Good morning. The Roper Technologies Conference Call will now begin. Today's call is being recorded and all participants will be in a listen-only mode. [Operator Instructions] I'd like to turn the call over to Zack Moxcey, Vice President, Investor Relations. Please go ahead..

amortization of acquisition-related intangible assets; purchase accounting adjustments to commission expense income tax restructuring expense associated with the pending sale of our industrial businesses. And lastly, we have adjusted our cash flow statement to exclude the cash taxes paid related to our 2021 divestitures.

GAAP requires these payments to be classified as operating cash flow items even though they are related to the divestitures. Reconciliations can be found in our press release and in the appendix of this presentation on our website. And now if you please turn to Page 4, I'll 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. This morning, we'll start by reviewing our second quarter highlights and financial results then we'll review our segment detail and our increase out for the year then get to your questions. Next slide, please.

As we turn to Page 5, the main takeaways for today's call are first, we had another great quarter of operational and financial performance, and we're increasing our outlook for the year; second, during the quarter, we entered into an agreement to divest the majority stake of our industrial businesses; and third, we have north of 7 billion of available M&A firepower.

Looking at the second quarter, we continue to be pleased with the quality of execution across our enterprise. This quarter is characterized by having very strong order activity and solid organic growth of 11%. Of particular importance, our growth was quite broad-based across our three segments.

Consistent with our commentary during the last several quarters, not only did we grow nicely within the quarter, but the quality of the underlying businesses also improved as we saw our software recurring revenue base grow 12% on an organic basis.

In addition to our strong software growth, our product businesses performed very well in the quarter, experiencing very high levels of demand and record levels of backlog. Once we complete the divestiture of the majority interest of our industrial businesses, the quality of our portfolio will be significantly improved across several dimensions.

First, we will be meaningfully less cyclical with about 75% of our portfolio being software and the balance being medical and water products. Second, we'll have higher levels of recurring revenue with 80% of our software revenue being recurring in nature.

Also, a large percentage of our product revenue is reoccurring in nature, such as Neptune's replacement demand and our medical product consumables. And third, we'll be even more asset-light given a vastly improved working capital profile one that generates significant increasing amount of cash as we continue to grow.

And finally, with the closing of our industrial divestiture, which we anticipate will occur later this year, we'll have north of $7 billion of M&A capacity. We are very active in the M&A markets, but also remain super patient and highly disciplined to ensure optimal deployment of our available capital.

We are confident in our ability to deploy this capital wisely, which in turn will further improve both the quality and scale of our enterprise. We are proud of our operating team for their execution, a very solid quarter. Now let me turn the call to Rob, who will walk through our financial summary.

Rob?.

Thanks, Neil. Good morning, everyone. Turning to Page 6, here, we want to briefly cover our Q2 performance compared to our guidance, including the industrial businesses now reported as part of discontinued operations due to the pending sale.

On that apples-to-apples basis, our Q2 of $3.95 compares quite favorably to our guidance of $3.80 to $3.84, an $0.11 beat at the high end of our guidance, a very strong quarter. Next slide. Turning to Page 7 and covering the Q2 financial highlights.

Here, we will review some of the key financial metrics on a continuing operations basis which is our reporting basis for earnings and guidance moving forward. Total revenue increased 10% to $1.31 billion. Organic revenue increased 11% with strength across each of our three reporting segments.

Application Software grew 7% organically as our two largest businesses, Deltek and Vertafore continue to perform very well. Network software grew 15% led by continued exceptional performance at our freight matching businesses. Finally, our new technology-enabled products segment grew 13% organically, aided by an excellent quarter from Neptune.

EBITDA margin was 39.3%, resulting in EBITDA increasing 10% to $515 million. DEPS on a continuing ops basis was 3.43%, 16% higher than last year. Net working capital is now negative 17% of Q2 annualized revenue as a result of our higher quality portfolio.

Q2 adjusted free cash flow was $252 million, which was 19% below prior year, but still represent a 17% three-year CAGR versus 2019. Notably, like many technology companies, our cash flow was negatively impacted by the Section 174 R&D capitalization change that took effect for 2022.

