | | (0.3) | % | | | | | | |
Process Technologies | 72.3 | | | 62.7 | | | 15.3 | % | | | | | | |
Total | $ | 1,030.1 | | | $ | 936.0 | | | 10.1 | % | | | | | | |
Operating profit*: | | | | | | | | | | | |
Application Software | $ | 173.8 | | | $ | 153.7 | | | 13.1 | % | | | | | | |
Network Software & Systems | 145.4 | | | 114.1 | | | 27.4 | % | | | | | | |
Measurement & Analytical Solutions | 115.9 | | | 121.5 | | | (4.6) | % | | | | | | |
Process Technologies | 41.8 | | | 35.1 | | | 19.1 | % | | | | | | |
Total | $ | 476.9 | | | $ | 424.4 | | | 12.4 | % | | | | | | |
Long-lived assets: | | | | | | | | | | | |
Application Software | $ | 135.8 | | | $ | 126.7 | | | 7.2 | % | | | | | | |
Network Software & Systems | 28.5 | | | 27.8 | | | 2.5 | % | | | | | | |
Measurement & Analytical Solutions | 32.5 | | | 33.9 | | | (4.1) | % | | | | | | |
Process Technologies | 13.3 | | | 18.3 | | | (27.3) | % | | | | | | |
Total | $ | 210.1 | | | $ | 206.7 | | | 1.6 | % | | | | | | |
*Segment operating profit is before unallocated corporate general and administrative expenses. These expenses were $37,513$55.8 and $30,951$49.8 for the three months ended September 30, 2017March 31, 2022 and 2016, respectively,2021, respectively.
12. Revenues from Contracts
Disaggregated Revenue - We disaggregate our revenues into two categories: (i) software and $109,614related services; and $89,730(ii) engineered products and related services. Software and related services revenues are primarily derived from our Application Software and Network Software & Systems reportable segments. Engineered products and related services revenues are derived from all of our reportable segments except Application Software and comprise substantially all of the revenues generated in our Measurement & Analytical Solutions and Process Technologies reportable segments. See details in the table below.
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2022 | | 2021 |
Software and related services | | | | | $ | 970.0 | | | $ | 864.5 | |
Engineered products and related services | | | | | 556.6 | | | 511.6 | |
Net revenues | | | | | $ | 1,526.6 | | | $ | 1,376.1 | |
Remaining performance obligations - Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes unexercised contract options. As of March 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $4,000.3. We expect to recognize revenue of $2,718.0, or approximately 68% of our remaining performance obligations over the next 12 months (“Backlog”), with the remainder to be recognized thereafter.
Contract balances | | | | | | | | | | | | | | | | | |
Balance Sheet Account | March 31, 2022 | | December 31, 2021 | | Change |
Unbilled receivables | $ | 110.0 | | | $ | 95.3 | | | $ | 14.7 | |
Deferred revenue - current | (1,120.3) | | | (1,130.2) | | | 9.9 | |
Deferred revenue - non-current (1) | (111.5) | | | (75.3) | | | (36.2) | |
Net contract assets/(liabilities) | $ | (1,121.8) | | | $ | (1,110.2) | | | $ | (11.6) | |
(1)The non-current portion of deferred revenue is included in “Other liabilities” in our Condensed Consolidated Balance Sheets.
The change in our net contract assets/(liabilities) from December 31, 2021 to March 31, 2022 was due primarily to the timing of payments and invoicing relating to Software-as-a-Service (“SaaS”) and post contract support (“PCS”) renewals, partially offset by the increase in unbilled receivables due to the timing of invoicing primarily related to software milestone billings associated with multi-year term license renewals and software implementations.
Most of the Company’s project-based contracts where the input method of revenue recognition is utilized are billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones. Often this results in unbilled receivables where billing occurs after revenue recognition. The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance relating primarily to SaaS and PCS renewals. Revenue recognized from the deferred revenue balance on December 31, 2021 and 2020 was $495.7 and $450.9 for the ninethree months ended September 30, 2017March 31, 2022 and 2016,2021, respectively.
In order to determine revenues recognized in the period, we allocate revenue to the individual deferred revenue balance outstanding at the beginning of the year until the revenue exceeds that balance.
The current and non-current portions of deferred commissions are included in “Other current assets” and “Other assets,” respectively, in our Condensed Consolidated Balance Sheets. At March 31, 2022 and December 31, 2021, we had $58.3 and $56.7 of deferred commissions, respectively.
| |
ITEM 2. | MANAGMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Formform 10-K for the year ended December 31, 2016 ("2021 (“Annual Report"Report”) as filed on February 27, 201722, 2022 with the U.S. Securities and Exchange Commission ("SEC"(“SEC”) and the Notes to Condensed Consolidated Financial Statements included elsewhere in this report.
Information About Forward-Looking Statements
This report includes "forward-looking statements"“forward-looking statements” within the meaning of the federal securities laws. In addition, we, or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents we file with the SEC or in connection with oral statements made to the press, potential investors or others. All statements that are not historical facts are "forward-looking“forward-looking statements."” Forward-looking statements may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes"“anticipate,” “estimate,” “plans,” “expects,” “projects,” “should,” “will,” “believes” or "intends"“intends” and similar words and phrases. These statements reflect management'smanagement’s current beliefs and are not guarantees of future performance. They involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Such risks and uncertainties include any ongoing impacts of the COVID-19 pandemic on our business, operations, financial results and liquidity, which will depend on numerous evolving factors that we cannot accurately predict or assess, including: the duration and scope of the pandemic, new variants of the virus and the distribution and efficacy of vaccines; the impact of vaccine mandates on our workforce in certain jurisdictions; any negative impact on global and regional markets, economies and economic activity; actions governments, businesses and individuals take in response to the pandemic; the effects of the pandemic, including all of the foregoing, on our employees, customers, suppliers, and business partners, and how quickly economies and demand for our products and services recover following the pandemic.
