SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
July 28, 2004
ROPER INDUSTRIES, INC.
DELAWARE
| 1-12273 | 51-0263969 | |
| (COMMISSION FILE NUMBER) | (IRS EMPLOYER IDENTIFICATION NO.) | |
| 2160 SATELLITE BLVD., SUITE 200, DULUTH, GEORGIA | 30097 | |
| (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) | (ZIP CODE) | |
(770) 495-5100
160 BEN BURTON ROAD, BOGART, GEORGIA 30622
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
| (a) | Financial Statements of Business Acquired | |
| Not Applicable | ||
| (b) | Pro Forma Financial Statements | |
| Not Applicable | ||
| (c) | Exhibits | |
| 99.1 Press Release of the Company dated July 28, 2004. |
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 28, 2004, Roper Industries, Inc. (“the Company”)
issued the press release containing information about the Company’s results of operations for the
second quarter ended June 30, 2004. A copy of the press release is furnished as Exhibit 99.1
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Roper Industries, Inc. | |||||||
| (Registrant) | |||||||
| BY: /s/ Martin S. Headley | |||||||
| Martin S. Headley, Vice President, Chief Financial Officer |
Date: July 28, 2004 | ||||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release of the Company dated July 28, 2004 |
Roper Industries, Inc.
Contact Information:
Chris Hix
Director of Investor Relations
+1 (770) 495-5100
investor-relations@roperind.com
FOR IMMEDIATE RELEASE
Roper Industries Achieves Record Second Quarter 2004 Results
Sales Increase 40%;
Earnings Up 58%; Cash Flow Grows 62%;
Margins Expand
Duluth, Georgia, July 28, 2004 ... Roper Industries, Inc. (NYSE: ROP) reported record diluted earnings per share (DEPS) of $0.63 in the second quarter of 2004, 58% higher than the prior-year quarter DEPS of $0.40 and at the high end of previously-issued guidance of $0.57-$0.63. The Company also reported record net sales of $232 million, an increase of 40%, from continued favorable organic growth trends and the December 2003 Neptune Technology Group Holdings (NTGH) acquisition.
“Second quarter results demonstrate the success of our growth strategy, with significant contributions from both existing businesses and acquisitions,” said Brian Jellison, Chairman, President and CEO of Roper Industries. “Our Neptune business had another strong quarter with double-digit revenue growth, and we continue to make important progress in our organic growth initiatives. Excluding net sales to Gazprom, we achieved our 6th consecutive quarter of organic growth, with double-digit performance in the second quarter.”
Leverage from revenue increases and the completion of restructuring activities earlier this year both contributed to significant margin expansion in the quarter. Operating margins increased over the prior-year quarter by 370 basis points to 17.5%, and EBITDA margins grew 560 basis points to 21.8%. Roper produced $41 million of operating profit and $51 million of EBITDA in this year’s second quarter.
Roper achieved record cash flow from operating activities of $40 million during the quarter, 62% higher than the prior year. These results included approximately $5 million from working capital improvements. The Company now expects full year cash flow of $150-$160 million versus its previous forecast of $140-$160 million. “Our focus on cash returns is driving exceptional cash flow performance,” said Mr. Jellison. “We could achieve even greater results depending on the pace of our continued working capital success. We are also well-positioned to produce as much as $3.74 of cash DEPS this year.”
As previously reported, late in the second quarter the Company acquired the power generation test business from R/D Tech, complementing Roper’s existing non-destructive evaluation systems business. This acquisition is expected to be accretive in 2005 after the completion of integration activities. Partly as a result of this acquisition and foreign currency exchange effects, the Company expects 2004 net sales to exceed its previous revenue guidance of $900-$925 million, even with a recent reduction in expected sales to Gazprom. Roper announced that it raised the lower end of its DEPS guidance range for the second consecutive quarter, increasing its estimates from $2.50-$2.70 to $2.58-$2.70, excluding inventory revaluation costs from recent acquisitions. The Company expects continued sequential strengthening in the third and fourth quarters of 2004, forecasting $0.68-$0.73 of DEPS in its third quarter and $0.75-$0.82 of DEPS in its fourth quarter.
Mr. Jellison commented, “Despite lower sales to Gazprom, which now represents 1% or less of our expected net sales this year, we remain on track to achieve our plans for record sales, cash flow and earnings this year. Favorable market conditions and organic growth initiatives should produce sequentially higher revenues throughout the remainder of the year, further expanding our already high margins. Cash flows are expected to continue to grow, increasing the financial resources available to support our full pipeline of acquisition opportunities.”
