rop-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 1-12273

ROPER TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Delaware		51-0263969
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6901 Professional Parkway, Suite 200
Sarasota,	Florida	34240
(Address of principal executive offices)		(Zip Code)

(941) 556-2601

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange On Which Registered

Common Stock, $0.01 Par Value

ROP

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


☒	Large accelerated filer	☐	Accelerated filer

☐	Non-accelerated filer	☐	Smaller reporting company

		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares outstanding of the registrant’s common stock as of April 29, 2022 was 105,912,655.

ROPER TECHNOLOGIES, INC.

REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited):

	Condensed Consolidated Statements of Earnings	3

	Condensed Consolidated Statements of Comprehensive Income	4

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Cash Flows	6

	Condensed Consolidated Statements of Changes in Stockholders' Equity	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 6.	Exhibits	26

	Signatures	27

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)

(in millions, except per share data)


	Three months ended March 31,
		2022		2021
Net revenues		$	1,526.6	$	1,376.1
Cost of sales		496.5		440.1
Gross profit		1,030.1		936.0

Selling, general and administrative expenses		609.0		561.4
Income from operations		421.1		374.6

Interest expense, net		52.6		60.6

Other income (expense), net		(1.9)		27.1


Earnings before income taxes		366.6		341.1

Income taxes		79.0		71.2

Net earnings from continuing operations		287.6		269.9

Earnings from discontinued operations, net of tax		15.6		19.1
Gain on disposition of discontinued operations, net of tax		1,717.3		—
Net earnings from discontinued operations		1,732.9		19.1

Net earnings		$	2,020.5	$	289.0

Net earnings per share from continuing operations:
Basic		$	2.72	$	2.57
Diluted		$	2.70	$	2.55

Net earnings per share from discontinued operations:
Basic		$	16.41	$	0.18
Diluted		$	16.24	$	0.18

Net earnings per share:
Basic		$	19.13	$	2.75
Diluted		$	18.94	$	2.73

Weighted average common shares outstanding:
Basic		105.6		105.0
Diluted		106.7		106.0

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (unaudited)

(in millions)


	Three months ended March 31,
		2022		2021
Net earnings		$	2,020.5	$	289.0

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(22.9)		14.6
Total other comprehensive income (loss), net of tax		(22.9)		14.6

Comprehensive income		$	1,997.6	$	303.6

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(in millions)


	March 31, 2022		December 31, 2021
ASSETS:

Cash and cash equivalents	$	3,237.5	$	351.5
Accounts receivable, net	755.3		839.4
Inventories, net	202.7		176.1
Income taxes receivable	19.2		27.7
Unbilled receivables	110.0		95.3
Other current assets	160.9		142.5
Current assets held for sale	—		788.6
Total current assets	4,485.6		2,421.1

Property, plant and equipment, net	98.9		102.8
Goodwill	14,094.9		14,094.5
Other intangible assets, net	6,454.1		6,588.5
Deferred taxes	101.4		101.1
Other assets	400.9		405.9

Total assets	$	25,635.8	$	23,713.9

LIABILITIES AND STOCKHOLDERS' EQUITY:

Accounts payable	$	167.8	$	150.8
Accrued compensation	208.2		309.8
Deferred revenue	1,120.3		1,130.2
Other accrued liabilities	413.0		440.7
Income taxes payable	793.0		132.0
Current portion of long-term debt, net	799.5		799.2
Current liabilities held for sale	—		159.1
Total current liabilities	3,501.8		3,121.8

Long-term debt, net of current portion	6,654.8		7,122.6
Deferred taxes	1,476.1		1,479.5
Other liabilities	451.2		426.2

Total liabilities	12,083.9		12,150.1

Commitments and contingencies (Note 10)

Common stock	1.1		1.1
Additional paid-in capital	2,363.9		2,307.8
Retained earnings	11,410.4		9,455.6
Accumulated other comprehensive loss	(206.0)		(183.1)
Treasury stock	(17.5)		(17.6)
Total stockholders' equity	13,551.9		11,563.8

Total liabilities and stockholders' equity	$	25,635.8	$	23,713.9

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(in millions)


	Three months ended March 31,
	2022		2021
Cash flows from operating activities:
Net earnings from continuing operations	$	287.6	$	269.9
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment	11.0		13.1
Amortization of intangible assets	148.1		146.3
Amortization of deferred financing costs	3.1		3.4
Non-cash stock compensation	35.9		31.6