Examples of forward-looking statements in this report include but are not limited to statements regarding operating results, the success of our internal operating plans, our expectations regarding our ability to generate cash and reduce debt and associated interest expense, profit and cash flow expectations, the prospects for newly acquired businesses to be integrated and contribute to future growth and our expectations regarding growth through acquisitions. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the cost, timing and success of product upgrades and new product introductions, raw materialsmaterial costs, expected pricing levels, expected outcomes of pending litigation, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include but are not limited to:
•general economic conditions;
•difficulty making acquisitions and successfully integrating acquired businesses;
•any unforeseen liabilities associated with future acquisitions;
•limitations on our business imposed by our indebtedness;
•unfavorable changes in foreign exchange rates;
•failure to effectively mitigate cybersecurity threats, including any litigation arising therefrom;
•failure to comply with new data privacy laws and regulations, including any litigation arising therefrom;
•difficulties associated with exports;exports/imports and risks of changes to tariff rates;
•risks and costs associated with our international sales and operations;
•rising interest rates;
•product liability and insurance risks;
•increased warranty exposure;
•future competition;
•the cyclical nature of some of our markets;
•reduction of business with large customers;
•risks associated with government contracts;
•changes in the supply of, or price for, labor, energy, raw materials, parts and components;components, including as a result of impacts from the current inflationary environment, ongoing supply chain constraints or outbreaks of COVID-19;
•environmental compliance costs and liabilities;
risks and costs associated with asbestos-related litigation;
•potential write-offs of our substantial goodwill and other intangible assets;
•our ability to successfully develop new products;
•failure to protect our intellectual property;
•the effect of, or change in, government regulations (including tax);
•economic disruption caused by armed conflicts (such as the war in Ukraine), terrorist attacks, including cybersecurity threats, health crises (such as the COVID-19 pandemic) or other unforeseen geopolitical events; and
•the factors discussed in other reports filedwe file with the SEC.SEC from time to time.
We believe these forward-looking statements are reasonable; however, youYou should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update any of these statements in light of new information or future events.
Overview
Roper Technologies, Inc. ("Roper," "we," "us" or "our") is a diversified technology company. We operate market leading businesses that design and develop vertical software (both license and software-as-a-service) and engineeredapplication-specific products and solutions for a variety of defensible niche end markets, including healthcare, transportation, commercial construction, food, energy, water, education and academic research.markets.
We pursue consistent and sustainable growth in revenue, earnings and cash flow by emphasizing continuous improvement in the operating performance of our existing businessesbusinesses. In addition, we utilize a disciplined, analytical and by acquiring other businesses that offer high value-added services, engineered productsprocess-driven approach to redeploy our excess free cash flow toward high-quality acquisitions.
Discontinued Operations
During 2021, the Company signed definitive agreements to divest our TransCore, Zetec and solutions and are capableCIVCO Radiotherapy businesses. As of achieving growth and maintaining high margins. We compete in many niche markets and believe we are the market leader or a competitive alternative to the market leader in mostMarch 31, 2022, Roper has completed all three divestitures. The financial results of these markets.businesses are classified as discontinued operations and certain prior period amounts have been reclassified to conform to current period presentation. Information regarding discontinued operations is included in Note 5 of the Notes to Condensed Consolidated Financial Statements.
Critical Accounting Policies
There were no material changes during the ninethree months ended September 30, 2017March 31, 2022 to the items that we disclosed as our critical accounting policies and estimates in "Item“Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” in our Annual Report.
Recently Issued Accounting Standards
Information regarding new accounting pronouncements is included in Note 2 of the Notes to Condensed Consolidated Financial Statements.
Impact of COVID-19 on our Business
The extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the outbreak and its severity, the actions to contain the virus and its variants including the distribution, administration and efficacy of available vaccines, the impact of vaccine mandates on our workforce, and how quickly and to what extent normal economic and operating conditions can resume. As a result of the effects of the COVID-19 global pandemic our ability to obtain products or services from certain suppliers and to operate at certain locations have been and may continue to be impacted. If COVID-19 and its variants continue to spread, particularly in countries with low vaccination rates, certain countries may experience more severe and lasting impacts from the pandemic. To the extent we have operations and/or customers in these countries, we may experience adverse impacts on our businesses located in such countries.
Results of Continuing Operations
All currency amounts are in millions, percentages are of net revenues
General
Percentages may not sum due to rounding.
The following table sets forth selected information for the periods indicated. Dollar amounts are in thousands and percentages are the particular line item shown as a percentage of net sales. Percentages may not foot due to rounding.
