Roper(ROP) - 2023 Q4 - Annual Report

Financial Performance - Net revenues for the year ended December 31, 2023, were $6,177.8 million, an increase of 15.0$5,371.8 million in 2022[147]. - Application Software segment revenues grew by 20.7%, with organic revenue growth of 5.9%, totaling $3,186.9 million in 2023[147]. - Network Software segment revenues increased by 4.4$1,439.4 million in 2023[148]. - Technology Enabled Products segment revenues rose by 14.6%, with organic revenue growth of 14.7%, totaling $1,551.5 million in 2023[149]. - Gross margin for total revenues was 69.7$2,037.4 million in 2023, a significant increase from $606.6 million in 2022[157]. - Backlog increased by 8.4$3,156.6 million as of December 31, 2023, with acquisitions contributing 5% and organic growth contributing 3%[155]. Tax and Debt Management - Roper Technologies reported a 2023 effective income tax rate of 21.5%, down from 23.1% in 2022, with an expected rate of approximately 21% to 22% for 2024[131]. - The effective income tax rate improved to 21.5% in 2023 from 23.1% in 2022, positively impacted by a net tax benefit from international restructuring[154]. - Total debt decreased to $6,360.2 million at December 31, 2023, representing 26.7$6,000.0 million in fixed-rate borrowings with interest rates ranging from 1.00% to 4.20% as of December 31, 2023[175]. - The company anticipates generating positive cash flows from operating activities, which will support the reduction of outstanding debt according to the repayment schedule[171]. Investments and Acquisitions - The company completed the divestiture of a 51% equity stake in its industrial businesses on November 22, 2022, significantly reducing cyclicality and increasing recurring revenue[121][123]. - Roper's strategy focuses on sustainable growth through continuous improvement and acquisitions of high value-added software and technology-enabled products[120]. - The company maintains an active acquisition program, but future acquisitions will depend on various factors and cannot be reasonably estimated[170]. - The company retained a 47.3% minority equity interest in Indicor as of December 31, 2023, down from 49.0% in 2022, and applies the fair value option for this investment[142]. - The fair value of Roper's equity investment in Indicor is updated quarterly and classified within Level 3 of the fair value hierarchy[142]. - 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 $67.6 million[177]. Operational Insights - 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[124]. - The company performed its annual goodwill impairment test in Q4 2023, determining that impairment was not likely for any of its 22 reporting units[137]. - Roper's divestitures have led to a higher margin profile and an increased mix of recurring revenue[123]. - Cash and cash equivalents at foreign subsidiaries decreased by 36.6$148.3 million compared to $234.0 million at December 31, 2022, primarily due to cash repatriation of$250.8 million[167]. - Capital expenditures for 2023 were $68.0 million, up from$40.1 million in 2022, while capitalized software expenditures increased to $40.0 million from$30.2 million[168]. - Total contractual cash obligations amounted to $7,944.3 million as of December 31, 2023, with$1,131.1 million due in fiscal year 2024[169]. - The company expects capital expenditures and capitalized software expenditures to be between 1.0% and 1.5% of annual net revenues in the future[168]. - The company is exposed to interest rate risks on its revolving credit facility borrowings and foreign currency exchange risks, with approximately 11% of total net revenues recognized in currencies other than the U.S. dollar[174][176].