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, 2021 ("Annual Report") as filed onFebruary 22, 2022 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 in certain jurisdictions; 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. 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 and our expectations regarding growth through acquisitions and the ability to complete announced divestitures. 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, energy, raw materials, parts and components, including as a result of impacts from the current inflationary environment, ongoing supply chain constraints or additional or ongoing outbreaks of COVID-19; •environmental compliance costs and liabilities; •potential write-offs of our goodwill and other intangible assets; •our ability to successfully develop new products; •failure to protect our intellectual property; 22 -------------------------------------------------------------------------------- •the effect of, or change in, government regulations (including tax); •economic disruption caused by armed conflicts (such as the war inUkraine ), terrorist attacks, health crises (such as the COVID-19 pandemic) or other unforeseen geopolitical events; and •the factors discussed in other reports we file with theSEC from time to time. 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 market leading businesses that design and develop vertical software and technology enabled products for a variety of defensible niche markets. We pursue consistent and sustainable growth in revenue, earnings and cash flow by emphasizing continuous improvement in the operating performance of our businesses. In addition, we utilize a disciplined, analytical and process-driven approach to redeploy our excess free cash flow toward high-quality acquisitions.
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 ofClayton, Dubilier & Rice, LLC . The businesses included in this transaction are Alpha, AMOT, CCC, Cornell,Dynisco , FTI, Hansen, Hardy, Logitech, Metrix, PAC,Roper Pump ,Struers , Technolog, Uson, andViatran (collectively the "Industrial Businesses"). During 2021, the Company signed definitive agreements to divest our TransCore,Zetec and CIVCO Radiotherapy businesses ("2021 Divestitures"). As ofMarch 31, 2022 , Roper had completed the 2021 Divestitures. The financial results of these businesses are presented 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.
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 -
-
-Technology Enabled Products -
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. Critical Accounting Policies There were no material changes during the six months endedJune 30, 2022 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. 23 --------------------------------------------------------------------------------
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. As a result of the effects of the COVID-19 global pandemic our ability to obtain products or services from certain suppliers and to operate at certain locations have been and may continue to be impacted. 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. 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 June 30, Six months ended June 30,
2022 2021 2022 2021
Net revenues:
Application Software $ 627.5 $ 587.9 $ 1,255.7 $ 1,161.0
Network Software 342.9 297.8 681.4 585.3
Technology Enabled Products 340.4 304.1 653.5 598.8
Total $ 1,310.8 $ 1,189.8 $ 2,590.6 $ 2,345.1
Gross margin:
Application Software 68.7 % 69.3 % 69.0 % 69.3 %
Network Software 84.3 84.0 84.2 83.6
Technology Enabled Products 56.3 59.8 56.4 60.4
Total 69.5 70.5 69.8 70.6
Selling, general and administrative
expenses:
Application Software 42.3 % 43.2 % 42.1 % 42.9 %
Network Software 44.3 46.6 44.0 46.6
Technology Enabled Products 23.5 26.1 24.1 25.6
Total 38.0 39.7 38.1 39.4
Segment operating margin:
Application Software 26.3 % 26.1 % 26.9 % 26.4 %
Network Software 40.0 37.3 40.2 37.0
Technology Enabled Products 32.7 33.6 32.3 34.7
Total 31.6 30.8 31.8 31.2
Corporate administrative expenses (3.9) (4.3) (4.0) (4.2)
Income from operations 27.7 26.6 27.7 27.0
Interest expense, net (3.4) (5.0) (3.8) (5.1)
Other income (expense), net (0.1) - (0.1) 1.2
Earnings before income taxes 24.2 21.6 23.9 23.1
Income taxes (7.0) (4.4) (6.0) (4.8)
Net earnings from continuing operations 17.2 % 17.2 % 17.8 % 18.2 %
24
--------------------------------------------------------------------------------
Three months ended
Net revenues for the three months ended
Technology Enabled
Application Software Network Software Products Roper
Total Revenue Growth 6.7 % 15.1 % 11.9 % 10.2 %
Less Impact of:
Acquisitions/Divestitures 1.0 1.1 - 0.9
Foreign Exchange (1.3) (1.3) (1.0) (1.2)
Organic Revenue Growth 7.0 % 15.3 % 12.9 % 10.5 %
In our Application Software segment, revenues were $627.5 in the second quarter
of 2022 as compared to $587.9 in the second quarter of 2021. The growth of 7.0%
in organic revenues was broad-based across the segment led by our businesses
serving the government contracting, property and casualty insurance and acute
healthcare markets. Gross margin decreased to 68.7% in the second quarter of
2022 as compared to 69.3% in the second quarter of 2021 due primarily to
increased headcount to support expected revenue growth. Selling, general and
administrative ("SG&A") expenses as a percentage of revenues decreased to 42.3%
in the second quarter of 2022 as compared to 43.2% in the second quarter of 2021
due primarily to operating leverage on higher organic revenues. The resulting
operating margin was 26.3% in the second quarter of 2022 as compared to 26.1% in
the second quarter of 2021.
