The Roper Industries Fourth Quarter 2013 Financial Results Conference Call will now begin. I would now like turn the call over to Mr. John Humphrey, Chief Financial Officer. Please go ahead.

Thank you, Mary, and thank you, all, for joining us this morning as we discuss the results of our fourth quarter. Joining me this morning is Brian Jellison, Chairman, President and Chief Executive Officer; Paul Soni, Vice President and Controller; and Rob Crisci, Director of Planning and Investor Relations. Earlier this morning, we issued a press release announcing our 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 webcast and also available on our website at www.roperind.com. If you turn to Slide 2, we begin with our Safe Harbor statement. During the course of today's call, we’ll be making forward-looking statements, which are subject to risks and uncertainties as described on this page and as further detailed on our SEC filings. You should listen to today's call in the context of that information. Now if you'll please turn to Slide 3. Today, we will be discussing our fourth quarter results on a GAAP basis. Results from prior periods are presented on an adjusted basis for comparison purposes, primarily related to revenue recognition around our Sunquest and MHA acquisitions. Reconciliations between this prior period GAAP and adjusted results are included in this presentation as attachments. Now if you'll please turn to the next slide, I’ll turn the call over to Brian Jellison, Chairman, President and Chief Executive Officer. After his prepared remarks, we’ll take questions from our participants. Brian?

Thank you, John. Good morning, everyone. We start here with an overview. I’ll give you fourth quarter enterprise financial results discussion and then look at the segment detail that happened in the quarter and what the implications are for 2014 and then close out with Q1 guidance and the 2014 guidance for what’s going on. We have some facts headwinds in ’14. We’ll talk about them. You’ll find our guys a lot more robust as some early notes indicated. All right. So we have the Q4 results, next slide. If you look at enterprise financial results, we had a record across the board for any quarter in the history again. We achieved record orders, record backlog, record revenue, record net earnings, record EBITDA and the orders as we’ll talk about were really terrific. $900 million in orders, $889 million in revenue with a book-to-bill of 1.01. Gross margins hit 60% in that quarter. Wow, 60%, up 210 basis points. EBITDA was up 12% to $307 million in the quarter. Our EBITDA margin was up 80 bps to 34.5%. And an EBITBA margin of 34.5% really is another example of Roper’s transformation that’s occurred over the last several years. Our DEPS were up 11% to $1.65 in the quarter, above our guidance and our operating cash flow was up 11% to $236 million, getting dangerously close to $1 billion run rate there. We’re very well positioned as a result of this quarter for 2014. So it’s really a great momentum item for us as we move ahead. Next slide, on the fourth quarter income statement, here you can see orders were up 16%, 10% organic orders. Double digit organic growth is a phrase we haven’t heard for a long time. Revenue was up 9%, with organic at 4%. Gross profit was…

(Operator Instructions). We'll take our first question from Joe Ritchie with Goldman Sachs. Joseph Ritchie – Goldman Sachs: So for my first question is -- well first, nice quarter, and my first question is really relating to the guidance on the incremental margins. It seems like the 35% to 40% is slightly lighter than what we’ve seen in recent years and yet you’ve continued to acquire software related asset-light businesses that have higher margins. I would have thought the margins would have been a little bit higher. So there seems to be a touch of conservativeness there. Can you just comment on the incremental that you’re expecting and why 35% to 40% is the right number?

In the fourth quarter, I think it ran 37% for operating leverage. There's a lot of amortization and these are non-cash. And so I think John can walk you through the forward mile, but we may be conservative. I hope we're conservative, but it is what it is. I think we're still -- I’m still flummoxed by the tax rate because we've got Sunquest and MHA which are our fastest growing businesses paying 40% tax. All right, John, go ahead.

