Q1 2016 Financial Results192 - Roper Technologies Q1 2016...Gross Debt $2,625 $3,112 Net Debt $2,010...

A Diversified Technology Company

Q1 2016 Financial Results April 25, 2016

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A Diversified Growth Company

2

Safe Harbor Statement

The information provided in this presentation 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, profit and cash flow 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.

We refer to certain non-GAAP financial measures in this presentation. Reconciliations of these non-GAAP

financial measures to the most directly comparable GAAP financial measures can be found within this

presentation.



3

Reg. G Disclosure

Today’s Conference Call Will Discuss Results Primarily on an Adjusted

(Non-GAAP) Basis. The Q1’16 Adjusted Results Exclude the Following

Items:

(1) Purchase Accounting Adjustment to Acquired Deferred Revenue

(2) Acquisition-Related Inventory Step-Up Charge

(3) Cash Taxes Related to Gain on 2015 Abel Divestiture

See Appendix for Reconciliation from GAAP to Adjusted Results



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Roper Conference Call

» Q1’16 Enterprise Financial Results

» Segment Detail & Outlook

» Q2 and FY 2016 Guidance

» Q&A

5

Q1 Enterprise Results

Q1 2016 Enterprise Highlights

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On Track for Record 2016

» Revenue: $906M, +4.4% to Last Year

– Organic (3.2%), FX (1.0%), Divestitures (1.0%), Acquisitions +9.6%

» Orders +9% to Record $927M

– Book to Bill of 1.03 or Greater in Three Segments

» Gross Margin +210 Bps to 62.1%

– Expanded in all Four Segments

» EBITDA +4% to $307M; 34.0% EBITDA Margin

» DEPS: $1.50

» Operating Cash Flow: $245M; 27% of Revenue

» Recent Acquisitions Performing Very Well

» Deployed $265M in Acquisitions; Strong Pipeline

Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results.



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Q1 Income Statement

(in $ millions)

Note: Amounts may not total due to rounding Q1’15 Q1’16

Orders $849 $927 +9%, Book-to-Bill: 1.02x

Revenue $867 $906 +4%

Gross Profit $520 $563 +8%

Gross Margin 60.0% 62.1% +210 Bps

Operating Income $249 $248

Operating Margin 28.7% 27.4% Amortization + $11M; (120 Bps)

Interest Expense $20 $27 ($0.05) impact

Other Income/(Expense) $(1) $0

Earnings Before Tax $228 $221

Tax Rate 31.2% 30.4%

Net Earnings $157 $154

DEPS $1.55 $1.50


Operating and EBITA Margins

Outstanding Margin Performance

Q1 Operating Margin

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Q1 EBITA Margin

26.8%

28.7% 27.4%

2015 2016 2014

+130 Bps

31.6% 33.0% 32.9%

2014 2015 2016

In $ Millions


+60 Bps

Asset-Light Business Model

9

Governance Process and Strategic Investments Drive Results

6.3%

5.0%

4.0%

2014 2015 2016

(230 Bps)

Notes: Percentages may not sum correctly due to rounding

* Defined as Inventory + A/R + Unbilled Receivables – A/P – Accrued Liabilities; Sales and Working Capital Related to Acquisitions Completed in Each Quarter Removed from Calculation

03/31/14 03/31/15 03/31/16

(I) Inventory 6.3% 5.7% 5.5%

(R) Receivables 18.3% 17.3% 17.4%

(P) Payables &

Accruals

18.2% 18.0% 19.0%

Total (I+R-P) 6.3% 5.0% 4.0%

Working Capital* as % of Q1 Annualized Net Sales

Cash Flow Performance

10

We Believe Cash is the Best Measure of Performance

» Q1 Operating Cash Flow: $245M

– 27% of Revenue

» Q1 Free Cash Flow: $235M

– 26% of Revenue

» TTM Operating Cash Conversion: 135%

» Continuing to Compound Cash Flow

Despite Macroeconomic Challenges

$844

$888 $913

Q1 2014 Q1 2015 Q1 2016

TTM Operating Cash Flow

(in $ millions)

Notes: Free Cash Flow = Operating Cash Flow less Capital Expenditures; TTM = Trailing Twelve Months


