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Roper (ROP) Beats on Q2 Earnings, Raises 2023 EPS Guidance
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Roper Technologies’ (ROP - Free Report) second-quarter 2023 adjusted earnings of $4.12 per share surpassed the Zacks Consensus Estimate of adjusted earnings of $4 per share. On a year-over-year basis, earnings increased 4.3%.
Roper’s net revenues of $1,531.2 million beat the consensus estimate of $1,495.4 million. The top line increased 16.8% year over year. Organic sales in the quarter increased 9%, owing to strength across each of the three segments. Acquisitions/divestitures boosted sales by 8%.
Segmental Performance
Roper has divested its Process Technologies segment and industrial units of the Measurement & Analytical Solutions segment. Beginning from the second quarter of 2022, the company started reporting under three segments, namely Application Software, Network Software and Technology Enabled Products.
Application Software’s revenues totaled $770.3 million, representing 50.3% of the quarter’s top line. Our estimate for the quarter was $741.2 million. On a year-over-year basis, the segment’s revenues increased 22.8%. Organic sales in the quarter increased 6%.
Network Software & Systems generated revenues of $358.1 million, accounting for 23.4% of second-quarter revenues. Our estimate for the quarter was $374 million. Segmental revenues grew 4.4% year over year. Organic sales in the quarter increased 5%.
Technology Enabled Products generated revenues of $402.8 million, accounting for 26.3% of the quarter’s revenues. Our estimate for the quarter was $374.1 million. Sales were up 18.3% year over year. Organic sales in the quarter grew 19%.
Roper Technologies, Inc. Price, Consensus and EPS Surprise
In the reported quarter, Roper’s cost of sales increased 16.2% year over year to $464.1 million. The cost of sales was 30.3% of the quarter’s net sales. Gross profit in the quarter grew 17.1% to $1,067.1 million, while the gross margin increased to 70% from 69.5% in the year-ago quarter.
Selling, general and administrative expenses increased 15.2% to $631.8 million. The same represented 41.3% of net sales in the reported quarter. Adjusted EBITDA was $617 million, reflecting year-over-year growth of 20%. The margin increased 100 basis points to 40.3%. Interest expenses fell 22.1% year over year to $34.8 million.
Balance Sheet & Cash Flow
Exiting second-quarter 2023, Roper had cash and cash equivalents of $1,462.8 million, compared with $792.8 million at the end of December 2022. Long-term debt (net of current portion) was $5,966.3 million, almost in line with $5,962.5 million at the end of the fourth quarter of 2022.
Roper generated net cash of $783.3 million from operating activities in the first six months of 2023, reflecting a decline of 90.5% from the year-ago level. Capital expenditure totaled $24.9 million, compared with $13.7 million in the year-ago quarter.
In the first six months of 2023, ROP rewarded its shareholders with a dividend payment of $144.8 million, up 10.8% year over year.
2023 Outlook
ROP has increased its 2023 guidance. The company predicts adjusted earnings per share from continuing operations to be $16.36-$16.50, compared with $16.10-$16.30 stated earlier. The Zacks Consensus Estimate for the same is $16.25.
For the third quarter, Roper anticipates earnings per share of $4.16-$4.20. The Zacks Consensus Estimate for the same is $4.12.
Zacks Rank & Other Stocks to Consider
ROP currently carries Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
GEF delivered a trailing four-quarter earnings surprise of 7.7%, on average. GEF’s earnings estimates have increased 13.4% for fiscal 2023 in the past 60 days. Its shares have risen 7.1% in the past year.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank of 2. AOS’ earnings surprise in the last four quarters was 8%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 0.9% for 2023. The stock has gained 29.4% in the past year.
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Roper (ROP) Beats on Q2 Earnings, Raises 2023 EPS Guidance
Roper Technologies’ (ROP - Free Report) second-quarter 2023 adjusted earnings of $4.12 per share surpassed the Zacks Consensus Estimate of adjusted earnings of $4 per share. On a year-over-year basis, earnings increased 4.3%.
Roper’s net revenues of $1,531.2 million beat the consensus estimate of $1,495.4 million. The top line increased 16.8% year over year. Organic sales in the quarter increased 9%, owing to strength across each of the three segments. Acquisitions/divestitures boosted sales by 8%.
Segmental Performance
Roper has divested its Process Technologies segment and industrial units of the Measurement & Analytical Solutions segment. Beginning from the second quarter of 2022, the company started reporting under three segments, namely Application Software, Network Software and Technology Enabled Products.
Application Software’s revenues totaled $770.3 million, representing 50.3% of the quarter’s top line. Our estimate for the quarter was $741.2 million. On a year-over-year basis, the segment’s revenues increased 22.8%. Organic sales in the quarter increased 6%.
Network Software & Systems generated revenues of $358.1 million, accounting for 23.4% of second-quarter revenues. Our estimate for the quarter was $374 million. Segmental revenues grew 4.4% year over year. Organic sales in the quarter increased 5%.
Technology Enabled Products generated revenues of $402.8 million, accounting for 26.3% of the quarter’s revenues. Our estimate for the quarter was $374.1 million. Sales were up 18.3% year over year. Organic sales in the quarter grew 19%.
Roper Technologies, Inc. Price, Consensus and EPS Surprise
Roper Technologies, Inc. price-consensus-eps-surprise-chart | Roper Technologies, Inc. Quote
Margin Profile
In the reported quarter, Roper’s cost of sales increased 16.2% year over year to $464.1 million. The cost of sales was 30.3% of the quarter’s net sales. Gross profit in the quarter grew 17.1% to $1,067.1 million, while the gross margin increased to 70% from 69.5% in the year-ago quarter.
Selling, general and administrative expenses increased 15.2% to $631.8 million. The same represented 41.3% of net sales in the reported quarter. Adjusted EBITDA was $617 million, reflecting year-over-year growth of 20%. The margin increased 100 basis points to 40.3%. Interest expenses fell 22.1% year over year to $34.8 million.
Balance Sheet & Cash Flow
Exiting second-quarter 2023, Roper had cash and cash equivalents of $1,462.8 million, compared with $792.8 million at the end of December 2022. Long-term debt (net of current portion) was $5,966.3 million, almost in line with $5,962.5 million at the end of the fourth quarter of 2022.
Roper generated net cash of $783.3 million from operating activities in the first six months of 2023, reflecting a decline of 90.5% from the year-ago level. Capital expenditure totaled $24.9 million, compared with $13.7 million in the year-ago quarter.
In the first six months of 2023, ROP rewarded its shareholders with a dividend payment of $144.8 million, up 10.8% year over year.
2023 Outlook
ROP has increased its 2023 guidance. The company predicts adjusted earnings per share from continuing operations to be $16.36-$16.50, compared with $16.10-$16.30 stated earlier. The Zacks Consensus Estimate for the same is $16.25.
For the third quarter, Roper anticipates earnings per share of $4.16-$4.20. The Zacks Consensus Estimate for the same is $4.12.
Zacks Rank & Other Stocks to Consider
ROP currently carries Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
GEF delivered a trailing four-quarter earnings surprise of 7.7%, on average. GEF’s earnings estimates have increased 13.4% for fiscal 2023 in the past 60 days. Its shares have risen 7.1% in the past year.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank of 2. AOS’ earnings surprise in the last four quarters was 8%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 0.9% for 2023. The stock has gained 29.4% in the past year.