Roper Technologies' first quarter 2021 financial results conference call will now begin. Today's call is being recorded. All participants will be in listen-only mode. I would now like to turn the call over to Zack Moxcey, Vice President, Investor Relations. Please go ahead. Good morning, and thank you all for joining us as we discuss the first quarter 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 Chief Accounting Officer, 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'll please turn to slide two. 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. Now, please turn to slide three. Today, we will discuss our results for the quarter, 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 first quarter, the difference between our GAAP results and our adjusted results consists of the following items: amortization of acquisition related to intangible assets, purchase accounting adjustments to acquired deferred revenue and related commission expense, and lastly, a gain on sale related to a minority investment in Settru. Now, if you please turn to slide four, I'll hand the call over to Neil. After our prepared remarks, we will take questions from our telephone participants. Neil? Good morning. Thanks for joining us. For this morning's call, I'll start with a brief summary of this quarter's results and activities. Rob will highlight our P&L performance and balance sheet metrics. I'll walk through our segment details, our increased outlook for the year, and our concluding comments. As usual, we'll leave plenty of time to talk to your questions towards the end. Next slide, please. As we turn to page five, we got off to a better start than we expected. Business execution was strong across the portfolio and was also broad-based. We're encouraged by seeing nice improvements across the vast majority of our software and product-based end markets. In addition, we continue to see accelerating software recurring revenue growth, growing approximately 6% on an organic basis. Importantly, our 2020 cohort of acquisitions, led by Vertafore, continued to perform very well versus our expectations. When we put this all together, we experienced double-digit growth across virtually all financial metrics: revenue, EBITDA, DEPS, and cash flow. The growth in cash flow performance in a quarter allowed us to continue our rapid deleveraging with about $500 million in debt paydown during the quarter. Based on this encouraging start, we're increasing our outlook and guidance for the full-year. With that, let me turn it over to Rob to review the financial details. Rob? Thanks, Neil. Good morning, everyone. Turning to page six and covering the Q1 financial highlights. Total revenue increased 13% to $1.53 billion, which was an all-time record for any Roper quarter. Organic revenue for the enterprise declined 1% versus last year's +4% pre-pandemic comp. EBITDA grew 20% to $561 million. EBITDA margin increased 220 basis points to 36.7% on really great incrementals across the portfolio. Adjusted DEPS was $3.60, 18% above prior year. Free cash flow was $543 million, up 54%. We continue to benefit from our business transformation to a more software-weighted model where working capital boosts cash flow as our growth accelerates. Our results were enhanced a bit by approximately $40 million of accelerated payments that were the result of wins at our U.K.-based Clinisys laboratory software business. Aided by our outstanding cash flow performance, we reduced our debt by approximately $500 million in the quarter. More on that to follow. In summary, a great start to 2021. Next slide. Turning to page seven, an update on our deleveraging. The charts on this page are a good preview for how we expect 2021 to look as we follow through on our commitment to reduce debt after our 2020 opportunistic capital deployment. As each quarter passes by, we will benefit from meaningfully improved trailing EBITDA as the performance of last year's acquisitions rolls into Roper's financials. EBITDA is further enhanced by our accelerating organic growth. Concurrently, our strong cash conversion allows us to apply our high levels of excess free cash flow toward consistent reduction of our debt. In the first quarter, we reduced our debt by approximately $500 million. Over the first three months of the year, our EBITDA growth, combined with debt reduction, enabled us to lower our net debt to EBITDA ratio from 4.7- 4.2. We expect this downward trend in leverage ratios to continue moving forward. With that, I'll turn it back over to Neil to discuss our segment performance. Thanks, Rob. As we turn to page nine, revenues in our application software segment were $578 million, up 2% on an organic basis. EBITDA margins were an impressive 44.9% in the quarter. Across this segment, we saw organic recurring revenue, which is about 75% of the revenue for this segment, increase approximately 6%. This recurring revenue strength is based on strong customer retention and continued migration to our SaaS delivery models. Of note, this quarter should be the last quarter of non-recurring revenue declines as we come across the COVID comp from last year. From a business unit perspective, Deltek continued its long string of great performance. As we expected, Deltek's recurring revenue grew nicely. Of particular importance, Deltek saw an increase to their perpetual revenue during the quarter, coming off a decently strong quarter a year ago. Also encouraging was the nature of the bookings activity, which was broad-based across their architecture, engineering, creative, and government contracting end markets. For reference, the professional services end markets tied to AEC and COVID have been slow since the onset of COVID. Also, Clinisys, our European lab software business just crushed it during the quarter. As Rob mentioned, Clinisys had exceptionally strong cash flow as they gained tremendous market share within the clinical lab consolidation occurring within the United Kingdom. Clinisys has approximately 85% market share in the U.K., and is now recognized as one of four critical IT vendors for the entire National Health Service. Just