In our Network Software segment, revenues were $342.9 in the second quarter of
2022 as compared to $297.8 in the second quarter of 2021. The growth of 15.3% in
organic revenues was broad-based across the segment led by our network software
businesses serving the freight match, life insurance and media and entertainment
markets. Gross margin increased to 84.3% in the second quarter of 2022 as
compared to 84.0% in the second quarter of 2021 due primarily to favorable
revenue mix. SG&A expenses as a percentage of revenues decreased to 44.3% in the
second quarter of 2022 as compared to 46.6% in the second quarter of 2021 due
primarily to operating leverage on higher organic revenues combined with revenue
mix. As a result, operating margin was 40.0% in the second quarter of 2022 as
compared to 37.3% in the second quarter of 2021.
In our Technology Enabled Products segment, revenues were $340.4 in the second
quarter of 2022 as compared to $304.1 in the second quarter of 2021. The growth
of 12.9% in organic revenues was primarily due to our water meter technology
business and medical products businesses. Gross margin decreased to 56.3% in the
second quarter of 2022 as compared to 59.8% in the second quarter of 2021 due
primarily to higher material, component and freight costs as our businesses
navigate the widespread global supply chain challenges. SG&A expenses as a
percentage of revenues decreased to 23.5% in the second quarter of 2022 as
compared to 26.1% in the second quarter of 2021 due to revenue mix and operating
leverage on higher organic revenues. The resulting operating margin was 32.7% in
the second quarter of 2022 as compared to 33.6% in the second quarter of 2021.
Corporate expenses were relatively flat at $50.9 , or 3.9% of revenues, in the
second quarter of 2022 as compared to $50.8 , or 4.3% of revenues, in the second
quarter of 2021. During the second quarter of 2022 there were offsetting impacts
of higher professional service expense offset by lower compensation expense.
Net interest expense decreased to
Other expense, net, of$1.3 and$0.2 for both the second quarter of 2022 and 2021 were composed primarily of foreign exchange losses at our non-U.S. based subsidiaries. Income taxes as a percent of pretax earnings increased to 29.0% in the second quarter of 2022 as compared to 20.3% in the second quarter of 2021. The rate was unfavorably impacted by the recognition of a net tax expense associated with an internal restructuring plan related to the pending sale of the Industrial Businesses. Backlog is equal to our remaining performance obligations expected to be recognized within the next 12 months as discussed in Note 13 of the Notes to Condensed Consolidated Financial Statements. Backlog increased 22% to$2,467.7 atJune 30, 2022 as compared to$2,027.0 atJune 30, 2021 . Organic growth in backlog was 21% and acquisitions contributed 1%. 25 --------------------------------------------------------------------------------
Backlog as of
June 30,
2022 2021
Application Software $ 1,505.1 $ 1,392.6
Network Software 449.5 401.3
Technology Enabled Products 513.1 233.1
Total $ 2,467.7 $ 2,027.0 Six months ended
Net revenues for the six months ended
Technology Enabled
Application Software Network Software Products Roper
Total Revenue Growth 8.2 % 16.4 % 9.1 % 10.5 %
Less Impact of:
Acquisitions/Divestitures 1.1 1.4 - 1.0
Foreign Exchange (1.0) (0.8) (0.7) (0.9)
Organic Revenue Growth 8.1 % 15.8 % 9.8 % 10.4 %
In our Application Software segment, revenues were $1,255.7 in the six months
ended June 30, 2022 as compared to $1,161.0 in the six months ended June 30,
2021 . The growth of 8.1% in organic revenues was broad-based across the segment
led by our businesses serving property and casualty insurance, government
contracting, and acute healthcare markets. Gross margin decreased to 69.0% in
the six months ended June 30, 2022 as compared to 69.3% in the six months ended
June 30, 2021 due primarily to increased headcount to support expected revenue
growth partially offset by favorable revenue mix. SG&A expenses decreased as a
percentage of revenue to 42.1% in the six months ended June 30, 2022 as compared
to 42.9% in the six months ended June 30, 2021 due to operating leverage on
higher organic revenues. The resulting operating margin was 26.9% in the six
months ended June 30, 2022 as compared to 26.4% in the six months ended June 30,
2021 .
