ROPER TECHNOLOGIES, INC. You should read the following discussion in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on form 10-K for the year endedDecember 31, 2020 ("Annual Report") as filed onFebruary 22, 2021 with theU.S. Securities and Exchange Commission ("SEC") and the Notes to Condensed Consolidated Financial Statements included elsewhere in this report.
Information About Forward-Looking Statements
This report includes "forward-looking statements" within the meaning of the federal securities laws. In addition, we, or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents we file with theSEC or in connection with oral statements made to the press, potential investors or others. All statements that are not historical facts are "forward-looking statements." Forward-looking statements may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes" or "intends" and similar words and phrases. These statements reflect management's current beliefs and are not guarantees of future performance. They involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Such risks and uncertainties include any ongoing impacts of the COVID-19 pandemic on our business, operations, financial results and liquidity, which will depend on numerous evolving factors that we cannot accurately predict or assess, including: the duration and scope of the pandemic, new variants of the virus and the distribution and efficacy of vaccines; the impact of vaccine mandates on our workforce; any negative impact on global and regional markets, economies and economic activity; actions governments, businesses and individuals take in response to the pandemic; the effects of the pandemic, including all of the foregoing, on our employees, customers, suppliers, and business partners, and how quickly economies and demand for our products and services recover following the pandemic. Additional examples of forward-looking statements in this report include but are not limited to statements regarding operating results, the success of our operating plans, our expectations regarding our ability to generate cash and reduce debt and associated interest expense, profit and cash flow expectations, the prospects for newly acquired businesses to be integrated and contribute to future growth, our expectations regarding growth through acquisitions and the ability to complete our announced divestitures, including obtaining any required regulatory approvals with respect thereto. Important assumptions relating to the forward-looking statements include, among others, demand for our products, the cost, timing and success of product upgrades and new product introductions, raw material costs, expected pricing levels, expected outcomes of pending litigation, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include but are not limited to: •general economic conditions; •difficulty making acquisitions and successfully integrating acquired businesses; •any unforeseen liabilities associated with future acquisitions; •limitations on our business imposed by our indebtedness; •unfavorable changes in foreign exchange rates; •failure to effectively mitigate cybersecurity threats, including any litigation arising therefrom; •failure to comply with new data privacy laws and regulations, including any litigation arising therefrom; •difficulties associated with exports/imports and risks of changes to tariff rates; •risks and costs associated with our international sales and operations; •rising interest rates; •product liability and insurance risks; •increased warranty exposure; •future competition; •the cyclical nature of some of our markets; •reduction of business with large customers; •risks associated with government contracts; •changes in the supply of, or price for, labor, raw materials, parts and components, including as a result of impacts from COVID-19; •environmental compliance costs and liabilities; •risks and costs associated with asbestos-related litigation; •potential write-offs of our goodwill and other intangible assets; •our ability to successfully develop new products; 18 -------------------------------------------------------------------------------- •failure to protect our intellectual property; •the effect of, or change in, government regulations (including tax); •economic disruption caused by terrorist attacks, health crises (such as the COVID-19 pandemic) or other unforeseen geopolitical events; and •the factors discussed in other reports filed with theSEC from time to time. We believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update any of these statements in light of new information or future events.
Overview
Roper is a diversified technology company. We operate businesses that design and develop software (both license and SaaS) and engineered products and solutions for a variety of niche end markets. We pursue consistent and sustainable growth in earnings and cash flow by emphasizing continuous improvement in the operating performance of our existing businesses and by acquiring other businesses that offer high value-added software, services, engineered products and solutions that we believe are capable of achieving growth and maintaining high margins. We compete in many niche markets and believe we are the market leader or a competitive alternative to the market leader in most of these markets.
Discontinued Operations
During and subsequent to the third quarter, the Company signed definitive agreements to divest its TransCore,Zetec and CIVCO Radiotherapy businesses. Accordingly, beginning in the third quarter of 2021, we have classified the results of these operations as discontinued operations and certain prior period amounts have been reclassified to conform to current period presentation. Information regarding discontinued operations is included in Note 5 of the Notes to Condensed Consolidated Financial Statements.
Critical Accounting Policies
There were no material changes during the nine months endedSeptember 30, 2021 to the items that we disclosed as our critical accounting policies and estimates in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report.
