Roper Industries Achieves Record Performance in the Third Quarter

02.11.2004

Roper Industries, Inc. reported record diluted earnings per share (DEPS) of $0.73 in the third quarter of 2004, as compared with $0.56 reported in the prior year period.

Net earnings grew 53% to a record $27 million on record net sales of $240 million, a 40% increase. Net orders increased 53% in the quarter to $248 million.

“Our record results in the third quarter demonstrate our progress in developing our operational and strategic growth capabilities,” said Brian Jellison, Chairman, President and CEO of Roper Industries. “The Neptune business acquired at the end of 2003 continues to perform strongly. We are on pace to achieve our integration plans with the power generation business acquired from RD Tech earlier this year. Our operations posted 11% organic order growth during the third quarter. Margins have strengthened throughout the year, and cash flow performance is very strong.”

Roper reported record EBITDA of $56 million in the third quarter, 61% higher than the prior year, and EBITDA margins of 23.2%, a 320 basis point improvement. The Company converted 130% of third quarter net earnings into cash flow from operating activities, demonstrating its successful focus on cash generation. Net working capital efficiency improved sequentially from the second quarter. The Company reported $36 million of cash flow from operating activities in the third quarter, 68% higher than the prior year quarter, and continues to expect to achieve cash flow from operating activities of $150-$160 million in 2004 with record performance in the fourth quarter.

The Company expects 2004 net sales of $940-$945 million and affirmed its adjusted DEPS guidance of $2.58-$2.70, excluding inventory revaluation costs from the acquisition of Neptune Technology Group Holdings (NTGH) and any effects from the acquisition of TransCore and related financing initiatives.

Mr. Jellison said, “Over the past few years, we have accelerated our successful growth strategy with the acquisition of new growth platforms, such as Neptune and the recently announced agreement to acquire TransCore Holdings. TransCore clearly meets all of our disciplined criteria, with high levels of recurring revenue, multiple growth paths and scale advantages. The acquisition is expected to close in December, and we look forward to the TransCore team joining us.” TransCore provides technologies and related services in areas such as radio frequency identification (RFID), satellite-based communication, mobile asset tracking, security applications and comprehensive toll system and processing services.

Third Quarter Results by Segment

All comparisons are made against the year-ago period unless otherwise stated.

In the Industrial Technology segment, net sales increased 133% to $101 million in the third quarter due primarily to contributions from the Neptune acquisition and organic sales gains. Net orders increased 153%. The segment produced a record $22 million of operating profit during the quarter and an operating margin of 22%.

Third quarter net sales in the Energy Systems & Controls segment improved 3% to $43 million. Excluding sales to Gazprom, third quarter net sales increased 22% due to strong activity with oil & gas and power utility maintenance customers, and contributions from the power generation business of RD Tech acquired in this year’s second quarter. Excluding Gazprom, third quarter net orders increased 73%; the segment reported total net orders increased 27% to $48 million. The segment reported operating profit of $10 million and operating margins of 23%.

Instrumentation segment net sales grew 14% to $51 million in the third quarter, experiencing continued strength in petroleum analysis and materials testing markets. The segment earned $9 million of operating profit, and operating margins held steady at 18%. Net orders increased 22% to $55 million in the third quarter.

The Scientific & Industrial Imaging segment reported a net sales increase of 8% to $46 million, including sales of handheld instruments acquired as part of the NTGH transaction. Net orders increased 11%. The segment posted operating profit of $8 million with an 18% operating margin.

Roper Industries is a diversified industrial growth company providing engineered products and solutions for global niche markets.

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