Roper(ROP) - 2024 Q4 - Annual Report

Financial Performance - Net revenues for the year ended December 31, 2024, were $7,039.2 million, an increase of 13.9% compared to$ 6,177.8 million in 2023[153]. - Application Software segment revenues grew to $3,868.3 million, with organic revenue growth of 5.6% driven by project-based business and healthcare markets[153]. - Network Software segment revenues increased to$ 1,475.6 million, with organic revenue growth of 2.5%, despite declines in media and entertainment markets[154]. - Technology Enabled Products segment revenues reached $1,695.3 million, with organic revenue growth of 9.3% led by medical products and water meter technology[155]. - Total consolidated gross margin was 69.3% for 2024, slightly down from 69.7% in 2023, impacted by acquisitions[153]. - Selling, general and administrative expenses as a percentage of net revenues decreased to 37.1% in 2024 from 37.8% in 2023, reflecting improved cost management[153]. Tax and Accounting - Roper Technologies reported an effective income tax rate of 21.2% for 2024, a slight decrease from 21.5% in 2023, with an expected rate of approximately 21% to 22% for 2025[137]. - The company emphasizes the importance of accounting estimates and assumptions in financial reporting, particularly in areas such as income taxes and goodwill impairment[135][136]. Divestitures and Investments - The company completed the divestiture of a majority equity stake in its industrial businesses in November 2022, retaining a 45.5% minority equity interest in Indicor as of December 31, 2024[127][148]. - The fair value of Roper's equity investment in Indicor is estimated quarterly, with changes reported as "Equity investments gain, net" in the consolidated statements of earnings[148]. - A hypothetical 10% decrease in the fair value of the company's equity investment in Indicor would result in a non-cash charge of approximately$ 77.2 million[183]. Strategic Goals - The company aims for consistent and sustainable growth in revenue, earnings, and cash flow through continuous improvement and strategic acquisitions of high value-added software and technology-enabled products[126]. - Roper's strategy includes acquiring businesses that can realize growth while maintaining high margins, contributing to the overall increase in shareholder value[126]. - The company has a proven track record of compounding cash flow and increasing shareholder value through its diversified technology offerings[125]. Debt and Cash Flow - Interest expense increased by 57.4% to $259.2 million in 2024, primarily due to higher debt balances[157]. - Total debt increased to$ 7,669.2 million at December 31, 2024, representing 28.9% of total capital, due to the issuance of senior notes[168]. - The company anticipates generating positive cash flows from operating activities to reduce outstanding debt according to the repayment schedule[177]. - At December 31, 2024, fixed-rate borrowings totaled $7,500.0 million with interest rates ranging from 1.00% to 4.90%[181]. Operational Metrics - Net working capital was negative$ 1,434.6 million at December 31, 2024, compared to negative $1,196.6 million in 2023, indicating increased deferred revenue[167]. - Backlog decreased by 1.6% to$ 3,105.4 million at December 31, 2024, primarily due to a decline in the Technology Enabled Products segment[162]. - Capital expenditures were $66.0 million in 2024, slightly down from$ 68.0 million in 2023, with capitalized software expenditures increasing to $45.0 million[174]. - Cash and cash equivalents held at foreign subsidiaries decreased by 11.8% to$ 130.8 million as of December 31, 2024, primarily due to cash repatriation of $270.9 million[173]. Segment Reporting - Roper's segment reporting includes three reportable segments: Application Software, Network Software, and Technology Enabled Products, with detailed financial information available in the consolidated financial statements[130]. - Roper's financial results from discontinued operations, including the 2021 divestitures, are reported separately, focusing discussions on continuing operations[129].