So it's true that Sunquest and MHA are our fastest growing businesses, but as you know their revenue base isn't all that large. So on a V basis that's definitely nice and of course on a cash basis it's even better. But we also do expect to have growth across the enterprise, not just in our software business. So we're expecting to see continued growth in our RF segment, particularly in the first half as we complete some of the projects that we have going on, and of course project revenue comes in a little lighter than some of our product revenue and definitely lighter than our software revenue. But I think that -- I think the 35% to 40% is right down the middle with respect to what we've been able to demonstrate and what we see as far as the backlog and the growth and where it's coming from in '14. Joseph Ritchie – Goldman Sachs: And I guess one follow-up question. Perhaps, Brian you can comment on the acquisition pipeline. Clearly it's an important part of the story. It seems like you're well positioned in the first half of the year to do another large acquisition. And so perhaps you can just comment on what you're seeing in the pipeline today and what your thoughts on the market are.

Everything is for sale at the moment. I don't think I’ve ever seen as many properties that are for sale. Also, we have never seen private equity as aggressive as they are. On pricing, we’re still getting 7, 7.5 times debt staples on everything that's out there. I think putting it a little bit equity and it lines up with pretty high stuff. We remain really disciplined. I think that we will do, we would expect to do a large acquisition in 2014. We never have a timeline established about whether that's any particular point in time, but we're sitting here with a net debt to EBITDA like 1.9 times and we’re already going to generate about $800 million, $900 million or more of new cash. So we're very well positioned to be able to do $1 billion plus type acquisition. In the last several months, we’ve actually looked at a number of things that we thought would be quite in the $400 million to $600 million arena, but it is remarkable what some people have paid. We walked away from two deals, one that looked attractive, but somebody paid 22 times trailing for it, and the other one somebody paid 23 times trailing. I don’t think that’s a new standard, but it just shows you the assets we're looking at are highly, highly sought after. So they always have to fit through this perfect hole we have. So the management teams needs to want to be part of Roper and we need one -- we need that management team to -- we want to have them be part of Roper. We have looked at a couple of very large transactions, larger than we’ve done previously, and I wouldn't rule that out. So I think the pipeline is more than adequate. It’s a more competitive process than it has been for a long time and as long as high yield debt is in our view mispriced, that’s going to be headwind for everybody.

We'll take our next question from Deane Dray with Citi Research. Deane Dray – Citi Research: Hey Brian, I think you may have answered this question and I’d like to hear some specifics from John. But the issue with the tax coming up you said, I believe it was the Sunquest and MHA being taxed at 40%. So was it a mix issue that’s driving the higher tax rate and is there any opportunity for any other tax strategies throughout the year?

So, the second part first. Yes, there are always things that we’re looking at, nothing that we’ve really baked into the guidance for '14 yet. But just to break down the increase in the tax rate, about half of it, so we're going from 29% up to call it 31% to 31.5% range. About half of that increase is just changes in U.S. tax law, which is the R&D tax credit not being extended into 2014, and combined with last year, we had the benefit of not only 2013, but also 2012 for R&D tax credit and a variety of other things that were expended on January 1 of '13. So they rolled into '13 instead of being in '12. So, that's about half of the increase. We did have some tax planning initiatives that benefitted 2013 that are not expected to continue and the rest of it is the mix that Brian was talking about. We're just growing faster in the U.S. and that's where we expected to see the growth coming from in '14 and the marginal tax rate in the U.S. approaches 40%. So that pushes our tax rate up a little bit also. But we have things that we're looking at. We have projects that we're evaluating in ways to obviously always in compliance with the law but to be able to minimize taxes wherever we can and we'll update you as some of those are successful. Deane Dray – Citi Research: Great. Then over on the businesses, the two areas that had been the softest over the past couple of quarters, Zetec and Imaging both sounded a bit better. Maybe you'd take us through the next level of detail on Zetec. What were the orders in the quarter and has there been any pricing giveback as you try to reload the backlog for this business?