Strong Financial Position

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Deployed >$2B in Last 15 Months; $1.8B Undrawn Revolver

3/31/15 3/31/16

Cash $615 $523

Undrawn Revolver $1,085 $1,830

Gross Debt $2,625 $3,112

Net Debt $2,010 $2,589

Shareholders’ Equity $4,807 $5,441

TTM EBITDA $1,223 $1,256

Net Debt-to-EBITDA (TTM) 1.6x 2.1x

(in $ millions)


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Segment Detail & Outlook

Q1 2016 Segment Performance

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Medical and RF Segments Represent 76% of EBITDA Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results.

Energy Ind Tech RF andSoftware

Medical

$30 $51

$111

$145

$119

$171

$282

$333

* Excludes Corporate Expenses EBITDA

Margin 25% 30% 39% 44%

Revenue

EBITDA*

(in $ millions)



Energy % of Roper

Q1’16 EBITDA*

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Energy Systems and Controls

(in $ millions) Q1’16 V to PY

Revenue $119 (15%)

Op Profit $24 (21%)

OP Margin 20.4% (130 bps)

* Excludes Corporate Expenses

9%


Q1 2016

» Organic (14%), FX (1%)

» Oil & Gas Down ~(20%)

» Nimble Execution in Difficult Market Conditions

» Zetec Grew High Single Digits

Q2 – Q4 2016

» High Single Digit Organic Decline

– No Improvement in Oil & Gas Markets

– Modest Growth in Nuclear Power and

Industrial Markets

» Margins Improve Sequentially



Ind. Tech % of Roper

Q1’16 EBITDA*

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Industrial Technology

Q1 2016

» Organic (5%), FX (1%), Divest (4%)

» Excluding Oil & Gas, Organic +3%

– Upstream Down as Expected

– Oil & Gas ~5% of Q1 Revenue

» Neptune Double Digit Growth in U.S.

– Aided by the 3-year American Water

Contract

Q2 – Q4 2016

» Low Single Digit Organic Growth for Segment

– Upstream Oil & Gas Continues its Decline

– Flat to Modest Growth in Other End

Markets

– Strong Growth at Neptune


Revenue $171 (10%)

Op Profit $47 (19%)



15%




RF Tech % of Roper

Q1’16 EBITDA*

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RF Technology & Software

Q1 2016

» Organic (1%), FX (1%) , Acq./Div. +18%

» Record Margin Performance

» Software and SaaS Businesses Growing with

Strong Margin and Cash Flow Performance

» Aderant Performing Well; Several New Wins

» Toll & Traffic:

– Down Due to Completion of Puerto Rico

Service Contract

– Strong Project Execution Continues

Q2 – Q4 2016

» Expect Flat Organic in Q2

» High Single Digit Organic Growth in 2nd Half

– Puerto Rico Comp Eases After Q2

– Multiple Transcore Project Opportunities

– RF IDeas Becomes Organic in Q4

» Software and SaaS Businesses Grow Mid to

High Single Digits with Strong Cash Returns


Revenue $282 +16%

Op Profit $91 +23%

OP Margin 32.2% +170 bps


33%




Medical % of Roper

Q1’16 EBITDA*

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Medical Solutions

Q1 2016

» Organic Revenue +2%, FX (1%), Acq +13%

– Organic: Medical +6%; Imaging (13%)

» Double Digit Growth in Medical Products Led by

Verathon and Northern Digital

» Recent Acquisitions Performing Very Well

» Exceptional Growth at Strata as Hospitals Focus on

SaaS Solutions for Cost Visibility and Containment

» Acquired PCI Medical to boost Civco’s Offering in

Ultrasound Products

Q2 – Q4 2016

» High Single Digit Organic Growth

– Continued Strength in Medical

– Strata, SoftWriters and Data Innovations

Become Organic in Q2

– Imaging Improves; Led by Gatan Innovation

» Positive Contributions from CliniSys Acquisition

» Sunquest Investments in Genetics; Including

Recent GeneInsight Acquisition


Revenue $333 +14%

Op Profit $116 +6%



43%


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Guidance Update



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Guidance Update

» Maintaining Full Year Guidance:

