The Roper Technologies Fourth Quarter 2018 Financial Results Conference Call will now begin. Today's call is being recorded. I will now turn the call over to Zack Moxcey.

Good morning, and thank you all for joining us as we discuss the fourth quarter and full year financial results for Roper Technologies. Joining me on the call this morning are; Neil Hunn, President and Chief Executive Officer; Rob Crisci, Executive Vice President and Chief Financial Officer; Jason Conley, Vice President and Controller; and Shannon O’Callaghan, Vice President of Finance. Earlier, this morning, we issued a press release announcing our financial 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 the webcast and are also available on our website. Now, if you will please turn to slide 2. We begin with our Safe Harbor statement. During the course of today’s call, we will make forward-looking statements, which are subject to risks and uncertainties as described on this page, in our press release, and in our SEC filings. You should listen to today’s call in the context of that information. And now please turn to slide 3. Today, we will discuss our results for the fourth quarter and year, primarily on an adjusted non-GAAP basis. Reconciliations between GAAP and adjusted measures can be found in our press release and in the appendix of this presentation on our website. For the quarter, the difference between our GAAP results and adjusted results consists of the following items; amortization of acquisition-related intangible assets; purchase accounting adjustments to acquired deferred revenue; a deferred tax benefit resulting from the held-for-sale classification of the Scientific Imaging businesses; a measurement period adjustment to 2017 provisional income tax amounts resulting from the Tax Cuts and Jobs Act; and lastly a one-time expense for accelerated vesting related to the passing of Brian Jellison. And now if you'll please turn to slide 4, I will hand the call over to Neil. After our prepared remarks we will take questions from our telephone participants. Neil?

Thanks, Zack, and good morning, everyone. Thanks for joining us on the call this morning. During today's call we'll go through our Q4 and FY 2018 enterprise financial results. We'll then turn to our 2018 segment detail and our 2019 segment outlook. We'll then turn to our 2019 guidance and then take your questions. Next slide please. This is really a fantastic quarter. Revenue, EBITDA, net earnings, cash flow really any measure you can look at was a record for both the quarter and the full year. Revenue increased 12% to $1.38 billion with organic growth of 9%. Gross profit increased 13% with margin expanding 90 basis points to 63.5%. Of note gross margins were increased in all four of our segments. EBITDA increased 12% to $496 million and EBITDA margins expanded 30 basis points to 36%. Earnings before taxes increased 14% and DEPS increased 19% to $3.22 in the quarter. Operating cash flow increased 26% to $464 million, an astounding 34% of revenue. Free cash flow increased 27% to $447 million, 32% of revenue just eye-popping cash flow. Before we turn to the next slide we want to highlight a few topics. Relative to cost push inflation tariffs, the impact across our businesses in the quarter was modest and manageable, which is clear with our gross margins expanding 90 basis points to 63.5%. Pricing actions already in effect offset most of the supply chain impact but the teams also quickly repositioned certain elements of the supply chains to minimize the tariff impact. Also during the quarter, we had the opportunity as we do every year to spend multiple hours with each of our businesses to discuss and challenge their forward strategy; discuss market trends, customer behaviors and competitive activity; talk through their enablement and execution of strategy; and review…

Thanks, Neil. Good morning, everyone, and thanks for waking up an hour earlier than normal to hear our call. So, on page 8, I'll go over the full year income statement. As Neil mentioned, it was an excellent 2018. We grew revenue 11%, which is more than $500 million for the year. The majority of the growth was organic, with full year organic growth of 8% and 9% organic in each of the last three quarters. At Roper, as you know, we pride ourselves in the ability to grow both organically and through our consistent deployment of capital. And in 2018, we really benefited from both, with the robust organic growth and positive contributions from PowerPlan and our other acquisitions. Our margins also expanded for the year. Gross margin, up 60 basis points. EBITDA margin, up 30 basis points for overall EBITDA growth of 13%, exceeding $1.8 billion for the first time, so we had very nice leverage on the growth. Earnings before taxes grew 15% for the year. As you will recall, from a year ago Q4 call, we talked about the many benefits from tax reform for Roper. And that certainly did play out, as you see our full year tax rate declined from 28.9% to 21.5%. So adding up all those numbers, we grew our DEPS for the year 25%. Next slide. At Roper, we always believe that cash is the best measure of performance. And in Q4, we grew our free cash flow, as Neil mentioned, 27% to $447 million. And on a full year basis, we grew our operating cash flow 16% and our free cash flow 17% to a record of $1.37 billion, which represents 26% of revenue. As you can see on the chart on the right, if you look at the last…

