10-Q 1 rop-20220930.htm 10-Q rop-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022.
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                   to                 .

Commission File Number   1-12273
ROPER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware51-0263969
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
6901 Professional Parkway, Suite 200
Sarasota,Florida34240
(Address of principal executive offices)(Zip Code)
(941) 556-2601
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each ClassTrading Symbol(s)Name of Each Exchange On Which Registered
Common Stock, $0.01 Par ValueROPNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
 Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes  No
The number of shares outstanding of the registrant’s common stock as of October 28, 2022 was 106,052,054.
1


ROPER TECHNOLOGIES, INC.

REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS

2


PART I.    FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS
 
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(in millions, except per share data)
Three months ended September 30,Nine months ended September 30,
2022202120222021
Net revenues$1,350.3 $1,232.1 $3,940.9 $3,577.2 
Cost of sales408.5 360.4 1,190.4 1,050.0 
Gross profit941.8 871.7 2,750.5 2,527.2 
Selling, general and administrative expenses548.6 524.8 1,638.5 1,546.5 
Income from operations393.2 346.9 1,112.0 980.7 
Interest expense, net41.3 58.2 138.6 178.2 
Other income (expense), net3.6 (2.1)0.2 25.0 
Earnings before income taxes355.5 286.6 973.6 827.5 
Income taxes78.6 75.8 235.3 189.3 
Net earnings from continuing operations276.9 210.8 738.3 638.2 
Earnings from discontinued operations, net of tax49.0 78.7 170.3 226.6 
Gain on disposition of discontinued operations, net of tax1.1  1,707.7  
Net earnings from discontinued operations50.1 78.7 1,878.0 226.6 
Net earnings$327.0 $289.5 $2,616.3 $864.8 
Net earnings per share from continuing operations:
Basic$2.61 $2.00 $6.97 $6.07 
Diluted$2.59 $1.97 $6.91 $6.00 
Net earnings per share from discontinued operations:
Basic$0.47 $0.75 $17.74 $2.15 
Diluted$0.47 $0.74 $17.59 $2.13 
Net earnings per share:
Basic$3.08 $2.75 $24.71 $8.22 
Diluted$3.06 $2.71 $24.50 $8.13 
Weighted average common shares outstanding:
Basic106.0 105.4 105.9 105.2 
Diluted106.8 106.7 106.8 106.4 

See accompanying notes to Condensed Consolidated Financial Statements.
3


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)
(in millions)

Three months ended September 30,Nine months ended September 30,
2022202120222021
Net earnings$327.0 $289.5 $2,616.3 $864.8 
Other comprehensive loss, net of tax:
Foreign currency translation adjustments(180.9)(35.4)(285.6)(3.5)
Total other comprehensive loss, net of tax(180.9)(35.4)(285.6)(3.5)
Comprehensive income$146.1 $254.1 $2,330.7 $861.3 
 
See accompanying notes to Condensed Consolidated Financial Statements.
4


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in millions)
 
September 30,
2022
December 31,
2021
ASSETS:
Cash and cash equivalents$1,894.5 $351.5 
Accounts receivable, net630.3 687.6 
Inventories, net101.0 69.2 
Income taxes receivable33.5 16.8 
Unbilled receivables98.8 81.9 
Other current assets138.6 136.1 
Current assets held for sale1,094.7 1,078.0 
Total current assets3,991.4 2,421.1 
Property, plant and equipment, net83.2 82.7 
Goodwill13,672.8 13,476.3 
Other intangible assets, net6,243.5 6,509.1 
Deferred taxes47.2 50.0 
Other assets359.1 369.8 
Assets held for sale 804.9 
Total assets$24,397.2 $23,713.9 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable$121.2 $98.3 
Accrued compensation225.6 261.9 
Deferred revenue1,048.8 1,106.3 
Other accrued liabilities365.6 398.7 
Income taxes payable159.9 117.3 
Current portion of long-term debt, net698.9 799.2 
Current liabilities held for sale220.4 340.1 
Total current liabilities2,840.4 3,121.8 
Long-term debt, net of current portion5,960.6 7,122.6 
Deferred taxes1,365.0 1,466.2 
Other liabilities373.4 390.1 
Liabilities held for sale 49.4 
Total liabilities10,539.4 12,150.1 
Commitments and contingencies (Note 11)
Common stock1.1 1.1 
Additional paid-in capital2,467.9 2,307.8 
Retained earnings11,874.8 9,455.6 
Accumulated other comprehensive loss(468.7)(183.1)
Treasury stock(17.3)(17.6)
Total stockholders' equity13,857.8 11,563.8 
Total liabilities and stockholders' equity$24,397.2 $23,713.9 
 
