Roper (ROP) 29 Jan 212020 Q4 Earnings call transcript

Good morning. The Roper Technologies Conference Call will now begin. Today’s call is being recorded. All participants will be in a listen-only mode. [Operator Instructions] I would like now to turn the call over to Zack Moxcey, Vice President of Investor Relations. ahead. go Please

you the Thank for joining as well. us Technologies. Good Quarter all and discuss doing is Fourth hope Results Full we We morning. everyone for Year Roper Financial

announcing call me today’s Officer; this Vice Officer; financial President Shannon includes Executive Executive our Jason this Joining Vice Crisci, press we the morning Neil issued and and information Rob Chief Hunn, and replay President press Earlier call. O’Callaghan, President The of morning, release are a Vice Conley, Finance. Chief President Financial release results. and on Controller; also for

We are slides accompany also are which and our have on prepared website. today’s through call, available webcast to the available

you to Now please begin slide turn with We statement. if two. our safe-harbor

today’s are we statements, filings. as of forward-looking press in uncertainties and SEC call, subject risks on and make which this described page, release our will During the our to in course

the three. basis. of today’s be in You will our and GAAP information. slide in to the non-GAAP on for in should year, measures adjusted appendix and and And between to press found turn this quarter primarily context the an presentation listen Today, our on our website. release of results adjusted please that Reconciliations call discuss can we now,

will from you telephone turn hand call After the transaction remarks, our Neil. related completed I’ll related our take For purchase assets, accounting four, consist between our fourth expense, items, lastly to over the slide quarter, adjusted acquisition the now, deferred questions and related intangible adjustments for and Neil? And GAAP results amortization revenue and results we please expenses commission participants. acquisitions. difference to if of acquire of the following to prepared

joining everyone. everyone Thanks, Thanks we well. us, Zack. hope And good and morning, doing is for

and then questions. discussing enterprise with discuss results today's outlook highlights, agenda, turn our prior XXXX XXXX our to detailed your our guidance walk end our operational we'll XXXX and to segment XXXX financials segment-by-segment we'll through For and

please. slide, Next

As we quite a look XXXX, it was year. back on

XXXX our as more company was a Perhaps To streams, for a with performed This declining result. and enhanced exit of to during single Our We the single just innovation we with $X EBITDA very future levels were of in X% $X.X asset end, company capital higher saw and percent. cash whose with organic notably revenue high XX%. Revenues grew This have flow a and our flow with X%, customers performance, flow businesses retention level is many increase we with progress a intimacy XXXX billion of grew and and our this with better This grew a things, was level XXXX billion the of important, digits high astounding. at business free revenues cash mid is model, field simply recurring this software company, portfolio a period. testament to and forward cash our light a just by company. is a execution of benefited acceleration great teams. prospects revenue our skill high a year also deployment. improved company cloud. the quality

continue our is software to our We by relationships intimate to our having customer’s be operations. with customers. Most mission-critical benefited close often,

double the market in investments, disruption In throughout of year. strategically market best and which on addition, portfolio historical drive times the will gains share the market years find invest our down to experience, we continue during turn to on to we come. innovation Based in our time

billion Roper's to further $X companies' were by Vertafore we enhance able Group to our headlines of acquisition. Finally, deploy

we So when key we themes. XXXX, look back two highlight on

during the quality enterprise during got Net-net, a XXXX. and XX% the second, the in and continued to of pandemic, better bigger year. increased First, we grew. Cash our we improve of flow middle

Let's turn to the slide. next

that highlight revenue we at past X% our at XX% flow at the XX%. rate, X a and grew years, EBITDA cash compounded Over

quality period, grow time and enterprise through during of Also, to continue cycles. the macroeconomic compound We meaningfully our improved. the

higher are are coming We tied with cyclical levels much recurring revenue. of more portfolio. thirds of a EBITDA end less over we Conversely, of software-focused with two our software to little from markets nearly today, our XX%

drivers low-risk our inorganic Given factors, organic do we are these with and strategy long-term flow multiple and We and so through fronts. a compound cash enterprise. cycle both growth across

compounding. As long-term to string and and cash we our we will of continue 'XX, look revenue EBITDA flow

let's that, backdrop and discuss with macro turn next the page So to for 'XX. the

look set we for are XXXX, As we to year. up a strong

as mid-teens range. well This single in the range expect to likely in and top anticipated the is with revenue software heading our into momentum in These both software grow growth double-digits, businesses and They some continues. are We the Breaking XXXX, extent. into network revenue of with compounding it strong application on and the recurring gains. EBITDA enter businesses organic pipeline segments activity customer be in in mid retention down, and revenue recover license, year will 'XX. plus our well-positioned are from digit further aided growth growth the perpetual to by will

to has Our above of XXXX Of activity, pattern while we trend, But product health note, customer comp. growth more are non-Verathon below Verathon businesses a as medical care trend was facilities challenging restrictions. expect since expected a to return loosen normalized here.

of capital in and their revenue of growth will volume large continued Bronchoscope reoccurring placements the remain given single-use base the XXXX new business. strong However,

in Northeast, to Neptune recover Canada, nicely our access and especially the gain and expect US locations. to We grow residential customers, as

and headwinds. Industrial quarterly improvements to of We our their expect and continue after growth Tech businesses to macro return years Process X

a by aided and this continue high-quality we To our Finally, with end, XXXX will pipeline. very acquisitions. from M&A work to meaningfully full XXXX of the contribution cohort be

building maturing committed but also active pipe. and we to deleveraging, are remain in We our

have XXXX. been of a we Roper, but a lot So heading XX do execution tailwinds as to of front of and a momentum nearly into better strong I heading into year. think the think back over years I've set cannot I in lots us, of with Clearly,

