Roper Technologies (ROP) Q2 2016 Earnings Call

posted in: Earnings Call, Notes | 0

Roper Technologies (ROP) CEO Brian Jellison said they saw massive weakness in the oil and gas sector

“We had really terrific growth in medical and in software, and water, we’ll talk more about that within those respective segments. But the oil and gas declines were actually worse than we expected. We went into the year thinking that we’d be down maybe in the high-teens to 20%. In the quarter, we were down 25%, but in the upstream areas, we were down dramatically more, 44%, 51%, 52% numbers that really were amazing for us.”

In the process of potentially acquiring more software companies

“We’ve got a very active pipeline. And really most of the numerous acquisitions that we’re involved with now in late stages are application software companies and it’s likely we’ll be doing something soon.”

Roper Technologies (ROP) CEO Brian Jellison commented on the general mergers and acquisitions environment

“There are as many things available in the acquisition market as I’ve ever seen. We have looked at billions of dollars of transactions this year, and we’re directly engaged with a couple now that have a higher likelihood of closing, I think than the ones that we were looking at earlier in the year because of the quality of the business. Lot of the people that are running these private companies aren’t interested in becoming public. They would much rather join our firm – at the public equity in our firm that and not have the quarterly calls and all of the things that you have to do with investors and banks. So we remain a very attractive home for people. And I think that the acquisitions we’ve made in the last couple of years give us a wider variety of things that we can look at. Application software has a huge number of potential verticals and there are lot of niches within them that the largest people that are, roll-up people aren’t going to be interested in, so it’s still a very favorable hunting ground for us.”

Roper Technologies (ROP) CEO Brian Jellison said oil & gas companies are driving all their equipment in to the ground before they even think about buying new equipment

“This year, all year along anybody who’s in the upstream business would know that people are cannibalizing what they’ve got, nobody is buying anything, rental fleets are in distress. But there’re an increasing number of signals that would say that the cannibalization of all the stacked horsepower business out there, at some point will turn into new orders in revenue. We just have no idea where it will be.”