See accompanying notes to Condensed Consolidated Financial Statements.
5


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in millions)
Nine months ended September 30,
20222021
Cash flows from operating activities:
Net earnings from continuing operations$738.3 $638.2 
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment28.0 33.9 
Amortization of intangible assets438.4 429.0 
Amortization of deferred financing costs9.2 10.1 
Non-cash stock compensation90.8 93.5 
Gain on sale of assets, net of tax (21.6)
Income tax provision, excluding tax associated with gain on sale of assets235.3183.8
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable48.3 (0.3)
Unbilled receivables(21.7)(22.9)
Inventories(33.6) 
Accounts payable24.7 14.6 
Other accrued liabilities (59.0)10.8 
Deferred revenue(15.2)26.5 
Cash tax payments related to disposal of businesses(534.6) 
Cash income taxes paid(397.5)(223.8)
Other, net(1.2)(29.2)
Cash provided by operating activities from continuing operations550.2 1,142.6 
Cash provided by operating activities from discontinued operations112.7 289.8 
Cash provided by operating activities662.9 1,432.4 
Cash flows from (used in) investing activities:
Acquisitions of businesses, net of cash acquired(580.9)(19.4)
Capital expenditures(30.0)(19.9)
Capitalized software expenditures(21.9)(22.2)
Proceeds from sale of assets 27.1 
Other, net(1.8)(1.5)
Cash used in investing activities from continuing operations(634.6)(35.9)
Proceeds from disposition of discontinued operations2,997.1  
Cash used in investing activities from discontinued operations(4.9)(6.5)
Cash provided by (used in) investing activities2,357.6 (42.4)
Cash flows from (used in) financing activities:
Payments on senior notes(800.0) 
Borrowings (payments) under revolving line of credit, net(470.0)(1,240.0)
Debt issuance costs(3.9) 
Cash dividends to stockholders(196.2)(176.9)
Proceeds from stock-based compensation, net57.0 63.9 
Treasury stock sales11.6 11.8 
Other(0.3) 
Cash flows used in financing activities from continuing operations(1,401.8)(1,341.2)
Cash flows provided by (used in) financing activities from discontinued operations(11.3)0.3 
Cash flows used in financing activities(1,413.1)(1,340.9)
(Continued)
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Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited) - Continued
(in millions)

Nine months ended September 30,
20222021
Effect of foreign currency exchange rate changes on cash(64.4)(4.9)
Net increase in cash and cash equivalents1,543.0 44.2 
Cash and cash equivalents, beginning of period351.5 308.3 
Cash and cash equivalents, end of period$1,894.5 $352.5 