Recently Issued Accounting Standards
Information regarding new accounting pronouncements is included in Note 2 of the Notes to Condensed Consolidated Financial Statements.
Impact of COVID-19 on our Business
The extent to which the COVID-19 pandemic impacts our business, results of
operations and financial condition will depend on future developments, which are
highly uncertain and are difficult to predict, including, but not limited to,
the duration and spread of the outbreak and its severity, the actions to contain
the virus and its variants including the distribution, administration and
efficacy of available vaccines, the impact of vaccine mandates on our workforce,
and how quickly and to what extent normal economic and operating conditions can
resume. If COVID-19 and its variants continue to spread, particularly in
countries with low vaccination rates, certain countries may experience more
severe and lasting impacts from the pandemic. To the extent we have operations
and/or customers in these countries, we may experience adverse impacts on our
businesses located in such countries.
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Results of Continuing Operations
All currency amounts are in millions, percentages are of net revenues
Percentages may not sum due to rounding.
The following table sets forth selected information for the periods indicated.
Three months ended September 30, Nine months ended September 30,
2021 2020 2021 2020
Net revenues:
Application Software $ 603.4 $ 447.9 $ 1,771.6 $ 1,251.4
Network Software & Systems 343.4 288.1 983.3 864.0
Measurement & Analytical Solutions 392.4 356.9 1,146.8 1,065.3
Process Technologies 123.6 105.3 363.8 337.9
Total $ 1,462.8 $ 1,198.2 $ 4,265.5 $ 3,518.6
Gross margin:
Application Software 69.6 % 68.7 % 69.3 % 68.1 %
Network Software & Systems 82.8 81.6 82.2 81.1
Measurement & Analytical Solutions 57.1 59.4 58.0 59.7
Process Technologies 54.7 52.3 54.3 53.4
Total 68.1 67.6 68.0 67.4
Selling, general and administrative
expenses:
Application Software 42.3 % 40.6 % 42.7 % 41.2 %
Network Software & Systems 43.7 46.1 44.7 46.6
Measurement & Analytical Solutions 26.8 25.9 26.5 26.7
Process Technologies 24.8 25.7 23.4 29.5
Total 37.0 36.2 37.1 37.0
Segment operating margin:
Application Software 27.3 % 28.0 % 26.7 % 26.9 %
Network Software & Systems 39.1 35.5 37.5 34.5
Measurement & Analytical Solutions 30.3 33.5 31.5 33.1
Process Technologies 29.9 26.6 30.9 23.9
Total 31.1 31.3 30.8 30.4
Corporate administrative expenses (3.5) (3.8) (3.6) (3.9)
Income from operations 27.6 27.6 27.2 26.4
Interest expense, net (4.0) (5.2) (4.2) (4.4)
Other income (expense), net (0.1) (0.2) 0.6 (0.1)
Earnings before income taxes 23.5 22.2 23.6 21.9
Income taxes (5.7) (4.9) (5.2) (4.9)
Net earnings from continuing
operations 17.8 % 17.3 % 18.3 % 17.1 %
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Three months ended
Net revenues for the three months endedSeptember 30, 2021 increased by 22.1% as compared to the three months endedSeptember 30, 2020 . The components of revenue growth for the three months endedSeptember 30, 2021 were as follows: Network Software & Measurement & Application Software Systems Analytical Solutions Process Technologies Roper Total Revenue Growth 34.7 % 19.2 % 10.0 % 17.2 % 22.1 % Less Impact of: Acquisitions/Divestitures 24.1 1.3 - - 9.3 Foreign Exchange 0.7 0.9 0.8 1.2 0.8 Organic Revenue Growth 9.9 % 17.0 % 9.2 % 16.0 % 12.0 % In our Application Software segment, revenues were$603.4 in the third quarter of 2021 as compared to$447.9 in the third quarter of 2020. The increase in organic revenues was broad-based across the segment led by our businesses serving the government contracting, professional services and acute healthcare markets. Gross margin increased to 69.6% in the third quarter of 2021 as compared to 68.7% in the third quarter of 2020 due primarily to the acquisition ofVertafore and operating leverage on higher organic revenues. Selling, general and administrative ("SG&A") expenses as a percentage of revenues increased to 42.3% in the third quarter of 2021 as compared to 40.6% in the third quarter of 2020 due primarily to higher amortization of acquired intangibles from theVertafore and EPSi acquisitions and to a lesser extent, revenue mix. The resulting operating margin was 27.3% in the third quarter of 2021 as compared to 28.0% in the third quarter of 2020. In ourNetwork Software & Systems segment, revenues were$343.4 in the third quarter of 2021 as compared to$288.1 in the third quarter of 2020. The increase in organic revenues was broad-based across the segment led by our network software businesses serving the freight match markets inthe United States andCanada , long-term care, life insurance