We paid $49 million in Q2 related to Section 174, and we expect to pay an additional $50 million for Section 174 in the second half. Importantly, this tax law change only impacts the timing of when the taxes are due, and not the overall amount of tax owed or our tax rate.

Additionally, in the quarter, we made tax payments related to the gains on the 2021 divestitures of TransCore, Zetec and CIVCO Radiotherapy. Per our normal convention, those payments have been adjusted out of our cash flow. Finally, we are very pleased to announce the completion of our new five-year $3.5 billion revolving credit facility.

We are grateful for our bank group and their continued support, and I personally like to thank Shannon O'Callaghan next to me for the excellent work in leading the process for Roper.

So in summary, with a $3 billion cash balance, our new revolver in place, and the future proceeds from the closing of our industrial sale later this year, we are very well positioned for meaningful capital deployment. So with that, I'll turn it back over to Neil..

We compound cash flow by acquiring and growing niche market-leading technology businesses. This is what we've done for over 20 years and will continue to do so. In addition, our value creation and governance model remains unchanged. We operate a portfolio of market-leading businesses and defensible niches.

Each of our businesses has high levels of recurring revenue, strong margins and compete based on customer intimacy, which yields highly resilient organic growth rates. We operate a highly decentralized operational structure that focuses on long-term business building.

Our culture sets a very high bar for performance and focuses on continually improving. We are all paid to grow, which reinforces our culture of transparency, nimbleness and humility. Finally, we redeployed the vast majority of our capital to acquire the next great business.

We do this with a centralized corporate resource team in a highly disciplined, thoughtful and analytical manner. This strategy, unchanged, delivers compounded and superior long-term shareholder value. So thanks for joining us this morning. And with that, let's open it up to your questions..

Yes, thank you. We will now go to our question-and-answer portion of the call. [Operator Instructions] And the first question comes from Deane Dray with RBC Capital Markets..

Congrats on the first earnings report under the new look, Roper..

No, thank you..

If we could start, I really like the new breakout on revenue on Page 9 as well as Page 19 in the appendix, which shows you the same information broken out by segment.

How do you expect that mix to change over the next couple of years, especially in the conversion and migration to SaaS?.

Yes, Deane. So really, the -- in the recurring line, that 54% line on Page 9, embedded in that line is both the on-premise maintenance and the SaaS. And so the migration will happen inside of that line.

Now what we'll see is, it'll -- as that happens, we get an uplift from the on-prem maintenance to the SaaS because you're delivering more value -- and so you'll see sort of a long-term multi-multiyear tailwind in that line, but it happens and the conversion happens within that singular line..

Okay, that's helpful. And then for Rob, look, we're all kind of calibrating the Section 174 and the impact, and I'm glad you added that one sentence that says it doesn't change the total amount. It just changed the timing of the tax payments -- just clarify how that plays out for the course of the year and the comps for next year.

And then is there -- on the working capital that negative 17%, is that the new run rate based upon the new earnings and mix for Roper going forward? And is there still upside to that?.

Yes, yes. So on working capital, yes, I mean, the 17% is the run rate. I think there is upside, right? We expect to grow these software businesses as they continue to grow, they'll generate more cash and work capital should get more negative over time. Yes, on 174, it is -- it will be a total $100 million headwind for this year.

So, it's basically around $25 million a quarter we paid. As you know, we make two tax payments in the second quarter, that's why it was 49% in the quarter. Yes. So, obviously, there's been a lot said about this. The law could change at some point, and then we'd get that money back.

So, it's really just -- you look at the same deductions over time, but certainly, now you have to wait for the deductions basically..

And the next question comes from Christopher Glynn with Oppenheimer..

So I wanted to talk about the new segment a little bit in the medical products. Talk seeing if you could break out some of the supply chain impacts on margins the revenue gating aspect and any abnormal kind of levels of backlog, how you'd characterize that, how let's think about it..