Not for Zetec. A lot of Zetec is service work and the rest are probes that are now used and those are reasonable margin business banks anyway. It's just -- we had things that were going to start up that didn't. Of course, that really caused us to change our view in the third quarter. Orders came back stronger than we expected, even though they're flattish, but they're not going down. And we had a one-time large thing that happened in the fourth quarter with Zetec, so to be able to recover from that, which was a sale in the prior year of some assets. That was a big deal. On the Imaging front, the orders picking up 12% was a pleasant surprise. So what if anything's changed about the government investments and what's going to happen in academic research and changes with NIH, and more funding perhaps in 2014. It's hard to say, but all those businesses appear to be past their worst performance pattern. We've made a couple of people changes inside those businesses that hopefully are paying off already. So we'll see, but it should not be a drag on 2014.

We'll take our next question from Matt Summerville with KeyBanc. Matt Summerville – KeyBanc: Out of the $3.3 billion or so in revenue you've been in 2013, how much of that would you say is from -- in two buckets; software plus SaaS in one bucket and then other recurring revenue sources in the other?

Out of the $3.3 billion or so in revenue you've been in 2013, how much of that would you say is from -- in two buckets; software plus SaaS in one bucket and then other recurring revenue sources in the other?

Software, the (inaudible) -- if you look at the application software businesses, I always say -- yeah, I'll put TransCore into this activity, because all the ITS stuff, just like we had a press release. We announced that we're doing special traffic analytics and controlling all the red lights in a huge area around Sunday’s Super Bowl. You can't do that without software. Now there's human involvement too. So you're not making a disc and sending it out, but it is application software and ITS is probably our large dollar revenue business. So I didn't include it in there, John hence did not include it in there. So it depends who you ask, but as far as I'm concerned --

I think you have Brian, so he'll give the answer.

If you look just like the SaaS businesses, pure software businesses, we get more than a fourth of the Company's EBITDA out of that. In reality, you really look at all of our application Software businesses, Compressor Controls for instance is an application software business. It would be much closer to half or more of the total family of activity. Here, you didn't ask but it's a more interesting thing. We've been looking at these GICS codes for a variety of reasons and we have a GICS code established, which is electronic components or electrical components. So we looked at that. We don't have a single Roper business that's in that category, not one. So, Forrest ranking them, our biggest area is application software. Our next biggest area is health care systems. Our next biggest area is health care products and then an equivalent thing, the line of electronic instrumentation that would be more like the adjunct type of activity and not much of that goes into Industrial activity. And then we've got about somewhere between 11% and 13% that goes into Energy equipment because really our fluid handling businesses are much more oriented around Energy activity, particularly with fracing now than they used to be. And so the core industrial concept of making stuff for OEMs or making the industrial product is less than 5% of the enterprise now. Matt Summerville – KeyBanc: And then just one easy follow-up, John, there was a little bit of a spike in corporate expense in the fourth quarter, is that sort of the run rate to think about or did you have a couple million of M&A related expense in there?

And then just one easy follow-up, John, there was a little bit of a spike in corporate expense in the fourth quarter, is that sort of the run rate to think about or did you have a couple million of M&A related expense in there?

So I would probably say yes to both of those things. We'd be looking at some level of acquisitions, like that's a part of our normal ongoing corporate activity. It will go up and down though. So it may not always hit in every single quarter. So I think building that in on an annual basis is fine, but being able to predict when that's going to happen on a quarterly basis is not quite as easy. Now also, a piece of the growth on a year-over-year basis, more so than our sequential basis is the increase in our stock price and the associated increase in equity and expense associated with that. We hope to continue that as well.

We'll take our next question from Steve Tusa with JPMorgan. Stephen Tusa – JPMorgan: Just thinking about the sequential dynamics and what happens seasonally here. You guys had a pretty weak first quarter last year on organic down, so really there's some lumpy businesses in your portfolio at least with last year, in 2013 there were a few lumpy ones. How do we think about the organic growth dynamics in the first quarter or the first half versus the second half? I would assume that with the easy comp, the first half would be at the higher end of the range?