and media and entertainment markets. Gross margin increased to 82.8% in the third quarter of 2021 as compared to 81.6% in the third quarter of 2020 due primarily to revenue mix. SG&A expenses as a percentage of revenues decreased to 43.7% in the third quarter of 2021 as compared to 46.1% in the third quarter of 2020 due primarily to operating leverage on higher organic revenues. As a result, operating margin was 39.1% in the third quarter of 2021 as compared to 35.5% in the third quarter of 2020. In our Measurement & Analytical Solutions segment, revenues were$392.4 in the third quarter of 2021 as compared to$356.9 in the third quarter of 2020. The increase in organic revenues was primarily due to broad-based growth in our water meter technology business, industrial businesses, and medical products businesses excludingVerathon , which declined due to unprecedented demand for their products used in the treatment of COVID-19 during 2020. Gross margin decreased to 57.1% in the third quarter of 2021 as compared to 59.4% in the third quarter of 2020 due primarily to revenue mix along with costs associated with navigating the wide-spread supply chain challenges. SG&A expenses as a percentage of revenues increased to 26.8% in the third quarter of 2021 as compared to 25.9% in the third quarter of 2020 due primarily to reduced operating leverage associated withVerathon's reduced 2021 revenues. The resulting operating margin was 30.3% in the third quarter of 2021 as compared to 33.5% in the third quarter of 2020. In our Process Technologies segment, revenues were$123.6 in the third quarter of 2021 as compared to$105.3 in the third quarter of 2020. The increase in organic revenues was due to broad-based revenue growth across the segment as energy and industrial markets continue to recover from the reduction in demand caused by the pandemic. Gross margin increased to 54.7% in the third quarter of 2021 as compared to 52.3% in the third quarter of 2020 due primarily to operating leverage on higher organic revenues. SG&A expenses as a percentage of revenues decreased to 24.8% in the third quarter of 2021 as compared to 25.7% in the third quarter of 2020 due to higher operating leverage on organic revenue growth partially offset by costs associated with navigating the wide-spread supply chain challenges. As a result, operating margin was 29.9% in the third quarter of 2021 as compared to 26.6% in the third quarter of 2020. Corporate expenses increased to$51.5 , or 3.5% of revenues, in the third quarter of 2021 as compared to$45.1 , or 3.8% of revenues, in the third quarter of 2020. The dollar increase was due primarily to higher compensation related expenses, partially offset by lower acquisition related expenses.
Net interest expense decreased to
21
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Other expense, net, of
Income taxes as a percent of pretax earnings increased to 24.4% in the third quarter of 2021 as compared to 22.2% in the third quarter of 2020. The rate was unfavorably impacted primarily due to the recognition of a net tax expense in connection with an internal restructuring plan. Backlog is equal to our remaining performance obligations expected to be recognized within the next 12 months as discussed in Note 12 of the Notes to Condensed Consolidated Financial Statements. Backlog increased 24% to$2,191.5 atSeptember 30, 2021 as compared to$1,770.3 atSeptember 30, 2020 . Organic growth in backlog was 23% and acquisitions contributed 1%. Backlog as of September 30, 2021 2020 Application Software$ 1,305.8 $ 1,131.9 Network Software & Systems 418.0 336.7 Measurement & Analytical Solutions 327.1 208.7 Process Technologies 140.6 93.0 Total$ 2,191.5 $ 1,770.3
Nine months ended
Net revenues for the nine months endedSeptember 30, 2021 increased by 21.2% as compared to the nine months endedSeptember 30, 2020 . The components of revenue growth for the nine months endedSeptember 30, 2021 were as follows: Network Software & Measurement & Application Software Systems Analytical Solutions Process Technologies Roper Total Revenue Growth 41.6 % 13.8 % 7.7 % 7.6 % 21.2 % Less Impact of: Acquisitions/Divestitures 33.2 2.6 - - 12.4 Foreign Exchange 1.4 1.1 1.7 2.3 1.5 Organic Revenue Growth 7.0 % 10.1 % 6.0 % 5.3 % 7.3 % In our Application Software segment, revenues were$1,771.6 in the nine months endedSeptember 30, 2021 as compared to$1,251.4 in the nine months endedSeptember 30, 2020 . The growth in organic revenues was primarily due to businesses serving government contracting, professional services and acute healthcare markets. Gross margin increased to 69.3% in the nine months endedSeptember 30, 2021 as compared to 68.1% in the nine months endedSeptember 30, 2020 due primarily