Roper Industries Announces Record Third Quarter Results

Net Earnings Increase 49%; Sales Increase 25%; Orders Increase 31%; Operating Cash Flow Increases 60%; Guidance Raised

SARASOTA, Fla., Oct. 25 /PRNewswire-FirstCall/ -- Roper Industries, Inc. (NYSE: ROP) reported record results for its third quarter ended September 30, 2010.  

Net earnings for the third quarter were $84 million, a 49% increase over the third quarter of 2009, and diluted earnings per share (DEPS) were $0.87 compared to $0.61 in the prior year third quarter. Orders increased 31% to $654 million and sales increased 25% to $605 million, representing a 1.08 book-to-bill ratio.  Operating Cash Flow was a record $139 million.  

Free cash flow represented 21.9% of sales and 158% of net earnings.  Third quarter gross margin expanded 260 basis points to 53.2% and operating margin increased 230 basis points to 21.2%.  EBITDA grew to $163 million, or 27.0% of sales.  

“Roper performed exceptionally well in the third quarter,” said Brian Jellison, Roper’s Chairman, President and CEO.  “We achieved record levels in orders, sales, net earnings, DEPS, EBITDA and cash flow.  Our continued growth in orders and backlog gives us confidence that we will finish 2010 with record performance and enter 2011 with significant momentum.”

Third quarter results include the acquisition of iTradeNetwork which was completed on July 27, 2010.  “Our integration and international market development with iTradeNetwork is off to a good start, and we are excited about the growth prospects we see in all of our software businesses,” said Mr. Jellison.  “We saw substantial order growth in our businesses, led by Medical & Imaging (+81%), Industrial Technology (+35%) and Energy Systems & Controls (+29%).  Our backlog finished the third quarter at a record $770 million, up 39% from the prior year.”

Fourth Quarter and Full Year Guidance

Roper is increasing its full year DEPS guidance to $3.22-$3.26 from $3.05-$3.15, and establishing fourth quarter DEPS guidance of $0.96-$1.00.  The Company is increasing its guidance for operating cash flow to $465-$485 million from $425-$450 million.  The Company’s guidance excludes future acquisitions and the first quarter impact of acquisition-related inventory charges.

Table 1:




Q3 Sales Growth

Q3 Orders Growth

Organic Growth

13.7%

19.6%

Acquisitions / Divestitures

11.9%

12.6%

Foreign Exchange

(1.0%)

(1.1%)

Total Growth

24.6%

31.1%



Table 2:  Free Cash Flow (millions)



Q3 2010

Sales (A)

605.1

Net Earnings (B)

84.3



Operating Cash Flow

$139.1

Less: Capital Expenditures

(6.3)

Free Cash Flow (C)

$132.8



Free Cash Flow as % of Net Earnings (C)/(B)

158%

Free Cash Flow as % of Q2 Revenue (C)/(A)

22%



Table 3:  EBITDA (millions)



Q3 2010

Net Earnings

$84.3

Add: Interest Expense

17.1

Add: Income Taxes

29.5

Add: Depreciation and Amortization

32.2

EBITDA

$163.1



Conference Call to be Held at 8:30 AM (ET) Today

A conference call to discuss these results has been scheduled for 8:30 AM ET on Monday, October 25, 2010. The call can be accessed via webcast or by dialing +1 888-280-4443 (US/Canada) or +1 719-325-2106, using confirmation code 4932667.  Webcast information and conference call materials will be made available in the Investors section of Roper’s website (www.roperind.com) prior to the start of the call.  Telephonic replays will be available for up to two weeks by calling +1 (719) 457-0820 and using the access code 4932667.

About Roper Industries

Roper Industries is a market-driven, diversified growth company and is a constituent of the S&P 500, Fortune 1000, and the Russell 1000 indices. Roper provides engineered products and solutions for global niche markets, including water, energy, radio frequency and research/medical applications.  Additional information about Roper Industries is available on the Company’s website at www.roperind.com.