Yes. So the performance was very good. So we're certainly, like everyone else who sells products, have some supply chain issues. I mean backlog is I think, double if you look where we are this year versus the same time last year. So there's plenty of opportunity to continue to grow the revenue. A little bit of margin impact.

We think that gets a little bit better in the second half. I think our business has done a great job of pushing through price. And so that takes some time to start to sell the products at a higher price versus the cost, so I think that's a little bit better over time. But everyone is managing it really, really well.

So, we feel really good about our operations..

Okay. And for a follow-up, if you look at Slide 12, the tech-enabled products, the EBITDA margins are down about 5.5 points Q2 this year versus 2020 second quarter.

Just can you talk just conceptually about that bridge, what that gap represents?.

Yes, so 2020 was an outlier because of the big Verathon quarter with the -- in the heart of COVID. So that's when Verathon had that just extremely strong growth as we're trying to fight the virus. And so, I think probably '19 is a little bit more normalized from a margin standpoint, but we do think that those margins should tick up over time..

Thank you. And the next question comes from Scott Day with Cornelius..

I wanted to talk a little bit about price.

Is there -- is there -- I imagine the price escalators in the SaaS, -- is it -- is there some sort of basis like CPI? Is it half a CPI? I mean, can you give us just a little bit kind how you think how price gets passed through and those things?.

Yes. So there's -- and price -- if you're -- obviously, you're specifically talking about software. I mean, there's the way you sort of capture price and value capture and software is a little bit different than the product.

So in the software, you're right, for the all that subscription and maintenance is generally tied to a CPI plus a touch -- which is -- so we were able to see price. The other thing that's just also just naturally embedded in the software business is price. I mean, it's a part of the growth algorithm in each and every year.

The customers are used to taking price. And obviously, with inflation, interest rates higher, then there'll be a little bit more price. The offset to that is the cost structure in the software businesses increase through increasing labor wages, but it happens over a longer arc of time, and it's less spiky than what you see in the product businesses.

So naturally, as the pipeline of that is you get a nice matchup of the increase of labor cost with the pricing on the software part of our business..

And is there a difference in kind of pricing when you think about recurring versus non-recurring? It's kind of Dean's question.

I was a little confused in your answer, and maybe just because I only had one cup of coffee, but -- is there a difference -- I mean you mentioned you kind of add more value and you get a little bit more price, but go back and talk to me like I'm three-year old..

No, so apologies if I was confusing. So there's two issues we're talking about. So on price, on software; if you're a well-run software company, you're taking price on both the cost of the software in a perpetual world and the maintenance on that.

So you move them up in tandem, where you don't end up in sort of a challenging thing that some software companies do that ends up being a bad thing is they only take price up on the maintenance and not the initial software. Our companies take them up in tandem, so they stay together. So that's the pricing point.

Dean's point was asking about what's the relationship between on-premise maintenance, which we get paid once we deliver the perpetual software and SaaS and the SaaS shift.

And so as we migrate or lift and shift a customer from on-premise to our cloud, as you're doing that, you're delivering more value, not only hosting the application and all the security, you're also delivering the most recent versions or keeping them on the most recent version so they take advantage of the most recent features and you're just generally eliminating sort of the headaches of running the software for the client.

Because of that value bundle of SaaS, you are able to capture more value, oftentimes, 2x on a recurring basis or a touch more. So it's -- that's about the value proposition of moving to the cloud versus your straight question of what happens in a price increase environment for the software..

And just to give you a sense, we're roughly 75% subscription and 25% in maintenance today. So we're still -- we're already largely in the cloud. There's roughly $200 million of license revenue that would go away over time and convert to that subscription revenue that Neil mentioned.

But as you know with us, that's a long period of time, driven by the customers. And so it's a really good story, I think, on the recurring revenue line..

Thank you. And the next question comes from Joe Giordano with Cowen..

So now you've gone through the GIG code change and all this.