Second Quarter Results by Segment
All comparisons are made against the year-ago period unless otherwise stated.
The Instrumentation segment posted $50 million of net sales in the second quarter, a 15% increase, driven by continued strength in petroleum analysis and materials testing markets. Operating profits increased 61% to over $8 million due to higher sales and benefits from restructuring activities completed in the prior year. Operating margins improved 490 basis points to 17%.
Excluding sales to Gazprom, second quarter net sales increased 31% in the Energy Systems & Controls segment due to strong activity with oil & gas and power utility maintenance customers. Total net sales increased 1% to $36 million. Operating profit grew 27% to $7 million in the quarter and operating margins improved 390 basis points to 19% as the segment realized the benefits of restructuring activities.
The Industrial Technology segment reported net sales of $101 million in the second quarter, 132% higher, due primarily to contributions from Neptune and organic sales gains throughout the segment. The segment produced a record $22 million of operating profit during the quarter and an operating margin of 22%.
Scientific & Industrial Imaging segment net sales rose 5% to $46 million, including sales of handheld instruments acquired as part of the NTGH transaction. Net orders increased 29%, supporting the Company’s expectations for a stronger second half for the segment. Operating profits increased 16% to $7 million, and operating margins increased 150 basis points to 16%.
Conference Call to be Held at 10:00 AM (ET) Tomorrow
A conference call to discuss these results has been scheduled for 10:00 AM ET on Thursday, July 29, 2004. The call can be accessed via webcast or by dialing (800) 811-0667 (US/Canada) or +1 (913) 981-4901, using confirmation code 555496. Webcast information and conference call materials will be made available in the “Investor Information” 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 (719) 457-0820 and using the passcode 555496.
Table 1: EBITDA (millions)
| Q2 2004 |
Q2 2003 |
|||||||
|---|---|---|---|---|---|---|---|---|
| Net earnings | $ | 23.6 | $ | 12.7 | ||||
| Interest expense | 6.8 | 4.4 | ||||||
| Income tax expense | 10.3 | 5.6 | ||||||
| Depreciation & amortization expense | 9.9 | 4.2 | ||||||
| EBITDA | $ | 50.6 | $ | 26.9 | ||||
Table 2: Cash DEPS
| 2004 Forecast |
|||||
|---|---|---|---|---|---|
| DEPS | $2.54-$2.66 | ||||
| Add: Inventory revaluation charges from acquisitions | 0.04 | ||||
| DEPS before inventory revaluation charges | $2.58-$2.70 | ||||
| Add: Depreciation & amortization expense per share (diluted) | 1.04 | ||||
| Cash DEPS | $3.62-$3.74 | ||||
Table 3: Sales to Gazprom (Millions)
| Q2 2004 |
Q2 2003 |
|||||||
|---|---|---|---|---|---|---|---|---|
| Sales to Gazprom | $ | 0.7 | $ | 8.7 | ||||
About Roper Industries
Roper Industries is a diversified industrial growth company providing engineered products and solutions for global niche markets. Additional information about Roper Industries, including registration for Company’s press releases via email, is available on the Company’s website, www.roperind.com.
