Roper Industries Inc.
) reported second quarter 2012 earnings of $1.15 per share, up 6.5%
year over year. The earnings per share came in line with the Zacks
Consensus Estimate. The year-over-year increase was primarily
driven by revenue growth and margin expansion in the quarter.
In addition, the company also announced the acquisition of
Sunquest Information Systems, Inc., a provider of comprehensive
suite of clinical and anatomic laboratory software solutions, for
approximately $1.42 billion.
Roper's total revenue increased 3.5% year over year to $724.9
million in the quarter. Reported revenue failed to surpass the
Zacks Consensus Estimate of $747.0 million.
Acquisitions/Divestitures contributed 3.0% to the revenue growth in
the quarter, while 3.0% came from organic growth, which offset the
negative 2.0% impact of foreign currency fluctuations.
The year-over-year growth was driven by the revenues from
Industrial Technology (up 11.2% year over year) and Energy Systems
& Controls (up 6.2% year over year), which more than offset the
decline in revenues from Medical & Scientific Imaging (down
0.1% year over year) and RF Technology (down 2.0% year over
Net orders were $763.5 million in the reported quarter, up from
$707.7 million in the previous-year quarter.
Gross profit rose 5.4% year over year to $397.6 million. Gross
margin in the reported quarter increased to 54.9% from 53.9% in the
year-ago quarter, driven by prudent revenue mix. Moreover, gross
profit margin was positively impacted by margin expansions across
its business segments. Gross margin for Industrial Technology,
Energy Systems & Controls, Medical & Scientific Imaging and
RF Technology expanded 20 basis points (bps), 50 bps, 80 bps and
240 bps, respectively.
In the reported quarter, income from operations increased 9.0%
year over year to $178.8 million. The upside in operating income
was based on improved sales. Operating margin improved 130 bps to
24.7% from 23.4% in the year-ago quarter.
Net income increased 8.0% year over year to $114.8 million in
the quarter, with net margin climbing 60 bps year over year to
Balance Sheet & Cash Flow
Roper exited the quarter with $518.9 million of cash and cash
equivalents and $1.07 billion of total debt (including the current
portion) compared with $451.7 million of cash and cash equivalents
and $1.08 billion of total debt (including the current portion) in
the previous quarter. Operating cash flow was $119.0 million in the
quarter versus $141.5 million in the previous quarter.
Roper Industries upped its fiscal 2012 earnings guidance to the
range of $4.84 - $5.00 per share from previous estimates of $4.75 -
$4.95 per share. Currently, the Zacks Consensus Estimate for fiscal
2012 is pegged at $4.83, below the company's guided
We believe strong backlog and improvement across segments
coupled with strong organic growth are expected to drive revenues
going forward. Moreover, acquisitions are expected to benefit the
company in the long run. However, competition from
Agilent Technologies Inc.
) are the near-term headwinds.
We maintain a Neutral recommendation for Roper over the long
term (6-12 months). Currently, Roper has a Zacks #3 Rank, which
implies a short-term Hold rating on the stock.
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