 
See accompanying notes to Condensed Consolidated Financial Statements.
7


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)
(in millions)
Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total stockholders’ equity
Balances at June 30, 2022$1.1 $2,417.1 $11,613.5 $(287.8)$(17.4)$13,726.5 
Net earnings— — 327.0 — — 327.0 
Stock option exercises— 17.9 — — — 17.9 
Treasury stock sold— 3.0 — — 0.1 3.1 
Currency translation adjustments— — — (180.9)— (180.9)
Stock-based compensation— 31.7 — — — 31.7 
Restricted stock activity— (1.8)— — — (1.8)
Dividends declared ($0.62 per share)
— — (65.7)— — (65.7)
Balances at September 30, 2022$1.1 $2,467.9 $11,874.8 $(468.7)$(17.3)$13,857.8 
Balances at December 31, 2021$1.1 $2,307.8 $9,455.6 $(183.1)$(17.6)$11,563.8 
Net earnings— — 2,616.3 — — 2,616.3 
Stock option exercises— 80.8 — — — 80.8 
Cash settlement of share-based awards in connection with disposition of discontinued operations— (11.1)— — — (11.1)
Treasury stock sold— 11.3 — — 0.3 11.6 
Currency translation adjustments— — — (285.6)— (285.6)
Stock-based compensation— 102.9 — — — 102.9 
Restricted stock activity— (23.8)— — — (23.8)
Dividends declared ($1.86 per share)
— — (197.1)— — (197.1)
Balances at September 30, 2022$1.1 $2,467.9 $11,874.8 $(468.7)$(17.3)$13,857.8 
Balances at June 30, 2021$1.1 $2,217.9 $9,003.1 $(115.1)$(17.8)$11,089.2 
Net earnings— — 289.5 — — 289.5 
Stock option exercises— 20.7 — — — 20.7 
Treasury stock sold— 3.5 — — 0.1 3.6 
Currency translation adjustments— — — (35.4)— (35.4)
Stock-based compensation— 36.1 — — — 36.1 
Restricted stock activity— (2.0)— — — (2.0)
Dividends declared ($0.5625 per share)
— — (59.4)— — (59.4)
Balances at September 30, 2021$1.1 $2,276.2 $9,233.2 $(150.5)$(17.7)$11,342.3 
Balances at December 31, 2020$1.1 $2,097.5 $8,546.2 $(147.0)$(18.0)$10,479.8 
Net earnings— — 864.8 — — 864.8 
Stock option exercises— 81.8 — — — 81.8 
Treasury stock sold— 11.5 — — 0.3 11.8 
Currency translation adjustments— — — (3.5)— (3.5)
Stock-based compensation— 103.3 — — — 103.3 
Restricted stock activity— (17.9)— — — (17.9)
Dividends declared ($1.6875 per share)
— — (177.8)— — (177.8)
Balances at September 30, 2021$1.1 $2,276.2 $9,233.2 $(150.5)$(17.7)$11,342.3 
See accompanying notes to Condensed Consolidated Financial Statements.
8




Roper Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
All currency and share amounts are in millions, except per share data

1.    Basis of Presentation

The accompanying Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2022 and 2021 are unaudited. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position, results of operations, comprehensive income and cash flows of Roper Technologies, Inc. and its subsidiaries (“Roper,” the “Company,” “we,” “our” or “us”) for all periods presented. The December 31, 2021 financial position data included herein was derived from the audited consolidated financial statements included in the Company’s 2021 Annual Report on Form 10-K (“Annual Report”) filed on February 22, 2022 with the Securities and Exchange Commission (“SEC”) but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”).

Roper’s management has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these Condensed Consolidated Financial Statements in conformity with GAAP. Actual results could differ from those estimates.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year. You should read these unaudited Condensed Consolidated Financial Statements in conjunction with Roper’s audited consolidated financial statements and the notes thereto included in its Annual Report. Certain prior period amounts have been reclassified to conform to current period presentation.

Discontinued Operations

During the second quarter of 2022, the Company entered into a definitive agreement to sell a majority equity stake in our industrial businesses, including its entire historical Process Technologies reportable segment and the industrial businesses within its historical Measurement & Analytical Solutions reportable segment, to affiliates of Clayton, Dubilier & Rice, LLC. The transaction, which is expected to close in the fourth quarter of 2022, is subject to customary closing conditions, including regulatory approvals. The businesses included in this transaction are Alpha, AMOT, CCC, Cornell, Dynisco, FTI, Hansen, Hardy, Logitech, Metrix, PAC, Roper Pump, Struers, Technolog, Uson, and Viatran (collectively the “Industrial Businesses”).

During 2021, the Company entered into definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses (“2021 Divestitures”). As of March 31, 2022, Roper had completed the 2021 Divestitures.

The financial results for these businesses are presented as discontinued operations for all periods presented. Unless otherwise noted, discussion within these notes to the Condensed Consolidated Financial Statements relate to continuing operations. Refer to Note 5 for additional information on discontinued operations.

