Roper Raises Outlook as Revenue Growth Slows
Adjusted earnings reached $5.38 a share, topping the prior forecast by eight cents.
Roper Technologies Inc. (ROP), a diversified technology company, raised its annual outlook after second-quarter revenue growth slowed from each of the previous four quarters.
Revenue rose 9% to $2.109 billion, down from 11% growth in the first quarter and 13% a year earlier. Organic growth eased to 5% from 6% in the first quarter, while the contribution from acquisitions fell to 3% from 5%.
Adjusted diluted earnings increased 10% from a year earlier and rose from $5.16 a share in the first quarter. Adjusted net earnings grew 3% to $542 million, with the faster per-share gain reflecting a reduction in diluted weighted-average shares to 100.6 million from 108.4 million.
GAAP net earnings more than tripled to $1.168 billion, lifting diluted earnings to $11.62 a share. The increase largely reflected an $835 million pretax gain tied to Roper’s minority investment in Indicor.
Network Software led the company’s segments with revenue growth of about 12% to $430.9 million. Its operating margin fell to 41% from 43.9%, even as gross margin expanded. Application Software revenue rose roughly 8% and its operating margin improved, while weaker profitability in Technology Enabled Products left that segment’s operating profit nearly flat.
Those segment trends weighed on companywide profitability. Adjusted earnings before interest, taxes, depreciation and amortization rose 5% to $815 million, slowing from 8% growth in the first quarter, while the adjusted EBITDA margin contracted 130 basis points to 38.6%. Operating cash flow increased 16% to $469 million, and adjusted free cash flow rose 11% to $447 million.
Roper now expects full-year adjusted earnings of $22.15 to $22.30 a share, up from its previous range of $21.80 to $22.05. The company also expects revenue growth of more than 8% and organic growth of about 6%, increases from its earlier forecasts.
The company repurchased 3.6 million shares for $1.2 billion during the quarter, bringing three-quarter purchases to 9 million shares for $3.2 billion. Interest expense rose 41% to $111.4 million as debt increased to about $11.32 billion, adding a higher financing cost to the company’s acquisition-driven growth.