Rob? So now to let call over me turn Rob. the

Good Neil. morning, Thanks, everyone.

our X% first for revenue while at statement we revenue the eight, $X.X page increased enterprise looking billion declined as Total Organic performance. for quarterly versus eclipsed time. prior X% QX of X%, income to Turning in the revenue the $XXX prior a came versus margin grew at XX.X%, lower points million. last down year's Tax EBITDA in record year basis at than XX EBITDA little rate quarter a XX.X%. to year. XX.X%. was

this diluted $X.XX earnings per So in our all-in, above resulted is adjusted share guidance which range. of

Next slide.

remain segment QX of Software with the later, segment. segment. Turning grew page on more nine, the Application the will reviewing mid growth here continuing. our the Sharp serving recurring detail was revenue minus higher declines Neil many with impacted by schools CBORD education to single XXXX digit & so Horizon addition in by of year just in Vertafore. as the some Organic for XX% businesses, full touching the highlights segment discuss and closed. unfortunately performance segment, X% QX results K-XX

putting plus network X% with very our For TransCore businesses, organic. Software up systems, solid prior a growth organic was The flat versus X% plus software year.

overall. For a investments Measurement acceleration & we a Industrial discussed channel some organic Neptune in and really businesses. and at we been Analytical conceptual some as by Verathon the bit to Segment recovery quarter, Solutions, X% our Verathon the growth, into start product sequential at margins coming as year of for plus it's [ph] see were impacted

after started up organic years decline, signs And a to of Lastly, some improvement couple XX.X%. for of at a early holding with here, Technologies, see once declines. margins Process of XX% we well again

slide. Next

XX, turning capital. ending net X% revenue. So slide the working a working annualized page to speaks quarter mostly QX negative looking capital for the at of as Honestly, with itself, net percentage

of software around certainly timing are primarily performance. seasonal QX our benefit renewals, trends, some there While typically do they

from negative You can see improving here X.X% XXXX, versus in to a XXXX. X% negative meaningful improvement

asset-light and our net sustainable, model Our cash cash high capital fuels compounding. drives flow negative working our conversion

sheet. is around growth on growing converts and and the our believe mindful cash of culture we impacts what are Our built to Topline right people all our focus to always flow, matters we way. balance

slide. Next

discussed, Neil So pretty turning XX% was recent excellent the performance, is really cash performance great of contributions look free XX% enterprise, you from which by represented flow QX flow, other to million acquisitions. Vertafore cash than with across driven really cash $XXX as along of matter This higher the year was revenue. working capital how I last meaningful was the and no just result at and cash flow it. spectacular, mentioned

full $X.XX billion operating cash of billion flow free and So cash of for of $X.XX generated year XXXX, we flow. the

So Full year year. to a repeat, cash conversion that's free from $X.X robust billion truly of free XX%, growth great cash in and EBITDA a flow XX%. was cash flow XXXX, flow was free our

So broad-based very and it really and durable. flow tremendous cash performance, was

slide. Next

updating XX, page balance to turning our sheet. on So

opportunistically fund quarter advantage billion, of market we earlier, ended EPSi approximately acquisitions of the with a mentioned acquisition with attractive during closed We $X were divestiture which on included complete Neil from excellent quickly leverage, our able the cost deal. financing deployment we to conditions and EPSi to October and XX. of total cash closed investment-grade take leverage. plan capital that Gatan to QX we're As the fourth combination paying to these our on performance, generated our the Thanks million great off internally start around cash to down proceeds flow, approximately since reduce Overall $XXX of a X%. XXXX was year

prepayable Looking ahead, has balance we plan a revolver, XXXX, of $X.X throughout current advantage leverage which approximately of taking billion. reduce our to rapidly

supports well-positioned continue. Our are compounding, cash solid balance long-term flow we sheet investment-grade which to

I'll to the remarks. remainder of So Neil our over for it with that, back prepared pass

Thanks, Rob.

recurring in and from aggregate, at this or businesses full last page, is X%. orient we primary The in we're recap revenues slightly New we between of York project to face In we leadership the our April that everyone our between a actually minus minute. required and guided model on to the flat, organic to It's TransCore be of in in help in outlook comparing and COVID turn demand. our to of a and $XX.XX came year or and happened. both Let's for more item plus DEPS revenue, the worth terms had to be up, minus guide came to thought down supply uncertainty, year business a being flat level the business We that reconciling and XXXX. reminding touch what at intimacy full down of To the felt $XX.XX $XX.XX. and our being customer you this and

the very on than of ability Also, this, are we there up no proud uncertainty example through our this of the let's of back basis of and last Software, organic across year. year. X% the out Looking walk this as segments. durability operate our that, anticipated each and through on With team's look model segment our to year. four of better Application played macro is for forward Relative the past to an drivers was

recurring the cloud. by very as well we mid up acceleration rates, saw an revenue as digits, retention strong Specifically, single to aided

this saw of segment revenue mid were to XX% We and As were about revenue some That to pushed reminder, we new implementations, revenue remained stream. this opportunities of pressure teens are said, down activity having services of pressure XXXX. which transactions. is perpetual new and and wins a Perpetual stream segment's new delayed. shifting much our recurring logo as in revenues, remote tied about tied as under revenue this fewer XX% installs anticipated Relative cross-selling to to revenue, for active expected.