| | | | | | | | | | | | | | | | | |
| | | Three months ended March 31, |
| | | | | 2022 | | 2021 |
Net revenues: | | | | | | | |
Application Software | | | | | $ | 631.5 | | | $ | 576.6 | |
Network Software & Systems | | | | | 368.7 | | | 314.2 | |
Measurement & Analytical Solutions | | | | | 392.4 | | | 369.6 | |
Process Technologies | | | | | 134.0 | | | 115.7 | |
Total | | | | | $ | 1,526.6 | | | $ | 1,376.1 | |
Gross margin: | | | | | | | |
Application Software | | | | | 69.3 | % | | 69.1 | % |
Network Software & Systems | | | | | 82.0 | | | 81.6 | |
Measurement & Analytical Solutions | | | | | 55.5 | | | 59.0 | |
Process Technologies | | | | | 54.0 | | | 54.2 | |
Total | | | | | 67.5 | | | 68.0 | |
Selling, general and administrative expenses: | | | | | | | |
Application Software | | | | | 41.8 | % | | 42.5 | % |
Network Software & Systems | | | | | 42.6 | | | 45.3 | |
Measurement & Analytical Solutions | | | | | 25.9 | | | 26.2 | |
Process Technologies | | | | | 22.8 | | | 23.9 | |
Total | | | | | 36.2 | | | 37.2 | |
Segment operating margin: | | | | | | | |
Application Software | | | | | 27.5 | % | | 26.7 | % |
Network Software & Systems | | | | | 39.4 | | | 36.3 | |
Measurement & Analytical Solutions | | | | | 29.5 | | | 32.9 | |
Process Technologies | | | | | 31.2 | | | 30.3 | |
Total | | | | | 31.2 | | | 30.8 | |
Corporate administrative expenses | | | | | (3.7) | | | (3.6) | |
Income from operations | | | | | 27.6 | | | 27.2 | |
Interest expense, net | | | | | (3.4) | | | (4.4) | |
| | | | | | | |
Other income (expense), net | | | | | (0.1) | | | 2.0 | |
Earnings before income taxes | | | | | 24.0 | | | 24.8 | |
Income taxes | | | | | (5.2) | | | (5.2) | |
Net earnings from continuing operations | | | | | 18.8 | % | | 19.6 | % |
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Net revenues: | | | | | | | |
RF Technology | $ | 480,572 |
| | $ | 303,565 |
| | $ | 1,370,688 |
| | $ | 872,536 |
|
Medical & Scientific Imaging | 343,639 |
| | 338,027 |
| | 1,042,638 |
| | 1,010,826 |
|
Industrial Technology | 200,442 |
| | 178,317 |
| | 576,713 |
| | 528,179 |
|
Energy Systems & Controls | 135,259 |
| | 125,235 |
| | 390,849 |
| | 367,584 |
|
Total | $ | 1,159,912 |
| | $ | 945,144 |
| | $ | 3,380,888 |
| | $ | 2,779,125 |
|
Gross margin: | | | | | | | |
RF Technology | 62.2 | % | | 55.7 | % | | 60.6 | % | | 56.4 | % |
Medical & Scientific Imaging | 71.9 |
| | 73.2 |
| | 72.2 |
| | 73.3 |
|
Industrial Technology | 50.9 |
| | 51.0 |
| | 50.9 |
| | 50.5 |
|
Energy Systems & Controls | 57.9 |
| | 56.7 |
| | 57.1 |
| | 55.9 |
|
Total | 62.6 |
| | 61.2 |
| | 62.1 |
| | 61.4 |
|
Selling, general & administrative expenses: | | | | | | | |
RF Technology | 34.3 | % | | 24.5 | % | | 35.6 | % | | 25.2 | % |
Medical & Scientific Imaging | 38.3 |
| | 38.0 |
| | 38.0 |
| | 38.9 |
|
Industrial Technology | 19.9 |
| | 21.4 |
| | 20.7 |
| | 21.9 |
|
Energy Systems & Controls | 31.0 |
| | 31.3 |
| | 31.6 |
| | 33.2 |
|
Total | 32.6 |
| | 29.6 |
| | 33.3 |
| | 30.6 |
|
Segment operating margin: | | | | | | | |
RF Technology | 27.9 | % | | 31.2 | % | | 25.0 | % | | 31.3 | % |
Medical & Scientific Imaging | 33.6 |
| | 35.2 |
| | 34.2 |
| | 34.4 |
|
Industrial Technology | 31.1 |
| | 29.6 |
| | 30.2 |
| | 28.6 |
|
Energy Systems & Controls | 26.9 |
| | 25.4 |
| | 25.4 |
| | 22.8 |
|
Total | 30.0 |
| | 31.6 |
| | 28.8 |
| | 30.8 |
|
Corporate administrative expenses | (3.2 | ) | | (3.3 | ) | | (3.2 | ) | | (3.2 | ) |
| 26.8 |
| | 28.3 |
| | 25.5 |
| | 27.5 |
|
Interest expense, net | (3.9 | ) | | (2.8 | ) | | (4.1 | ) | | (2.9 | ) |
Other income/(expense), net | (0.1 | ) | | (0.1 | ) | | 0.2 |
| | (0.1 | ) |
Earnings before income taxes | 22.8 |
| | 25.4 |
| | 21.6 |
| | 24.6 |
|
Income taxes | (6.4 | ) | | (7.7 | ) | | (6.0 | ) | | (7.4 | ) |
Net earnings | 16.4 | % | | 17.7 | % | | 15.6 | % | | 17.1 | % |
Three months ended September 30, 2017March 31, 2022 compared to three months ended September 30, 2016March 31, 2021
Net revenues for the three months ended September 30, 2017March 31, 2022 increased by 23%10.9% as compared to the three months ended September 30, 2016.March 31, 2021. The increase wascomponents of revenue growth for the result of a net effect of 17% from acquisitions and divestitures, organic growth of 5% and foreign exchange benefit of 1%.three months ended March 31, 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Application Software | | Network Software & Systems | | Measurement & Analytical Solutions | | Process Technologies | | Roper |
Total Revenue Growth | 9.5 | % | | 17.3 | % | | 6.2 | % | | 15.9 | % | | 10.9 | % |
Less Impact of: | | | | | | | | | |
Acquisitions/Divestitures | 1.0 | | | 1.5 | | | — | | | — | | | 0.8 | |
Foreign Exchange | (0.6) | | | (0.3) | | | (1.1) | | | (1.7) | | | (0.8) | |
Organic Revenue Growth | 9.1 | % | | 16.1 | % | | 7.3 | % | | 17.6 | % | | 10.9 | % |
In our RF TechnologyApplication Software segment, revenues were $481 million$631.5 in the third quarter of 2017three months ended March 31, 2022 as compared to $304 million$576.6 in the third quarterthree months ended March 31, 2021. The growth of 2016, an increase of 58%. Acquisitions accounted for 54% and organic revenue increased by 5%. The increase9.1% in organic revenues was due primarily to growth inbroad-based across the segment led by our software businesses serving property and increased revenues from tolling projects.casualty insurance, government contracting, and acute healthcare markets. Gross margin increased to 62.2%69.3% in the third quarter of 2017three months ended March 31, 2022 as compared to 55.7%69.1% in the third quarterthree months ended March 31, 2021 due primarily to operating leverage on higher organic revenues and revenue mix. SG&A expenses decreased as a percentage of 2016revenue to 41.8% in the three months ended March 31, 2022 as compared to 42.5% in the three months ended March 31, 2021 due to an increased percentageoperating leverage on higher organic revenues. The resulting operating margin was 27.5% in the three months ended March 31, 2022 as compared to 26.7% in the three months ended March 31, 2021.