It's a good question. The last year -- Q1 was negative organic of 3% on orders and Q2 was plus 1% and Q3 was plus 3% and Q4 was plus 4%. So I think we view our organic ought to be in this 4% to 7% throughout the year. It’s plus or minus 5% every quarter. So we don't see massive trend change. We do have a -- we should have a decent first quarter with some of the project work that we're doing. So I don't think there's a huge seasonality variant there versus whatever seasonality we have we'd expect it to be up 5%, 6%, 7% quarter-over-quarter throughout the year. Stephen Tusa – JPMorgan: So the easy comp doesn't help your -- you're not going to be at the high end or above the high end of that range in the first quarter despite the easy comp?

Yeah, I think that's true. So let’s think about that easy comp for a second. So that easy comp really was our Neptune business which had a lost customer. So it showed the decline, particularly in the first two or three quarters last year. So we do expect Industrial to be very good against a relatively easy comp in the first quarter. Other parts of our enterprise, particularly as we're building capacity around implementations at Sunquest, introduction of a couple of new products, the Verathon, as well as continuing to build momentum in the project work in our Energy Systems business, particularly in the CCC application software business. So those areas are probably a little bit more toward the back end. So, we have the easier comp on the Industrial in the first half, but more of a ramp-up that we see towards the backend on Energy and Medical, specifically. Stephen Tusa – JPMorgan: So that balances out. One last to just follow up; any mix considerations, either positive or negative from the moving parts of this year on an organic basis; better margin or worse margin businesses coming back?

Margins are remarkably similar other than the pure software businesses. I mean, they are all pretty good. It's like EBITDA in Industrial, 32%, right. So the lower margin business would be Imaging which is a relatively small part of the total, but if you're still looking at mid-20s in Imaging. So as things grow, the big issue with mix is if we've done instead of software or hardware applications in Radio Frequency with TransCore, you get into design issues and some actual human labor in getting things installed, which all is bad margin business, but it’s part of the price you pay for the total. So some of those are really teens type margins and others would be broker type margins. Stephen Tusa – JPMorgan: One last very quick one. Looking back at '13, it was obviously a little more choppy than I think a lot of us would have expected, especially from you guys. Did that change your view at all on hey, let's get back on the horse here and so let's set an appropriate -- be a little more appropriate in setting the targets this year or you view '13 as really a non-issue and just when thinking about setting expectations for '14?

'13 had these three unusual things in it. So we had the customer issue at Neptune, the non-recurring multiyear contract and we've gotten through that. So, it's no longer a negative. So that helps organic for this next year. We had Zetec, which was a second half of the year negative that was impossible to predict, it can't get worse literally, so, we're in pretty good shape there. Then, we had a vendor issue in the second quarter which we've never had in the time I've been here and that's behind us. We've eaten that. So that will, on a GAAP basis I think we're going to look quite strong in 2014 versus '13. We had most of our business reviews for '14 and I think we all walk away feeling like there's a lot of optimism in the field. But our guidance is conservative because of this $0.20 tax hit, right. So $6.05 to $6.25 is the equivalent of $6.45. So it's the tax that's causing us the angst of going into 2014.

We'll take our next question from Jeff Sprague with Vertical Research Partners. Jeffrey Sprague – Vertical Research Partners: Congratulations on the 10 year anniversaries on those big businesses. I was also wondering though, that is often a cliff point for some level of amortization. Is there a significant inflection down in amortization in either or both of those businesses here in '14?

Jeff, no, not really. Most of the amortization associated with those things, it was either customer related or technology related that was amortizing has already rolled off. We have a modest amount that will give us a slight pickup at the Neptune business, but not very much. Jeffrey Sprague – Vertical Research Partners: I was just wondering, Brian, just when you look across the health care businesses here, as we're just in the teeth of Obamacare rolling out and all this various uncertainty, is there any -- obviously you had the order pickup in the Imaging businesses, but is there any discernible change in behavior in the marketplace you're seeing from your customers or through the supply chain or anything?