saw declines tied fewer we deals. principally XXXX, here, digit to mid For single new

Our part wonderful large in a backside to job installs, pandemic. continue the we teams remote shifting did trend of on a the anticipate will

As it to the in revenue singles Network year. X% when, year grew mid the be for segment, we our relates for organic fact, to to we the full double-digits expect up

the This high Toll last be from Shipped Our noting levels anticipated. million single to congestion when we to infrastructure on New timing. turn given number More digits, benefited by the revenue this historic with lower low year growing underperformed at of million this revenue of York anticipated but Network expected as performed primarily more actually $XX revenue. the and expect recognized retention recurring $XX XXXX. high in businesses again, approximately project It's our occurred project this recurring expectations, in pushed that April, also but In volumes, were due lows TransCore's this revenues than to rates segment XXXX. in traffic we we overview, of segment was worth Software Tags

the talked Industrial. and Neptune all situations, we've Medical tale Products, this segment, year For Verathon, Other about our MAS of being four

Neptune. We For be slower April, recovery this to flat to of our about Medical up product basis. the We tied in and a across X% is year, organic The reconciliation the group companies. again, primary we felt growth. mid group non-Verathon feel ramp back factor single very this execution digits would an posted on businesses good

Specifically, we anticipated unprecedented demand product for family. innovation Verathon's

COVID For year, accelerated the as video substantially, the preferred Verathon intubation the adoption further grew technology. as of

volumes year, a uncertainty mid for Our Neptune, limited April. tied and approved budgets municipal non-factor, This as directly the elective municipalities Interestingly other clockwork, generally which for we proved grow digits in digits to medical lower to budget available. product be were highlighted mid-single procedure like were spending. hospital businesses, and down single capital

Northeast, impact However, do and the the on meter US to had lockdowns, ability impact in the customer’s Canada, replacements. of especially a routine our prolonged

As initial expectations. double-digits than was down for low a the result, our worse Neptune slightly year,

for said, segment, our with that quarterly Finally, across both we and is sharp sequential this That declines, Industrial businesses. what we improvements double-digits being Neptune these down industrial expected year. businesses for seeing and the low are happens,

customer and were energy-related it inability to the logging anticipated much with locations. Process project be out to as field our played XX%. get pushes we at it we XX% Finally, down to to Segment, service Tech into relates down we and in lower XX%, timing expect and This spending, resources as

XXXX. rewind play-by-play the is this So for

a bit detail. Now for let's more segment to pages turn the

please. slide, Next

billion, Application activity segment For for $XXX consistent The broad EBITDA with of X% quite of here up $X.XX has where this for XXXX. organically were macro Software, million. much remained revenues

to space. grow doing continues offerings that solid continue to to This solutions. nice is the flat activity revenue nice and the GovCon EPSi. business headwinds AEC level, Software activity see the target long-term consulting, for our At did fight experienced in Strata of part That PowerPlan customer analyze very nicely. we top-of-funnel Lab suggest and growth intimacy. COVID in business some demand will services the hospital EBITDA growth super Deltek's unit we our well occurring. accelerating some help But with Specifically, marketing recent revenue group, across a their again for a recurring delivered spend. said, roughly be and customer bodes see falling gains. cloud relative and and market growth completed our We our Aderant very recurring year strategic delivered Notably, and the war. double-digit combined acquisition business organic US to half

simply that a tied digits was in having double businesses these businesses two the volumes. in education due CBORD space, are our Finally, of that amount customer base decent the student A year, serve declined Horizon, & to shutdown. revenues to

acquired great fourth They're in cash and strong we off year. start strong last a Importantly, flow earnings quarter. very to the with Vertafore

we based last QX, revenue flat Looking by single see growth digit low perpetual mid revenues given to year's continued to recurring non-COVID services organic on offset growth, slightly single comp. lower digit and

Network our to turn let's Now segment.

EBITDA on were with Here, up an $X.XX basis billion, revenues X% organic of million. $XXX

well performed growing businesses low single Software last Network Our year, digits. during

retention grew a growing strong, Specifically, double network tied DAT on continues DAT's very tied and construction iTrade, network solid innovation to and focus had scale headwinds enable digits. was labor to organic based tighter some MHA market. gains. utilization, ConstructConnect with end and Foundry first disrupted had being said, remain well acquisitions. their their That businesses being networks very during bolt-on due of strong. to completed each markets also year iPipeline to high rates Roper COVID. two and these performed the

the during a non-software year. struggled businesses bit Our

was in hampered their secure Specifically, applications, but market. their prudential in care rf meaningful business, our by well are print IDEAS, did [ph] multi-protocol health reader declines

revenue million project. associated XXXX of about XXXX New York with For our full $XXX year, TransCore out of the pushed into

addition, York In shipments push-outs. due to lower were tag pressured and project non-New EBITDA a margins few

decline New low in businesses, anticipated in due with the to single associated to our shipments distinction the As X% see our TransCore non-software first the quarter lower businesses important in down you quarter. in lower software the grow we to quarter right-hand for revenue, revenue will and driven first XXXX, box, York continue digit see range of organic of look as to much An to But projects. timing by range. the to the can tag X% will be high-teens highlight, the we

off year comp is growth year coming a reminder, first mid-teens a quarter the a ago. from of this As

up our Demand Now awesome was The were with their for let's demand was on turn year basis Revenues to based $X.XX segment. $XXX global. EBITDA the of on MAS billion, line. product X% in intubation Verathon grew substantially for business organic an unprecedented video XXXX. million.

