Roper Technologies Inc. (NASDAQ:ROP)

Current Income Tax Expense

The current income tax expense exhibits significant fluctuations over the five-year period. Starting at 316,700 thousand USD in 2018, it increased sharply to 549,700 thousand USD in 2019. This was followed by a notable decline to 317,200 thousand USD in 2020 and a further slight decrease to 281,900 thousand USD in 2021. In 2022, the current tax expense rose again to 469,600 thousand USD. Overall, the current tax expense shows considerable variability with no consistent trend upward or downward.

Deferred Income Tax Expense

The deferred income tax expense demonstrates a more volatile and negative trend for most years. It was negative in 2018, 2019, and 2020, with values of -62,700; -90,200; and -57,600 thousand USD respectively. In 2021, this trend reversed to a positive value of 6,500 thousand USD, indicating a deferred tax benefit or reversal of previous liabilities. However, in 2022, the deferred tax expense dropped sharply again to -173,200 thousand USD, the lowest point in the observed period. This substantial negative value suggests a significant increase in deferred tax liabilities or a reduction in deferred tax assets realized in 2022.

Total Income Tax Expense

The total income tax expense, representing the sum of current and deferred taxes, generally follows the pattern of the current tax expense with some moderation due to the deferred component. It started at 254,000 thousand USD in 2018 and rose to 459,500 thousand USD in 2019, mirroring the spike in current tax expense. In 2020, the total tax expense decreased to 259,600 thousand USD, then increased moderately to 288,400 thousand USD in 2021. In 2022, the total tax expense slightly increased again to 296,400 thousand USD. Despite the unusual positive deferred tax expense in 2021, the total tax expense remained relatively stable around the 250,000 to 300,000 thousand USD range, suggesting that the current tax expense predominantly drives the overall tax burden.

Key Insights

The data reveals that current tax expense is the primary driver of total income tax expense fluctuations. The deferred tax component is highly volatile, with frequent negative values indicating periods of deferred tax benefits or changes in tax asset/liability positions. The sharp negative deferred tax expense in 2022 stands out as an anomaly, potentially impacting the company's tax obligations substantially that year. The interplay between current and deferred tax expenses necessitates careful consideration when evaluating the company's effective tax rate and tax planning strategies.

Statutory Federal Income Tax Rate

The statutory federal income tax rate remained constant at 21% throughout the five-year period, indicating a stable baseline for federal taxation on income.

Foreign Operations, Net

The percentage impact of foreign operations showed volatility over the period, starting at 1.6% in 2018, dropping sharply to 0.2% in 2019, then rising to a peak of 2.6% in 2021 before decreasing again to 0.8% in 2022. This suggests fluctuating contributions from foreign operations to the overall tax position.

R&D Tax Credits

Research and development tax credits increased in magnitude, starting at -0.9% in 2018 and growing in absolute terms to -3% by 2022, reflecting greater benefit from R&D credits over time, potentially driven by increased qualifying expenditures or policy changes.

State Taxes, Net of Federal Benefit

State tax contributions, net of federal benefits, exhibited an upward trend, beginning at 2.4% in 2018 and rising to 3.7% by 2022, albeit with minor fluctuations. This indicates a growing relative impact of state taxation on the company’s effective tax rate.

Stock-Based Compensation

The effect of stock-based compensation on the tax rate decreased over the period, starting from -3.1% in 2018, decreasing in absolute value to -1% by 2022. This declining benefit could suggest changes in compensation practices or accounting treatments.

Impact of UK Tax Rate Change

A notable impact appeared in 2021 with a 1.7% increase, reflecting a one-time effect due to adjustments in the UK tax rate. This impact was absent in other years.

Tax Cuts and Jobs Act of 2017, Measurement Period Adjustments

In 2018, there was a -1.2% adjustment related to the Tax Cuts and Jobs Act of 2017, after which no further adjustments were recorded, indicating the finalization of measurement period effects linked to that legislation.

Divestitures

A single positive impact of 1.8% was reported in 2019 related to divestitures, suggesting a tax effect from restructuring or asset sales during that year, with no subsequent entries.