Update to Segment Reporting Structure

During the second quarter of 2022, we updated our reportable segment structure following the announcement of the transaction to sell a majority stake in our Industrial Businesses. The Company’s new reporting segment structure is classified based on business model and delivery of performance obligations. The three updated reportable segments (and businesses within each) are as follows:

–Application Software - Aderant, CBORD, CliniSys, Data Innovations, Deltek, IntelliTrans, PowerPlan, Strata, Vertafore

–Network Software - ConstructConnect, DAT, Foundry, iPipeline, iTradeNetwork, Loadlink, MHA, SHP, SoftWriters

–Technology Enabled Products - CIVCO Medical Solutions, FMI, Inovonics, IPA, Neptune, Northern Digital, rf IDEAS, Verathon

The day-to-day operations of our businesses, our organizational structure, and our strategy remain unchanged. All prior periods have been recast to reflect the changes noted above.

9



2.    Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) establishes changes to accounting principles under GAAP in the form of accounting standards updates (“ASUs”) to the Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. Any recent ASUs were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s results of operations, financial position or cash flows.

3.    Weighted Average Shares Outstanding

Basic earnings per share were calculated using net earnings and the weighted average number of shares of common stock outstanding during the respective period. Diluted earnings per share were calculated using net earnings and the weighted average number of shares of common stock and potential common stock outstanding during the respective period. Potentially dilutive common stock consisted of stock options based upon the trading price of Roper’s common stock. The effects of potential common stock were determined using the treasury stock method. Weighted average shares outstanding are shown below:

Three months ended September 30,Nine months ended September 30,
2022202120222021
Basic shares outstanding106.0 105.4 105.9 105.2 
Effect of potential common stock:
Common stock awards0.8 1.3 0.9 1.2 
Diluted shares outstanding106.8 106.7 106.8 106.4 

For the three and nine months ended September 30, 2022, there were 0.832 and 0.829 outstanding stock options, respectively, that were not included in the determination of diluted earnings per share because doing so would have been antidilutive, as compared to 0.502 and 0.530 outstanding stock options that would have been antidilutive in the respective 2021 periods.

4.    Business Acquisitions and Disposition

On January 3, 2022, Roper acquired the outstanding membership interests of Horizon Lab Systems, LLC, a provider of laboratory information management systems in the toxicology, environmental, public health and agricultural markets for an aggregate purchase price of $49.8.

On April 6, 2022, Roper acquired the issued and outstanding shares of Common Cents Systems, Inc. (“ApolloLIMS”) for a purchase price of $25.5, net of cash acquired and debt assumed. ApolloLIMS is a provider of laboratory information management systems in the toxicology and public health markets.

Both of these acquisitions have been integrated into our CliniSys business and their results are reported in the Application Software reportable segment.

On June 27, 2022, Roper acquired the issued and outstanding shares of MGA Systems Holdings, Inc., (“MGA”) for a purchase price of $180.1, net of cash acquired and debt assumed. MGA is a leading provider of purpose-built insurance software for managing general agents. This acquisition has been integrated into our Vertafore business and its results are reported in the Application Software reportable segment.

On August 19, 2022, Roper acquired substantially all of the assets of viDesktop Inc., (“viGlobal”) for a purchase price of $286.5, net of cash acquired and debt assumed. viGlobal is a leading provider of end-to-end human resources management software used for recruiting and integration, productivity management, resource allocation, performance management, learning and development, and diversity and inclusion to primarily law firms. This acquisition will be operated by and integrated with our Aderant business and its results are reported in the Application Software reportable segment.

During the third quarter of 2022, Roper also completed two business acquisitions, TIP Technologies Inc. and Common Sense Solutions Inc., for an aggregate purchase price of $36.9 which will be operated by and integrated with our Deltek business and their results are reported in the Application Software reportable segment.

10


The Company recorded $361.5 in goodwill, $9.5 assigned to trade names that are not subject to amortization and $239.3 of other identifiable intangibles in connection with these acquisitions. The amortizable intangible assets include customer relationships of $223.4 (18.2 year weighted average useful life) and technology of $15.9 (4.9 year weighted average useful life).