Vitriol is going up with customers or as gentlemen you mentioned is to healthcare program, but for business, it doesn't really affect us that much. I mean, our products are all going into situations that are not Affordable Care Act driven behaviors. And the Sunquest situation is an enabling technology for compliance with regulations in addition to helping hospitals run better. So actually we're not really seeing anything there. We had the Medicare tax, the cost taxes, (inaudible) products. We try to keep that neutral inside the business, which has been a little bit challenging, but generally come out okay. So I don't really think there's anything -- if something changes with this in the next two years, it shouldn't really have a positive or negative effect on our results. Jeffrey Sprague – Vertical Research Partners: And then finally, I don’t know Zetec maybe and that isn’t worth two questions on the conference call, but the outlook there, do you see anything coming out of Japan? Obviously, there's a lot of debate about whether they start the nukes or not. Is that any part of your view of the business there and how significant could that be?

This is a really small business and this business is well under $100 million in total revenue, and half of its sensors that get used to different stuff. So, there is very little materiality in that. It really is just – I don't think there's much that would happen globally or would have any material effect on Roper in any way around Zetec. This year for the full year it's certainly pulled down the Energy segment quite a bit. But Zetec is less than 10% of the Energy segment, and half of it is really sensors that can be used in all other kinds of industrial activity, and half or 60% in nuclear. So it's just not material.

We'll take our next question from Christopher Glynn with Oppenheimer. Christopher Glynn – Oppenheimer & Co. Inc.: So, Brian, you did the walk by the quarters for Steve on how the organic growth range transpires through the years. Wondering if we could do that walk by the segments, how they stack up against one another?

So, yeah, I can do that for you. In general, our expectation is for about the same amount of full year growth out of each of the segments, but a little more out of Medical and Scientific Imaging. So from that standpoint, Medical and Scientific because of obviously the backlog at Sunquest, the continued growth there around compliance with some of the regulations, and as people are just wanting to have upgrades and other functionality. So I don’t want to put too much on to the regulation, it’s also about increased functionality. So we see that plus the continued growth on the MHA side and some new product introductions. So we do expect more growth out of Medical than we would see out of the other three. The other three are about the same. Christopher Glynn – Oppenheimer & Co. Inc.: Interesting to hear that Industrial Tech would be grouped in as about the same. That's encouraging. And then on RF, you’ve had four quarters in a row now with record operating margin. Just wondering if you could put a little narrative behind that; do you still see runway with that segment in the margin performance?

I’m sorry, Chris. What segment was that? Christopher Glynn – Oppenheimer & Co. Inc.: RF.

So once again, with our expectation around leverage of being somewhere between 35% and 40%, that gives continued opportunity for margin expansion. Now, that’s not necessarily true for every single business, right, some of our businesses are operating at 60% plus margins. We're not looking for margin expansion there. We're looking for more growth, but for those businesses they're operating a little below our overage, as they continue to grow, they bring the margin profile up accordingly and that's really where we see in most of the opportunity on the leverage and margin expansion side.

We'll take our next question from Mark Douglass with Longbow Research. Mark Douglass – Longbow Research: Looking at the double-digit orders growth in Medical and Imaging, I think you probably already answered this. How is that playing out in sales? A lot of those orders are going to come in first half or is it pretty even throughout the year?

As in relates to Sunquest, they're continuing to build capacity -- human capacity to help people with their implementations. And so those implementations things are directly related to how quick client can get it installed. So, they're less time sensitive as opposed to say, it's got to get done in the year types of projects. It certainly involves manpower in the hospital, involves manpower in us and we've been building those teams very, very fast. So I think if the clients are ready to start implementing off those orders, this is a year we'll have double-digit revenue growth and order growth may or may not reach that. So the backlog is really what provides so much safety around Sunquest double-digit growth this year. Mark Douglass – Longbow Research: So would you say as your portfolio has shifted with the increased number of software companies, it sure seems like maybe in the past you'd been maybe more of a book and ship on the orders, it's fair to say that your orders maybe are lumpier, but sales are still relatively even, it's fair to say?