Thanks Rob. If I can turn to RF Technology & Software, slide 13, we'll go through and recap this segment and the next three segments for the review of 2018. We can see in the upper left the segment really had fantastic financial performance in the year. Revenue plus 13%, operating profit plus 17%, core margins expanding and EBITDA growing 16%, really a fantastic year. Importantly the segment organic growth was 6% but inside of that our software businesses grow organically 8%. As we start with Deltek and remind you Deltek is our applications software business focused on the government contracting and professional services firm market space, they grew high single-digit revenue with tremendous cash performance in the year. We break it apart. On the GovCon side in the Deltek business, the scale benefits that we have continued. There are market share gains across both the enterprise or the large side of the government contracting space as well as the small and medium-sized business. On the professional services side for Deltek, the year was highlighted by the launch of VantagePoint and we'll talk to this in a minute about the importance of that. And then we saw early traction in niche professional services end markets specifically consulting and accounting firms. Across both businesses Deltek is in a SaaS migration and for this and many of our software businesses this SaaS migration is a growth driver. Turning to our Freight Match business, which is our full truckload spot market network business just a record year from this enterprise based on network expansion and favorable end market conditions. The network expanded due to net subscriber adds, but importantly the vitality of the network also was increased by the ARPU or the revenue per unit increasing for two reasons. First, because we're able…

Thank you. We will now go to our question-and-answer portion of the call. [Operator Instructions] We take our first question from Deane Dray with Royal Bank of Canada Capital Markets.

Thank you. Good morning, everyone.

Good morning, Deane.

Hey. You guys are throwing-off my biorhythms at such an early hour this morning.

Thank you for waking up early.

Yes, sir. Hey. Just to start it off, and I wasn't planning on doing this, but I just feel it's important to recognize the passing of Brian. In my career, I've never called ever thought of anyone as a financial genius, but I think Brian was. And it just struck me is his legacy, his business model – that has the Roper business model, talent development all of that lives on. And I think you're seeing it in these numbers today and I just want to take a moment to say that.

We appreciate you saying that and agree with what you said.

Terrific. All right. So business at hand just was interesting that with Deltek's exposure there wasn't any issue you didn't cite any issue with the government shutdown with all the projects. Do you see any effect there across your businesses?

So – the sort of bifurcate it with what we saw nothing obviously in last year and we look forward into this year. In the first part of January, at the top-end the enterprise side with GovCon it's completely business as usual. As you can imagine, they have gigantic teams and staffs and they can flow their staffs to where the work is. On the very, very bottom-end, the mom-and-pop we saw a little bit of a slowdown in booking activities. It's very, very small part of Deltek, but Deltek is highly confident that rebounds based on their experience from sequestration. All of that business was captured and then following couple of months. And so it was – we view it as a push, if anything and certainly not lost business. So, in the grand scheme of things very limited impact on the Deltek business relative to the government shutdown.

Got it. That's good to hear. And then, Neil you gave a bit of a tease about the re-segmentation. This has been talked about for more than a year and it makes all kind of sense. Now, I'm not expecting you to disclose any real specifics here, but just conceptually how does this – will it look like in terms of putting alike businesses into similar segments like consolidating energy? Where do you think the benefits that come from this, please?

Yeah. I appreciate that. So just – every time we get asked about the re-segmentation, we just want to make sure everybody understands, it's just how we organize the businesses for reporting out to investors. It's not how we operate the business. It's not changing any of the business model characteristics. It's just for communication to our investors and shareholders. To that end, the design principles are quite simple and straightforward. We want there not to be segments based on end market orientation, as our strategy is not end market-oriented. We'll put like business models and segments and that will certainly have a segment structure that supports our long term multi-industry view of our strategy, as well as having a combination of products and software. But the confusion of having multiple types of products and energy across two different segments, that will all likely be streamlined and cleaned up in new segment reporting structure.

All good to hear. Thank you.

Thank you.

Our next question is from Julian Mitchell with Barclays.

Hi, good morning.

Good morning.

Just – and I'll echo Deane's comments on Brian, of course. In terms of the guidance on organic sales, you just grew 9% in the fourth quarter organically. Big step down in the guide, so about 4% at the midpoint in Q1. Maybe just talk a little bit about the segments, obviously, leading that how steep a drop-off you're expecting in industrial and energy. And maybe any comments around the cadence of order intake in those two businesses in the recent months, as you said, amidst the oil price volatility.