to the acquisition ofVertafore and operating leverage on higher organic revenues. SG&A expenses increased as a percentage of revenue to 42.7% in the nine months endedSeptember 30, 2021 as compared to 41.2% in the nine months endedSeptember 30, 2020 due primarily to higher amortization of acquired intangibles from theVertafore and EPSi acquisitions, partially offset by operating leverage on higher organic revenues. The resulting operating margin was 26.7% in the nine months endedSeptember 30, 2021 as compared to 26.9% in the nine months endedSeptember 30, 2020 . In ourNetwork Software & Systems segment, revenues were$983.3 in the nine months endedSeptember 30, 2021 as compared to$864.0 in the nine months endedSeptember 30, 2020 . The increase in organic revenues was broad-based across the segment led by our network software businesses serving the freight match markets inthe United States andCanada , long-term care and construction markets. Gross margin increased to 82.2% in the nine months endedSeptember 30, 2021 as compared to 81.1% in the nine months endedSeptember 30, 2020 due primarily to revenue mix. SG&A expenses decreased as a percentage of revenues at 44.7% in the nine months endedSeptember 30, 2021 as compared to 46.6% in the nine months endedSeptember 30, 2020 due primarily to operating leverage on higher organic sales. As a result, operating margin was 37.5% in the nine months endedSeptember 30, 2021 as compared to 34.5% in the nine months endedSeptember 30, 2020 . 22 -------------------------------------------------------------------------------- In our Measurement and Analytical Solutions segment, revenues were$1,146.8 in the nine months endedSeptember 30, 2021 as compared to$1,065.3 in the nine months endedSeptember 30, 2020 . The growth in organic revenues was primarily due to broad-based growth led by our industrial businesses, water meter technology business, and medical products businesses excludingVerathon , which declined due to unprecedented demand for their products used in the treatment of COVID-19 during 2020. Gross margin decreased to 58.0% in the nine months endedSeptember 30, 2021 as compared to 59.7% in the nine months endedSeptember 30, 2020 due primarily to revenue mix and reduced operating leverage associated withVerathon's reduced 2021 revenues. SG&A expenses as a percentage of revenues decreased to 26.5% in the nine months endedSeptember 30, 2021 as compared to 26.7% in the nine months endedSeptember 30, 2020 due primarily to revenue mix. The resulting operating margin was 31.5% in the nine months endedSeptember 30, 2021 as compared to 33.1% in the nine months endedSeptember 30, 2020 . In our Process Technologies segment, revenues were$363.8 in the nine months endedSeptember 30, 2021 as compared to$337.9 in the nine months endedSeptember 30, 2020 . The growth in organic revenues was due to broad-based revenue growth across the segment as energy and industrial markets continue to recover from the reduction in demand caused by the pandemic. Gross margin increased to 54.3% in the nine months endedSeptember 30, 2021 as compared to 53.4% in the nine months endedSeptember 30, 2020 due to increased operating leverage on higher organic revenues. SG&A expenses as a percentage of revenues decreased to 23.4% in the nine months endedSeptember 30, 2021 as compared to 29.5% in the nine months endedSeptember 30, 2020 due primarily to$13.6 of restructuring charges for structural cost reduction actions taken at certain of our businesses during the second quarter of 2020 and operating leverage on organic revenues. As a result, operating margin was 30.9% in the nine months endedSeptember 30, 2021 as compared to 23.9% in the nine months endedSeptember 30, 2020 . Corporate expenses increased to$155.4 , or 3.6% of revenues, in the nine months endedSeptember 30, 2021 as compared to$137.5 , or 3.9% of revenues, in the nine months endedSeptember 30, 2020 . The dollar increase was due primarily to higher compensation related expenses, partially offset by lower acquisition related expenses. Net interest expense increased to$178.2 for the nine months endedSeptember 30, 2021 as compared to$154.8 for the nine months endedSeptember 30, 2020 due to higher weighted average debt balances, partially offset by lower weighted average interest rates and$7.2 in interest expense for the origination fee on our bridge financing associated with theVertafore acquisition in 2020. Other income, net, of$24.9 for the nine months endedSeptember 30, 2021 was composed primarily of a gain on sale of minority investment of$27.1 . Other expense, net, of$4.0 for the nine months endedSeptember 30, 2020 was composed primarily of foreign exchange losses at our non-U.S. based subsidiaries.