to we our ability Verathon's of meaningfully consumables installed Given years GlideScope’s pull-through of generate expect in increased come. reoccurring levels to the base this expanded to fulfill demand,

was believe first inaugural gained Single-Use product category. the We their during this the substantial year a release year foothold we in the addition, of Bronchoscope successful. market of In

to tied share throughout the low remains levels patient product declined are Northeastern, having year. customers Neptune's normalized resemble XXXX. med engagement. customer double-digits exclusively declined, businesses Neptune to more to Further, end market started volumes in other more see in of our the towards year. Our access were the interactions but meters. starting US the Canada to during not they indoor and regions flat strong Other normal

have throughout down, Finally, year. but our were Industrial shown sequential businesses the improvements

this low expect that growth to quarter. we QX, fourth for single-digit with the patterns organic segment of For similar

to of the turn segment, million organic final down year for XX% were XX% an $XX let's of are million with yet for margins. Congrats versus $XXX our ago, XX% or about Revenues businesses execution. X thanks our EBITDA continued team Process Compared and in to maintained EBITDA million, revenue. years exceptional on Now their EBITDA Tech. leadership and basis $XXX these down

we side As this our negatively has and a the and note, That continued despite all these is said, to prices did started pretty across exited cyclical and oil some straightforward compound COVID said, headwinds. segment has impacted as gas the we capital green same Roper XXXX. group, businesses. year. either. Certainly, story been shoots have not lower That seen help to short-cycle oil improve spending as

to declines to be quarter, in look the moderate the to quarter expect range. first we we in As first XX% the

The upswing. couple quarter. investments make this years, best should continue we good. channel easing positioned be have here Also, last capture few to as second years these comps be businesses fully next to cyclical enter pretty to and the Importantly, product we over of the

and associated framework. the Now turn our let's guidance to

the in outlook is year mid differences range full actual total In the versus for we macro between slide XXXX wanted basis our to single you in our on we somewhat revenue busy, growth with this organic XXXX a aggregate, mid line-up results. teens expect increase digit-plus the segment area. key to While being

As & growth. for we Software the we singles Application across our revenue segment, streams mid expect look

a slightly an improved towards recurring and rate, expect we by recurring SaaS. growth Specifically, momentum aided increased mix revenue year's last

with in mid Network second in Software and expect digit businesses expect we single plus We recovery easing services revenues expect we flat and growth a as segment growth plus. market Network organic digit half Similarly, comps. digit mid single mid growing modest single our Perpetual our

complete recovering Tag project grow expect We sales. York TransCore for and to combined, the year. When singles New see the should mid TransCore

MAS We expect well. single as to grow mid digits

businesses Medical Our up were exceptional year, XX%. Product last

the tied Importantly, streams medical to gain quality momentum. continue Verathon's of as revenue our to stream BFlex improve products continue GlideScope and revenue reoccurring will to

difficult high As we to and comp. declines. spending finally, should to Neptune digits, plus businesses high normalized plus procedures be capital look grow return elective levels and XXXX COVID more to hospital of XXXX, Medical to grow partially in by being after XXXX, access expected our single and recover are as Product offset restrictions returned our indoor low single up with years throughout the our meter businesses X more easing single Industrial should digits range And digit this replacements.

projects be these through well are Our maintenance, to as on the resumption end of deferred year improvements up based modest digits PT markets. in and as expected the businesses single field high

mid all range. to grow So plus mid revenues revenue the we total digits expect all, teens to in single in and organic increase

our together, on slide. to be establishing Based we're adjusted the and full just DEPS roll you range turn XXXX year $XX.XX guidance $XX.XX. Let's guidance when what to everything we in of our outlined,

XX% be XX% in rate tax Our to should range. the

of guidance is DEPS long-term Of and adjusted we're between to consistent quarter, establishing DEPS full our year $X.XX guidance be historical our For and to seasonality. roughly adjusted range our DEPS the first note, with XX% is XX% QX guided $X.XX.

get forget summary ever our to a of your year. XXXX. us None turn let's to questions. Now What and will

amazing. EBITDA Our were aggregate XX%, organic billion. percent so X% and flow very $X.X a had XX.X%, just margins XX% year. performed This well an cash at single in cash last declined steady we grew means, business margins on of to only flow grew basis. We revenue and

to the focused something performance, business ability on $X strategy, no this our vertical enterprise our is billion we foresee on say. model's of improved resulted of this which niche-leading, during There to stayed incredibly high-quality, our we're XXXX, doubt executing deployment be able capital Given proud to quality deployment performance, software in companies.

revenue capital quality spend. increased Our the digits. with of recurring innovation our our mid-single and grew increased portfolio We deployment investments

are look So XXXX, we as we well-positioned. we incredibly feel to

In We an contributions expect revenues. of will increased from two-thirds strong XXXX, organic acquisitions. the mix from to us that come EBITDA which our recurring be further about expect businesses, all augmented towards Software growth provides our virtues of by our we recent

active, committed will this A our has remain quality to and We on balance long-term To sheet, focused of we deleveraging continue deployment strategy. focus robust and our our opportunities. M& on pipeline capital many candidates high but end, is

to look durability back XXXX, year's last business proud as our we we are navigate our and of So model's successfully ability over leaders' uncertainties.