Sure. Good morning. This is Rob. So, I think, in the two largest segments RF and medical, very consistent. I mean, these are mid single digit organic growth segments for the most part if you go back last year and we expect much of the same for 2019. I think you're right. I think for the industrial and energy segments, we do see a little bit lower growth than we saw last year clearly. And I think, Neil mentioned a few reasons for that earlier. Neil, you can probably expand.

Sure. If you look across the aggregate of our industrial and energy segments and outlook, basically you see Neptune and CCC up for the year. We see our upstream assets down. And everything else in aggregate, the bucket of everything else, is flattish across 2019. As I mentioned, the field is generally pretty upbeat and our January activities were modestly strong. And our approach on guidance is we all saw the volatility in December in oil prices in that market. We saw a slight, ever so slight impact on some of the Q4 seasonal shipments that we talked about earlier. We also have a difficult first half comp across our energy businesses in particular. So we've modeled Q1 down with only modest improvements in the balance of the year. But importantly if the takeaway capacity, the 3 million barrels that's scheduled to come online comes online, or oil prices stay where they are or increase, then there could be positive levers in our model here specifically to the upstream assets that we modeled down for the balance of the year.

Thank you. And then, just my second follow-up around the medical business, maybe just give us some updates on what you expect from the U.S. lab business in 2019? And also just to confirm the delay on sale of Gatan that in no way I assume affects your capital deployment given how strong the balance sheet is?

I'll take that Gatan one first. No, I mean it doesn't at all. I mean, we're very active and have the balance sheet that Rob shared was -- it was looking through any impact of the divestiture of Gatan. So we're planning on being quite offensive to the extent that the targets present themselves. Relative to Sunquest, we expect it to be down in 2019, although less down in 2018. That's consistent with how we set the situation about this time last year about what next couple of years look like for Sunquest.

Thank you very much.

Yeah, just to be clear for the U.S. part of Sunquest.

Got it. Thank you.

Yes. Thank you.

And next we'll year with Oppenheimer with Christopher Glynn.

Thanks. Good morning.

Good morning to you.

Good morning. Nice job. So good comments on Aderant and Deltek on the share gains and explanations there. I was also looking for an update on PowerPlan impact Roper's having, any new initiatives on pricing or sales organizations?

Well, we just -- it's still pretty early days with PowerPlan. They had a very busy year last year and a newer SaaS offering around lease accounting. So that had tremendous uptake given the accounting changes. So that little bit of a pig -- through the python in terms of getting all those implemented and they did a very good job, and that we ran them through our planning process. I thought their end market orientation was good. They're also -- we bought the company that was in the mid-innings of a SaaS transition. So they are quite busy in terms of upgrading their tech stack and just getting the first early implementations on the new stack with recurring revenue SaaS part of that business. So early days. But as we mentioned, they on-boarded fantastically well, and the team has acclimatized well to our governance model and our structure.

Okay. And then similarly for iTrade, you've had some pretty consistent growth there at least for a short bit here. Just wondering what delay of the competitive and market opportunity profiles is like and particularly outside the U.S. if that's starting to tap.

Well, iTrade is mostly a U.S. business. It's not exclusively U.S. but mostly U.S. From a competitive landscape point of view is one of the things we like a lot about our network businesses it is a supply chain network that has network scale that's larger than anybody else. And so the relative market share advantage that we have in that business is quite larger over the next largest competitor, and really haven't seen a meaningful challenger in that business for several years. Again it's the network scale. And then Rhonda and her team over the last 18 or 24 months have just done a great job on the product and the features and driving even more customer loyalty and uptake. It's always had a high recurring revenues and high retention rates, but now the ability to sell more value in the product stack is encouraging.

Great. Thanks.

Thank you.

We’ll next hear with Steve Tusa with JPMorgan.

Hi, guys. Good morning.

Good morning, Steve.

Hey, Steve.

I have been up since 4 AM, went for run, so this is piece cake, no problem. I say move it up, let’s cut the wheat from the chaff.

Hunn didn’t run this morning, so you're a step ahead of Steve.

I'm actually joking, I actually broke my ankle on Sunday. So I am not really moving – move very much. So again, on a more somber note, our condolences obviously around Brian. I echo Deane's comments. I think he said it pretty well. So, sorry to hear about that guys.

Appreciate it.

Thank you, Steve.

