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Roper Industries Q3 Profit Up 17%, Lowers Full-year Earnings Outlook

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10/28/2013 8:32 AM ET

Industrial solutions provider Roper Industries Inc. (ROP: Quote) on Monday reported a 17 percent increase in profit for the third quarter from last year, reflecting higher revenues and margins.

Looking ahead, the company forecast earnings for the fourth quarter below analysts' estimates and also lowered its earnings guidance for fiscal 2013, citing slower growth in energy and select other markets.

The Sarasota, Florida-based company's third-quarter net earnings were $136.32 million or $1.36 per share, up from $116.71 million or $1.17 per share in the same quarter last year.

The latest quarter's results include a purchase accounting adjustment for acquired businesses of $0.06 per share.

Adjusted earnings per share for the latest quarter were $1.42. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $1.45 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 11 percent to $827.81 million from $747.64 million in the prior-year quarter. Analysts had a consensus revenue estimate of $862.54 million.

Brian Jellison, Roper's Chairman, President and CEO said, "We are pleased to deliver record third quarter results with strong operating performance, exceptional margins and outstanding cash flow. Orders increased 18%, including 7% organic growth in the quarter and backlog increased to a record $1.04 billion."

Organic revenue growth for the quarter was 7 percent. Adjusted gross margin for the quarter was 58.7 percent, up 280 basis points over the prior year. Operating margin rose to 29.0 percent from 27.8 percent in the year-ago period.

Net orders for the quarter increased 16 percent from the year-ago period to $838.28 million.

The prior-year quarter's results include a loss of $1.04 billion on the extinguishment of debt.

Segment-wise, industrial technology segment sales for the third quarter edged up slightly to $200.68 million, while energy systems and controls sales declined 2 percent to $155.06 million. Medical & scientific imaging segment sales surged 38 percent to $237.34 million and RF Technology sales rose 8 percent to $234.73 million.

Higher sales at the Medical & Scientific Imaging segment also reflects the company's $1 billion acquisition of privately-held health care services provider Managed Health Care Associates, Inc. or MHA earlier in the year.

Looking ahead to the fourth quarter, Roper Industries forecasts adjusted earnings in a range of $1.57 to $1.63 per share and revenue to increase 7 to 9 percent, including organic growth of 3 to 4 percent. Analysts expect the company to report earnings of $1.74 per share for the quarter on revenues of $916.42 million.

For fiscal 2013, Roper Industries lowered its outlook for adjusted earnings to a range of $5.57 to $5.63 per share from the prior range of $5.72 to $5.86 per share. Analysts expect the company to report earnings of $5.77 per share for the year.

Jellison said, "We believe that growth in energy and select other markets will be slower than anticipated in the fourth quarter and, as such, we are updating our revenue and diluted earnings per share guidance for the full year."

On October 4, 2013, Roper Industries completed the acquisition of Advanced Sensors Ltd, a technology provider of instrumentation and detection solutions for offshore oil and gas applications, for 34 million pounds. The company said it continues to have an attractive pipeline of acquisition opportunities and was well positioned with well over $1 billion of cash and available liquidity.

ROP closed Friday's trading at $133.04, up $1.47 on a volume of 311,500 shares.

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by RTT Staff Writer

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