Roper Technologies, Inc.

Good morning. The Roper Technologies conference call will now begin. Today's call is being recorded, and all participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. I would now like to turn the call over to Zach Moxie, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you all for joining us as we discuss the third quarter financial results for Roper Technologies. Joining me on the call this morning are Neil Hunn, President and Chief Executive Officer, Rob Cresci, Executive Vice President and Chief Financial Officer, Jason Conley, Vice President and Chief Accounting Officer, and Shannon O'Callaghan, Vice President of Finance. Earlier this morning, we issued a press release announcing our financial results. The press release also includes replay information for today's call. We have prepared slides to accompany today's call, which are available through the webcast and are also available on our website. Now, if you will please turn to page two. We begin with our safe harbor statement. During the course of today's call, we will make forward-looking statements which are subject to risks and uncertainties as described on this page, in our press release, and in our SEC filings. You should listen to today's call in the context of that information. And now please turn to page three. Unless otherwise noted, we will discuss our results and guidance on an adjusted non-GAAP and continuing operations basis. For the third quarter, the difference between our GAAP results and adjusted results consists of the following items. Amortization of acquisition-related intangible assets. purchase accounting adjustments to commission expense, transaction-related expenses for completed acquisitions, and lastly, we have adjusted our cash flow statement to exclude the cash taxes paid related to our divestiture activity. GAAP requires these payments to be classified as operating cash flow items even though they are related to divestitures. Reconciliations can be found in our press release and in the appendix of this presentation on our website. And now if you'll please turn to page four, I'll hand the call over to Neil. After our prepared remarks, we will take questions from our telephone participants.

Neil? Thanks, Zach, and good morning, everyone. As we turn to page four, we'll walk through our usual agenda, highlights for the most recent quarter, followed by color commentary for each of our segments, and ending with our increased outlook for the year. Let's go ahead and get started. Next slide, please. As we turn to page five, the main takeaways for today's call are, first, we had another great quarter of operational and financial performance, and we're further increasing our outlook for the year. Second, earlier this month, we acquired another leading niche software business, Frontline Education. Third, we continue to have substantial M&A firepower north of $4 billion. And fourth, and perhaps the most important, the new higher quality Roper portfolio is becoming increasingly more evident, and we've never been more excited about our future. As it relates to the operating and financial performance in the quarter, we're pleased that revenues grew 10% on our organic basis and that the strength was broad based across our three segments and that margin performance improved as well. Consistent with our commentary during the last several quarters, not only did we grow nicely in the quarter, but the quality of our underlying business also improved as we saw our software recurring revenue base grow 11% on our organic basis. More on frontline in a moment. Based on the strength in Q3, and our expectations for Q4, we're increasing our organic growth outlook to north of 9% for the year. And for those reasons, together with the addition of frontline, we're increasing our full year depth guidance by 57 cents at the midpoint. And finally, we've been active in the M&A market. Over the last few months, we deployed just over 4 billion, 3.7 billion for frontline, and 300 million for two bolt-ons, one for Dell Tech, and the other for adders. To this end, even after our recent $4 billion in capital deployment, we still have a large amount of available M&A firepower, over $4 billion. We continue to be very active in the M&A markets, but as you saw in Q3 and as always, we will remain super patient and highly disciplined to ensure optimal deployment of our available capital. Finally, we feel great about the improving quality of the portfolio and the associated financial and operating results. All of this is made possible by our incredibly committed and passionate teams and associates. Thank you to everyone. Turning to the next page. As previously announced, we're excited to introduce to you another niche application software leader, which we've added to the Roper portfolio, Frontline Education. Of note, we closed this transaction on October 4th. Frontline is a leading provider of SaaS software solutions targeted to the U.S. K-12 education market. Frontline is an exceptional business which not surprisingly meets all our acquisition criteria, including being the clear leader that delivers administrative and HCM solutions purpose-built for the K-12 market, having multiple durable growth drivers, and a high single-digit organic growth outlook, high recurring revenue north of 90%, great cash flow characteristics, and a passionate high-quality team. While early days were delighted to welcome Frontline to the Roeper family, where we will be their permanent home going forward. This is just another great fit relative to our capital deployment and corporate strategy, not only to increase the scale of our enterprise, but the quality as well. Next slide, please. As we turn to page seven, we want to take a moment to highlight the recent transformation of Roper and our higher quality portfolio. To that end, the vast majority of our 27 businesses, save for their smaller size, could be a highly successful standalone leading vertical software or tech-enabled product company. Each of our 27 businesses are leaders in their respective niche markets. Our businesses serve the mission-critical needs of our customers and have intimate relationships with them. Our market leadership, purpose-built software solutions, and customer intimacy are the basis for our long-term competitive advantage. Next is our higher level of organic growth. This is no accident. We have raised the performance expectation for each of our businesses to structurally improve their long-term organic growth capabilities. We're doing this in a balance sheet and margin-friendly way. A large component of the organic growth story is the higher level of recurring revenue within each of our companies, approaching 60% for the enterprise and about 75% for software businesses. In addition, Our businesses are blessed with business models that generate high levels of free cash flow, a result of their operational efficiency, margin levels, and customer prepaid orientation of their balance sheets. Today, our portfolio is 75% software and 25% medical and water products. We are meaningfully less cyclical today versus 2018, given the markets we serve, healthcare, legal, education, government contracting, utilities, and food, to name some of our larger ones, and our fixed subscription versus volume-based revenue model. To put today's portfolio in perspective, in 2018, roughly 40% of our company was either highly cyclical or project-oriented. Today, these market dynamics essentially no longer exist for us. When we reflect on this portfolio transition, We've never been more excited for the future of Roper, given our increased quality, higher growth, and more resilient portfolio of companies. With that, let me turn the call over to Rob to walk you through our financial summary and our balance sheet position. Rob?