Legal Entity Restructuring

Legal entity restructuring effects varied, with a -1.8% impact in 2019, a -1.2% impact in 2021, and a positive 0.8% in 2022, indicating fluctuating tax consequences from corporate restructuring activities over the years.

Other, Net

Other net tax effects were generally minor and inconsistent, with a positive 1.4% in 2018, slight negative in 2019, and small positive impacts in 2020 and 2022, suggesting miscellaneous adjustments without a clear trend.

Effective Income Tax Rate

The effective income tax rate gradually increased from 21.2% in 2018 to 23.1% in 2022. This steady rise reflects an overall increase in the tax burden when considering all adjustments and tax effects, notwithstanding the stable statutory federal rate.

The financial data exhibits notable trends and fluctuations across several tax-related and asset/liability categories over the five-year period ending December 31, 2022.

Reserves and accrued expenses

Initially, reserves and accrued expenses increased steadily from 156,500 thousand USD in 2018 to 195,800 thousand USD in 2021, followed by a slight decline to 192,400 thousand USD in 2022. Concurrently, a related line item shows negative values in reserves and accrued expenses, with a reduction in magnitude from -14,300 thousand USD in 2018 to -12,000 thousand USD in 2022, indicating potential adjustments or offsetting entries over time.

Net operating loss carryforwards

These carryforwards rose significantly, peaking at 154,600 thousand USD in 2020, before declining to 101,500 thousand USD in 2021 and further to 84,600 thousand USD in 2022, suggesting utilization or expiration of previously accumulated losses in recent years.

R&D credits and capitalized R&D expenditures

R&D credits demonstrated variability, decreasing from 6,100 thousand USD in 2018 to 4,100 thousand USD in 2019, then spiking sharply to 26,300 thousand USD in 2020, followed by a reduction to 8,900 thousand USD in 2022. Capitalized R&D expenditures are only reported in 2022 at 97,800 thousand USD, indicating a possible change in capitalization policy or reporting.

Interest expense limitation carryforwards

These carryforwards rose dramatically from 4,500 thousand USD in 2018 to a notable high of 63,000 thousand USD in 2020, decreasing to 10,900 thousand USD in 2021, and rising again to 41,100 thousand USD in 2022, reflecting volatility in interest expense constraints over this timeframe.

Outside basis differences on assets held for sale

Data is sparse but shows a value of 2,700 thousand USD in 2018, absence in subsequent years, and a sharp increase to 57,500 thousand USD in 2021, implying significant transactions or revaluations related to held-for-sale assets during that year.

Lease liability and ROU asset

Lease liabilities commenced reporting in 2019 at 64,000 thousand USD, remaining relatively stable through 2020 before declining gradually to 50,100 thousand USD in 2022. Conversely, the right-of-use (ROU) asset, reported starting 2019 at -61,700 thousand USD, follows a similar declining trend to -48,000 thousand USD in 2022, consistent with lease obligations decreasing over time.

Deferred tax assets and valuation allowances

Deferred tax assets, less valuation allowance, increased substantially from 237,700 thousand USD in 2018 to a peak of 496,500 thousand USD in 2020, then decreased to 430,800 thousand USD in 2021 before a moderate rise to 474,900 thousand USD in 2022. The valuation allowance showed a gradual increase in the negative balance from -26,400 thousand USD in 2018 to -44,400 thousand USD in 2021, then receded to -37,100 thousand USD in 2022, indicating periodic reassessments of realizability of deferred tax assets.

Deferred tax assets and liabilities

Gross deferred tax assets rose robustly from 211,300 thousand USD in 2018 to 458,500 thousand USD in 2020, before declining and recovering to 437,800 thousand USD in 2022. Conversely, deferred tax liabilities grew significantly from -1,090,200 thousand USD in 2018 to -2,058,700 thousand USD in 2022, exacerbating the net deferred tax liabilities position.

Amortizable intangible assets

There is a consistent increase in the negative value of amortizable intangible assets from -1,043,000 thousand USD in 2018 to -1,818,700 thousand USD in 2022, reflecting growing amortization or additions to intangible assets subject to amortization.