In our Network Software & Systems segment, revenues were $368.7 in the three months ended March 31, 2022 as compared to $314.2 in the three months ended March 31, 2021. The growth of 16.1% in organic revenues atwas broad-based across the segment led by our network software businesses which have higher gross margins. Selling, generalserving the freight match, media and administrative ("entertainment and life insurance markets. Gross margin increased to 82.0% in the three months ended March 31, 2022 as compared to 81.6% in the three months ended March 31, 2021 due primarily to revenue mix. SG&A")&A expenses
decreased as a percentage of revenues at 42.6% in the third quarter of 2017 increased to 34.3%three months ended March 31, 2022 as compared to 24.5%45.3% in the third quarter of 2016 due to recently acquired software businesses with a higher SG&A expense structure, which includes amortization of acquired intangibles. The resulting operating margin was 27.9% in the third quarter of 2017 as compared to 31.2% in the third quarter of 2016.
Our Medical & Scientific Imaging segment revenues increased by 2% to $344 million in the third quarter of 2017 as compared to $338 million in the third quarter of 2016. Organic revenues increased by 1% due to growth in our alternate site healthcare businesses and several of our medical products businesses, partially offset by declines in our scientific imaging businesses. Gross margin decreased to 71.9% in the third quarter of 2017 as compared to 73.2% in the third quarter of 2016,three months ended March 31, 2021 due primarily to unfavorableoperating leverage on higher organic sales mix at both our software and medical products businesses. SG&A expenses as a percentage of revenues increased to 38.3% in the third quarter of 2017 as compared to 38.0% in the third quarter of 2016 due primarily to increased software development and selling expenses at our software businesses.combined with revenue mix. As a result, operating margin was 33.6%39.4% in the third quarter of 2017three months ended March 31, 2022 as compared to 35.2%36.3% in the third quarter of 2016.three months ended March 31, 2021.
Our Industrial TechnologyIn our Measurement & Analytical Solutions segment, revenues increased by 12% to $200 millionwere $392.4 in the third quarter of 2017three months ended March 31, 2022 as compared to $178 million$369.6 in the third quarterthree months ended March 31, 2021. The growth of 2016. Organic7.3% in organic revenues increased by 12%was primarily due to our water meter technology business and industrial businesses. Gross margin decreased to 55.5% in the foreign exchange benefit was 1%. The increasethree months ended March 31, 2022 as compared to 59.0% in revenues wasthe three months ended March 31, 2021 due primarily to higher material, component and freight costs as our fluid handling and water meter technology businesses. Gross margin was effectively consistent at 50.9% inbusinesses navigate the third quarter of 2017 as compared to 51.0% in the third quarter of 2016 due to a consistent sales mix.widespread global supply chain challenges. SG&A expenses as a percentage of revenues decreased to 19.9%25.9% in the third quarter of 2017three months ended March 31, 2022 as compared to 21.4%26.2% in the third quarter of 2016three months ended March 31, 2021 due primarily to operating leverage on higher revenues.revenue mix. The resulting operating margin was 31.1%29.5% in the third quarter of 2017three months ended March 31, 2022 as compared to 29.6%32.9% in the third quarter of 2016.three months ended March 31, 2021.
Our Energy Systems & ControlsIn our Process Technologies segment, revenues increased by 8% to $135 millionwere $134.0 in the third quarter of 2017three months ended March 31, 2022 as compared to $125 million$115.7 in the third quarterthree months ended March 31, 2021. The growth of 2016. Organic revenues increased by 6%, acquisitions contributed 1% and the foreign exchange benefit was 1%. The increase17.6% in organic revenues was due primarily to growthbroad-based across the segment led by a recovery in our pressure sensorsoil and valves businesses serving energy markets as well as businesses serving industrial endgas markets. Gross margin increaseddecreased to 57.9%54.0% in the third quarter of 2017three months ended March 31, 2022 as compared to 56.7%54.2% in the third quarter of 2016 andthree months ended March 31, 2021 due to primarily to revenue mix partially offset by higher operating leverage on organic revenues. SG&A expenses as a percentage of revenues decreased to 31.0%22.8% in the third quarter of 2017three months ended March 31, 2022 as compared to 31.3%23.9% in the third quarter of 2016, both of which werethree months ended March 31, 2021 due to operating leverage on higher organic revenues. As a result, operating margin was 26.9%31.2% in the third quarter of 2017three months ended March 31, 2022 as compared to 25.4%30.3% in the third quarter of 2016.three months ended March 31, 2021.
Corporate expenses increased to $37.5 million,$55.8, or 3.2%3.7% of revenues, in the third quarter of 2017three months ended March 31, 2022 as compared to $31.0 million,$49.8, or 3.3%3.6% of revenues, in the third quarter of 2016.three months ended March 31, 2021. The dollar increase was due primarily to increased incentive and equityhigher compensation and increased professional services.services expense.
Net interest expense was $45.5 milliondecreased to $52.6 for the third quarter of 2017three months ended March 31, 2022 as compared to $26.8 million$60.6 for the third quarter of 2016three months ended March 31, 2021 due to higherlower weighted average debt balances in the current quarter.associated with our credit facility and fixed debt.
Other expense, net, of $0.7 million$1.9 for the third quarter of 2017three months ended March 31, 2022 was composed primarily of foreign exchange losses ata one-time charge associated with a transaction to transfer the remainder of our non-U.S. based subsidiaries. Other expense, net, of $0.5 million for the third quarter of 2016 was due primarilyexposure related to asbestos claims to a non-cash charge of $0.9 million related to the early termination of our prior credit facilitythird party, partially offset by foreign exchange gains at our non-U.S. based subsidiaries. Other income, net, of $27.1 for the three months ended March 31, 2021 was composed primarily of a gain on sale of minority investment of $27.1.