outstanding execution by the Clinisys team, and congrats. We also saw thawing in the higher education markets that CBORD serves. Certainly encouraging. Finally, our 2020 cohort of acquisitions continues to perform very well. Specific to Vertafore, we continue to be encouraged by their customers' comfort in having Roper as a long-term owner for the business. Amy and her team have done a great job transitioning to Roper and our governance model. As we turn to the outlook for the balance of the year, we expect high single-digit organic growth for the segment. This is based on the expectation for sustained levels of recurring revenue growth and the resumption of non-recurring revenue growth. As it relates specifically to the second quarter, we expect our growth to be a touch below high single-digits due to our global lab software group coming off across a challenging comp from a year ago as they were instrumental standing up COVID testing on a global basis. Solid and encouraging quarter for sure. With that, let's turn to our next slide, please. Turning to page 10, revenue in our Networks segment were $440 million, flat versus last year and down 3% on an organic basis. EBITDA margins were 40.9% in the quarter. Our software businesses in the segment, about 65% of the revenues, were up 4% on an organic basis. This revenue was broad-based among our software businesses and driven by organic recurring revenue growth of approximately 6%. Recurring revenue growth is underpinned by strong customer retention. Recurring revenues are also benefited by increasing network participation. At the business level, our Freight Match businesses both in the U.S. and Canada continue to be solid growers for us. As a reminder, our Freight Match networks are critical and necessary elements to help organize and transact the trucking shipping spot markets. Strength in our businesses has been on both sides of the network, brokers and carriers. We also continue to see nice organic gains at ConstructConnect as their network enables commercial construction planning and bidding to occur in a more efficient and transparent manner. Lastly, as it relates to our network software businesses, we saw improved end market activity, especially in the middle market for Foundry, our media and entertainment compositing software business. Our non-software businesses in this segment were down 13% for the quarter, a touch better than we anticipated. TransCore's New York project work continues and is tracking well. TransCore's tag volumes declined versus a year ago based on lower traffic volumes across the U.S. Turning to the outlook for the balance of the year, we expect to see high single-digit organic revenue growth for the segment, with consistent high double-digit growth through the balance of the year for our network software businesses. As it relates specifically to the second quarter, we anticipate our segment organic growth to be a touch below HSD, given TransCore should be stronger in the second half versus next quarter based on timing of project execution and tag shipments. All in all, a solid outlook for the balance of the year. Please turn to the next slide. As we turn to page 11, revenues in our MAS segment were $381 million, up 2% on an organic basis. EBITDA margins were 34.8% in the quarter. As usual in the segment, we will profile the three macro parts, medical products, Neptune, and our industrial businesses. To start, our medical product businesses performed very well this quarter. Verathon continued its strength based on consistent factors, GlideScope unit placements and recurring consumables pull-through, and continued momentum and share gains with their single-use bronchoscope product offering. What's also encouraging to see is the growth in their BladderScan product line. We believe this was based on a broader base trend of hospitals resuming some normal level of clinical capital spending. We saw similar strength in our other medical product businesses as well. For instance, Northern Digital had their best Q1 bookings quarter in history. This trend bodes well for the balance of the year. Neptune, as expected, declined in the quarter for the same reasons discussed in each of the last three quarters, having limited access to indoor meters in the Northeast U.S. and Canada. However, we did see some easing of these restrictions in March, and Neptune's customers are beginning to increase their maintenance schedules throughout Q2 and into the second half of the year. Finally, our industrial businesses benefited from improvements in their end market conditions. For the balance of the year, we expect high single-digit growth for the segment. This is based on broadly improving conditions, both in medical and industrial end markets, and increases to access and indoor meter replacements at Neptune. This strength will be somewhat offset by the extraordinary prior year COVID demand at Verathon. We're encouraged by our expected high single-digit growth for the balance of the year. Now let's turn to our final segment, Process Tech. As we turn to page 12, revenues in our Process Technology segment were $131 million, down 10% on an organic basis. EBITDA margins hung in at 31% in the quarter. The short story here is we're seeing improving end market conditions across virtually every one of our businesses in this segment after nearly two years of declines. For instance, at CCC, we're seeing the resumption of previously deferred projects and demand for field services to come back online. Greenfield bidding activity is back in full swing, especially on an international basis. Cornell continues to perform well for us. This is partially based on market conditions, but also based on Cornell's product innovation, as they're seeing very nice demand pickup for their IoT-connected pumping solutions. We look to the outlook for the balance of the year, we see double-digit organic growth based on improving end market conditions and continued easing comps. Please turn to page 14, where I'll highlight our increased guidance for 2021. Based on strong Q1 performance and our increased confidence for the balance of the