Plant and equipment and accrued tax on unremitted foreign earnings

Plant and equipment values are negative but notably decrease in magnitude from -6,600 thousand USD in 2018 to a missing value in 2022, implying potential asset disposals or changes in classification. Accrued tax on unremitted foreign earnings fluctuated, rising in expense from -16,300 thousand USD in 2018 to -24,700 thousand USD in 2021, then sharply decreasing to -5,800 thousand USD in 2022, possibly due to repatriations or tax planning strategies.

Outside basis difference in Indicor

This item shows isolated negative values of -10,000 thousand USD in 2018 and a significant increase to -174,200 thousand USD in 2022, with gaps in intervening years, likely reflecting one-time or infrequent adjustments related to this investment or subsidiary.

Net deferred tax assets (liabilities)

The net position consistently reflects a negative balance, increasing from -878,900 thousand USD in 2018 to -1,620,900 thousand USD in 2022, indicating growing net deferred tax liabilities which may impact future tax obligations or benefits.

Overall, the data reveals complex movements in deferred tax positions, lease-related balances, and intangible asset amortization, along with fluctuating carryforward assets. There is an apparent trend of increasing deferred tax liabilities exceeding deferred tax assets, accompanied by sizable changes in intangible asset amortization and lease accounting balances. These patterns suggest evolving tax positions, asset management strategies, and adoption of accounting standards impacting deferred tax and lease-related accounts over the observed periods.

The analysis of deferred tax assets and deferred tax liabilities over the five-year period reveals distinct trends and notable shifts.

Deferred Tax Assets

Deferred tax assets showed a significant increase from 52,200 thousand US dollars in 2018 to a peak of 104,000 thousand US dollars in 2020, nearly doubling over two years. However, this upward trend reversed with a decline to 101,100 thousand US dollars in 2021 and a more pronounced drop to 55,900 thousand US dollars in 2022. This indicates that the company initially recognized increasing future tax benefits but experienced a reduction in these benefits towards the end of the period analyzed.

Deferred Tax Liabilities

Deferred tax liabilities exhibited a continuous and substantial growth trend throughout the entire period. Starting at 931,100 thousand US dollars in 2018, the liabilities increased steadily each year, reaching 1,678,800 thousand US dollars by 2022. The largest year-over-year increase occurred between 2019 and 2020, rising by over 450,000 thousand US dollars. Despite a slight decrease in 2021, deferred tax liabilities surged again in 2022 to the highest level observed, indicating rising future taxable amounts and potential tax obligations.

In summary, while deferred tax assets saw a rise followed by a decline, deferred tax liabilities consistently expanded at a rapid pace, resulting in a widening gap between liabilities and assets over the five years. This pattern suggests increasing future tax burdens relative to tax benefits, which may impact the company’s tax planning and financial strategy going forward.

The financial data reveals several notable trends over the five-year period ending December 31, 2022, when adjusted for reported and deferred income tax impacts.

Total Assets

Both reported and adjusted total assets show a consistent upward trajectory throughout the period. Reported total assets increased from approximately $15.25 billion in 2018 to $26.98 billion in 2022. Adjusted total assets closely track the reported values, with a slight consistent downward adjustment. This growth indicates steady asset accumulation, although the pace of asset growth accelerated notably between 2019 and 2020.

Total Liabilities

Reported total liabilities rose sharply from about $7.51 billion in 2018 to a peak of around $13.55 billion in 2020, then declined steadily to approximately $10.94 billion in 2022. Adjusted total liabilities follow a similar pattern but remain consistently lower, reflecting the tax adjustments. The peak and subsequent decline suggest active liability management or debt reduction efforts after 2020.

Stockholders’ Equity

Stockholders’ equity, both reported and adjusted, shows strong growth over the period. The reported figure rose from about $7.74 billion in 2018 to $16.04 billion in 2022, more than doubling. Adjusted equity values are consistently higher than reported, implying positive tax-related adjustments impacting equity. The equity growth implies retained earnings accumulation and possibly equity issuances or revaluations.

Net Earnings

Net earnings experienced considerable volatility across the years. Reported net earnings surged significantly from $944.4 million in 2018 to $1.77 billion in 2019, then dropped to $949.7 million in 2020 before gradually increasing again to $4.54 billion in 2022. Adjusted net earnings mirror the reported trends but remain consistently lower, indicating that tax adjustments somewhat reduce reported profitability. The substantial earnings jump in 2022 signals a marked improvement in profitability relative to prior years.