The information provided in this press release contains forward looking statements within the meaning of the federal securities laws. These forward looking statements include, among others, statements regarding operating results, the success of our internal operating plans, and the prospects for newly acquired businesses to be integrated and contribute to future growth and profit expectations.  Forward looking statements may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes" or "intends" and similar words and phrases.  These statements reflect management'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 contained in any forward looking statement. Such risks and uncertainties include our ability to integrate our acquisitions and realize expected synergies.  We also face other general risks, including our ability to realize cost savings from our operating initiatives, general economic conditions, unfavorable changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, difficulties in making and integrating acquisitions, risks associated with newly acquired businesses, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, environmental compliance costs and liabilities, risks and cost associated with asbestos related litigation and potential write-offs of our substantial intangible assets, and risks associated with obtaining governmental approvals and maintaining regulatory compliance for new and existing products.  Important risks may be discussed in current and subsequent filings with the SEC.  You should not place undue reliance on any forward looking statements.  These statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(Amounts in thousands)










September 30,


December 31,

ASSETS

2010


2009





CURRENT ASSETS:




 Cash and cash equivalents

$          250,813


$        167,708

 Accounts receivable

378,323


381,658

 Inventories

180,929


178,795

 Deferred taxes

28,941


27,306

 Unbilled receivable

76,928


57,153

 Other current assets

41,708


58,125

   Total current assets

957,642


870,745





PROPERTY, PLANT AND EQUIPMENT, NET

105,878


109,493





OTHER ASSETS:




 Goodwill

2,727,249


2,388,432

 Other intangible assets, net

1,128,435


868,900

 Deferred taxes

60,828


33,123

 Other assets

76,095


57,043

   Total other assets

3,992,607


3,347,498





TOTAL ASSETS

$       5,056,127


$     4,327,736









LIABILITIES AND STOCKHOLDERS' EQUITY








CURRENT LIABILITIES:




 Accounts payable

$          134,316


$        110,103

 Accrued liabilities

269,309


253,441

 Income taxes payable

-


-

 Deferred taxes

9,933


1,671

 Current portion of long-term debt

95,788


112,796

   Total current liabilities

509,346


478,011





NONCURRENT LIABILITIES:




 Long-term debt

1,380,742


1,040,962

 Deferred taxes

466,356


328,299

 Other liabilities

63,308


58,974

   Total liabilities

2,419,752


1,906,246





STOCKHOLDERS' EQUITY:




 Common stock

967


958

 Additional paid-in capital

1,019,993


982,321

 Retained earnings

1,583,997


1,395,586

 Accumulated other comprehensive earnings

52,514


63,945

 Treasury stock

(21,096)


(21,320)

   Total stockholders' equity

2,636,375


2,421,490





TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$       5,056,127


$     4,327,736



Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)

(Amounts in thousands, except per share data)





















Three months ended


Nine months ended



September 30,


September 30,



2010

2009


2010


2009






Net sales


$ 605,088


$ 485,676


$ 1,706,633


$ 1,496,030

Cost of sales


283,339


240,156


803,372


744,304










Gross profit


321,749


245,520


903,261


751,726










Selling, general and administrative expenses


193,516


153,648


555,125


477,098










Income from operations


128,233


91,872


348,136


274,628










Interest expense


17,134


14,437


49,608


41,708

Other income


2,631


105


1,421


2,917










Earnings from continuing operations before









  income taxes


113,730


77,540


299,949


235,837










Income taxes


29,467


21,130


84,680


68,280










Net Earnings


$   84,263


$   56,410


$    215,269


$    167,557














































Earnings per share:









 Basic


$       0.89


$       0.62


$          2.29


$          1.85

 Diluted


$       0.87


$       0.61


$          2.23


$          1.81










Weighted average common and common









 equivalent shares outstanding:









   Basic


94,312


90,877


94,046


90,526

   Diluted


96,671


92,908


96,374


92,635



Roper Industries, Inc. and Subsidiaries

Selected Segment Financial Data (unaudited)

(Amounts in thousands and percents of net sales)





































Three months ended September 30,


Nine months ended September 30,



2010


2009


2010


2009



Amount


%


Amount


%


Amount


%


Amount


%

Net sales:

















Industrial Technology


$ 161,205




$ 130,538




$    442,007




$    397,730



Energy Systems & Controls


123,458




102,988




348,523




314,997



Scientific & Industrial Imaging


134,434




78,934




393,192




238,914



RF Technology


185,991




173,216




522,911




544,389



Total


$ 605,088




$ 485,676




$ 1,706,633




$ 1,496,030





































Gross profit:

