The information provided in this press release contains forward-looking statements within the meaning of the federal securities laws. These statements reflect management’s current beliefs and are not guarantees of performance. They involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Important risk factors include those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003, and may be discussed in 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)
| June 30, 2004 |
December 31, 2003 |
|||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 74,733 | $ | 70,234 | ||||
| Accounts receivable | 161,833 | 150,856 | ||||||
| Inventories | 108,995 | 107,082 | ||||||
| Deferred taxes | 29,964 | 33,314 | ||||||
| Other current assets | 15,031 | 19,706 | ||||||
| Total current assets | 390,556 | 381,192 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | 75,840 | 78,461 | ||||||
| OTHER ASSETS: | ||||||||
| Goodwill | 736,014 | 711,158 | ||||||
| Other intangible assets, net | 301,059 | 298,669 | ||||||
| Deferred taxes | 2,121 | 6,034 | ||||||
| Other assets | 39,665 | 39,481 | ||||||
| Total other assets | 1,078,859 | 1,055,342 | ||||||
| TOTAL ASSETS | $ | 1,545,255 | $ | 1,514,995 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 51,370 | $ | 45,412 | ||||
| Accrued liabilities | 77,991 | 93,523 | ||||||
| Deferred taxes | 1,640 | 1,639 | ||||||
| Current portion of long-term debt | 20,184 | 20,923 | ||||||
| Total current liabilities | 151,185 | 161,497 | ||||||
| NONCURRENT LIABILITIES: | ||||||||
| Long-term debt | 599,264 | 630,186 | ||||||
| Deferred taxes | 53,596 | 50,187 | ||||||
| Other liabilities | 18,829 | 17,344 | ||||||
| Total liabilities | 822,874 | 859,214 | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Common stock | 381 | 372 | ||||||
| Additional paid-in capital | 328,552 | 293,402 | ||||||
| Retained earnings | 371,100 | 336,520 | ||||||
| Accumulated other comprehensive earnings | 45,655 | 48,989 | ||||||
| Treasury stock | (23,307 | ) | (23,502 | ) | ||||
| Total stockholders' equity | 722,381 | 655,781 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,545,255 | $ | 1,514,995 | ||||
Roper Industries,
Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts
in thousands, except per share data)
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 |
2003 |
2004 |
2003 |
|||||||||||
| Net sales | $ | 232,434 | $ | 166,055 | $ | 453,074 | $ | 315,498 | ||||||
| Cost of sales | 116,419 | 80,858 | 227,621 | 151,610 | ||||||||||
| Gross profit | 116,015 | 85,197 | 225,453 | 163,888 | ||||||||||
| Selling, general and administrative expenses | 75,307 | 62,203 | 151,773 | 117,613 | ||||||||||
| Income from operations | 40,708 | 22,994 | 73,680 | 46,275 | ||||||||||
| Interest expense | 6,836 | 4,382 | 13,739 | 8,635 | ||||||||||
| Other income/(expense) | 12 | 74 | 35 | 44 | ||||||||||
| Earnings from continuing operations before | ||||||||||||||
| income taxes | 33,884 | 18,686 | 59,976 | 37,684 | ||||||||||
| Income taxes | 10,334 | 5,604 | 18,292 | 11,305 | ||||||||||
| Earnings from continuing operations | 23,550 | 13,082 | 41,684 | 26,379 | ||||||||||
| Loss from discontinued operations, net of tax benefit | ||||||||||||||
| of $240 and $480, respectively for 2003 | 0 | 410 | 0 | 910 | ||||||||||
| Net Earnings | $ | 23,550 | $ | 12,672 | $ | 41,684 | $ | 25,469 | ||||||
| Earnings per share: | ||||||||||||||
| Basic: | ||||||||||||||
| Earnings from continuing operations | $ | 0.64 | $ | 0.42 | $ | 1.13 | $ | 0.84 | ||||||
| Loss from discontinued operations | $ | -- | $ | (0.01 | ) | $ | -- | $ | (0.03 | ) | ||||
| Net Earnings | $ | 0.64 | $ | 0.40 | $ | 1.13 | $ | 0.81 | ||||||
| Diluted: | ||||||||||||||
| Earnings from continuing operations | $ | 0.63 | $ | 0.41 | $ | 1.12 | $ | 0.83 | ||||||
| Loss from discontinued operations | $ | -- | $ | (0.01 | ) | $ | -- | $ | (0.03 | ) | ||||
| Net Earnings | $ | 0.63 | $ | 0.40 | $ | 1.12 | $ | 0.80 | ||||||
| Weighted average common and common | ||||||||||||||
| equivalent shares outstanding: | ||||||||||||||
| Basic | 36,863 | 31,471 | 36,784 | 31,437 | ||||||||||