In summary, the data indicates robust growth in asset base and equity, accompanied by active liability reduction post-2020. Earnings demonstrate volatility but culminate in a substantial increase by 2022, pointing to improved operational or financial performance. The consistent spread between reported and adjusted figures highlights the material impact of income tax considerations on the financial position and results.

Net Profit Margin

The reported net profit margin exhibits considerable fluctuation over the observed period, beginning at 18.19% in 2018, peaking at 32.94% in 2019, then declining sharply to 17.18% in 2020. It moderately increased to approximately 20% in 2021 before surging dramatically to 84.6% in 2022. The adjusted net profit margin follows a similar trajectory, with values slightly lower than the reported figures, indicating consistent adjustment effects. This spike in 2022 suggests a substantial improvement in profitability relative to sales, likely influenced by factors beyond typical operations.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios show a steady decline across the five-year span, starting from 0.34 in 2018 and falling to 0.20 by 2022. This decreasing trend indicates a diminishing efficiency in generating revenue from assets employed, which may suggest either asset base growth outpacing sales or reduced efficiency in asset utilization.

Financial Leverage

Financial leverage ratios, both reported and adjusted, have generally decreased from 2018 through 2022. The reported financial leverage moved from 1.97 in 2018 to 1.68 in 2022, while the adjusted leverage decreased from 1.76 to 1.52 over the same period. This downward trend signifies a gradual reduction in reliance on debt financing or a relative increase in equity, potentially implying a strengthening balance sheet or a strategic shift towards lower financial risk.

Return on Equity (ROE)

ROE percentages demonstrate notable volatility. Reported ROE began at 12.2% in 2018, rose to a peak of 18.63% in 2019, then dropped substantially to 9.06% in 2020 before stabilizing around 9-10% in 2021. In 2022, it rose markedly to 28.34%. Adjusted ROE mirrors this pattern but remains consistently lower, suggesting adjustments reduce reported profitability metrics. The 2022 increase aligns with the surge in net profit margin and reflects improved overall equity returns.

Return on Assets (ROA)

Reported ROA follows the general trend of profitability measures, climbing from 6.19% in 2018 to 9.76% in 2019, then falling to 3.95% in 2020. It experiences a slight recovery in 2021 with 4.86% and then significantly increases to 16.84% in 2022. Adjusted ROA tracks closely with reported values and indicates a similar performance trend. This pattern highlights turning points in asset profitability, with a pronounced uplift occurring in the most recent year.

Reported Net Earnings

The reported net earnings exhibit a fluctuating trend over the five-year period. Beginning at $944.4 million in 2018, there was a notable increase to $1.77 billion in 2019, followed by a decrease to $949.7 million in 2020. Earnings then rose again to $1.15 billion in 2021 and sharply increased to $4.54 billion in 2022. This indicates a significant surge in profitability in the latest year, reaching nearly four times the amount from the previous year.

Adjusted Net Earnings

Adjusted net earnings follow a similar pattern to reported earnings but consistently show slightly lower values. Starting at $881.7 million in 2018, there was an increase to $1.68 billion in 2019, followed by a drop to $892.1 million in 2020. Earnings improved moderately to $1.16 billion in 2021 before a substantial jump to $4.37 billion in 2022. The adjusted figures confirm the significant growth in core profitability during the last year while smoothing out some effects likely related to tax adjustments.

Reported Net Profit Margin

The reported net profit margin reflects a marked variation across the time frame. It was 18.19% in 2018, more than doubling to 32.94% in 2019. However, it then declined to 17.18% in 2020, before rising slightly to 19.95% in 2021. The margin then surged dramatically to 84.6% in 2022, indicating a substantial increase in profitability relative to revenue that year.

Adjusted Net Profit Margin

Adjusted net profit margin trends closely mirror those of the reported margin but are consistently lower. The margin moved from 16.98% in 2018 up to 31.26% in 2019, decreased to 16.14% in 2020, and increased marginally to 20.06% in 2021. A sharp rise to 81.38% occurred in 2022. This suggests that after accounting for tax-related adjustments, profit margins still show significant enhancement in the final year, reflecting strengthened operational profitability.

