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Roper Industries Inc. Reports Operating Results (10-Q)

November 02, 2009 | About:
10qk

10qk

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Roper Industries Inc. (ROP) filed Quarterly Report for the period ended 2009-09-30.

Roper Industries Inc. designs manufactures and distributes specialtyindustrial controls fluid handling and analytical instrumentation productsworldwide serving selected segments of a broad range of markets such as oil & gas scientific research medical diagnostics semiconductor microscopy chemical and petrochemical processing large diesel engine andturbine/compressor control applications bulk-liquid trucking power generation and agricultural irrigation industries. Roper Industries Inc. has a market cap of $4.59 billion; its shares were traded at around $50.55 with a P/E ratio of 19 and P/S ratio of 1.99. The dividend yield of Roper Industries Inc. stocks is 0.65%. Roper Industries Inc. had an annual average earning growth of 16.3% over the past 10 years. GuruFocus rated Roper Industries Inc. the business predictability rank of 4.5-star.

Highlight of Business Operations:

Accounts receivable collectibility is based on the economic circumstances of customers and credits given to customers after shipment of products including, in certain cases, credits for returned products. Accounts receivable are regularly reviewed to determine customers who have not paid within agreed upon terms, whether these amounts are consistent with past experiences, what historical experience has been with amounts deemed uncollectible and the impact that current and near-term forecast economic conditions might have on collection efforts in general and with specific customers. The returns and other sales credit allowance is an estimate of customer returns, exchanges, discounts or other forms of anticipated concessions and is treated as a reduction in revenue. The return and other sales credit histories are analyzed to determine likely future rates for such credits. At September 30, 2009, our allowance for doubtful accounts receivable, sales returns and sales credits was $11.5 million, or 3.4% of total gross accounts receivable as compared to 3.2% at December 31, 2008.

Net sales for the quarter ended September 30, 2009 were $485.7 million as compared to $593.1 million in the prior year quarter, a decrease of 18%. Our third quarter 2009 results included a net $11.8 million, or a 2% increase, in sales from 2008 acquisitions and 2009 divestitures. We experienced a 19% decline in organic sales and a negative 1% impact from foreign currency.

In our Industrial Technology segment, net sales were down 22.8% to $130.5 million in the third quarter of 2009 as compared to $169.1 million in the third quarter of 2008. The decrease was broad-based across all of our companies in this segment due primarily to the weak global economy. Gross margins were 47.5% for the third quarter of 2009 as compared to 48.6% in the third quarter of 2008. The decrease was the result of negative operating leverage on lower sales volume and $0.5 million in severance and related costs in the current year quarter. SG&A expenses as a percentage of net sales were 24.1%, up from 22.7% in the prior year quarter due to negative operating leverage from lower sales and the inclusion of approximately $0.4 million in severance and related costs. The resulting operating profit margins were 23.4% in the third quarter of 2009 as compared to 25.9% in the third quarter of 2008.

Net sales in our Energy Systems & Controls segment decreased by 25.1% to $103.0 million during the third quarter of 2009 compared to $137.5 million in the third quarter of 2008. The decrease was broad-based across all of our Energy Systems & Controls businesses, due to the weak global economy and its impact on our end markets, and included a negative 2.1% impact from foreign currency. Gross margins were 50.9% in the third quarter of 2009 compared to 54.7% in the third quarter of 2008 due to negative operating leverage on lower sales volume and $0.8 million in severance and related costs in the current year quarter. SG&A expenses as a percentage of net sales increased to 32.3% as compared to 31.0% in the prior year quarter due in part to $0.5 million of severance and related costs in the current year quarter. Operating margins were 18.7% in the third quarter of 2009 as compared to 23.7% in the third quarter of 2008.

Net sales in our Scientific & Industrial Imaging segment decreased by 16.6% to $78.9 million during the third quarter of 2009 compared to $94.6 million in the third quarter of 2008. The decrease was due to lower shipments to research and imaging markets and relatively flat sales in our medical business over the prior year period. Gross margins increased to 56.0% in the third quarter of 2009 from 54.4% in the third quarter of 2008 due to favorable product mix and lower costs. SG&A as a percentage of net sales increased to 37.2% in the third quarter of 2009 as compared to 34.6% in the third quarter of 2008 due to negative operating leverage from lower sales. As a result, operating margins were 18.8% in the third quarter of 2009 as compared to 19.8% in the third quarter of 2008.

In our RF Technology segment, net sales decreased 9.7% to $173.2 million compared to $191.9 million in the third quarter of 2008. Acquisitions accounted for $11.8 million in increased sales for 2009. Organic sales were down 16.7% due primarily to lower hardware and tag sales and the completion of transportation projects. Gross margins were 50.1% as compared to 52.1% in the prior year quarter, due to negative operating leverage from lower sales, and an unfavorable product mix due to higher service revenue and lower hardware shipments in transportation end markets. SG&A as a percentage of sales in the third quarter of 2009 increased to 27.7%, compared to 25.9% in the prior year third quarter. Operating profit margins decreased to 22.5% in 2009 as compared to 26.2% in 2008.

Read the The complete ReportROP is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.

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10qk
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