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Net earnings for the third quarter were $56 million, or $0.61 per diluted share. Excluding restructuring expenses, adjusted net earnings were $58 million, or $0.63 per diluted share. Sales during the quarter were $486 million, an 18% decrease compared to the same period in 2008. Orders were $499 million, and represented 103% of sales, marking the first time since the second quarter of 2008 that orders exceeded sales. Operating cash flow was $87 million, or 18% of revenue, bringing year-to-date operating cash flow to $248 million. Free cash flow (operating cash flow less capital expenditures) during the quarter was $81 million, representing 143% of net income in the quarter. Year-to-date free cash flow is $229 million, or 137% of year-to-date net income.
"More than half our businesses experienced greater than 10% growth in orders over the second quarter, and this improvement in order momentum is expected to continue in the fourth quarter," said Brian Jellison, Roper's Chairman, President and CEO. "Although sales in the quarter were 4% lower than second quarter levels, in part due to some orders shifting to the fourth quarter, we were pleased with the performance of our businesses in terms of margins, cost controls and cash flow. In addition, we increased cash and liquidity during the quarter with a successful $500 million 10-year bond offering that increases our flexibility as we pursue strategic acquisition opportunities."
Operating margin was 18.9% in the quarter, or 19.5% excluding restructuring costs. Decremental margin (change in operating profit divided by change in sales), excluding the RF segment was 34% in the quarter, including the cost of restructuring, and 31% excluding restructuring costs. "Our decremental margin performance again demonstrated the success of our operating model, with its focus on breakeven analysis and quick payback restructuring actions," Mr. Jellison concluded.
Outlook and Guidance
Roper expects full year operating cash flow to be in excess of $350 million. Adjusting for the additional interest costs related to the recent bond offering, the Company now expects full-year earnings per diluted share between $2.57 and $2.63, which excludes the impact of restructuring costs and future acquisitions.
Table 1: Sequential Income Statement (Millions)
Q3 2009 Q2 2009
Net Orders $499 $489
Net Sales 486 505
Cost of Sales 240 250
Gross Profit $246 $255
Selling, General & Administrative Expenses 154 159
Operating Profit $92 $96
Table 2: Operating Margin (Millions)
Q3 2009
(1) Operating Profit $91.9
Restructuring Costs, All Segments 2.7
(2) Adjusted Operating Profit $94.6
(3) Revenue $486
Operating Margin (1)/(3) 18.9%
Adjusted Operating Margin (2)/(3) 19.5%
Table 3: Sales Growth
Q3 2009
Organic Growth (19%)
Acquisitions / Divestitures 2%
Foreign Currency (FX) (1%)
Total Sales Growth (18%)
Conference Call to be Held at 8:30 AM (ET) October 26, 2009
A conference call to discuss these results has been scheduled for 8:30 AM ET on Monday, October 26, 2009. The call can be accessed via webcast or by dialing +1 800-967-7141 (US/Canada) or +1 719-457-2638, using confirmation code 6889450. 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 +1 888-203-1112 (US/Canada) or +1 719-457-0820 and using the access code 6889450.
About Roper Industries
Roper Industries is a diversified growth company and is a component of the Fortune 1000, S&P MidCap 400 and the Russell 1000 Indexes. 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 2009 2008
CURRENT ASSETS:
Cash and cash equivalents $256,024 $178,069
Accounts receivable 323,959 376,855
Inventories 174,055 185,919
Deferred taxes 27,540 29,390
Unbilled receivable 60,344 61,168
Other current assets 65,572 26,906
Total current assets 907,494 858,307
PROPERTY, PLANT AND EQUIPMENT, NET 104,748 112,463
OTHER ASSETS:
Goodwill 2,142,765 2,118,852
Other intangible assets, net 759,241 804,020
Deferred taxes 31,190 28,050
Other assets 56,383 49,846
Total other assets 2,989,579 3,000,768
TOTAL ASSETS $4,001,821 $3,971,538
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $100,561 $121,807
Accrued liabilities 224,483 261,682
Income taxes payable - 1,892
Deferred taxes 1,079 -
Current portion of long-term debt 119,852 233,526
Total current liabilities 445,975 618,907
NONCURRENT LIABILITIES:
Long-term debt 1,004,357 1,033,689
Deferred taxes 286,352 272,182
Other liabilities 42,662 42,826
Total liabilities 1,779,346 1,967,604
STOCKHOLDERS' EQUITY:
Common stock 931 919
Additional paid-in capital 846,966 815,736
Retained earnings 1,332,555 1,187,467
Accumulated other comprehensive earnings 63,425 21,513
Treasury stock (21,402) (21,701)
Total stockholders' equity 2,222,475 2,003,934
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,001,821 $3,971,538
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,
2009 2008 2009 2008
Net sales $485,676 $593,100 $1,496,030 $1,730,509
Cost of sales 240,156 284,340 744,304 840,029