Income taxes as a percent of pretax earnings were 28.1% in21.5% for the third quarter of 2017three months ended March 31, 2022 as compared to 30.4% in20.9% for the third quarter of 2016.three months ended March 31, 2021. The rate was favorably impacted primarily due toby the timing of a discrete tax benefit from the settlement of tax mattersassociated with an internal restructuring plan that occurred in the current quarter.first quarter of 2021.
Order backlog was $1.59 billionBacklog is equal to our remaining performance obligations expected to be recognized within the next 12 months as discussed in Note 12 of the Notes to Condensed Consolidated Financial Statements. Backlog increased 28% to $2,718.0 at September 30, 2017March 31, 2022 as compared to $1.12 billion$2,131.6 at September 30, 2016, an increase of 42%. Acquisitions accounted for 33%March 31, 2021. Organic growth in backlog was 27% and internal growthacquisitions contributed 10%.
|
| | | | | | | |
| Order backlog as of |
| September 30, |
| 2017 | | 2016 |
| (in thousands) |
RF Technology | $ | 956,264 |
| | $ | 563,716 |
|
Medical & Scientific Imaging | 441,508 |
| | 396,620 |
|
Industrial Technology | 98,541 |
| | 69,020 |
|
Energy Systems & Controls | 96,481 |
| | 90,699 |
|
Total | $ | 1,592,794 |
| | $ | 1,120,055 |
|
Nine months ended September 30, 2017 compared to nine months ended September 30, 2016
Net revenues for the nine months ended September 30, 2017 increased by 22% as compared to the nine months ended September 30, 2016. The increase was the result of a net effect of 17% from acquisitions and divestitures, organic growth of 6% and a negative foreign exchange impact of less than 1%.
In our RF Technology segment, revenues were $1,371 million in the nine months ended September 30, 2017 as compared to $873 million in the nine months ended September 30, 2016, an increase of 57%. Acquisitions accounted for 52% and organic revenues increased by 5%. The growth in organic revenues was due primarily to increased sales from tolling projects as well as growth in our software businesses. Gross margin increased to 60.6% in the nine months ended September 30, 2017 as compared to 56.4% in the nine months ended September 30, 2016 due to increased percentage of revenues at our software businesses, which have a higher gross margin. SG&A expenses as a percentage of revenues in the nine months ended September 30, 2017 increased to 35.6% as compared to 25.2% in the prior year due primarily to an increased percentage of revenues at our software businesses, which have a higher SG&A expense structure, including amortization of acquired intangibles. The resulting operating margin was 25.0% in the nine months ended September 30, 2017 as compared to 31.3% in the nine months ended September 30, 2016. | | | | | | | | | | | |
| Backlog as of |
| March 31, |
| 2022 | | 2021 |
Application Software | $ | 1,567.5 | | | $ | 1,394.6 | |
Network Software & Systems | 476.5 | | | 382.1 | |
Measurement & Analytical Solutions | 508.8 | | | 248.5 | |
Process Technologies | 165.2 | | | 106.4 | |
Total | $ | 2,718.0 | | | $ | 2,131.6 | |
Our Medical & Scientific Imaging segment revenues increased by 3% to $1,043 million in the nine months ended September 30, 2017 as compared to $1,011 million in the nine months ended September 30, 2016, all of which was attributable to organic growth. The growth in organic revenues was due primarily to increased sales in our medical businesses, led byNorthern Digital, and our alternate site healthcare businesses. Gross margin decreased to 72.2% in the nine months ended September 30, 2017 as compared to 73.3% in the nine months ended September 30, 2016 due primarily to an unfavorable sales mix at both our software and medical products businesses. SG&A expenses as a percentage of revenues decreased to 38.0% in the nine months ended September 30, 2017 as compared to 38.9% for the nine months ended September 30, 2016 due primarily to operating leverage on higher revenues. As a result, operating margin was 34.2% in the nine months ended September 30, 2017 as compared to 34.4% in the nine months ended September 30, 2016.
Our Industrial Technology segment revenues increased by 9% to $577 million in the nine months ended September 30, 2017 as compared to $528 million in the nine months ended September 30, 2016, all of which was attributable to organic growth. The growth in organic revenues was due primarily to our fluid handling, water meter technology and materials testing businesses. Gross margin increased to 50.9% in the nine months ended September 30, 2017 as compared to 50.5% in the nine months ended September 30, 2016 and SG&A expenses as a percentage of revenues decreased to 20.7% in the nine months ended September 30, 2017 as compared to 21.9% in the nine months ended September 30, 2016, both of which were due to operating leverage on higher revenues. The resulting operating margin was 30.2% in the nine months ended September 30, 2017 as compared to 28.6% in the nine months ended September 30, 2016.
Our Energy Systems & Controls segment revenues increased by 6% to $391 million in the nine months ended September 30, 2017 as compared to $368 million in the nine months ended September 30, 2016. Organic revenues increased by 7% and the negative foreign exchange impact was 1%. The growth in organic revenues was due primarily to increased sales in our pressure sensors and valves businesses serving energy markets as well as businesses serving industrial end markets. Gross margin increased to 57.1% in the nine months ended September 30, 2017 as compared to 55.9% in the nine months ended September 30, 2016 and SG&A expenses as a percentage of revenues decreased to 31.6% in the nine months ended September 30, 2017 as compared to 33.2% in the nine months ended September 30, 2016, both of which were due to operating leverage on higher revenues. As a result, operating margin was 25.4% in the nine months ended September 30, 2017 as compared to 22.8% in the nine months ended September 30, 2016.
Corporate expenses increased to $109.6 million in the nine months ended September 30, 2017 as compared to $89.7 million in the nine months ended September 30, 2016, which were consistent as a percentage of revenues at 3.2%. The dollar increase was due primarily to increased incentive and equity compensation and increased professional services.