Gain on sale of assets, net of tax	—		(21.6)
Income tax provision, excluding tax associated with gain on sale of assets	79.0		65.7
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable	82.0		54.3
Unbilled receivables	(15.4)		(17.8)
Inventories	(27.7)		(2.1)
Accounts payable	17.9		13.3
Other accrued liabilities	(125.1)		(59.0)
Deferred revenue	29.4		60.9

Cash income taxes paid	(27.4)		(17.2)
Other, net	(24.6)		(14.9)
Cash provided by operating activities from continuing operations	473.8		525.9
Cash provided by operating activities from discontinued operations	1.5		33.7
Cash provided by operating activities	475.3		559.6

Cash flows from (used in) investing activities:
Acquisitions of businesses, net of cash acquired	(53.2)		—
Capital expenditures	(7.1)		(7.1)
Capitalized software expenditures	(7.5)		(7.2)

Proceeds from sale of assets	—		27.1
Other, net	—		(0.1)
Cash (used in) provided by investing activities from continuing operations	(67.8)		12.7
Proceeds from disposition of discontinued operations	3,006.2		—
Cash used in investing activities from discontinued operations	(0.2)		(2.0)
Cash provided by investing activities	2,938.2		10.7

Cash flows from (used in) financing activities:


Borrowings (payments) under revolving line of credit, net	(470.0)		(495.0)


Cash dividends to stockholders	(65.3)		(58.8)
Proceeds from stock-based compensation, net	21.0		4.4
Treasury stock sales	5.5		4.7

Other	—		(0.1)
Cash flows used in financing activities from continuing operations	(508.8)		(544.8)
Cash flows used in financing activities from discontinued operations	(11.4)		(0.4)
Cash flows used in financing activities	(520.2)		(545.2)
(Continued)

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited) - Continued

(in millions)


	Three months ended March 31,
	2022		2021

Effect of foreign currency exchange rate changes on cash	(7.3)		(2.4)

Net increase in cash and cash equivalents	2,886.0		22.7

Cash and cash equivalents, beginning of period	351.5		308.3

Cash and cash equivalents, end of period	$	3,237.5	$	331.0

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

(in millions)


	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total stockholders’ equity











Balances at December 31, 2021	$	1.1	$	2,307.8	$	9,455.6	$	(183.1)	$	(17.6)	$	11,563.8

Net earnings	—		—		2,020.5		—		—		2,020.5
Stock option exercises	—		38.7		—		—		—		38.7
Cash settlement of share-based awards in connection with disposition of discontinued operations	—		(11.1)		—		—		—		(11.1)
Treasury stock sold	—		5.4		—		—		0.1		5.5
Currency translation adjustments	—		—		—		(22.9)		—		(22.9)
Stock-based compensation	—		40.8		—		—		—		40.8
Restricted stock activity	—		(17.7)		—		—		—		(17.7)
Dividends declared ($0.62 per share)	—		—		(65.7)		—		—		(65.7)
Balances at March 31, 2022	$	1.1	$	2,363.9	$	11,410.4	$	(206.0)	$	(17.5)	$	13,551.9












Balances at December 31, 2020	$	1.1	$	2,097.5	$	8,546.2	$	(147.0)	$	(18.0)	$	10,479.8


Net earnings	—		—		289.0		—		—		289.0
Stock option exercises	—		19.2		—		—		—		19.2
Treasury stock sold	—		4.6		—		—		0.1		4.7
Currency translation adjustments	—		—		—		14.6		—		14.6
Stock-based compensation	—		32.4		—		—		—		32.4
Restricted stock activity	—		(14.8)		—		—		—		(14.8)
Dividends declared ($0.5625 per share)	—		—		(59.2)		—		—		(59.2)
Balances at March 31, 2021	$	1.1	$	2,138.9	$	8,776.0	$	(132.4)	$	(17.9)	$	10,765.7

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

All currency and share amounts are in millions, except per share data

1. Basis of Presentation

The accompanying Condensed Consolidated Financial Statements for the three months ended March 31, 2022 and 2021 are unaudited. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position, results of operations, comprehensive income and cash flows of Roper Technologies, Inc. and its subsidiaries (“Roper,” the “Company,” “we,” “our” or “us”) for all periods presented. The December 31, 2021 financial position data included herein was derived from the audited consolidated financial statements included in the Company’s 2021 Annual Report on Form 10-K (“Annual Report”) filed on February 22, 2022 with the Securities and Exchange Commission (“SEC”) but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”).

Roper’s management has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these Condensed Consolidated Financial Statements in conformity with GAAP. Actual results could differ from those estimates.