Gross profit 245,520 308,760 751,726 890,480
Selling, general and
administrative expenses 153,648 176,461 477,098 523,374
Income from operations 91,872 132,299 274,628 367,106
Interest expense 14,437 16,122 41,708 42,141
Other income (expense) 105 (2,836) 2,917 (1,695)
Earnings from continuing
operations before
income taxes 77,540 113,341 235,837 323,270
Income taxes 21,130 39,312 68,280 112,267
Net Earnings $56,410 $74,029 $167,557 $211,003
Earnings per share:
Basic $0.62 $0.83 $1.85 $2.36
Diluted $0.61 $0.79 $1.81 $2.24
Weighted average
common and common
equivalent shares
outstanding:
Basic 90,877 89,629 90,526 89,381
Diluted 92,908 94,251 92,635 94,026
Roper Industries, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in thousands and percents of net sales)
Three months ended September 30,
2009 2008
Amount % Amount %
Net sales:
Industrial Technology $130,538 $169,065
Energy Systems & Controls 102,988 137,535
Scientific & Industrial Imaging 78,934 94,610
RF Technology 173,216 191,890
Total $485,676 $593,100
Gross profit:
Industrial Technology $62,060 47.5% $82,215 48.6%
Energy Systems & Controls 52,464 50.9% 75,172 54.7%
Scientific & Industrial Imaging 44,169 56.0% 51,457 54.4%
RF Technology 86,827 50.1% 99,916 52.1%
Total $245,520 50.6% $308,760 52.1%
Operating profit*:
Industrial Technology $30,547 23.4% $43,767 25.9%
Energy Systems & Controls 19,214 18.7% 32,541 23.7%
Scientific & Industrial Imaging 14,818 18.8% 18,746 19.8%
RF Technology 38,918 22.5% 50,191 26.2%
Total $103,497 21.3% $145,245 24.5%
Operating profit excluding restructuring*:
Industrial Technology $31,494 24.1% $43,767 25.9%
Energy Systems & Controls 20,503 19.9% 32,541 23.7%
Scientific & Industrial Imaging 15,195 19.3% 18,746 19.8%
RF Technology 38,976 22.5% 50,191 26.2%
Total $106,168 21.9% $145,245 24.5%
Net Orders:
Industrial Technology $125,776 $163,442
Energy Systems & Controls 104,593 134,970
Scientific & Industrial Imaging 84,329 102,933
RF Technology 184,243 179,274
Total $498,941 $580,619
Nine months ended September 30,
2009 2008
Amount % Amount %
Net sales:
Industrial Technology $397,730 $525,929
Energy Systems & Controls 314,997 410,638
Scientific & Industrial Imaging 238,914 282,206
RF Technology 544,389 511,736
Total $1,496,030 $1,730,509
Gross profit:
Industrial Technology $190,501 47.9% $253,719 48.2%
Energy Systems & Controls 164,123 52.1% 223,720 54.5%
Scientific & Industrial Imaging 132,385 55.4% 154,135 54.6%
RF Technology 264,717 48.6% 258,906 50.6%
Total $751,726 50.2% $890,480 51.5%
Operating profit*:
Industrial Technology $91,614 23.0% $136,627 26.0%
Energy Systems & Controls 59,926 19.0% 96,359 23.5%
Scientific & Industrial Imaging 43,300 18.1% 54,091 19.2%
RF Technology 115,724 21.3% 119,902 23.4%
Total $310,564 20.8% $406,979 23.5%
Operating profit excluding restructuring*:
Industrial Technology $95,931 24.1% $136,627 26.0%
Energy Systems & Controls 63,739 20.2% 96,359 23.5%
Scientific & Industrial Imaging 44,797 18.8% 54,091 19.2%
RF Technology 116,542 21.4% 119,902 23.4%
Total $321,009 21.5% $406,979 23.5%
Net Orders:
Industrial Technology $391,049 $514,326
Energy Systems & Controls 298,551 402,553
Scientific & Industrial Imaging 235,433 289,606
RF Technology 534,251 538,624
Total $1,459,284 $1,745,109
* Operating profit is before unallocated corporate general and
administrative expenses. These expenses were $11,625 and $12,946
for the three months ended September 30, 2009 and 2008, respectively,
and $35,936 and $39,873 for the nine months ended September 30, 2009
and 2008, respectively.
Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
Nine months ended
September 30,
2009 2008
Net earnings $167,557 $211,003
Non-cash items:
Depreciation 25,828 24,775
Amortization 51,280 50,588
Stock-based compensation expense 20,821 22,848
Income taxes (24,146) 2,602
Changes in assets and liabilities:
Receivables 54,127 (5,517)
Inventory 14,496 (12,157)
Accounts payable (22,354) 5,358
Accrued liabilities (42,375) 2,234
Other, net 2,615 3,805
Cash provided by operating activities 247,849 305,539
Business acquisitions, net of cash
acquired (1,248) (701,935)
Capital expenditures (18,708) (20,787)
Other, net 6,983 (4,084)
Cash used by investing activities (12,973) (726,806)
Principal debt borrowings 500,000 850,000
Principal debt payments (466,186) (957,745)
Revolver borrowings (payments), net (179,000) 393,000
Debt issuance costs (4,310) (10,169)
Dividends (22,343) (19,393)
Excess tax benefit from share-based
payment 1,055 4,688
Proceeds from exercise of stock options 4,845 10,050
Other, net (604) 918
Cash provided by (used by) financing
activities (166,543) 271,349
Effect of exchange rate changes on cash 9,622 (2,578)
Net increase (decrease) in cash and
equivalents 77,955 (152,496)
Cash and equivalents, beginning of
period 178,069 308,768
Cash and equivalents, end of period $256,024 $156,272
SOURCE Roper Industries, Inc.
http://www.roperind.com
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