year, we're raising our full-year adjusted DEPS to be in the range of $14.75 and $15 per share, and organic growth to be in the 6%- 7% range. This 6%- 7% organic growth is against a 1% organic decline in 2020. This demonstrates that we have meaningfully improved on an organic basis since 2019. The compounding continues. Our tax rate should continue to be in the 21% - 22% range. For the second quarter, we're establishing adjusted DEPS guidance to be between $3.61 and $3.65, and expect second quarter organic revenue growth to be in line with the full-year organic growth rate. Let's turn to our summary and get to your questions. Turning to page 15 and our closing summary, this was an encouraging start, and we're raising our outlook for the year. We performed well across virtually every financial metric, with double-digit increases in revenue, EBITDA DEPS, and cash flow. EBITDA margins expanded nicely, and free cash flow grew 54% to $543 million, which enabled us to continue our rapid deleveraging in the quarter. Importantly, we are well-positioned for continued double-digit compounding. We're seeing improving conditions across virtually all of our end markets. When combined with our leading market positions, we expect high single-digit organic growth for the remainder of the year. As owners or prospective owners of Roper Tech, you should be encouraged by our increasing levels of recurring revenue and the stability of our recurring revenue growth. Also, our 2020 cohort of acquisitions are performing very well, and Vertafore has proven to be an excellent addition to our growing portfolio of software businesses. We continue to focus on deleveraging our balance sheet and remain committed and focused on our long-term capital deployment strategy. To this end, our pipeline of M&A candidates is active, robust, and has many high-quality opportunities. As our balance sheet becomes more offensive towards the end of this year, our active pipeline of M&A targets will enable us to resume capital deployment in our usual process-oriented and disciplined manner. In closing, and as we turn to your questions, we recently announced that Amy Woods Brinkley will become our new Board Chair effective June 1st. Amy has been a tremendous board member since 2015 and will be a fantastic board chair. I certainly look forward to working with Amy Woods Brinkley and the full board for many years to come. As we turn to your questions, I would like to take a moment to acknowledge and thank our outgoing board chair, Wilbur Prezzano. Wilbur has been a Roper director since 1997 and has reached our mandatory board retirement age. He served as our lead independent chair, director, and became board chair during the CEO transition from Brian Jellison to myself. Wilbur has been a wonderful board chair, enabling a smooth CEO transition and the continued evolution of our strategy and business model. On a personal note, Wilbur has been a tremendous mentor to me, which I hope will continue on an informal basis for years to come. Wilbur, thank you for your years of service to Roper shareholders. I think the share price was around $16 when you started. Thank you for helping me become a better leader and chief executive officer. With that, we'd like to open it up to your questions. We will now go to our question-and-answer portion of the call. We request that our callers limit their questions to one main question and one follow-up. If you would like to ask a question, you may do so by pressing the star key followed by the digit one on your touch-tone telephone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then the digit two. Again, we request that callers limit their questions to one main question and one follow-up. Our first question is from Christopher Glynn from Oppenheimer. Please go ahead. Hey, thanks. Good morning, everybody. Good morning. Strong margins across the board. I was curious, in particular application software looked particularly better than expected. I don't know if Vertafore had some incremental revenue versus what you expected, but what kind of drove the app soft margins in the quarter? Hey, Chris. Good morning. Yeah, there was strength across those businesses. I think Neil mentioned Clinisys was strong. Sunquest had a nice quarter. Deltek, sort of perpetual license wins there. All that stuff comes in at really high incrementals. That drove most of the margin performance. A question on acquisition philosophy. You've kind of highlighted financial profile and returns and characteristics over strategic end markets, but it strikes that Vertafore and iPipeline are two out of your three biggest deals ever, both kind of serve in the insurance marketplaces. I'm wondering if there's any emerging prioritization in types of end markets. Hey, Christopher Glynn. I appreciate the question and the opportunity to talk about that. The short answer is no. I mean, our M&A strategy for 20 years has centered on picking the best businesses and business models that we can identify from the range of opportunities in the marketplace. If you go back to really starting in 2011, you might have thought from 2011 - 2013, we're all about healthcare IT, and then maybe from 2014- 2017 about professional services ERP, and then the last couple of years about insurance tech, but all of those steps are completely coincidental. We really just evaluate the range of opportunities and pick the very best business that we can find. The next question is from Deane Dray from RBC Capital Markets. Please go ahead. Thank you. Good morning, everyone. Good morning, Deane. Hey, first question is how would you characterize the software demand this quarter? It might be hard to parse this out, but how much might have been pent up from the COVID shutdown, kind of a catch-up versus a true recovery and resumption of growth? I'm not sure you can characterize it broadly, but maybe some individual examples within the businesses. Thanks. Yeah. I don't think there's much pent up here from our call-downs to our businesses this year. This quarter, it's more of a recovery story. For instance, we talked about in the prepared remarks about the professional