I'm just curious, Neil, Rob, what's your initial kind of conversations were with the new cohort of investors that you'll likely talk to now? And what were some of the things that maybe some initial pushback you're getting from them some things that they like and how have those discussions kind of overall have gone so far?.

Yes. I would say the GICS code change, it's not like this light switch that's happened or all of a sudden, every conversation we're having with the buy-side is a different person. In fact, it's quite the opposite. I mean, it's a slow evolutionary sort of change here. We've been to a singular software conference where we had half a dozen conversations.

They were generally the same conversation we have with our legacy shareholder base, which is what's your business model, what's your flywheel and what are the risks, what's the durability and quite similar.

A little bit -- a little discussion, obviously, on growth a little bit on the cash flow dynamics of the business, a little bit of the business model mix between recurring, non-recurring, but they're the same questions really..

I was just saying a lot of excitement, right? Because I think as we said at that conference, we were at intra-quarter that we're the fourth largest application software company, I think, in the S&P 500. And a lot of these analysts are just getting to know us, and I think they're really excited when they look at our past and our future prospects.

So we're excited to expand to a new shareholder race while, of course, also making sure that our current shareholder base is continually happy with their investment in Roper..

So when you think about M&A, does the divestment like -- is there a step change function that happened internally with DRI that makes finding new companies that clear the threshold harder I'm guessing just mathematically taking out the industrial businesses, make CRI higher or more negative or however you want to look at it.

And then like maybe you could have slotted in a business that previously could have improved the profile of Roper, but maybe now that business might not meet the threshold.

Is that accurate? Or is it just not material enough to worry about?.

It's not material enough to worry about, but let me tell you why. I mean, -- the -- for essentially my entire almost 11 years I've been here, we've looked at the same cohort of targets, which are wonderful asset-light software businesses.

And that's the cohort we're looking at now, right? So, it's just -- it's not about becoming even more asset-light once yours asset lines we are. It's about staying as asset light as we are. That's why the universe of targets is plentiful..

Thank you. And the next question comes from Allison Poliniak with Wells Fargo..

On that network software business, understanding that freight matching sort of the growth and sort of the moderation there, could you maybe talk to the balance of the businesses in that segment in terms of the overall combined? Is it mid- to high single-digit growth? I'm just trying to understand the impact that the freight match had on it..

Yes, most of the businesses in that segment are normally sort of mid-single-digit organic businesses that occasionally do higher than that, very rarely do lower than that.

And so, I think as you get into the second half of the year, those are sort of doing what they do, and then you just have a little bit of moderation in the freight matching growth..

And then just kind of pulling on to that last M&A question, certainly, the software is a focus in terms of M&A.

What about tech-enabled products? Is there anything you guys are kind of looking at that we may be clear that hurdle or is it sort of off the table there at this point?.

No, it's definitely not off the table. It has not been off the table. We just haven't actioned anything there in quite a while. So if it's an asset-light tech-enabled product than business that is a leader in a small market, the competitive forces are stable, sort of all of our criteria, then it's definitely something we would look at..

Thank you. And the next question comes from Julian Mitchell with Barclays..

Maybe I just wanted to ask a couple of questions on the software business. First off, in terms of freight match, help us understand the cyclicality of that business. There's been a lot of scary stories about freight recessions all year long in the U.S.

How should we expect that business to perform in that type of macro? And I guess NSS has enjoyed fantastic operating leverage. We see the margins going up to the low 50s in Q2.

What's the risk to that sort of incremental margin, if you like, from freight match rolling? And then any color in application software about the license business? Again there were some questions after the SAP update earlier this week..

So let me take the DAT One and the application software license one, and I'll let Rob talk about the margins if that's okay in NSS. So on DAT, DAT grew through the 2019 freight recession. But it has been just spectacular the last couple of years at DAT for two reasons.

There's certainly a cyclical tailwind it's had, there's also a secular tailwind that it's enjoyed. The secular tailwind endures. That's why the business is able to sort of grow through in '19.

And principally, in summary version, that secular tailwind is that the spot freight markets are just a more liquid, less -- easier to transact end market today than it was two years, three years, five years ago.