In our Network Software segment, revenues were $681.4 in the six months ended
June 30, 2022 as compared to $585.3 in the six months ended June 30, 2021 . The
growth of 15.8% in organic revenues was broad-based across the segment led by
our network software businesses serving the freight match, life insurance and
media and entertainment markets. Gross margin increased to 84.2% in the six
months ended June 30, 2022 as compared to 83.6% in the six months ended June 30,
2021 due primarily to favorable revenue mix. SG&A expenses decreased as a
percentage of revenues at 44.0% in the six months ended June 30, 2022 as
compared to 46.6% in the six months ended June 30, 2021 due primarily to
operating leverage on higher organic revenues combined with revenue mix. As a
result, operating margin was 40.2% in the six months ended June 30, 2022 as
compared to 37.0% in the six months ended June 30, 2021 .
In our Technology Enabled Products segment, revenues were $653.5 in the six
months ended June 30, 2022 as compared to $598.8 in the six months ended
June 30, 2021 . The growth of 9.8% in organic revenues was primarily due to our
water meter technology business. Gross margin decreased to 56.4% in the six
months ended June 30, 2022 as compared to 60.4% in the six months ended June 30,
2021 due primarily to higher material, component and freight costs as our
businesses navigate the widespread global supply chain challenges. SG&A expenses
as a percentage of revenues decreased to 24.1% in the six months ended June 30,
2022 as compared to 25.6% in the six months ended June 30, 2021 due to revenue
mix and operating leverage on higher organic revenues. The resulting operating
margin was 32.3% in the six months ended June 30, 2022 as compared to 34.7% in
the six months ended June 30, 2021 .
Corporate expenses increased to $103.8 , or 4.0% of revenues, in the six months
ended June 30, 2022 as compared to $97.9 , or 4.2% of revenues, in the six months
ended June 30, 2021 . The dollar increase was due primarily to higher
professional service and acquisition related expenses partially offset by lower
compensation expense.
Net interest expense decreased to $97.3 for the six months ended June 30, 2022
as compared to $120.0 for the six months ended June 30, 2021 due to lower
weighted average debt balances and higher interest income earned on our cash
equivalents.
26
--------------------------------------------------------------------------------
Other expense, net, of $3.4 for the six months ended June 30, 2022 was composed
primarily of a one-time charge associated with a transaction to transfer the
remainder of our exposure related to asbestos claims to a third party and
foreign exchange losses at our non-U.S. based subsidiaries. Other income, net,
of $27.1 for the six months ended June 30, 2021 was composed primarily of a gain
on sale of minority investment.
Income taxes as a percent of pretax earnings were 25.4% for the six months ended
June 30, 2022 as compared to 21.0% for the six months ended June 30, 2021 . The
rate was unfavorably impacted by the recognition of a net tax expense associated
with an internal restructuring plan related to the pending sale of the
Industrial Businesses.
Financial Condition, Liquidity and Capital Resources All currency amounts are in millions
Selected cash flows for the six months endedJune 30, 2022 and 2021 were as follows: Six months ended June 30, Cash provided by/(used in): 2022 2021 Continuing operations: Cash provided by operating activities$ 331.0 $ 805.5 Cash used in investing activities (287.6)
(18.1)
Cash used in financing activities (551.5)
(934.5)
Cash flows provided by discontinued operations 3,061.3
175.4
Operating activities - Net cash provided by operating activities from continuing operations decreased by 59% to$331.0 in the six months endedJune 30, 2022 as compared to$805.5 in the six months endedJune 30, 2021 , due primarily to (i) the timing of cash taxes paid in connection with the 2021 Divestitures, (ii) higher cash taxes associated with changes to Internal Revenue Code Section 174 and (iii) less cash provided by working capital primarily associated with higher incentive compensation payments in the first quarter of 2022 associated with 2021 performance. These cash outflows were partially offset by higher net income from continuing operations net of non-cash expenses. Investing activities - Cash used in investing activities from continuing operations during the six months endedJune 30, 2022 is due to business acquisitions and capital expenditures. Cash used in investing activities from continuing operations during the six months endedJune 30, 2021 was due primarily to capital expenditures and business acquisitions, partially offset by proceeds from the sale of a minority investment.