Yeah. We were looking at that preparing for the call. I mean, we've already entered the year with about a third of the full year backlog accomplished. So you'd still have to book and ship two-thirds of the full year's guidance on revenue within the year itself. We do have a lot more recurring revenue. So what we don't report -- we only report orders if they're going to ship within a 12-month period. So there's a lot of backlog that we never identify as backlog until the cycle has come up for the year. So we know there's a lot of recurring revenue, particularly in Radio Frequency and in Medical. So the book and ship is more around Industrial and Energy. And in the application software side of the business in Energy, we can look very easily at six months out, maybe even eight months out. So it's the rest of those businesses which maybe 35% in the enterprise that are booked and shipped within a quarter.

We'll take our next question from Richard Eastman with Robert Baird. Richard Eastman – Robert W. Baird: Just a couple of things. On the Industrial Tech side, I presume given your segment lock-up on the growth rate, John, you're expecting Industrial Tech to grow maybe at the 4% number, maybe the lower end. I'm just curious, within that business, is it a macro expectation? Obviously, we've all seen industrial production numbers trending higher. That's the material side of the businesses. Is it mainly just a macro driver there; home starts, IP for that Industrial Tech business?

So for those two portions, yes. The fluid handling portion is not as much macro as it is specific around oil and gas and some new product introductions and expansion of our own capacity in order to meet the customer demand that’s been there for a while. So I'd say it’s more in our control on the fluid handling side, more on the Industrial production and housing starts at the margin for the Neptune and the instrument side. Richard Eastman – Robert W. Baird: Your guys in the fields expect that front end O&G business to be healthier for '14?

Modestly, particularly around directional drilling, not as much around rig count increase, but around feet drilled and the horizontal drilling and that’s really where more of our applications are going, whether that's on the water side for Cornell or it’s on the actual power section side for Roper Pumps. Richard Eastman – Robert W. Baird: And then just within the Energy business, when I look at the gross margin which was fantastic for not just the quarter but the full year, does that continue to have an upward bias given that more of that is Compressor Controls, software applications? Should we just continue to expect that to see drift higher, the gross margin there?

The fourth quarter is always the best margin performance for our Energy segment, particularly as instruments are sold. We still have some customer buying behavior which is more year-end budget consumption activity where they’re trying to make sure they use all of what was budgeted for the year. So the fourth quarter is always disproportionately high in terms of instrument sales and the volume associated with that helps the gross margin as well. Even though we don't have a lot of factories, we do get a little bit of absorption benefit as the volume goes up. So that's really what's driving that margin expansion. In addition to just some of the new products that are being introduced are a little bit higher margin than the things that they're replacing, but I would say that, that is incremental growth on the gross margin side, and the operating leverage that we get from that growth is going to drive the bottom-line performance. Richard Eastman – Robert W. Baird: And then just last question, John, could you provide us the GAAP EBIT contribution for MHA in the fourth quarter, either in dollars or percent?

There was really no difference on a GAAP and non-GAAP basis for MHA at this point. I think we disclosed when we acquired the business that it was a very healthy margin, 2 times the Company average on an EBITDA basis. I'll have to get back with you on exactly how much the amortization is associated with that, but I think you can probably get there just in terms of the change in amortization from Q2 to Q3, but we'll follow-up with you on that specific question.

That will end our question and answer session for this call. We will now turn the call back over to Mr. John Humphrey for any closing remarks.

Thank you, Mary and thank you, all for joining us this morning. We look forward to talking to you in another three months.

That does conclude today's conference. We thank you for your participation.