The results of operations of the acquired businesses are included in Roper’s Condensed Consolidated Financial Statements since the date of acquisition. Pro forma results of operations and the revenue and net income subsequent to the acquisition date has not been presented because the effects of the acquisitions were not material to our financial results.

On October 4, 2022, Roper completed its previously announced acquisition of Frontline Technologies Parent, LLC, a Delaware limited liability company and the parent company of Frontline Technologies (“Frontline Education”), pursuant to an Equity Purchase and Merger Agreement dated as of August 30, 2022 for a purchase price of $3,738, net of cash acquired and debt assumed. Frontline Education is a leading provider of school administration software, connecting solutions for human capital management, student and special programs, and business operations with powerful analytics to empower educators. Frontline Education will be reported in the Application Software reportable segment beginning in the fourth quarter of 2022. Roper funded the transaction using its cash on hand and revolving credit facility.

Disposition

On March 17, 2021, Roper completed the sale of a minority investment in Sedaru, Inc. for $27.1. The pretax gain on the sale was $27.1, which is reported in “Other income (expense), net” in the Condensed Consolidated Statements of Earnings.

5.    Discontinued Operations

The Company concluded that both the 2021 Divestitures and the sale of the Industrial Businesses each represented a strategic shift that will have a major effect on the Company’s operations and financial results. These transactions will greatly reduce the cyclicality and asset intensity of the Company. In addition, the Company will have an improved recurring revenue and higher margin profile. Accordingly, the financial results related to the 2021 Divestitures and Industrial Businesses are presented in the Condensed Consolidated Financial Statements as discontinued operations for all periods presented. Current and non-current assets and liabilities of the 2021 Divestitures and Industrial Businesses are presented in the Condensed Consolidated Balance Sheets as assets and liabilities of discontinued operations classified as held for sale for both periods presented, as applicable.

2021 Divestitures - During 2021, the Company signed definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses as described below.

On March 17, 2022, Roper closed on the divestiture of our TransCore business to an affiliate of Singapore Technologies Engineering Ltd., for approximately $2,680.0 in cash. The sale resulted in a pretax gain of $2,073.7 and income tax expense of $550.5, which are reported within “Gain/(loss) on disposition of discontinued operations, net of tax” in the Condensed Consolidated Statements of Earnings. TransCore was previously included in the historical Network Software & Systems reportable segment.

On January 5, 2022, Roper closed on the divestiture of our Zetec business to Eddyfi NDT Inc. for approximately $350.0 in cash. The sale resulted in a pretax gain of $255.3 and income tax expense of $60.9, which are reported within “Gain/(loss) on disposition of discontinued operations, net of tax” in the Condensed Consolidated Statements of Earnings. Zetec was previously included in the historical Process Technologies reportable segment.

On November 1, 2021, Roper closed the divestiture of our CIVCO Radiotherapy business to an affiliate of Blue Wolf Capital Partners LLC. CIVCO Radiotherapy business was previously included in the historical Measurement & Analytical Solutions reportable segment.


11


The following table summarizes the major classes of assets and liabilities related to the discontinued operations of the TransCore, Zetec and CIVCO Radiotherapy businesses, as reported in the Condensed Consolidated Balance Sheets at December 31, 2021:
December 31, 2021
Accounts receivable, net$74.7 
Inventories, net47.8 
Unbilled receivables158.2 
Goodwill405.5 
Other intangible assets, net31.0 
Other current assets71.4 
Current assets held for sale$788.6 
Accounts payable$40.3 
Accrued compensation27.0 
Deferred taxes29.5 
Other current liabilities62.3 
Current liabilities held for sale$159.1 