Net interest expense was $137.2 million for the nine months ended September 30, 2017 as compared to $81.1 million for the nine months ended September 30, 2016 due to higher weighted average debt balances in the current year.
Other income, net, of $5.3 million for the nine months ended September 30, 2017 was composed primarily of a $9.4 million gain on sale of a product line in our Energy Systems & Controls segment, offset in part by foreign exchange losses at our non-U.S. subsidiaries. Other expense, net, was $2.0 million for the nine months ended September 30, 2016 due primarily to foreign exchange losses at our non-U.S. subsidiaries and to a non-cash charge of $0.9 million related to the early termination of our prior credit facility.
Income taxes as a percent of pretax earnings decreased to 27.8% in the nine months ended September 30, 2017 as compared to 30.2% in the nine months ended September 30, 2016 due primarily to discrete tax benefits from settlements of tax matters and an increase in excess tax benefits related to equity compensation in the current year.We expect the effective tax rate for 2017 to be between 28% and 29%.
Financial Condition, Liquidity and Capital Resources
All currency amounts are in millions
Selected cash flows for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 were as follows (in millions):follows:
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
Cash provided by/(used in): | 2017 | | 2016 | | 2017 | | 2016 |
Operating activities | $ | 315.6 |
| | $ | 316.5 |
| | $ | 865.7 |
| | $ | 693.4 |
|
Investing activities | (66.3 | ) | | (10.4 | ) | | (128.3 | ) | | (303.6 | ) |
Financing activities | (331.8 | ) | | (47.3 | ) | | (950.2 | ) | | (279.3 | ) |
| | | | | | | | | | | |
| Three months ended March 31, |
Cash provided by/(used in): | 2022 | | 2021 |
Continuing operations: | | | |
Cash provided by operating activities | $ | 473.8 | | | $ | 525.9 | |
Cash (used in) provided by investing activities | $ | (67.8) | | | $ | 12.7 | |
Cash used in financing activities | $ | (508.8) | | | $ | (544.8) | |
Cash flows provided by discontinued operations | $ | 2,996.1 | | | $ | 31.3 | |
Operating activities - Net cash provided by operating activities from continuing operations decreased by 0.3%10% to $316 million$473.8 in the third quarter of 2017three months ended March 31, 2022 as compared to $317 million$525.9 in the third quarter of 2016three months ended March 31, 2021, due primarily to increasesless cash provided by working capital associated with higher incentive compensation payments in accounts receivable, unbilled receivablesthe first quarter of 2022 associated with 2021 performance and higher income tax payments, largelyapproximately $36 of accelerated cash receipts in the first quarter of 2021 generated from our UK-based laboratory software business. These decreases were partially offset by higher net income from continuing operations net of non-cash charges, higher deferred revenue balances and the timing of interest payments. Net cash provided by operating activities increased by 24.9% to $866 million in the nine months ended September 30, 2017 as compared to $693 million in the nine months ended September 30, 2016 due primarily to higher net income net of non-cash charges, higher deferred revenue balances due to an increased percentage of revenue from software and other subscription based products and improved collections on accounts receivable, offset in part by higher unbilled receivables associated with our project-based businesses, higher prepaid asset balances and increased inventories.expenses.
Investing activities - Cash used in investing activities was primarily for business acquisitions and capital expendituresfrom continuing operations during the three and nine months ended September 30, 2017March 31, 2022 is due to a business acquisition and 2016.capital expenditures. Cash received fromprovided by investing activities from continuing operations during the ninethree months ended September 30, 2017March 31, 2021 was due primarily to the proceeds from the sale of a product line in our Energy Systems & Controls segment.minority investment, partially offset by capital expenditures.
Financing activities - Cash used in financing activities from continuing operations for the three months ended March 31, 2022 was primarily for debt principaldue to repayments on our unsecured credit facility and dividendsdividend payments, partially offset by net proceeds from stock based compensation. Cash used in financing activities from continuing operations during the three and nine months ended September 30, 2017 and 2016. Net debtMarch 31, 2021 was primarily due to net repayments on theour unsecured credit facility were $880 million inand dividend payments.
Discontinued operations - Cash provided by discontinued operations for the ninethree months ended September 30, 2017 as comparedMarch 31, 2022 was primarily due to proceeds from the sale of TransCore and Zetec slightly offset by less cash provided by discontinued operations which was impacted by the timing of our divestiture activity. Cash provided by discontinued operations during the three months ended
March 31, 2021 was primarily due to net debt repaymentsincome net of $180 million innon-cash expenses and cash provided by working capital primarily associated with the nine months ended September 30, 2016.timing of payments related to accounts receivable.
Effect of foreign currency exchange rate changes on cash - Cash and cash equivalents increaseddecreased during the three and nine months ended September 30, 2017 by $24.7 million and $61.2 million, respectively, due primarily to the strengthening of functional currencies of our European and Canadian subsidiaries against the U.S. dollar, as compared to an increase and a decrease during the three and nine months ended September 30, 2016 of $1.1 million and $6.7 million, respectively. The increase for the three months ended September 30, 2016 wasMarch 31, 2022 by $7.3 due primarily to the strengthening of the EuroU.S. dollar against the functional currencies of our European and United Kingdom subsidiaries partially offset by weakening of the U.S. dollar whileagainst our Canadian subsidiaries. Cash and cash equivalents decreased during the decrease for the ninethree months ended September 30, 2016 wasMarch 31, 2021 by $2.4 due primarily to the weakeningstrengthening of the British Pound against the U.S. dollar offset in part by the strengthening of the Euro and Canadian dollar against the U.S. dollar.functional currencies of our European subsidiaries.