I guess just the acquisition pipeline with all these kind of crosscurrents out there and with multiples coming in a bit. I mean, is this – it all, it is cycle timing it all enough to kind of change people's mentalities around deals at all or no not yet in valuations?

So, generally speaking, not generally, it's absolute. I think the fact that private valuations, you know we buy everything from private equity, lag any change in public and they also don't have the volatility of public. And so that's just an observed fact in the market. The other thing, I would say to that is valuations remain robust in the private markets. But the assets that we all come to – I think you all come to appreciate that we look for the niche orientation, the high retention rates, the mid to high single-digit growth, generally non-cyclicality high-recurring revenues. Those assets and high cash flow low to limited CapEx those command a higher price than your average company. And those are the type of businesses that we look for. So we continue to do that. The other thing which we always do, we do it with our Board, a few times a year as we go through models to say is it better to continue deploying through valuation environments or wait? And every time the mass says to continue deploy through because the compounding effect overwhelms any market timing you could possibly dream up. And so our strategy has been for the last five years to invest through the cycle and we'll continue to do that.

Okay. Is there – just one last one. Now that you're kind of running the show there, what's kind of the biggest challenge you see as far as maintaining this type of performance?

Well, the beauty of this business is that it's comprised of 50 businesses. And I won't go through all the things you know about their niche orientation, defensibility, the market share leading positions that we have and so. The cash flow generation side of this business is pretty stable and robust given the assets that we have in our org structure. I think there is certainly a challenge or an opportunity we have to continue to add planning rigor and strategy execution rigor and talent development rigor through that organization, through the organization which we'll continue to do. And I won't say, it's a challenge, but is certainly something that's obviously top of mind, we spend a tremendous amount of time thinking about how we deploy the capital, right? So we have process and rigor and CRI discipline that really minimize the likelihood of making mistakes. But Rob and myself and the entire team here spent a lot of time on that and continue to try to learn through our history and make sure that we do a good job relative to deploying capital going forward. So it’s how I do cash flow generation, cash flow deployment is how I think about what the job is and the challenges and opportunities associated with that.

But I would just add to that you guys you know, that's very institutionalized. I mean, everything that we are doing is consistent with what we've been doing for the last 15 years. Neil and myself obviously have been very heavily involved in all the M&A we've done in valuation and execution in the last six, seven years. So it is no change at all and what we've done in the past, and it will stay the same moving forward.

And maybe just one thing – I'm sorry, go ahead, Steve.

No, no, you go ahead. You go ahead.

Yeah. So the poor transcriptionist missed all of that. But the one thing I would say is that that it's a challenge that I just wake up everyday thinking about. As we get bigger, the concept, that complexly can creep in. It's certainly something that I spend a lot of time thinking about how at every turn we can avoid that, and really keep this thing simple, which is one or probably the single largest thing that Brian left for the legacy is -- what we do is just very simple and we'll continue to do that going forward and that's very top of mind.

Well, it sounds you guys have too much money to spend and that's not a bad problem to have. I think there's a lot other companies that would like that problem. Thanks a lot.

Yeah. Thank you.

Our next question comes from Joe Ritchie with Goldman Sachs.

Hi. Good morning, everyone.

Good morning.

So I thought you did a nice job, Neil, of telling us about the different offerings that are now in place at both Deltek and Aderant. But can you maybe just delve into that a little bit more? What are the opportunities from those offerings? And how are you seeing that translating into growth over the next couple of years?

Well, I'll take it one at a time, maybe start with Aderant. The last four -- three or four, five years and the next several years, the large law market will continue to be viable growth driver for the business and all the legacy reasons why we've won, we think will continue. So as you think about building a recurring revenue business, you build it on top of that larger pieces. And so, while each individual piece of the recurring revenue piece that we talked about at Aderant earlier, by itself is small, when you stack it on top of an existing business, it can become pretty meaningful. And importantly, it extends your – the company is also working in it's R&D pipeline to add – to build bolt-on products that you can sell into large law and the mid and small law size practices. So it's just a concept of which we talk broadly about, the software business is about "solution stacking". So you spend a lot of money acquiring a customer, and hopefully selling them one or two products. And then as you – certainly, once you have the customer, it's much easier to sell them additional product, especially if they're fully integrated in with – excuse me, the existing products that they have. And so that strategy is specific, not specific to Aderant or Deltek, but ConstructConnect or DAT or iTrade. And so, we can certainly spend more time off line about it, but that's the way we think about growing the product strategies of these businesses.