We are proud continue forward-leaning to that and be strategic. we

improved short, business are XXXX. last proud better and an In revenue focus. we recurring innovation and with continued year bigger during of increasing got We our we that growing mix

we As even a that can time. providing them long case everyone to certainly questions, strategy operate your model an remind we was low-risk in over of on and the acquiring arc whose better businesses they with then environment Roper, the get where This fantastic XXXX. I'll centers at turn

our So to turn with question. first let's that,

call. ahead. our of Deane We Dray will comes of Please question now Capital portion first [Operator RBC Instructions] go today The question-and-answer to go from the Markets.

Thank morning, everyone. Good you.

Hey, good Deane. morning,

Deane. morning, Good

how change scope? the much such did quarter? in you it can year, just been confirm of disclosures because you us you're sense the York your a especially new the is and just first original just all organic swing City the really delivered and expecting profile granularity there's lot give bridges have helpful, for providing appreciate land is the between high you're the and we there. in really - then factor, could on I XX. of no a And a XX a New XX here, revenue And were to pages what remind Those bridge contract if how of much Hey, start, us guidance, it

Yeah.

So And in - first million have $XXX good about million It's hey, full $XX the to the Deane, about year. only we for in million morning. there. quarter, $XX

As we now it's of is mentioned, pause, a the running again, a scope started up bit and and there's unchanged. but

seeing if in the pipeline, highlight you And it. high today? in what's and were the Got at licenses the services the improvement you're all to where terms areas of end businesses

Deane, maybe of sort question. the make you we want fully ask sure question. I can rephrase to I the understand to that

Yeah.

Just revenues see the in that seeing side? you're how it today, of have - play of challenges licenses taken you've terms positive the your the guidance would us been. where through the of where out upper-end the some potentially on would What's on you

Sure.

Okay.

appreciate I So question. the

understand we it think now. I

core So down was total revenue for while have XXXX. the been that obviously, businesses the portfolio in our for the perpetual in businesses, Software a

about book business. in XXXX the recovery half - all down. the know, strength We're expect the business, what to we've about in we We perpetual GovCon - seeing in in be are Deltek's perpetual of ‘XX of year continued seen you in strength,

about prepared in These are remarks, that firms, those business. As firms, architects, in in the professional end some their services the encouraging. the showing that's [ph] book markets I we're the engineers, the services consulting talked marketing of the - activity contractors, seeing -

their set upgraded In from of software have competitive its software at Aderant the to perpetual PowerPlan. have have we're winning – parts not to book upgraded factors not and Aderant unique customers addition, the where own - the the of the other upgrade, customers customers that the those. competitive has large percentage large a and have of are

obviously pushed all a somewhat handful But so pipeline just companies across, timing. opportunities are activity the we the And to hard build activity perpetual of that's large it, is the right And of and It book actually in bit, and activity have business. is that like pipeline encouraging then full. a predict PowerPlan's positive the exact the has to pipeline there. got which that primary

in of XXXX? just as just year share plans follow-up my can with And that could terms you'd said have for specific you the share question where there you that Rob. and revolver, specific helpful. us down how? but for for you That's be would Okay. goals be paying Do deleveraging the are You

Sure.

free you know, mode, be, flow So the goes it will all as cash in deleveraging towards we're deleveraging. when

cash a That continue. we But So rest towards pay deleveraging. the essentially, the flow free goes of dividend. will

So that's dividend, roughly probably in billion - a ballpark rough a you $X.X deleveraging good number. after probably a paying is

Oppenheimer. Please go comes ahead. Next question of Glynn from Christopher

Thanks, morning. Yeah. good

Good morning.

last on of congrats year. am inbounds just your lot curious, you're all a capital some the So I allocation after divisions. getting of sub-segment

had quality you fullness there's real the some Given pipeline, and of on in emphasis markets. the liquidity certainly

if pipeline little trade back wondering fund calculus to non-operating and into deleverage any So has shifted cash towards flow the the a your sooner?

back the Yeah. difficult handful there's make I've math I appreciate the it's meaningful for say, just rate it's sort the just almost compounding though, we in tax we to make and that it's to a to work helped it, we to here And you when Gatan business, math just buyer, business hard at XX the inbounds work. a sell get because leak inbounds. very a would said any us redeploy I question. of, been lower sell taxes, We Like a look - very you for timing. then Gatan, Certainly, with have routine credible years. orientation of what years, to strategic a in given year.

So yes, been ramped yeah, it's in inquiry. inbounds. few not decade more the there's But inbound would here. the has been than say up over always the activity quarters I last we get I've

Any appetite that of part other was the entertain question. that to

Yeah.

to doing in comes We've appetite. It according it's just the had the never our appetite. our not the and math I what's view, shareholders. to best think down our for math

unchanged. – has - it's remained that So appetite the

Thanks. Understood.

welcome. You're

is The from Tusa of go ahead. question Steve next Please JPMorgan.

morning. Good guys. Hey,

Hey, Steve.

in the And strong was of quarters, cash of did XX% comes overdrive fourth couple the Vertafore cash add? EBITDA, to roughly when EBITDA. was how much free it almost it's of kind pretty XX%. What been Last around quarter, The did fourth like then and there?

