Roper cuts annual profit forecast as acquisition costs bite

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(Reuters) -Roper Technologies cut its annual profit forecast on Thursday, as it expects higher costs related to acquisitions in the third quarter, sending the software company’s shares down 7%.

The company has grown largely through acquisitions, establishing itself as a provider of software and automated solutions to a variety of sectors, including healthcare, transportation and education.

Roper has more than $5 billion in capital available for merger and acquisitions over the next 12 months, it said.

It now expects adjusted earnings per share between $19.90 and $19.95 for the year, compared with its earlier expectation of $19.90 to $20.05. The forecast assumed about 10 cents of adjusted EPS dilution from quarterly acquisitions.

The company said it deployed $1.3 billion for acquisitions in the third quarter.

“Our underlying earnings are trending toward the higher end of our previous guidance range despite the government shutdown and some timing delays at Neptune,” CEO Neil Hunn said in a statement.

Roper’s water-metering unit, Neptune, is facing delays in some water utility deployments. The new copper tariff that took effect on August 1 also caused some short-term disruption at Neptune.

The company’s Deltek government contracting business saw a slowdown in September as agencies halted activity before the shutdown.

It forecast fourth-quarter adjusted profit to be between $5.11 and $5.16 per share, below analysts’ average estimate of $5.25, according to data compiled by LSEG. This forecast assumes a 5-cent impact from small acquisitions.

Revenue for the third quarter ended September 30 rose 14% to $2.02 billion, which was in-line with analysts estimates. It reported adjusted EPS of $5.14, beating estimates of $5.11.

Roper also unveiled a new $3 billion share repurchase program on Thursday.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Shinjini Ganguli and Leroy Leo)