Yeah. Fair enough. And maybe just kind of following on just staying on RF Tech for a second. Obviously, that business has evolved a lot over the last several years. And how do you think about then the cyclicality of this business? Now that you're so much more of a software-oriented business, if we were to go into a downturn. How resilient do you think this business is?

Which business are you referring to?

I was thinking about the whole segment. I mean, obviously, there's variety.

The RF segment.

Yeah. The RF.

Yeah, sure. So the TransCore business which actually is a highly recurring – high recurring revenue business, I mean, yes, there are products that come in and out on any given year, but there's a huge base of recurring revenue there. But that continues to be smaller part of this segment as currently reported. Software has now become two-thirds and growing of the segment. So very, very high levels of recurring revenue. If you look at our RF Tech segment organically over the past several years, I mean, it's very, very consistent growth and that continues to tick upward over time as we've added more of these high quality software businesses. So it's really not cyclical at all in the segment at this point in time.

All right, guys. Good to hear. And again I wish my condolences for Brian as well.

Appreciate that. Thank you.

We'll now hear from Robert McCarthy with Stephens.

Good morning, everyone. Can you hear me?

Perfectly.

All right. Crystal clear. Well, obviously I echo the nice things said about Brian, and I think you guys know that. I guess the first question I would have is, obviously, you've given a lot of airtime to this re-segmentation the kind of risk the more cyclical businesses of the portfolio. At some point does it become a situation where it's better in the spin or other hands? Because I just think about your management there they're managing through this, but they are perceived as probably lower growth more cyclical within the portfolio and they're not getting capital going forward. So how do you bridge the gap to keep them motivated, keep them incentivized given the context that clearly you're deemphasizing the strategic importance of this collection of businesses and what's kind of the end game here?

Well, I'll start with your last statement about deemphasizing the strategic importance. I would say we're absolutely not doing that. All of our businesses, even the energy businesses are in niches, they are clear leaders. Importantly they are tremendous cash machines, right? Their CRI performance in stunning and so these businesses are fantastic businesses. They do, obviously, have some cyclicality associated with them, but they are fantastic businesses, period, full stop. So there are strategy at the same. We have a collection of roughly 50 businesses. They generate the cash flow and we take all the cash flow and deploy to businesses that are better than the core. So, that's how I would summarize our feelings on that.

Yeah, I mean there is a lot of investment in these businesses. As you know, it’s like we centralize investment and did it out, these businesses generate high margins and they are encouraged and they knew that. I think Neil talked about some of the innovations in every single one of our businesses is investing to grow. And that's why they have such great performance. So they are all very, very strategic in their own way.

Great example of that is both the Cornell and Roper Pump. We've talked now all year long about the share gains that they've had in 2018. Those are directly a result of the investments we made in the channel and the product in the last down cycle. So we were there when others weren't there. And so I think our ability to sort of with the long-term horizon of owning these businesses proves to be beneficial.

Well, now that everybody is awake, I guess, the question I have about acquisitions is you guys have done a great job in acquisitions that’s clear and great job in terms of the core operations of the business. But to I think Steve's question earlier, I mean, how do you keep this performance off in context of capital deployment? Where do you think the risk is? I asked Brian these years ago and he said, really the risk is in -- if we buy company that does not equate the software, the code that we think it has or is it a question of market position. It wouldn't be a question of capital intensity, because the nature of the businesses that you buy are not going to have surprises with respect to what their CapEx or funding needs are. But could you just talk about kind of ring-fencing the risks around, CRI through the lens, where you look at acquisitions. And if you are going to miss where is it going to be in your relative assessment? Just thinking self critically.

Sure. So I'll just -- I'll answer your question through the lens of how we deploy capital, right? So the first step in that approach for us is, do we like the CRI performance, yes or no? That is analytical, objective and is not subject to any bias or interpretation. So before we engage or do any work, we know that it fits our financial criteria. I think most companies that are stretching, or they stretch the valuations and assume synergies that's not anywhere in our CRI map. And so we don't sort of romance ourself into the financial strategy of an acquisition. It straight CRI map. Second is do – what we think that management team will strive in our environment. And we can spend more time about this later, but essentially is, are they – do they love building businesses yes or no? You can actually somewhat objectively determined that based on, if they've been running that business across multiple owners, you look back their leadership CVs, and see if they've had three jobs in their career versus 20. You get a sense that they love building businesses or not. And then third, so after we know we like the financial performance, we know we have a management team that will strive then is it a business that we like? Is it niche leadership position or early market share advantage, recurring revenue, high retention rates et cetera? So it's not certainly far from impossible to make a mistake, but the rigor of the process really makes it hard to do so. And so the punch line of that where we have been disappointed in the past is would be summarized and maybe they were a little slower to grow early until our strategy prod tools sort of have time to take effect, but it's far from value destructive [ph] from our shareholders, because there's so much arbitrage value in the CRI map from the onset.