The following table summarizes the major classes of revenue and expenses constituting net income from discontinued operations attributable to the TransCore, Zetec and CIVCO Radiotherapy businesses:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net revenues$ $158.6 $100.4 $472.1 
Cost of sales 91.3 71.2 280.2 
Gross profit 67.3 29.2 191.9 
Selling, general and administrative expenses (1)
 25.6 19.9 87.8 
Income from operations 41.7 9.3 104.1 
Other income (expense), net 0.2 0.1 1.4 
Earnings before income taxes (2)
 41.9 9.4 105.5 
Income taxes 12.2 (6.2)23.4 
Earnings from discontinued operations, net of tax 29.7 15.6 82.1 
Gain on disposition of discontinued operations, net of tax1.1  1,707.7  
Net earnings from discontinued operations$1.1 $29.7 $1,723.3 $82.1 
(1) Includes stock-based compensation expense of $1.4 for the three months ended September 30, 2021, and $0.9 and $3.2 for the nine months ended September 30, 2022 and 2021, respectively. Stock-based compensation for discontinued operations was previously reported as a component of unallocated corporate general and administrative expenses. In connection with the sale of TransCore and Zetec, we recognized expense of $4.5 associated with accelerated vesting of share-based awards for the nine months ended September 30, 2022. The charges associated with accelerated vesting were recorded as a component of “Gain on disposition of discontinued operations, net of tax” within the Condensed Consolidated Statements of Earnings.
(2) During the three and nine months ended September 30, 2022, there was no depreciation of property, plant and equipment or amortization of intangible assets given the asset classification as held for sale during the period. During the three and nine months ended September 30, 2021 depreciation and amortization was $1.7 and $5.2, respectively.

12


Industrial Businesses - On May 29, 2022, Roper entered into a definitive agreement to sell a 51% majority stake in the Industrial Businesses to affiliates of Clayton, Dubilier & Rice, LLC (“CD&R”). Roper will receive total upfront, pre-tax cash proceeds of approximately $2,600 while retaining a 49% minority equity interest in a new standalone entity, RIPIC Equity LLC (“RIPIC TopCo”). Roper will receive a distribution of $1,775 from RIPIC TopCo, which will be funded by third-party indebtedness of $1,950 on RIPIC TopCo, and $829 of purchase price proceeds related to the 51% majority stake obtained by CD&R in RIPIC TopCo. In addition, Roper shall be entitled to an earnout payment from CD&R of up to $51 million if RIPIC TopCo exceeds a threshold level of earnings before interest, taxes, depreciation and amortization for the year ended December 31, 2022. Roper will also be required to make quarterly payments, directly or indirectly to CD&R, either (i) in cash, with total payments initially equaling approximately $29 million per year on a pre-tax basis, or (ii) in kind through the transfer of Roper’s equity interests in RIPIC TopCo to CD&R, initially representing approximately a 1.7% ownership interest of RIPIC TopCo on an annual basis.

The transaction, which is expected to close in the fourth quarter of 2022, is subject to customary closing conditions, including regulatory approvals.

The following table summarizes the major classes of assets and liabilities related to the discontinued operations of the Industrial Businesses, as reported in the Condensed Consolidated Balance Sheets:
September 30,
2022 (1)
December 31,
2021
Accounts receivable, net$163.0 $151.8 
Inventories, net146.2 106.9 
Deferred taxes45.3  
Goodwill569.0  
Other intangible assets, net69.3  
Other current assets101.9 30.7 
Current assets held for sale$1,094.7 $289.4 
Goodwill 618.2 
Other intangible assets, net 79.4 
Deferred taxes 51.1 
Other assets 56.2 
Assets held for sale$ $804.9 
Accounts payable$64.7 $52.5 
Accrued compensation39.0 47.9 
Deferred revenue19.7 23.9 
Deferred taxes12.7  
Income taxes payable10.1 14.7 
Operating lease liabilities34.4  
Other current liabilities39.8 42.0 
Current liabilities held for sale$220.4 $181.0 
Deferred taxes$ $13.3 
Noncurrent operating lease liabilities 24.1 
Other liabilities 12.0 
Liabilities held for sale$ $49.4 
(1) All assets and liabilities held for sale were classified as current as it is probable the sale of the Industrial Businesses will be completed within one year.