Vertafore both across the of great performance earlier, was as very mentioned working around portfolio, XX% or so broad-based. just EBITDA. yeah, Steve, And capital cash and I

quarter. There fourth right? which benefit, that is softer, performance. overall. capital right your little those businesses getting lowers working very from more were the software working great capital And certainly a being bit in You're just is some renewals, cyclical But strong

Our flat. about cash taxes year-over-year were

capital. was it working on really So all

Got next the flow within don't cash guidance, guide you you usually really it. And for year. then quite I didn't guess, for free -

I the that tax Vertafore, of that then after bought $X.X Is with any - does you think billion. the And you guys include said that? the that is dividend? $X.X the benefit of benefit billion

Yeah.

dividends. an billion that's So the $X.X number, is That's paying after estimate. so deleveraging

flow. next strong free year, for We conversion. right, very So have always yeah, you're cash don't we guide

that conversion As to you high know, we continue. very expect

As trends It's businesses It's I of the the buy. very capital right? mentioned, those working stainable, are we type culture.

As capital should businesses that their all down, the so continues to software grow, go working continue.

In tax attributes, there million. related tax some terms the to Vertafore, of which over little attributes $XXX disclosed, a are we yes,

some So coming right, companies, benefited of there'll 'XX. some from There's many we that other like benefit be all payroll deferral and also, taxes. in from multi-industry really

way So year that as you're the I'll other pay go next to payroll back again. starting taxes those

Allison ahead. other Next business Poliniak But about we know. of little counter So bit. each don't guide feel Operator question comes year. of – those are from cash the flow we a sort Fargo. you Please But go of great sort [ph] Wells next as

Hi, guys. Good morning.

Good morning, Allison.

Allison. morning, Good

of you're about to obviously, an you, some of understand number any maybe progression to talk those get of here? work? thinking a a of it things me you if Could pretty to your reopening theme of we, pervasive to it more start outsized sort seems Is businesses the progression in of Or businesses. is want out thoughts? bump, fact, as to Just the that, that start do back we of help in reopen

sort give let give back you his the Neil. I'll on the add and I'll Well, of color Rob it’s headline, the end. – you I'll

sequential It So a year. step get it's function when QX, bump-up. improvement the not of a sort the is you roll easier. lot like a Obviously, past whole throughout comps

it's the of segment-by-segment So sorry three ramps When last book businesses, come back other tags steady that by Software cetera. of principally and perpetual the the - return really a them. of it's basically, traffic they're services that the were up. that is business a Application volumes back iTrade. she York for with at little quarters will through, that's New In and the part project little of back Network, ConstructConnect, ramp Network it bit ramp DAT, for associated businesses the at associated as TransCore foundry. well. things, look just bit - as to on look It's of by basis, what goes, company you But pretty a at rolling It's one go the and the itself. that year two tied like of the with second, stands completing, et

our business because do difficult replacements. place capital will access in indoor Product customers in a to Neptune maintenance just these Process And then handful US got Industrial, customers. this Northeast, meters share is businesses, orders that's coming importantly, cyclical a maybe higher businesses finally, do the some market you back bit in prepared about. There's basis. plus important It's - energy that other all segment, maintenance restocking MAS the get all super the were to sequentially the For you and I the same. But just Industrial in was - activity - the in and the in sequential the prices little much getting the of oil quarter in headwind of modestly access there have to getting rebound, like some access of lot it's this helped. last there we rotate have there's Canada. in pipeline deferred talked a like said up then and we retain just do year. done. the Medical sort get a fourth a steady, the of have Verathon a and businesses got But to remarks, just

step would sort no anything? the if add But but you Rob, ramp, color would the that function. what of of be So

right. No, there. QX still We're I clearly that's then pandemic and of think assuming from the is much improve very middle things in

you Got would that it. obviously, your a anticipate been in financial significant amount of this that, time. point? that with of of ramp some or for existing at from line under of concerns we've And customers not then closure this the Any impact

obviously, I most most there. sort there's small across the are macro size it companies be the may We're be our here small, some I would would of medium A very the pockets software in – sort I or where subject of business enterprise say of And going level. no. portfolio, more to be our small to very percentage mean, of headwinds think and customers – uncertainty.

incredible we our data paid we the the mean, year. last is I think I just by got point and so to point cash flow. customers, right,

And so going don't what think be we no, do is just to down… critical to I what they there's do. And

of talked as Yeah. to those there. customers we pockets and universities, tend customers hit have most we The right about, areas that larger colleges of are

financial area. side, schools iTrade too like food So our that And about in worried are not then network customers in we're the trouble the have overall. they on being

issues a meaningful So there us. impact some that But in those really an impact to and restaurants certainly market. overall, could meaningful smaller impact some from of be not

Next from Giordano go ahead. comes Please Joe of Cowen. question

Good morning. guys. Hey,

Good morning, Joe.

Good morning, Joe.

so to you my in I'm X% blended, help the… me market the can with refinance at mortgage out guys

guy Florida, first will the way. run by never the We count question, through [ph] a in I have that I as

And and and negative with then what way? further But push getting – more that without that the that maximum where more on current it is the net can the to that working interesting. that into is more keeps that, like deals obviously, capital, portfolio, doing get more

Yeah.