| Diluted | 37,468 | 31,780 | 37,375 | 31,747 | ||||||||||
Roper Industries, Inc. and Subsidiaries
Selected
Segment Financial Data (unaudited)
(Amounts
in thousands and percents of net sales)
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||||||||||||
| Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% |
|||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||
| Instrumentation | $ | 49,702 | $ | 43,316 | $ | 98,827 | $ | 85,838 | ||||||||||||||||||
| Industrial Technology | 100,961 | 43,437 | 194,079 | 83,603 | ||||||||||||||||||||||
| Energy Systems & Controls | 36,261 | 35,884 | 68,338 | 63,639 | ||||||||||||||||||||||
| Scientific & Industrial Imaging | 45,510 | 43,418 | 91,830 | 82,418 | ||||||||||||||||||||||
| Total | $ | 232,434 | $ | 166,055 | $ | 453,074 | $ | 315,498 | ||||||||||||||||||
| Gross profit: | ||||||||||||||||||||||||||
| Instrumentation | $ | 28,529 | 57.4 | % | $ | 25,004 | 57.7 | % | $ | 57,760 | 58.4 | % | $ | 49,907 | 58.1 | % | ||||||||||
| Industrial Technology | 43,027 | 42.6 | % | 20,061 | 46.2 | % | 80,512 | 41.5 | % | 38,650 | 46.2 | % | ||||||||||||||
| Energy Systems & Controls | 18,973 | 52.3 | % | 17,473 | 48.7 | % | 36,591 | 53.5 | % | 32,200 | 50.6 | % | ||||||||||||||
| Scientific & Industrial Imaging | 25,486 | 56.0 | % | 22,659 | 52.2 | % | 50,590 | 55.1 | % | 43,131 | 52.3 | % | ||||||||||||||
| Total | $ | 116,015 | 49.9 | % | $ | 85,197 | 51.3 | % | $ | 225,453 | 49.8 | % | $ | 163,888 | 51.9 | % | ||||||||||
| Operating profit*: | ||||||||||||||||||||||||||
| Instrumentation | $ | 8,435 | 17.0 | % | $ | 5,234 | 12.1 | % | $ | 17,830 | 18.0 | % | $ | 12,842 | 15.0 | % | ||||||||||
| Industrial Technology | 21,684 | 21.5 | % | 9,403 | 21.6 | % | 37,411 | 19.3 | % | 18,192 | 21.8 | % | ||||||||||||||
| Energy Systems & Controls | 6,848 | 18.9 | % | 5,395 | 15.0 | % | 11,649 | 17.0 | % | 8,955 | 14.1 | % | ||||||||||||||
| Scientific & Industrial Imaging | 7,385 | 16.2 | % | 6,378 | 14.7 | % | 14,380 | 15.7 | % | 12,699 | 15.4 | % | ||||||||||||||
| Total | $ | 44,352 | 19.1 | % | $ | 26,410 | 15.9 | % | $ | 81,270 | 17.9 | % | $ | 52,688 | 16.7 | % | ||||||||||
| Net Orders: | ||||||||||||||||||||||||||
| Instrumentation | $ | 49,132 | $ | 41,858 | $ | 97,560 | $ | 81,786 | ||||||||||||||||||
| Industrial Technology | 96,615 | 44,511 | 189,310 | 87,577 | ||||||||||||||||||||||
| Energy Systems & Controls | 31,851 | 45,013 | 65,745 | 67,835 | ||||||||||||||||||||||
| Scientific & Industrial Imaging | 45,429 | 35,211 | 90,499 | 72,970 | ||||||||||||||||||||||
| Total | $ | 223,027 | $ | 166,593 | $ | 443,114 | $ | 310,168 | ||||||||||||||||||
| * | Operating profit is before unallocated corporate general and administrative expenses. Such expenses were $3,644 and $3,416 for the three months ended June 30, 2004 and 2003, respectively, and $7,590 and $6,413 for the six months ended June 30, 2004 and 2003, respectively. |
Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
(Amounts
in thousands)
| Six months ended June 30, |
||||||||
|---|---|---|---|---|---|---|---|---|
| 2004 |
2003 |
|||||||
| Net earnings | $ | 41,684 | $ | 25,469 | ||||
| Depreciation | 8,845 | 5,794 | ||||||
| Amortization | 10,766 | 2,295 | ||||||
| Other, net | 4,646 | 2,964 | ||||||
| Cash provided by operating activities | 65,941 | 36,522 | ||||||
| Business acquisitions, net of cash acquired | (51,511 | ) | (65 | ) | ||||
| Capital expenditures | (5,125 | ) | (4,836 | ) | ||||
| Other, net | (1,307 | ) | (1,516 | ) | ||||
| Cash used by investing activities | (57,943 | ) | (6,417 | ) | ||||
| Debt payments, net | (30,752 | ) | (17,272 | ) | ||||
| Issuance of common stock | 28,873 | -- | ||||||
| Dividends | (7,104 | ) | (5,514 | ) | ||||
| Other, net | 6,183 | 2,575 | ||||||
| Cash used by financing activities | (2,800 | ) | (20,211 | ) | ||||
| Effect of exchange rate changes on cash | (699 | ) | 2,040 | |||||
| Net increase in cash and equivalents | 4,499 | 11,934 | ||||||
| Cash and equivalents, beginning of period | 70,234 | 15,270 | ||||||
| Cash and equivalents, end of period | $ | 74,733 | $ | 27,204 | ||||