Income taxes as a percent of pretax earnings was flat at 22.2% for the nine
months ended
Financial Condition, Liquidity and Capital Resources All currency amounts are in millions
Selected cash flows for the nine months endedSeptember 30, 2021 and 2020 were as follows: Nine months ended September 30, Cash provided by/(used in): 2021 2020 Operating activities $ 1,432.4$ 950.9 Investing activities (42.4) (5,693.0) Financing activities (1,340.9) 4,336.4 Operating activities - Net cash provided by operating activities increased by 51% to$1,432.4 in the nine months endedSeptember 30, 2021 as compared to$950.9 in the nine months endedSeptember 30, 2020 , due primarily to (i) higher net income net of non-cash expenses, and (ii) the non-recurrence of$201.9 of cash taxes paid on the disposal ofGatan in the first nine months of 2020. These increases were partially offset by lower cash provided by working capital in the nine months endedSeptember 30, 2021 as compared to the nine months endedSeptember 30, 2020 . Investing activities - Cash used in investing activities during the nine months endedSeptember 30, 2021 is due primarily to capital expenditures, capitalized software expenditures and business acquisitions, partially offset by proceeds from the sale of a minority investment. Cash used in investing activities during the nine months endedSeptember 30, 2020 was primarily for the acquisition ofVertafore . 23 -------------------------------------------------------------------------------- Financing activities - Cash used in financing activities for the nine months endedSeptember 30, 2021 was primarily due to net repayments on our unsecured credit facility and dividend payments, partially offset by net proceeds from stock based compensation. Cash provided by financing activities during the nine months endedSeptember 30, 2020 was primarily due to net proceeds from the issuance of the$3,300.0 in aggregate principle amount of senior unsecured notes, primarily for the acquisition ofVertafore , and net borrowings under our unsecured credit facility. Effect of foreign currency exchange rate changes on cash - Cash and cash equivalents decreased during the nine months endedSeptember 30, 2021 by$4.9 due primarily to the strengthening of theU.S. dollar against the functional currencies of our European subsidiaries. Cash and cash equivalents decreased during the nine months endedSeptember 30, 2020 by$1.9 due primarily to the strengthening of theU.S. dollar against the functional currencies of ourUnited Kingdom and Canadian subsidiaries.