Total debt at September 30, 2017March 31, 2022 consisted of the following (amounts in thousands):following:
| | | | | |
$500 3.125% senior notes due 2022 | $ | 500.0 | |
$300 0.450% senior notes due 2022 | 300.0 | |
$700 3.650% senior notes due 2023 | 700.0 | |
$500 2.350% senior notes due 2024 | 500.0 | |
$300 3.850% senior notes due 2025 | 300.0 | |
$700 1.000% senior notes due 2025 | 700.0 | |
$700 3.800% senior notes due 2026 | 700.0 | |
$700 1.400% senior notes due 2027 | 700.0 | |
$800 4.200% senior notes due 2028 | 800.0 | |
$700 2.950% senior notes due 2029 | 700.0 | |
$600 2.000% senior notes due 2030 | 600.0 | |
$1,000 1.750% senior notes due 2031 | 1,000.0 | |
Unsecured credit facility | — | |
Deferred finance costs | (45.9) | |
Other | 0.2 | |
Total debt, net of deferred finance costs | 7,454.3 | |
Less current portion | 799.5 | |
Long-term debt, net of deferred finance costs | $ | 6,654.8 | |
|
| | | |
$400 million 1.850% senior notes due 2017 | $ | 400,000 |
|
$800 million 2.050% senior notes due 2018 | 800,000 |
|
$500 million 6.250% senior notes due 2019 | 500,000 |
|
$600 million 3.000% senior notes due 2020 | 600,000 |
|
$500 million 2.800% senior notes due 2021 | 500,000 |
|
$500 million 3.125% senior notes due 2022 | 500,000 |
|
$300 million 3.850% senior notes due 2025 | 300,000 |
|
$700 million 3.800% senior notes due 2026 | 700,000 |
|
Unsecured credit facility | 1,050,000 |
|
Deferred finance costs | (19,023 | ) |
Other | 3,278 |
|
Total debt, net of deferred finance costs | 5,334,255 |
|
Less current portion | 401,534 |
|
Long-term debt, net of deferred finance costs | $ | 4,932,721 |
|
The interest rate on borrowings under our $2.5 billion$3,000.0 unsecured credit facility is calculated based upon various recognized indices plus a margin as defined in the credit agreement.facility. At September 30, 2017, there were $1,050 millionMarch 31, 2022, we had no outstanding borrowings under theour unsecured credit facility. At September 30, 2017, we had $3.3 million of other debt in the form of capital leasesfacility and several smaller facilities that allow for borrowings or the issuance of letters of credit in various foreign locations to support our non-U.S. businesses and $76 million$20.3 of outstanding letters of credit.
Cash and short-term investments at our foreign subsidiaries at September 30, 2017 totaled $572 million. RepatriationMarch 31, 2022 increased to $394 as compared to $311 at December 31, 2021 due primarily to the cash generated at our foreign subsidiaries during the three months ended March 31, 2022, partially offset by the repatriation of these funds under current regulatory$29 during the three months ended March 31, 2022. We intend to repatriate substantially all historical and tax law for use in domestic operations could expose us to additional taxes. We generally consider this cash to be permanently reinvested. future earnings.
We expect existing cash and cash equivalents,balances, together with cash generated by our U.S. operations and amounts available under our unsecured credit facility, as well as our expected ability to access the capital markets, will be sufficient to fund our operating requirements in the U.S. for the foreseeable future.
We were in compliance with all debt covenants related to our unsecured credit facility throughout the ninethree months ended September 30, 2017.March 31, 2022.
Net working capital (total current assets, excluding cash and current assets held for sale, less total current liabilities, excluding debt) wasdebt and current liabilities held for sale) decreased to negative $89 million$1,454.2 at September 30, 2017March 31, 2022 as compared to negative $25 million$882.5 at December 31, 2016, reflecting a decrease in working capital due2021 primarily to increased deferred revenues and other accrued liabilities, offset in part primarilydriven by an increase in unbilled receivablesincome taxes payable associated with the divestitures of TransCore and inventories.Zetec and a reduction in accounts receivable, partially offset by a decrease in accrued compensation. Consistent negative net working capital demonstrates Roper’s continued evolution and focus on asset-light business models. Total debt was $5.33 billion$7,454.3 at September 30, 2017March 31, 2022 as compared to $6.21 billion$7,921.8 at December 31, 20162021, due primarily to the use of operating cash flows to pay down outstanding debtnet repayments under our unsecured credit facility. Our leverage on a continuing operations basis is shown in the following table (in thousands):table:
| | | September 30, 2017 | | December 31, 2016 | | March 31, 2022 | | December 31, 2021 |
Total debt | $ | 5,334,255 |
| | $ | 6,209,536 |
| Total debt | $ | 7,454.3 | | | $ | 7,921.8 | |
Cash | (605,616 | ) | | (757,200 | ) | Cash | (3,237.5) | | | (351.5) | |
Net debt | 4,728,639 |
| | 5,452,336 |
| Net debt | 4,216.8 | | | 7,570.3 | |
Stockholders' equity | 6,458,984 |
| | 5,788,865 |
| |
Stockholders’ equity | | Stockholders’ equity | 13,551.9 | | | 11,563.8 | |
Total net capital | $ | 11,187,623 |
| | $ | 11,241,201 |
| Total net capital | $ | 17,768.7 | | | $ | 19,134.1 | |
| | | | | | | |
Net debt / total net capital | 42.3 | % | | 48.5 | % | Net debt / total net capital | 23.7 | % | | 39.6 | % |
Capital expenditures were $36 million$7.1 for the ninethree months ended September 30, 2017March 31, 2022 as compared to $27 million$7.1 for the ninethree months ended September 30, 2016.March 31, 2021. Capitalized software expenditures were $7.5 for the three months ended March 31, 2022 as compared to $7.2 for the three months ended March 31, 2021. We expect the aggregate of capital expenditures and capitalized software expenditures for the balance of the year to be comparable to prior years as a percentage of revenues.
There have been no significant changes to our contractual obligations from those disclosed in our Annual Report.
