Roper reports results, including revenue, operating margin, net income and diluted earnings per share, on a GAAP and adjusted basis. Adjusted measures are reconciled to the corresponding GAAP measures at the end of this release.
Second quarter GAAP diluted earnings per share (DEPS) were $1.69, an 8% increase over the prior year and adjusted DEPS were$1.70, a 9% increase over last year. GAAP revenue increased to $890 million and adjusted revenue increased 1% to $892 million. GAAP operating profit increased to $252 million, representing 28.3% of revenue. Adjusted operating profit increased to $254 millionand adjusted operating margin increased 60 basis points to 28.5%.
GAAP gross margin increased 90 basis points to 60.0% and adjusted gross margin increased to 60.1%, a 100 basis point gain over the prior year. Operating cash flow increased 23% to $173 million. First half operating cash flow was a record $433 million, a 23% increase over the prior year.
“We were pleased with our performance in the second quarter,” said Brian Jellison, Roper’s Chairman, President and CEO. “Continued growth in our Medical and RF Technology segments offset declines in energy-related markets. Our businesses acted quickly, taking appropriate cost actions in light of more difficult market conditions. EBITDA margin increased 60 basis points to 33.9%. Revenue from acquisitions completed in the last year contributed 4% growth, more than offsetting a 3% decline due to foreign exchange. Importantly, free cash flow was exceptional, as YTD free cash flow increased 24% to $412 million.”
On July 20th, the company completed the acquisition of On Center Software, Inc., headquartered in The Woodlands, Texas. On Center Software is a leading provider of construction automation management solutions. “We are pleased to welcome Cecilia Padilla, her leadership team and all the employees of On Center to the Roper family,” said Mr. Jellison. “With our record cash flow, a strong balance sheet and a full pipeline of opportunities, we expect to complete additional acquisitions in the year.”
Roper expects full year diluted earnings per share to be $6.61 – $6.75 versus previous guidance of $6.75 – $6.95. This reflects continued strength in the company’s Medical and RF Technology segments and more difficult end market conditions in energy-related markets, particularly businesses serving upstream oil and gas customers. The company expects third quarter diluted earnings per share to be $1.53 – $1.57. The company’s guidance excludes the impact of any future acquisitions or divestitures.
Use of Non-GAAP Financial Information
The company supplements its consolidated financial statements presented on a GAAP basis with certain non-GAAP financial information to provide investors with greater insight, increase transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making. Reconciliation of non-GAAP measures to their most directly comparable GAAP measures are included in the accompanying financial schedules or tables. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP, and the financial results prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated.
|Table 1: Q2 Revenue Growth Detail|
|Q2 2014 Revenue (A)||$885M|
|Q2 2015 GAAP Revenue||$890M||0%|
|Add: Purchase Accounting Adjustment to Acquired Deferred Revenue (FoodLink, SHP, Strata, SoftWriters, Data Innovations)||3|
|Q2 2015 Adjusted Revenue (B)||$892M|
|Components of Adjusted Revenue Growth|
|Acquisitions / Divestitures||4%|