Total debt at
$500 2.800% senior notes due 2021$ 500.0 $500 3.125% senior notes due 2022 500.0$300 0.450% senior notes due 2022 300.0$700 3.650% senior notes due 2023 700.0$500 2.350% senior notes due 2024 500.0$300 3.850% senior notes due 2025 300.0$700 1.000% senior notes due 2025 700.0$700 3.800% senior notes due 2026 700.0$700 1.400% senior notes due 2027 700.0$800 4.200% senior notes due 2028 800.0$700 2.950% senior notes due 2029 700.0$600 2.000% senior notes due 2030 600.0$1,000 1.750% senior notes due 2031 1,000.0 Unsecured credit facility 380.0 Deferred finance costs (51.3) Other 0.4
Total debt, net of deferred finance costs 8,329.1 Less current portion
799.2
Long-term debt, net of deferred finance costs
The interest rate on borrowings under our$3,000.0 unsecured credit facility is calculated based upon various recognized indices plus a margin as defined in the credit facility. AtSeptember 30, 2021 , we had$380.0 of outstanding borrowings under our unsecured credit facility and$60.3 of outstanding letters of credit. Cash at our foreign subsidiaries atSeptember 30, 2021 increased to$337 as compared to$259 atDecember 31, 2020 due primarily to the cash generated at our foreign subsidiaries during the nine months endedSeptember 30, 2021 , partially offset by the repatriation of$243 during the nine months endedSeptember 30, 2021 . We intend to repatriate substantially all historical and future earnings. Subsequent to the nine months endedSeptember 30, 2021 , onOctober 8, 2021 , the Company elected to exercise its optional redemption rights to redeem all of its outstanding 2.800% Notes dueDecember 15, 2021 (the "Notes") in the original aggregate principal amount of$500 , andWells Fargo Bank, National Association , as trustee under the indenture governing the Notes (the "Indenture"), issued redemption notices to registered holders of the Notes. The date fixed for the redemption of the Notes isNovember 15, 2021 (the "Redemption Date"). The Notes will be redeemed at 100% of the aggregate principal amount of the Notes, plus accrued and unpaid interest thereon to the Redemption Date in accordance with the terms and conditions set forth in the Indenture. The foregoing does not constitute a notice of redemption with respect to any of the Notes. We expect existing cash balances, together with cash generated by our operations and amounts available under our credit facility, will be sufficient to fund our operating requirements for the foreseeable future. 24 --------------------------------------------------------------------------------
We were in compliance with all debt covenants related to our unsecured credit
facility throughout the nine months ended
Net working capital (total current assets, excluding cash and current assets held for sale, less total current liabilities, excluding debt and current liabilities held for sale) was relatively flat at negative$704.2 atSeptember 30, 2021 as compared to negative$704.4 atDecember 31, 2020 . Consistent negative net working capital demonstrates Roper's continued evolution and focus on asset-light business models. Total debt was$8,329.1 atSeptember 30, 2021 as compared to$9,560.8 atDecember 31, 2020 , due primarily to the net repayments under our unsecured credit facility. Our leverage on a continuing operations basis is shown in the following table: September 30, December 31, 2021 2020 Total debt$ 8,329.1 $ 9,560.8 Cash (352.5) (308.3) Net debt 7,976.6 9,252.5 Stockholders' equity 11,342.3 10,479.8 Total net capital$ 19,318.9 $ 19,732.3 Net debt / total net capital 41.3 % 46.9 % Capital expenditures were$22.5 for the nine months endedSeptember 30, 2021 as compared to$20.9 for the nine months endedSeptember 30, 2020 . Capitalized software expenditures were$22.3 for the nine months endedSeptember 30, 2021 as compared to$9.8 for the nine months endedSeptember 30, 2020 . The increase in capitalized software expenditures is primarily due to the acquisition ofVertafore . We expect the aggregate of capital expenditures and capitalized software expenditures for the balance of the year to be comparable to prior years as a percentage of revenues.
Off-Balance Sheet Arrangements
AtSeptember 30, 2021 , we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Outlook
Current geopolitical and economic uncertainties could adversely affect our
business prospects. The COVID-19 pandemic has had, and may continue to have, an
adverse impact on our business. A significant terrorist attack, other global
conflict, or public health crisis could cause changes in world economies that
would adversely affect us. It is impossible to isolate each of these potential
factor's future effects on current economic conditions or any of our businesses.
It is also impossible to predict with any reasonable degree of certainty what or
when any additional events may occur that also would similarly disrupt the
economy and have an adverse impact on our businesses.
We maintain an active acquisition program; however, future acquisitions will be
dependent on numerous factors and it is not feasible to reasonably estimate if
or when any such acquisitions will occur and what the impact will be on our
business, financial condition and results of operations. Such acquisitions may
be financed by the use of existing credit lines, future cash flows from
operations, announced divestitures, future divestitures, the proceeds from the
issuance of new debt or equity securities or any combination of these methods,
the terms and availability of which will be subject to market and economic
conditions generally.
We anticipate that our businesses will generate positive cash flows from
operating activities, and that these cash flows will permit the reduction of
currently outstanding debt in accordance with the repayment schedule. However,
the rate at which we can reduce our debt (and reduce the associated interest
expense) will be affected by, among other things, the financing and operating
requirements of any new acquisitions, the financial performance of our existing
companies and the impact of the COVID-19 pandemic on our business prospects and
the financial markets generally. None of these factors can be predicted with
certainty.
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