– Adjusted DEPS: $6.85 – $7.15

– Operating Cash Flow ~ $1.0B

» Establishing Q2 Adjusted DEPS:

– $1.56 – $1.61


Q1 2016 Summary

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Excellent Quarter; On Track for Record 2016

» Revenue: $906M, +4.4% to Last Year

– Strength in Medical, Software and Neptune Offset Declines in

Oil & Gas

» Orders +9%; Record Backlog of $1.12B

» Gross Margin +210 Bps to 62.1%

– All Four Segments Increased

» EBITDA Margin 34.0%; EBITA Margin 32.9%

» EBITDA +4% to $307M

» 2015 Acquisitions Performing Very Well

» Attractive Acquisition Pipeline; Expect to Deploy Over $1B in 2016


Appendix

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Reconciliations I

Q1 2016 Revenue Growth

Reconciliation

Industrial

Technology

Energy

Systems &

Controls

Medical &

Scientific

Imaging

RF

Technology Roper

Organic Growth (5)% (14)% 2% (1)% (3)%

Acquisitions/Divestitures (4)% - 13% 18% 9%

Foreign Exchange (1)% (1)% (1)% (1)% (1)%

Rounding - - - - (1)%

Total Revenue Growth (10)% (15)% 14% 16% 4%

Q1 2016 Orders Growth

Reconciliation

Industrial

Technology

Energy

Systems &

Controls

Medical &

Scientific

Imaging

RF

Technology Roper

Organic Growth - (5)% 9% (7)% -

Acquisitions/Divestitures (4)% - 18% 19% 10%

Foreign Exchange (1)% (2)% (2)% - (1)%

Rounding - 1% - (1)% -

Total Orders Growth (5)% (6)% 25% 11% 9%



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Reconciliations II

(in $ thousands) Q1 2016

Margin Reconciliation

Industrial

Technology

Energy Systems &

Controls

Medical & Scientific

Imaging RF Technology

GAAP Revenue $171,235 $118,764 $332,214 $280,210

Add: DI / SWI / Strata / Atlas / CliniSys / PCI Adj 0 0 1,124 0

Add: On Center / Aderant Adj 0 0 0 2,170

Adjusted Revenue 171,235 118,764 333,338 282,380

GAAP Gross Profit 86,020 66,237 246,897 160,365



Adjusted Gross Profit 86,020 66,237 248,107 162,535

GAAP Operating Profit 46,759 24,182 114,456 88,766



Adjusted Operating Profit 46,759 24,182 115,666 90,936

Add Amortization 2,237 3,849 26,336 17,127

EBITA 48,996 28,031 142,002 108,063

Add Depreciation 2,481 1,513 3,065 2,595

EBITDA 51,477 29,544 145,067 110,658



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Reconciliations III

(in $ thousands) Q1 2015

Margin Reconciliation

Industrial

Technology

Energy Systems &

Controls

Medical &

Scientific Imaging RF Technology

GAAP Revenue $190,728 $139,899 $291,700 $242,954

Add: DI / SHP / SoftWriters / Strata

Purchase Accounting Adjustment to

Acquired Deferred Revenue

0 0 1,713 0

Add: FoodLink Purchase Accounting

Adjustment to Acquired Deferred Revenue 0 0 0 180

Adjusted Revenue 190,728 139,899 293,413 243,134

GAAP Operating Profit 57,897 30,422 107,779 73,977

Add: DI / SHP / SoftWriters / Strata

Purchase Accounting Adjustment to

Acquired Deferred Revenue

0 0 1,713 0

Add: FoodLink Purchase Accounting

Adjustment to Acquired Deferred Revenue 0 0 0 180

Adjusted Operating Profit 57,897 30,422 109,492 74,157

Add Amortization 2,261 4,170 22,225 9,772

EBITA 60,158 34,592 131,717 83,929

Add Depreciation 2,839 1,250 3,053 2,624

EBITDA 62,997 35,842 134,770 86,553



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Reconciliations IV

Q1’16 TTM Reconciliation of GAAP to Adjusted; Revenue, Gross Profit, and EBITDA

(1) For the adjustments, the company used a 35% tax rate as these adjustments are US-based items and 35% is the statutory tax rate in the United States.