During 2021, the Company signed definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses. As of March 31, 2022, Roper has completed all three divestitures. The financial results for these businesses are presented as discontinued operations for all periods presented. Unless otherwise noted, discussion within these notes to the Condensed Consolidated Financial Statements relate to continuing operations. Refer to Note 5 for additional information on discontinued operations.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year. You should read these unaudited Condensed Consolidated Financial Statements in conjunction with Roper’s audited consolidated financial statements and the notes thereto included in its Annual Report. Certain prior period amounts have been reclassified to conform to current period presentation.

2. Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) establishes changes to accounting principles under GAAP in the form of accounting standards updates (“ASUs”) to the Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. Any recent ASUs not listed were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s results of operations, financial position or cash flows.

3. Weighted Average Shares Outstanding

Basic earnings per share were calculated using net earnings and the weighted average number of shares of common stock outstanding during the respective period. Diluted earnings per share were calculated using net earnings and the weighted average number of shares of common stock and potential common stock outstanding during the respective period. Potentially dilutive common stock consisted of stock options based upon the trading price of Roper’s common stock. The effects of potential common stock were determined using the treasury stock method. Weighted average shares outstanding are shown below:


	Three months ended March 31,
		2022	2021
Basic shares outstanding		105.6	105.0
Effect of potential common stock:
Common stock awards		1.1	1.0
Diluted shares outstanding		106.7	106.0

For the three months ended March 31, 2022, there were 0.840 outstanding stock options, respectively, that were not included in the determination of diluted earnings per share because doing so would have been antidilutive, as compared to 0.647 outstanding stock options that would have been antidilutive in the respective 2021 period.

4. Business Acquisitions and Disposition

On January 3, 2022, Roper acquired the outstanding membership interests of Horizon Lab Systems, LLC, a provider of laboratory information management systems in the toxicology, environmental, public health and agricultural markets for an aggregate purchase price of $49.8. This acquisition has been integrated into our Clinisys business and its results are reported in the Application Software reportable segment. The results of operations of the acquired business are included in Roper’s Condensed Consolidated Financial Statements since the date of acquisition. Pro forma results of operations and the revenue and net income subsequent to the acquisition date has not been presented because the effects of the acquisition were not material to our financial results.

The Company recorded $25.6 in goodwill and $23.3 of other identifiable intangibles in connection with this acquisition. The amortizable intangible assets include customer relationships of $20.9 (15.1 year weighted average useful life) and technology of $2.4 (5.3 year weighted average useful life).

Disposition

On March 17, 2021, Roper completed the sale of a minority investment in Sedaru, Inc. for $27.1. The pretax gain on the sale was $27.1, which is reported in “Other income (expense), net” in the Condensed Consolidated Statement of Earnings.

5. Discontinued Operations

During 2021, the Company signed definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses as described below.

•On March 17, 2022, Roper closed on the divestiture of our TransCore business to an affiliate of Singapore Technologies Engineering Ltd., for approximately $2,680.0 in cash. The sale resulted in a pretax gain of $2,073.7 and income tax expense of $550.5, which are reported within “Gain on disposition of discontinued operations, net of tax” in the Condensed Consolidated Statements of Earnings. TransCore was previously included in the Network Software & Systems reportable segment.

•On January 5, 2022, Roper closed on the divestiture of our Zetec business to Eddyfi NDT Inc. for approximately $350.0 in cash. The sale resulted in a pretax gain of $255.3 and income tax expense of $60.9, which are reported within “Gain on disposition of discontinued operations, net of tax” in the Condensed Consolidated Statements of Earnings. Zetec was previously included in the Process Technologies reportable segment.

•On November 1, 2021, Roper closed the divestiture of our CIVCO Radiotherapy business to an affiliate of Blue Wolf Capital Partners LLC. CIVCO Radiotherapy business was previously included in the Measurement & Analytical Solutions reportable segment.

The Company concluded these disposal activities, in the aggregate, represented a strategic shift that will have a major effect on the Company’s operations and financial results. These divestitures significantly enhance our mix of high-margin, recurring revenue businesses and notably reduce our working capital requirements. Accordingly, the financial results of the TransCore, Zetec and CIVCO Radiotherapy businesses are presented in the Condensed Consolidated Financial Statements as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses are presented in the

Condensed Consolidated Balance Sheet as assets and liabilities of discontinued operations classified as held for sale at December 31, 2021.

The following tables summarize the major classes of assets and liabilities related to the discontinued operations of the TransCore, Zetec and CIVCO Radiotherapy businesses, as reported in the Condensed Consolidated Balance Sheets at December 31, 2021:


Accounts receivable, net	$	74.7
Inventories, net	47.8
Unbilled receivables

SEC Form 10-Q filed by Roper Technologies Inc.