Financing activities - Cash used in financing activities from continuing
operations for the both the six months ended
Discontinued operations - Cash provided by discontinued operations for the six months endedJune 30, 2022 was primarily due to proceeds from the sale of TransCore andZetec slightly offset by less cash provided by discontinued operations which was impacted by the timing of our divestiture activity. Cash provided by discontinued operations during the six months endedJune 30, 2021 was primarily due to net income net of non-cash expenses partially offset by cash used in working capital primarily associated with the build-up of inventory in response to the wide-spread global supply chain challenges. Effect of foreign currency exchange rate changes on cash - Cash and cash equivalents decreased during the six months endedJune 30, 2022 by$25.6 due primarily to the strengthening of theU.S. dollar against the functional currencies of our European andUnited Kingdom subsidiaries. Cash and cash equivalents increased during the six months endedJune 30, 2021 by$1.2 due primarily to the weakening of theU.S. dollar against the functional currency of our Canadian subsidiaries. 27 --------------------------------------------------------------------------------
Total debt at
$500 3.125% senior notes due 2022$ 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 - Deferred finance costs (43.4) Other 0.4
Total debt, net of deferred finance costs 7,457.0 Less current portion
799.9
Long-term debt, net of deferred finance costs
Prior to our unsecured credit facility being replaced onJuly 21, 2022 as noted below, the interest rate on borrowings under the$3,000.0 unsecured credit facility was calculated based upon various recognized indices plus a margin as defined in the credit facility. AtJune 30, 2022 , we had no outstanding borrowings under our unsecured credit facility and$20.5 of outstanding letters of credit. Cash at our foreign subsidiaries atJune 30, 2022 increased to$431 as compared to$311 atDecember 31, 2021 due primarily to the cash generated at our foreign subsidiaries during the six months endedJune 30, 2022 , partially offset by the repatriation of$29 during the six months endedJune 30, 2022 . We intend to repatriate substantially all historical and future earnings. 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.
We were in compliance with all debt covenants related to our unsecured credit
facility throughout the six 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) decreased to negative$1,132.2 atJune 30, 2022 as compared to negative$990.9 atDecember 31, 2021 primarily driven by an increase in income taxes payables associated with the 2021 Divestitures partially offset by a decrease in accrued compensation. Consistent negative net working capital demonstrates Roper's continued evolution and focus on asset-light business models. Total debt was$7,457.0 atJune 30, 2022 as compared to$7,921.8 atDecember 31, 2021 , due primarily to the net repayments under our unsecured credit facility. Our leverage on a continuing operations basis is shown in the following table: June 30, December 31, 2022 2021 Total debt$ 7,457.0 $ 7,921.8 Cash (2,879.1) (351.5) Net debt 4,577.9 7,570.3 Stockholders' equity 13,726.5 11,563.8 Total net capital$ 18,304.4 $ 19,134.1 Net debt / total net capital 25.0 % 39.6 % 28 -------------------------------------------------------------------------------- Capital expenditures were$13.7 for the six months endedJune 30, 2022 as compared to$12.8 for the six months endedJune 30, 2021 . Capitalized software expenditures were$15.0 for the six months endedJune 30, 2022 as compared to$15.3 for the six months endedJune 30, 2021 . 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. OnJune 23, 2022 ,Roper Technologies, Inc. (the "Company") elected to exercise its optional redemption rights to redeem all of its outstanding 3.125% Notes due 2022 (the "Notes") in the original aggregate principal amount of$500.0 , andComputershare Trust Company, N.A. , as successor toWells 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 isAugust 15, 2022 (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, but not including, 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. OnJuly 21, 2022 ,Roper Technologies, Inc. (the "Company" or "Roper") entered into a new five-year unsecured credit facility (the "Credit Agreement") among Roper, the financial institutions from time to time party thereto,JPMorgan Chase Bank, N.A ., as administrative agent,Bank of America, N.A . andWells Fargo Bank, N.A. , as syndication agents, andMizuho Bank, Ltd. ,MUFG Bank, Ltd. ,PNC Bank, National Association ,TD Bank, N.A .,Truist Bank andU.S Bank, National Association , as documentation agents, which replaces its existing$3,000.0 unsecured credit facility, dated as ofSeptember 2, 2020 , as amended. The new facility comprises a five-year$3,500.0 revolving credit facility, which includes availability of up to$150.0 for letters of credit. Loans under the facility will be available in dollars, and letters of credit will be available in dollars and other currencies to be agreed. The Company may also, subject to compliance with specified conditions, request additional term loans or revolving credit commitments in an aggregate amount not to exceed$500.0 .
Off-Balance Sheet Arrangements
AtJune 30, 2022 , 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, including the current inflationary environment, supply chain disruptions and labor shortage, could adversely affect our business prospects. The COVID-19 pandemic has had, and may continue to have, an adverse impact on our business. An armed conflict (such as the ongoing war inUkraine ), 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. 29
--------------------------------------------------------------------------------
© Edgar Online, source