Off-Balance Sheet Arrangements
At September 30, 2017,March 31, 2022, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Outlook
Current geopolitical and economic uncertainties could adversely affect our business prospects. AThe COVID-19 pandemic has had, and may continue to have, an adverse impact on our business. An armed conflict (such as the war in Ukraine), significant terrorist attack, or other global conflict, or public health crisis could cause changes in world economies that would adversely affect us. It is impossible to isolate each of these factor'spotential factor’s future effects on current economic conditions.conditions or any of our businesses. It is also impossible to predict with any reasonable degree of certainty what or when any additional events may occur that also would similarly disrupt the economy.economy and have an adverse impact on our businesses.
We maintain an active acquisition program; however, future acquisitions will be dependent on numerous factors and it is not feasible to reasonably estimate if or when any such acquisitions will occur and what the impact will be on our business, financial condition and results of operations. Such acquisitions may be financed by the use of existing credit lines, future cash flows from operations, announced divestitures, future divestitures, the proceeds from the issuance of new debt or equity securities or any combination of these methods.methods, the terms and availability of which will be subject to market and economic conditions generally.
We anticipate that our recently acquired companies as well as our other companiesbusinesses will generate positive cash flows from operating activities, and that these cash flows will permit the reduction of borrowings under our unsecured credit facility.currently outstanding debt in accordance with the repayment schedule. However, the rate at which we can reduce our debt during 2017 (and reduce the associated interest expense) will be affected by, among other things, the financing and operating requirements of any new acquisitions, and the financial performance of our existing companies.companies and the impact of the COVID-19 pandemic on our business prospects and the financial markets generally. None of these factors can be predicted with certainty.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See "Item 7A -“Item 7A. Quantitative and Qualitative Disclosures about Market Risk"Risk” in our Annual Report. There were no material changes during the ninethree months ended September 30, 2017.March 31, 2022.
ITEM 4. CONTROLS AND PROCEDURES
As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q ("(“Evaluation Date"Date”). This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation as of the Evaluation Date, these officers have concluded that the design and operation of our disclosure controls and procedures are effective.
Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC'sSEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
There were no changes to our internal controls during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information pertaining to legal proceedings can be found in Note 910 of the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and is incorporated by reference herein.
ITEM 1A. RISK FACTORS
ForInformation regarding risk factors can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Information About Forward-Looking Statements,” in Part 1 - Item 2 of this Form 10-Q and in Part 1 - Item 1A of our 2021 Annual Report on Form 10-K. We are providing the following information regarding changes that have occurred to the previously disclosed risk factors that could affectin our Form 10-K. Except for such additional information, there were no material changes during the three months ended March 31, 2022 to the risk factors reported in the 2021 Annual Report on Form 10-K.
Our business, financial condition and results of operations seecould be adversely affected by disruptions in the risk factors discussionglobal economy caused by the ongoing conflict between Russia and Ukraine.
The global economy has been negatively impacted by the military conflict between Russia and Ukraine. Furthermore, governments in Item 1Athe United States, United Kingdom and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. We have historically had limited operations in Russia and a limited number of suppliers in Ukraine. Nevertheless, the Russia-Ukraine military conflict could have a negative impact on the global supply chain logistics or economy. Further escalation of geopolitical tensions related to the military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain. In addition, the effects of the ongoing conflict could heighten many of our Annual Report. See also "Information About Forward-Looking Statements" includedknown risks described in section entitled “Risk Factors" in Part I, Item 2 of this Quarterly1A in our Annual Report on Form 10-Q.10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 22, 2022.
ItemITEM 6.Exhibits
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| | | | | | | | | | |
31.1 |
| | Rule 13a-14(a)/15d-14(a), Certification of the Chief Executive Officer, filed herewith. |
| | |
31.2 |
| | Rule 13a-14(a)/15d-14(a), Certification of the Chief Financial Officer, filed herewith. |
| | |
32.1 |
| | Section 1350 Certification of the Chief Executive and Chief Financial Officers, furnished herewith. |
| | |
101.INS |
| | XBRL Instance Document, filed herewith. |
| | |
101.SCH |
| | XBRL Taxonomy Extension Schema Document, filed herewith. |
| | |
101.CAL |
| | XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith. |
| | |
101.DEF |
| | XBRL Taxonomy Extension Definition Linkbase Document, filed herewith. |
| | |
101.LAB |
| | XBRL Taxonomy Extension Label Linkbase Document, filed herewith. |
| | |
101.PRE |
| | XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith. |
EXHIBIT INDEX
TO REPORT ON FORM 10-Q
|
| | | |
Number | | Exhibit |
| | |
31.1 |
| | | |
| | | |
31.2 |
| | | |
| | | |
32.1 |
| | | |
| | | |
101.INS |
| | XBRL Instance Document, filed herewith.Document. | |
| | | |
101.SCH |
| | XBRL Taxonomy Extension Schema Document, filed herewith.Document. | |
| | | |
101.CAL |
| | XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith.Document. | |
| | | |
101.DEF |
| | XBRL Taxonomy Extension Definition Linkbase Document, filed herewith.Document. | |
| | | |
101.LAB |
| | XBRL Taxonomy Extension Label Linkbase Document, filed herewith.Document. | |
| | | |
101.PRE |
| | XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith.Document. | |
| | | |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |
*The related exhibits and schedules are not being filed herewith. The Company agrees to furnish supplementally a copy of any such exhibits and schedules to the Securities and Exchange Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Roper Technologies, Inc.
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| | | | | | | | | | |
/s/ Brian D. JellisonS/ L. Neil Hunn | | Chairman of the Board, President | November 6, 2017 |
Brian D. Jellison | | and Chief Executive Officer | May 4, 2022 |
L. Neil Hunn | | (Principal Executive Officer) | |
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/S/ Robert C. Crisci | | | |
/s/ Robert Crisci | | Executive Vice President and Chief Financial Officer | November 6, 2017May 4, 2022 |
Robert C. Crisci | | (Principal Financial Officer) | |
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| | | | | | | | | | |
/s/S/ Jason Conley | | Vice President and ControllerChief Accounting Officer | November 6, 2017May 4, 2022 |
Jason Conley | | (Principal Accounting Officer) | |