So you see that the spot market -- market share of the total freight increasing over this time mark, and that's been a benefactor of DAT and its customers, and that's going to continue.

As DAT in the market, it will continue period, but then it may accelerate over the next five-plus years as we further tech-enable the broker's business model, right? As it relates to the license -- excuse me, the perpetual license activity in application software, it's solid orders in the first half and in the quarter.

I think we're maybe modestly different than like an SAP because our price points are much, much lower, right? I mean our -- something like that. So, we're not -- these are -- we're important and we're sizable for our customers.

But these are -- our price points, I mean, a big deal for us is a $1 million, $2 million, $3 million deal, not multiples of that. So Rob, do you want to....

Yes. Then on the margins, I would not be concerned that margins would take a step backwards growth were to slow there. I mean, these are businesses that sort of all have those structural EBITDA margins in that 50% plus range. And so, I'd expect that to continue even if growth were to slow a little..

And then maybe sort of following up more for Rob this line. Just you have an out this big divestment, you've got restated numbers out there. How should we think about any changes from here around or changes in the sort of go-forward run rate for things like tax rate in the P&L? Maybe corporate costs and then kind of free cash flow conversion.

Any changes in those three metrics as we look at the sort of new go-forward Roper?.

Yes. There shouldn't be any meaningful changes in terms of tax rate. I think in terms of conversion, I mean, clearly, there's a lot of noise around cash taxes this yearas we've been talking about, and that's sort of part of the price to pay also when you do these transactions that we think are the best thing to do for the Company in the long term.

So I think if you look forward to next year and beyond, I mean, our free cash flow conversion should be at the levels it's been historically and probably a little bit better because we have even more negative working capital. Just better quality portfolio, less cyclicality.

And so, I think the cash flow conversion should get a little bit better over time. And corporate, yes, I mean I think the run rate that you see now sort of worth continuing ops is the right run rate moving forward..

Thank you. And the next question comes from Steve Tusa with JPMorgan..

Just a question on the cash. I know you guys don't guide on cash, but usually it gets on kind of an underlying basis, seasonally better in the third and the fourth. Anything changed from that perspective? And any kind of color on how you'd expect it to kind of bounce back here in the third and the fourth from second quarter levels.

It's a little bit lumpy in the first and second quarter..

Yes, I think that's right. So seasonally, fourth quarter is always our best working capital quarter because that's when you're getting a lot of the renewals in software. So we would expect working capital to be a pretty good guy in the second half. And we sort of talked about the cash tax situation.

And I think everything else is performing really well to generate a lot of cash..

And then on the revenue side, when you think about your recurring, is there on the accounting there in 606, do you book a percentage of those deals, the three-year, three-year type of deals? Do you book a percentage of those upfront as per the 606 accounting? I know you have different businesses in there, so maybe they behave differently from an accounting perspective.

But is there an element of that in the revenue there?.

Yes. Steve, this is Jason Conley. A lot of the term licenses, there's a portion of that that does get recognized upfront, so multiyear term license is very small for us. Only a couple of businesses have that. And then our perpetual licenses are also booked upfront as part of 606, a portion of it..

Thank you. And the next question comes from Joe Ritchie with Goldman Sachs..

Maybe just the first question on this new portfolio going forward, how do I think about like the right long-term organic growth rate for this business over time? I think we've historically kind of thought about your legacy businesses kind of like somewhere in that 4% to 5% type organic growth rate.

I'm just wondering if this business is going to achieve healthier growth longer term..

So it's -- when we did the -- announced the transaction with the Industrial and Process businesses, we showed a chart that showed the long-term growth rate -- historical long-term growth rate of the go-forward portfolio is about 6%. So, that's where we would expect at the baseline, and then obviously, we work every day to try to make that better.

But right now, that we would sort of say 6% to the new norm..

And then I guess this whole this whole conversion from on-prem to your SaaS business, it seems like you guys are well on your way there.