and an that page was see go it's think XX, driven go us I side, software. working equal if the we mix and our QX the basically – side, capital right? asset to is which So structural QX the page, here. all increasing to on benefit by you indicates to business-by-business, towards on We're you'll that, liability to

say. the first I'd thing that's So

ahead, XXX% a is right? have days revenue. Second And is a at to going that approach to negative get you you they Xst year think that when the get but That's you of if take businesses net paid, capital, on or quite business of look and that's company XX%, recurring XX%. have revenue XX% working XX% its the don't SaaS that couple a about to prepaid certainly we of XX January that let's is you bill possible, art say,

we're should become going it legacy to Will XX%? it incentive will XX software we our more drive culture we negative. not system this year X see you're ever It's the that little inching target. that and percent every XX% We a number keep trying years. get as the over better to So But x a get business it get just perpetual and to We to an to business next It No, don't won't. higher. be have becomes to higher. bit more have a metric. on Saas, this

that a we you since any? – sorry, on And - frame a are Have of market some like leader, there Is look market for that, been How like you forward? seemed guys business helpful now? follow-up market drives that just where doing internal definitely diligence definitely upstarts - that our change how was that whole an are have that - right when you've that to did how be there. like at? if Thanks. A there? there was but approaching business change I'm the initial approaching you is was Vertafore. on that changes up. And it instituted, anything would you of That's are Like kind business kind that noticed what been

Yeah.

know, that had I better that, time. environment then buy them long these a summarize matter, do Vertafore we important most amazingly thing is is get great we if think in say provide we the over acquisition to any we what you businesses So regards and to to can of that period

five the got business. is business That was good principal and thought a the agency is said, side. result, not our a in and these We've as did to you short-term. to things We basically So That's – It's reflective of duopoly. on M&A the improve not competitor share of research quite a strategic one the market there with we a ours. strategy. do piece

the market last - largest and closed, we release press partners. after weeks three the in we out just ago. years won Fortunately, acquired a in of the There a deal was the four the for and or went that business business us, assured handful

delighted we're three that. over years, a ramp couple of So about slow years. It's couple, a a

beginning. indication the owner a they business by is going bit reflected - an right years. the you in reassured the you the the to long-term we of just just quality being you by that's numbers customer, look R&D, allocate That's think that Vertafore based business also was that in run more have. know, there in wanted our make investments. being But given the you of I therefore, is, from that's products which can case, little is we to to who the the in owned not of a we're, Vertafore Roper short And thing that on did diligence if sell the to by similar have handful we've and work is well you doing one very If to and done. a

features out, that's so ways to their going a monetize years few add take And to and just to continuing play functionality customer add to and base.

It last it quarter. the of on was just the we wasn't as Hey, company very, that's has business, very EBITDA, clarify performed But well month obviously, of it. just the own But there's there in XX quarter. in the XX fourth and well. my own Joe, - a the since answer, to all we the since cash fourth in

Wolfe question next Research. from ahead. Please go The Blake with Gendron

want the context thanks. kind comment, Yeah, R&D portfolio. of follow-up of your morning. I actually, broader to Good that on in

reasons, with would So of structurally COVID and a imagine was number end I for competitively. markets disruptive the

for a really ramp Vertafore? In wondering addition bit to if But the across moving we opportunities just units. R&D maybe appreciate know R&D across result there, ramping changes little to to the will not other that structurally and just I business expect of market business are simply a should R&D some all us all opportunities hard fully the new of because the there Vertafore as across any units, portfolio, your forward? stick to ramp pandemic it's I'm there's

Yeah.

things few a I'd say to there So with. begin

growth sometimes and when of broadly long CRI-accretive it's market, to we where into times, questions of them win, but to then First to go-to-market answer. it's a about it you is win, a product or two play go-to-market A is of how how how lot to effective of sort answer. get a - businesses when talk engage each sustainably grow of over the our with we to Answering strategically, arc with time.

from [ph] into and strategic That our across orientation said, shop each a more - not it's development doesn't mostly software business of our get-go. the and So product narrow mostly R&D, innovation obviously, innovation businesses. D

as But year, other percent about a businesses. are have probably R&D little about spend percentage, for compared In innovation to little it seeing X%. years There's X.X%, XXX was to an in some think increase continue there over year, a it's a of have they coming will increase of bit points, come. Vertafore seen there. our see in to over see last I You basis about will X%. that likely higher and be mix you add a as a and modest This revenue to little in to ‘XX, going

I – if sort happy you to there's stop of do So short mean, I there. have is But answer other yes. I’d we're guess it. one any follow-ups, the thing.

any lower side R&D businesses that. have of business model. higher we're We're right revenue compare mix Application the look is low because in the X% to you Network the bit software on of in be be to don't Roper's, TransCore, or we that. appears and XX% the our Software tend tend compared The peers. of on have company. And and a other XX% R&D line of on revenue quite that you we at is companies, that If reason When businesses to X% low. side businesses, spend Roper in depending The others XX%, the our it for the in between with MHA the effectively

it's So to get important always point about asked when we R&D. question out a

about framework there. large by COVID. dealing impacted maybe you're to think GovCon's was customers. of being to shift stability would it when you versus professional with helpful enterprise mentioned I imagine That's I services interesting wanted the thought The GovCon, some I the Deltek. to

should And we government just anything think think respect on be customer about side? size, there at to expect non-residential general we reopening? it side, Deltek stable? and markets it the improvement looking should construction about large How the Or specifically XXXX to is of a versus is in that matter with the we professional can kind to beyond? So we addition AEC being in Is spending SMB? just it maybe then recovery? just end On be for should stable of

one I’ll give you for gold question. like into a getting seven star questions

to to - try best do tick these. going come I'm So through to our

to se. that's M&A it's on combination high go space at generally Deltek, is just large It's spend end tied throughout super important to is, is us. that activity, is. yes, infrastructure, as It the the educations, the to end. a per continue, to for good military year. that - maybe note. of by the enterprise strong of and been it not way, been we GovCon smaller to not - the So just And it's the where currents might drive is These It's contractors government government it some of just fast gone the from infrastructure. toward go They which expect

the architects, in On mostly of and are shown here It's case, But up contractors, a shoots contractors, sort non-res are that the there little more. green contractors. the engineering QX. in the are broad. and some firms concentration, of bit of little worried, if Obviously, the book here they've have pockets side, this is Professional bit ones it's business services they engineers tightened and architects a that in

for Deltek, leading niche is and fall. In businesses those have started addition, firms a also marketing to services

off after that two, If follow-up So we the think to happy we're call. or checked I with your questions. you missed one

Mitchell go Julian from Barclays. of comes question next The Please ahead.