Thank you for taking my questions. I appreciate it.

Thank you.

And from Baird we'll now hear from Richard Eastman.

Yes. Good morning, Neil, Rob, Zack.

Good morning.

Again, I'll definitely second all the closing comments and nice comments about Brian. He will be missed. Just a quick question around the ES&C business as well as the IT business, the incremental margins in both in the fourth quarter just exceeded the gross margin that those two businesses generate. And I'm curious, is that a mix issue in those two segments? Or how did they deliver that amount of leverage I guess?

Yeah. I mean, I think in the energy segment, you had 1% growth. So that's just sort of a small number since you asked. I think in the industrial businesses, look there is – we do have high contribution margins and so as you get late in the year and you're delivering a lot of product it's going to come through a pretty high contribution margin. So, certainly over time, it’s not going to be a 100%, but certainly for a quarter, you can have pretty strong incrementals.

Okay. Okay. And just I guess this is kind of plays into my second question here. Again, when I look at 2019 and I look at core guide of 3% to 5% for sales, if I add back the $0.25 that you have pulled out for Gatan and other imaging businesses I'm curious about the EBIT leverage you will be able to show for the year. Again, if I just add that back the EBIT leverage looks a lot like maybe 3% type of thing. So, I'm a little bit curious, if in your plan assuming Gatan and imaging businesses is most of the compounding effect in EBIT going to come from M&A this year with your guide around industrial businesses? Is that kind of how your plan picks up?

Yes, sure, yes. As you know, we don't include any acquisitions in guide. So this guide is strictly based-off of organic. We've got a lot of capital that we expect to deploy as long as the right opportunities are there. And so, at the end of the year, yes, the compounding will always be a combination of our organic growth and our M&A growth. In terms of the guide, we are assuming roughly 30% to 35% leverage on the growth overall, which is pretty consistent with the kind of long-term trends. I think as Neil mentioned in our base guidance, because we are assuming some declines in some of the upstream businesses, and there's going to be a little bit of delevering there and it will hurt you, whereas the software and the medical businesses generally leverage 40%. And so if you put it all together, you get something in the 30s for our baseline midpoint guidance, which we think is sort of a prudent approach at this point in time.

I see. Yeah, yeah. And then just last question, around Gatan, is there any chance you would share kind of that revenue forecast for 2019? I mean, I understand when you're taking it out, but as the numbers would suggest that Gatan kind of decelerates off of what apparently was a really good 2018? Is that correct and...?

Yeah. So I don't really want to get that specific on that, given the fact that we're currently trying to get it to closed, the regulatory. But I would say that from a seasonality standpoint, it's always stronger in the second half than in the first half. So I think it is true, we're not assuming a lot of growth in 2019 versus what was a very strong 2018.

I see. Okay. Okay, very good. Thank you.

Thank you.

Our next question comes from Joe Giordano of Cowen.

Hey, guys. Good morning. This is Tristan in for Joe. Thanks for taking the question. Neil, just a quick one. I was wondering if you changed anything this year in the way Roper sets its guidance, since really that was the first time you had to do this at the entire company level. I guess what I'm trying to get to is how conservative though your guidance is this year compared to the previous years.

Well, I'll give you a little bit of a process and turn over to Rob. Maybe he can add some color. So the process of setting this is the same process that we've gone through for the last four or five years. I've certainly been involved with it, but not at the helm, obviously. So the engagement with the company is going through all the plan reviews, doing the call downs in January, doing all the analytics, getting the market information. So it's the same process. I went through earlier about the – what the posture we're taking on our oil and gas businesses relative to Q1 and the outlook. So we believe if the market, the takeaway capacity comes online or oil prices stay where they are or go up, there could be some positive levers. But other than that it's generally the same approach. Rob, do you want to add?

Yeah. It's the exact same process we've done over the last 10 years. So we certainly view it as well-balanced.

Great. Thank you, guys.

Great. Thank you.

That will end our question-and-answer session for this call. We now return back to Zack Moxcey for closing remarks.

Thank you, everyone for joining us today and we look forward to speaking with you during our next earnings call.

This concludes today’s conference. Thank you for your participation. You may now disconnect.