Overall Analysis

Over the examined period, both reported and adjusted net earnings and profit margins demonstrate volatility, with peaks in 2019 and dips in 2020, likely reflecting economic and operational challenges during those years. The substantial leap in 2022 across all metrics highlights an exceptionally profitable year, with profit margins reaching historically high levels. This trend indicates either a significant increase in earnings, a reduction in costs relative to revenue, changes in tax treatment, or a combination thereof. The close alignment between reported and adjusted figures suggests that tax adjustments have a relatively consistent and moderate impact compared to overall earnings and profitability trends.

The analysis of the financial data over the five-year period reveals several key trends and patterns in the company's asset management and efficiency metrics.

Asset Growth

The reported total assets exhibited a consistent upward trajectory, increasing from approximately $15.25 billion in 2018 to nearly $27.0 billion in 2022. This represents a significant expansion over the period, indicating active asset accumulation or acquisition strategies. The adjusted total assets, which account for income tax adjustments, follow a closely parallel pattern, confirming the reliability of the reported figures while reflecting minor adjustments.

Asset Turnover Ratios

Both the reported and adjusted total asset turnover ratios demonstrate a decreasing trend over the five-year span. Starting at 0.34 in 2018, the ratio declined steadily to 0.20 by the end of 2022. This decline suggests a reduction in the efficiency with which the company is generating revenue from its asset base. The uniformity between reported and adjusted metrics indicates that tax-related adjustments have minimal impact on this efficiency measure.

Performance Implications

The simultaneous increase in total assets and decrease in asset turnover ratio may imply that asset growth is outpacing revenue generation, leading to lower asset utilization efficiency. This could reflect strategic investment in long-term assets that have yet to fully contribute to revenue or challenges in operational scaling. The decline in asset turnover warrants further investigation into revenue trends and operational effectiveness to assess sustainability.

The data reveals notable trends in the financial position of the company over the five-year period from 2018 to 2022 when considering both reported and adjusted figures that take into account annual reported and deferred income tax adjustments.

Total Assets

Total assets show a consistent upward trend throughout the period, increasing from approximately $15.25 billion in 2018 to about $26.98 billion in 2022 based on reported values. The adjusted total assets closely follow the reported figures, with only minor differences, indicating that tax adjustments have a limited impact on the overall asset base. The substantial asset growth reflects ongoing expansion or acquisitions contributing to the asset base increase.

Stockholders’ Equity

Stockholders’ equity also demonstrates a steady increase over the years. Reported equity rises from approximately $7.74 billion in 2018 to $16.04 billion in 2022. Adjusted equity figures are consistently higher than reported figures, reflecting the impact of income tax adjustments that increase equity by several percentage points each year. The growth in equity signifies strengthened capitalization and retained earnings accumulation.

Financial Leverage

Financial leverage ratios exhibit more variability. The reported financial leverage decreases from 1.97 in 2018 to 1.68 in 2022, signaling a gradual reduction in reliance on debt relative to equity. The adjusted leverage ratios are consistently lower than reported ones, ranging from 1.76 in 2018 to 1.52 in 2022, which further indicates a more conservative leverage position when accounting for tax adjustments. After peaking around the 2020 period, leverage ratios decline steadily, implying deleveraging and potentially lower financial risk.

Overall, the trends suggest ongoing growth in asset size and equity with improving financial leverage profiles, especially when adjusted for income tax effects. The adjustments consistently elevate equity and reduce leverage ratios, offering a slightly more favorable view of the company's financial stability and flexibility across the observed timeframe.

Net earnings

Reported net earnings show a fluctuating pattern from 2018 to 2022. Starting at 944.4 million USD in 2018, the figure increases sharply to 1.77 billion USD in 2019, declines to 949.7 million USD in 2020, rises moderately to 1.15 billion USD in 2021, and then surges significantly to 4.54 billion USD in 2022. Adjusted net earnings mirror this general trend but are consistently lower than reported figures each year. The adjusted net earnings begin at 881.7 million USD and culminate at 4.37 billion USD in 2022, reflecting a similar large increase in the final year.