13


The following table summarizes the major classes of revenue and expenses constituting net income from discontinued operations attributable to the Industrial Businesses:

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net revenues$269.0 $230.7 $770.9 $688.3 
Cost of sales126.3 106.3 361.6 316.1 
Gross profit142.7 124.4 409.3 372.2 
Selling, general and administrative expenses (1)
78.9 67.8 213.4 193.3 
Income from operations63.8 56.6 195.9 178.9 
Other income (expense), net2.5 0.4 3.6 (0.1)
Earnings before income taxes (2)
66.3 57.0 199.5 178.8 
Income taxes17.3 8.0 44.8 34.3 
Earnings from discontinued operations, net of tax$49.0 $49.0 $154.7 $144.5 
(1) Certain costs previously reported as a component of unallocated corporate general and administrative expenses have been reclassified to discontinued operations. These costs primarily include stock-based compensation expense of $2.6 and $3.4 for the three months ended September 30, 2022 and 2021, respectively, and $8.1 and $9.4 for the nine months ended September 30, 2022 and 2021, respectively.
(2) During the three months ended September 30, 2022, there was no depreciation of property, plant and equipment or amortization of intangible assets given the asset classification as held for sale during the period. There was depreciation and amortization expense of $4.4 for the three months ended September 30, 2021 and $6.4 and $14.2 for the nine months ended September 30, 2022 and 2021, respectively.

6.    Stock Based Compensation

The Roper Technologies, Inc. 2021 Incentive Plan is a stock-based compensation plan used to grant incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights or equivalent instruments to Roper’s employees, officers, directors and consultants.

The following table provides information regarding the Company’s stock-based compensation expense:

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Stock-based compensation$29.6 $32.0 $90.8 $93.5 
Tax effect recognized in net earnings from continuing operations6.2 6.7 19.1 19.6 

Stock Options - In the nine months ended September 30, 2022, 0.379 options were granted with a weighted average fair value of $115.91 per option. During the same period in 2021, 0.513 options were granted with a weighted average fair value of $95.04 per option. All options were issued with an exercise price equal to the closing price of Roper’s common stock on the date of grant, as required by the Company’s stock-based compensation plans.

Roper records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. Historical data is used to estimate the expected price volatility, the expected dividend yield, the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option.

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The following weighted average assumptions were used to estimate the fair value of options granted during current and prior year periods using the Black-Scholes option-pricing model:

Nine months ended September 30,
20222021
Risk-free interest rate (%)2.09 0.94 
Expected option life (years)5.635.61
Expected volatility (%)24.54 25.15 
Expected dividend yield (%)0.55 0.56 

Cash received from option exercises for the nine months ended September 30, 2022 and 2021 was $80.8 and $81.8, respectively.

Restricted Stock Grants - During the nine months ended September 30, 2022, the Company granted 0.239 shares with a weighted average grant date fair value of $450.49 per restricted share. During the same period in 2021, the Company granted 0.225 shares with a weighted average grant date fair value of $408.07 per restricted share. All grants were issued at grant date fair value.

During the nine months ended September 30, 2022, 0.163 restricted shares vested with a weighted average grant date fair value of $345.79 per restricted share and a weighted average vest date fair value of $449.67 per restricted share.

Employee Stock Purchase Plan - Roper’s employee stock purchase plan (“ESPP”) allows employees in the U.S. and Canada to designate up to 10% of eligible earnings to purchase Roper’s common stock at a 10% discount on the lower of the closing price of the stock on the first and last day of each quarterly offering period. Common stock sold to employees pursuant to the ESPP may be either treasury stock, stock purchased on the open market, or newly issued shares.

During the nine months ended September 30, 2022 and 2021, participants in the ESPP purchased 0.031 and 0.031 shares of Roper’s common stock for total consideration of $11.6 and $11.8, respectively. All shares were purchased from Roper’s treasury shares.

7.    Inventories

The components of inventory were as follows:

September 30,
2022
December 31,
2021
Raw materials and supplies$52.9 $36.4 
Work in process25.3 19.1 
Finished products29.6 18.4 
Inventory reserves(6.8)(4.7)
Inventories, net$101.0 $69.2 

8.    Goodwill and Other Intangible Assets

The carrying value of goodwill by segment was as follows:
Application SoftwareNetwork SoftwareTechnology Enabled ProductsTotal
Balances at December 31, 2021$8,889.3 $3,655.3 $931.7