(2) Abel gain on sale used a 52.8% tax rate.

(3) Medical Segment includes SHP, Strata, SoftWriters, Data Innovations, Atlas and CliniSys.

(4) RF Technology Segment includes FoodLink, On Center and Aderant.

(All Numbers are In Thousands)

Adjustments

Q1’16 TTM

GAAP

RF Ideas

Acquisition

Related

Inventory Step-

up Charge

PCI Medical

Acquisition

Related

Inventory Step-

up Charge

Medical

Segment

Purchase

Accounting

Adjustment to

Acquired

Deferred

Revenue

RF Segment

Purchase

Accounting

Adjustment to

Acquired

Deferred

Revenue

ABEL Gain on

Sale

IDT Write-down

on Investment

Q1’16 TTM

Adjusted

Net Sales $3,619,537 - - $7,242 $4,776 - - $3,631,555

Gross Profit $2,206,004 $4,560 $86 $7,242 $4,776 - - $2,222,668

Operating Profit $1,026,013 $4,560 $86 $7,242 $4,776 - - $1,042,677

Net Earnings $691,710 $2,964 $56 $4,707 $3,104 ($33,431) $6,193 $675,303

Taxes 301,703 1,596 30 2,535 1,672 (37,429) 3,335 273,442

Interest 91,802 - - - - - - 91,802

Depreciation 38,007 - - - - - - 38,007

Amortization 177,197 - - - - - - 177,197

EBITDA $1,300,419 $4,560 $86 $7,242 $4,776 ($70,860) $9,528 $1,255,751



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Reconciliations V

(All Numbers are In Thousands)

Adjustments

Q1’15 TTM

GAAP

SHP

Purchase

Accounting

Adjustment to

Acquired

Deferred

Revenue

IPA

Acquisition

Related

Inventory

Step-up

Charge

FoodLink

Purchase

Accounting

Adjustment to

Acquired

Deferred

Revenue

Data

Innovations

Purchase

Accounting

Adjustment to

Acquired

Deferred

Revenue

SoftWriters

Purchase

Accounting

Adjustment to

Acquired

Deferred

Revenue

Strata

Purchase

Accounting

Adjustment to

Acquired

Deferred

Revenue

Q1’15 TTM

Adjusted

Net Sales $3,580,723 $2,847 - $540 $338 $32 $466 $3,584,946

Gross Profit $2,131,124 $2,847 $849 $540 $338 $32 $466 $2,136,196

Operating Profit $1,022,969 $2,847 $849 $540 $338 $32 $466 $1,028,041

Net Earnings $654,580 $1,850 $552 $351 $220 $21 $303 $657,877

Taxes 288,264 997 297 189 118 11 163 290,039

Interest 78,646 - - - - - - 78,646

Depreciation 41,104 - - - - - - 41,104

Amortization 155,785 - - - - - - 155,785

EBITDA $1,218,379 $2,847 $849 $540 $338 $32 $466 $1,223,451

Q1’15 TTM Reconciliation of GAAP to Adjusted; Revenue, Gross Profit, and EBITDA

(1) For the six adjustments, the company used a 35% tax rate as these adjustments are US-based items and 35% is the statutory tax rate in the United States.



Reconciliations VI

Cash Flow Reconciliation (in $ thousands) Q1 2016

Operating Cash Flow $207,072

Add: Cash Paid for Taxes on Sale of ABEL 37,429

Adjusted Operating Cash Flow (A) 244,501

Capital Expenditures (9,489)

Free Cash Flow (B) 235,012

GAAP Net Income 151,416

Add: Purchase Accounting Adjustment to Acquired

Deferred Revenue 2,141

Add: Acquisition Related Inventory Step-Up Charge 56

Adjusted Net Income (C) 153,613

Operating Cash Flow Conversion (A / C) 159%

Free Cash Flow Conversion (B / C) 153%

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A Diversified Technology Company

Q1 2016 Financial Results192 - Roper Technologies Q1 2016...Gross Debt $2,625 $3,112 Net Debt $2,010...

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