I'm just curious like how much is that kind of like added to the growth rate in recent years? And then that extra, call it, I don't know if it's an additional 20% to 25% that you are expected to convert, how do we think about that as kind of like an added benefit that you'll continue to see in the coming years?.

Yes. It's been, as we said for a while, it's been a modest growth driver. And just to go through it for a minute, there's the good guy and there's a bad guy, right? So the bad guy is if you're in a year where you're selling a perpetual deal, let's say it's a $1 million deal. You booked the vast majority of that revenue in that year.

If that deal converts to a subscription or a SaaS deal, maybe that's I mean maybe that's priced at, I don't know, $300,000 a year, plus or minus. So in that end year, there's a $700,000 bad guy between the upfront license versus the SaaS, and that's assuming you booked the SaaS deal on January 1.

So there's a little bit of a bad guide when that happens. But what is overwhelmed that for us to a slight net positive is the lifting and shifting of our large installed base of maintenance customers.

So as you take the -- in this same example, if you have a cohort of customers paying you $300,000 a year, you're going to lift and ship them into the cloud in the plus or minus $600,000 a year. So you get that and that nets out to be a slight good guide. We've gotten many years of that dynamic.

Even if I had to guess, it's 7 to 10 years of that dynamic because we're not forcing our customers to migrate. We're very much in the posture of meeting our customers where they are relative to wanting to do this. And that's why it will take a while to do it..

Yes. I'll just add that every business is on a different sort of phase of this journey, right? I mean many businesses have been SaaS in the very beginning, and they're always 100% SaaS. Other businesses were mainly on-prem like an Aderant.

That's really the one business we have talked about where really their customers are really starting to move to the cloud. Deltek has been a mix over time. Most of the rest of the businesses are really kind of already SaaS, at least several businesses that we bought the last four or five years..

Thank you. The next question comes from Jeff Sprague with Real Research..

I guess as we're transitioning to software, I'll just ask an annoying industrial question. Just going back to the deal itself and the structure there are some additional detail on that 8-K, obviously, that wasn't -- certainly wasn't clear to me at the time the deal was announced.

And what's still not clear to me is what the back end might look like for you guys on this deal, right? With CD&R paying $829 million for 51% of the equity, and then with new debt on the deal of 1.950 billion I mean it looks like the enterprise value is 3.6 billion an 11x multiple, right? If you guys have taken 2.6 out upfront, it's very unclear how we think about the back end..

So, the way that we would think about it, I'll just -- I'll put it through the lens of our new partner, right? So by the way, the maths went through, we would say it's correct, right? And so, it was that 3.5, 3.6 is the enterprise value upfront, that's 11x this year, 13.5x last year.

In terms of EBITDA more like in that 13 range if you look over the last five years, given the cyclicality We, too, so the amount of capital that CD&R put in is basically equal to our amount of capital, still in the business. CD&R's business model is to drive a 3x-plus money-on-money return over their investment horizon.

So if we and they are successful, then you get a triple of our stub of equity, right? It's sort of a framing of how to think that. So maybe there's a couple of billion plus or minus of upside in addition to getting the liquidity on the 800 or 900 million that we have there.

So call it, $2.5 billion to $3 billion on the back end if underscore and capitalize if things go successful over the next five or so years..

Is that based on the premise that they actively do other things with the business? For example, other M&A in the business, and wouldn't that dilute you or would you participate in kind of incremental investments in the business to get it ready for eventual sale?.

Yes. So we're totally aligned -- two questions in there, right? So the implied is around the growth thesis of the Company. So we're completely aligned with our partner on the growth thesis.

It centers on continuing to invest in the organic growth that we've been doing with these businesses for the last four or so years and then building it at sort of a capital deployment or M&A flywheel or repeat of a flywheel.

Without getting into the details of how the Company is going to execute that because it's still very much being formed, but at the highest level, this is a -- one, it's a cash generative asset, right? So the goal for all of us is to run a levered asset and use that leverage in the cash generation as a primary source of funding.