Industrial Technology


$   82,383


51.1%


$   62,060


47.5%


$    223,825


50.6%


$    190,501


47.9%

Energy Systems & Controls


65,590


53.1%


52,464


50.9%


183,884


52.8%


164,123


52.1%

Scientific & Industrial Imaging


82,610


61.5%


44,169


56.0%


238,427


60.6%


132,385


55.4%

RF Technology


91,166


49.0%


86,827


50.1%


257,125


49.2%


264,717


48.6%

Total


$ 321,749


53.2%


$ 245,520


50.6%


$    903,261


52.9%


$    751,726


50.2%



































Operating profit*:

















Industrial Technology


$   44,954


27.9%


$   30,547


23.4%


$    115,462


26.1%


$      91,614


23.0%

Energy Systems & Controls


28,611


23.2%


19,214


18.7%


76,606


22.0%


59,926


19.0%

Scientific & Industrial Imaging


31,193


23.2%


14,818


18.8%


88,323


22.5%


43,300


18.1%

RF Technology


37,155


20.0%


38,918


22.5%


104,060


19.9%


115,724


21.3%

Total


$ 141,913


23.5%


$ 103,497


21.3%


$    384,451


22.5%


$    310,564


20.8%



































Operating profit excluding restructuring*:

















Industrial Technology


$   44,954


27.9%


$   31,494


24.1%


$    115,462


26.1%


$      95,931


24.1%

Energy Systems & Controls


28,611


23.2%


20,503


19.9%


76,606


22.0%


63,739


20.2%

Scientific & Industrial Imaging


31,193


23.2%


15,195


19.3%


88,323


22.5%


44,797


18.8%

RF Technology


37,155


20.0%


38,976


22.5%


104,060


19.9%


116,542


21.4%

Total


$ 141,913


23.5%


$ 106,168


21.9%


$    384,451


22.5%


$    321,009


21.5%


















Net Orders:

















Industrial Technology


$ 169,887




$ 125,776




$    488,665




$    391,049



Energy Systems & Controls


135,224




104,593




377,484




298,551



Scientific & Industrial Imaging


152,499




84,329




418,874




235,433



RF Technology


196,265




184,243




555,427




534,251



Total


$ 653,875




$ 498,941




$ 1,840,450




$ 1,459,284






















































*  Operating profit is before unallocated corporate general and administrative expenses.  These expenses were $13,680 and $11,625 for the three months ended September 30, 2010 and 2009, respectively and $36,315 and $35,936 for the nine months ended September 30, 2010 and 2009, respectively.



Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)













Nine months ended



September 30,



2010


2009




Net earnings


$ 215,269


$ 167,557

Non-cash items:





Depreciation


27,271


25,828

Amortization


61,430


51,280

Stock-based compensation expense


19,384


20,821

Income taxes


10,943


(24,146)

Changes in assets and liabilities:





Receivables


(13,118)


53,303

Inventory


(7,277)


14,496

Accounts payable


22,549


(22,354)

Accrued liabilities


10,561


(42,375)

Other, net


(2,594)


3,439

 Cash provided by operating activities


344,418


247,849






Business acquisitions, net of cash acquired


(536,413)


(1,248)

Capital expenditures


(20,391)


(18,708)

Other, net


1,815


6,983

 Cash used by investing activities


(554,989)


(12,973)






Principal debt borrowings


-


500,000

Principal debt payments


(20,123)


(466,186)

Revolver borrowings (payments), net


318,000


(179,000)

Debt issuance costs


-


(4,310)

Dividends


(26,722)


(22,343)

Excess tax benefit from share-based payment


4,287


1,055

Proceeds from exercise of stock options


16,955


4,845

Other, net


922


(604)

 Cash provided/(used) by financing activities


293,319


(166,543)






Effect of exchange rate changes on cash


357


9,622






Net increase in cash and equivalents


83,105


77,955

Cash and equivalents, beginning of period


167,708


178,069






Cash and equivalents, end of period


$250,813


$256,024



SOURCE Roper Industries, Inc.

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