Hey. Morning Julian. for everyone. This on is Joao

morning. Hey, good

a the expectations to XX, wanted segment? in for thoughts calling kind thoughts your in that your on just XXXX, out shift software get a of to of Obviously, the you of I Maybe start could get we lot mix slide with, so maybe margins there? movement guys lot on are margin

the go are flat can detail But we in mean, the I guide. later on. I relatively year-over-year mean, in our segments Yeah. margins through overall,

And post-COVID, a in there's will think cost a the I happen, the didn't travel revenue of that a comes margin. margins, then decline higher in of the there. Vertafore a lot given bit back core little things at decline modest very come and

sort expect grow that some bounce more nice relatively process, the margins. So to overall, we margins cyclical of type should then get And bottom starts and the some we'd in in were stuff improvement flat. back as

that EBITDA the of coming and about trap we as sort to come travel sort amount are our be bit to percent piggybacking for the And said, expect Rob customer these a as back by this and in. down. with hard I revenue of it of increasing thing leadership. on back money could add going That a one in year, last because, year. of last core of one. Core to same costs margins there, if a question instance, that we I just spend said, margins are call your We're meetings, to expect the down some come like R&D It's

we're going - doing the inside Vertafore be and very may some In teams mix choose to then versus to and specifically obviously, margins, going coming the get trap. case, our there's opportunity to and to intentionally coming - we And not have that of somewhere. they're cost So companies there's in. business some the to that hold benefit

touch. So on - in aggregate, margins should be to flat up a

services that of cadence Perfect. about any Thanks. that piece sort kind or And guys And you look you then beyond of expectations kind some Application just that guided growth guys does flat process of the of maybe on like? thoughts the talk What of for? rebuilding pipeline. Software, on

Yeah.

they're say where I of work in whether is most or I application precursor. have the the as dynamic a first - tied think our are the here implementations, what - so segment should a new SaaS majority, on-premise. Most - services you to vast

back through activity activity, in XXXX, happened the what look shutdown, sequentially the license and So slowed if you think the perpetual quickly in down. very

services So activity a And business in little months a then QX. continued the behind right? a activity. of of services bit basically backlog, So down a slowed it QX, book the sort continued of you completed license license has projects. were in had bit QX, in-flight of through The handful low the little

activity comeback sooner, pick services got up you but and you it. So side, license back the behind - on when work follow will then will the this to

services. slower essentially a for ramp slower you've had up So ramp down a and

So why you growth perpetual can see in that's you it where see flattish book. the

ahead. next Harbor Clear Blanton go question Asset of Your Management. Alex comes from Please

Good Hi. morning.

Good Alex. morning,

Good Good to hear you. Alex. morning,

your XX a said outlook the XX would for had today, be there deleveraging a would You earlier would intentions you potential many for XXXX? characterize active, acquisition change so characterize to you wanted to could in be of that primarily there ask, acquisition had for with opportunities, you months. - How it that mentioned very robust But in deleveraging? acquisitions I has been pipeline your intentions of this year? terms you

for Alex the you, Thank question.

things with would you. I So share two

more things. is, a couple maybe of First than

So we are active. The is active. pipeline

businesses, time We learning all - with with spending to we spending opportunities understand looks time have the are the with sponsors like. that what cohort of relationships

XXXX, have not Importantly, management XX we transaction. least the the multiple had once, X months chance and we've every that before since if anywhere times, at between transaction sizable teams completed we months to meet completed a

of ready this year, likely are the to principally end we year. be into understand focused they're is first that that well businesses the that. we're So So before or work on to meeting These we're right? businesses acquire next doing now month the getting businesses be to going transacted, may at half this are of

So it's thing the early would say. I pipeline is the first work

to absolutely that. on we're is committed or unwavering Second deleveraging

focus. Third thing, figure there's through, came if not the primary that's But that right our out. deal way a to always

deleveraging. primary the the as is early focus well as of Our build, pipeline the part

direction? these in Okay. software? companies makeup it And know. industries? still Are Is you secondly, how you that would getting characterize you're still What going the of that primarily to

– lens. buying return cash again, our characterized, better M&A and that quantitative businesses are we're characterized than – us It's by our process pipeline the through Absolutely.

end XX businesses. wide the our It's models. variety same mostly combination types the business that it's yields They're deployment a type a informatics that a perpetual business. wide last what over what But by yeah, of So markets, capital of versus of characterized pipeline software to years. variety is of X SaaS essentially

question-and-answer This session. our concludes

back return Moxcey remarks. for to now will We any Zack closing

for our everyone, today. us you, Thank with call. joining you speaking during next We forward to earnings look

today's for now has attending you conference The concluded. presentation. Thank

now may You disconnect.