So you don't have a dilutive effect. If there is a transaction where CDR is going to kick in equity, then we have the option to consider that. And we'll make that a deal-by-deal sort of decision. We think it's in the best interest of our shareholders.

And so, yes, there could be a little bit of dilution, but that dilution is sort of somewhat factored into the math that I gave you before..

Thank you. And the next question comes from Rob Mason with Baird..

Just first, a technical question around the guidance. So, the core growth guidance for the year is eight to nine.

Did that change versus where it would have been on an apples-to-apples basis three months ago?.

I would say slightly higher, maybe like 0.5% or so. But I mean it's -- I think we are seven to nine in our last guide and the businesses we divested were slightly higher. Those go away, and we've raised eight to nine. So, I think it's a little bit of a net raise, but not by a lot..

Where would you slot that increase within the segments -- the three segments now?.

So I'd say the biggest business that has a better outlook is Neptune. They're just doing incredibly well, as we said in the prepared remarks in their second half, given their backlog, given their ability to execute and deliver to their customers. It looks really, really strong. So that's really the one I think that's gotten quite a bit better.

Everything else I'd say is about the same as we had it three months ago..

Thank you. And the next question is Alex Blanton with Clear Harbor Asset Management..

Yes, I just wanted to look at this $2.30 per minute.

What was that in the first quarter?.

Yes, it was about $0.50 in the first quarter and what $0.52 in the second quarter..

And then what is your guidance for that for the third quarter?.

So, we're not guiding it by quarter, right, because it's in disc ops, but it's 230 for the full year. So generally, the fourth quarter is the best quarter for those businesses given the cyclicality and the oil and gas markets..

Yes. Well, the thing was I was trying to work out what the total would have been with that in there for the rest of the year quarter-by-quarter. But I guess I can do it with what you just said. I'd like to talk about the future and the future is acquisitions, of course.

How does that look now? What's the pipeline like how far are you along in putting the work to $7 billion? What are you working on? What kinds of things are you working on? Just give us some color on that because I think that really is what is going to give investors confidence..

I appreciate the question and the opportunity to address it. So it's been a very above-average level of activity really for this year. Obviously, we've not posted anything of size, just a couple of small tuck-ins. We're being -- while we have $7 billion, we're continued to be just ridiculously selective as we've always been.

We run this sort of -- we have our criteria. We stay committed to the criteria. There's a lot of analytics, there's a tremendous amount of discipline and a ton of patients. And the reason we have that posture is we're making decisions to put companies in the portfolio, which we view as a forever staying.

And so every deal matters, everyone's got to be right and everyone has got to meet the criteria. And so -- but we're super busy, and we'll continue to sort of keep this posture and to grow the quality and the scale of the enterprise. But we -- there's no timetable on that.

We're just going to we're going to do the right deal at the time in which it presents itself..

But do you think that you'll be able to do some this year?.

We would like to be -- we would like to do it. But again, there's no timetable. There's no clock ticking in the back of mine or this team, or our Board's head about we have to get X dollars deployed by X date. So I think that leads to bad decision making, but it's an active market.

So, the odds are we'll get something done this year, but we'll just have to see how....

Yes, yes, just we're very active working on a lot of different projects like we always are. So, we're certainly very active..

And just characterize the pipeline of how many businesses are available compared with the past. And what are the prices like compared with the past and so on..

Yes, so I mentioned it's -- we never want to quantify the number of deals either by number or dollar size in a pipeline. We think it's -- for us is it sufficient or not. And so it's clearly sufficient. I said at the beginning of your question, it's been an above-average level of activity for this year.

Valuations, hey, it's, high-quality assets are still highly priced. I mean that's a bit of the reason why we're being patient. And we'll just -- we believe that market comes to us over time, and so we remain patient for the right company with the right characteristics at the right price..

Thank you. And this concludes our question-and-answer session. I would now like to turn the call back over to Zack Moxcey for any closing remarks..

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

Thank you. This concludes today's presentation. Thank you for dialing in, and you may now disconnect your lines..