Stockholders’ equity

Reported stockholders’ equity presents a consistent upward trajectory over the entire period. It grows steadily from 7.74 billion USD in 2018 to 16.04 billion USD in 2022. The adjusted stockholders’ equity also increases each year, starting higher than the reported figure at 8.62 billion USD in 2018 and reaching 17.66 billion USD in 2022. Both measures indicate strengthening equity, with adjusted equity amounts remaining above the reported values throughout, suggesting an upward adjustment for deferred tax or other factors.

Return on equity (ROE)

The reported ROE shows considerable variation, peaking at 18.63% in 2019 before dropping sharply to 9.06% in 2020. It then rises slightly to 9.97% in 2021 and experiences a pronounced increase to 28.34% in 2022. Adjusted ROE follows a similar pattern but is consistently lower than the reported ROE. It ranges from 10.23% in 2018, peaks at 15.97% in 2019, declines to 7.47% in 2020, then climbs to 8.96% in 2021, and finally rises substantially to 24.76% in 2022. This demonstrates a strong improvement in profitability on equity in the last year, although the adjustment for taxes and other items suggests a somewhat more conservative profitability estimate.

Overall observations

The data indicates strong growth especially in 2022 across reported and adjusted net earnings and stockholders’ equity. The significant jump in reported net earnings and ROE in 2022 highlights exceptional profitability in that year. Adjusted figures generally run lower than reported results across earnings and ROE, reflecting the impact of tax and possibly other accounting adjustments. Stockholders’ equity has increased steadily, with adjusted amounts consistently exceeding reported figures, pointing to a conservative equity valuation approach when tax adjustments are considered. The years 2019 and 2020 show notable volatility in profitability metrics, suggesting operational or market conditions affected returns during this period.

Net Earnings Trend

The reported net earnings increased substantially from 2018 to 2019, nearly doubling from 944.4 million USD to 1.7689 billion USD. Following this peak, there was a considerable decline in 2020 to 949.7 million USD, with a slight recovery in 2021 to 1.1526 billion USD. A striking surge occurred in 2022, where reported net earnings reached 4.5447 billion USD, representing the highest value in the period analyzed.

Adjusted Net Earnings Analysis

Adjusted net earnings closely follow the pattern of reported net earnings, with a peak in 2019 at 1.6777 billion USD, a decline in 2020 to 892.1 million USD, and a modest increase in 2021 to 1.1591 billion USD. In 2022, adjusted net earnings show a significant increase to 4.3715 billion USD, slightly lower than the reported figure but still demonstrating substantial growth.

Total Assets Movement

The reported total assets show a consistent upward trend over the years. Beginning at 15.25 billion USD in 2018, assets grew to 18.11 billion USD in 2019, followed by a sharper increase to 24.02 billion USD in 2020. A marginal decline was seen in 2021 to 23.71 billion USD; however, total assets increased again in 2022, reaching almost 27 billion USD. Adjusted total assets mirror this trend with minimal differences, confirming reliability in asset valuation adjustments.

Return on Assets (ROA) Dynamics

The reported ROA demonstrates notable fluctuations. Starting at 6.19% in 2018, it increased significantly to 9.76% in 2019 before dropping to 3.95% in 2020. The ROA improved slightly to 4.86% in 2021 and then experienced a sharp rise to 16.84% in 2022. The adjusted ROA follows a similar trend pattern with values slightly lower than the reported percentages but showing the same surges and declines during the respective years.

Overall Insights

The data reveals a period of volatility in earnings and profitability between 2019 and 2021, with a peak in earnings and ROA in 2019 followed by a downturn in 2020, possibly due to external economic factors. The substantial growth in both net earnings and ROA in 2022 indicates a strong recovery and improved operational efficiency or other contributing factors leading to higher profitability. Total assets steadily increased over the 5-year period, reflecting growth or acquisitions contributing to asset base expansion. Adjusted figures consistently parallel reported values closely, suggesting that tax adjustments have a limited impact on the overall financial performance trends. The considerable increase in 2022 may warrant further investigation to understand the underlying drivers behind this exceptional performance.