services end markets that Deltek serves. Architecture, engineering, creative agencies started to come back in the quarter, which was great to see. Vertafore was steady as she goes. They were not particularly impacted by the pandemic. Aderant, the law firms, continued to proceed with their transition. We did see some recovery start in the education and healthcare markets at CBORD, the middle market at Foundry, which is great to see as live production begins and comes out of production into post-production. It was really just a nice increasing sort of start to recovery. Anytime anybody asks a question about software, we got to talk about the recurring revenue stream. It was around 6% growth organically across the two segments, and in total, which bodes well for the future. That's great to hear. Just a second question, since it is such a high-profile project, any updates on the New York City congestion tolling? I saw in the slide it says that work has continued, but any update there would be helpful. Thanks. Yeah, just that the project continues. The customer continues to want us to get the project done so they can commence the discussions on how they're going to do the tolling and begin to start the tolling. Certainly, the most macro backdrop is more favorable now with the administration and the White House and Pete Buttigieg and That is all in a much more favorable position than it was just a quarter or two ago. The project continues. The next question comes from Julian Mitchell from Barclays. Please go ahead. Hi, good morning. Maybe my first question, just to try and circle back onto the margin aspect. In application software, you did have a very substantial margin increase year-over-year in the first quarter. You laid out some of the reasons why. Maybe just help us understand, sort of as we think about the balance of the year for that business and maybe for Roper firm-wide, what type of incremental margins or margin trajectory we should expect because it looks as if the sort of drop-through margin is maybe around 20% in the guide for the balance of the year. I just wanted to sort of check how you are thinking about that. I'll give a crack at that. On an EBITDA margin basis, right, Vertafore is a higher EBITDA margin business. You're seeing that. We talked about when we bought the business, it's around a 50% or so, a little below that EBITDA margin business. That helps. I think on a core basis, it's going to be relatively consistent year-over-year for the rest of the businesses on an EBITDA margin basis, and that's conversion at 40%-50%, consistent with what we see in these businesses as they grow. As you know, they have great cash characteristics, very negative working capital. The cash flow growth can often be even faster than the EBITDA growth. It's a great story there, and I think we'll continue to see margins high within that segment. Julian, just Neil, just to underscore one thing Rob said, the incremental EBIT margins for the year are 40%. As you said, I just want to underscore that. Yeah. Yeah, that's right. Perfect. Thanks very much. Second question would really be around the network software. How are you thinking about the leaving aside TransCore and other, the sort of core piece of it? You did have some big impacts there in network software last year from COVID in sort of healthcare, food, and media, I think you'd called out before. Maybe just clarify what pace of sort of top-line acceleration you're seeing in some of those COVID-impacted areas, and what kind of cyclical recovery, if you like, in network software you're experiencing. Yeah. The network software businesses are strong, high single-digit organic for the rest of the year. That's the consistency in the recurring, which we talked about has been growing all along, you do get a little bit of the bounce back in some of the markets you mentioned, Foundry and others. I think you're on the right track there. Neil, you want to anything to that? Just the color on the three, the healthcare, entertainment, and the food. MHA is the healthcare business, that was tied and indexed to patient and volumes going through long-term care, skilled nursing, assisted living facilities. That's normalized. That business also has added products to its contract portfolio, that business is on its way to recovery as we speak. We talked about Foundry in the prepared remarks, which is, there's just tremendous content budget, not surprising, in the marketplace, and all that content requires post-production, and we're a critical element in that post. Then finally, iTradeNetwork. iTradeNetwork's going to be one of the longer recovery cycles for us. It'll be a second half this year and the next year as they are indexed partially to retail food, but also partially to what I'll call institutional food, which is think about that as restaurants, schools, universities, a little bit of stadiums. That's going to come back on a longer recovery curve. The next question is from Allison Poliniak-Cusic from Wells Fargo. Please go ahead. Hi, guys. Good morning. Just want to circle back on to Deane's question around, I know he mentioned around the reopening kind of theme in Q2, and it sounds like you are seeing some green shoots. Just trying to reconcile for the balance of the year. It sounds like you guys are expecting a more, I would say, gradual recovery in some of those businesses. Any color from your customers in terms of, are they still a little concerned about the COVID impact? Are they thinking maybe there could be some pent-up demand as we sort of exit this year? Any thoughts there? Well, we got to sort of run through the portfolio, Allison, in that regard. I think our comments here will be around the product businesses as opposed to the software ones. First is the tag volumes at TransCore. That's going to be probably a second half of this year recovery cycle, just based on when the tags were bought last year into this year and having the customers burn through existing inventory as traffic patterns come back on. We talked about medical products. We got the COVID headwind for a quarter or two at Verathon, but the other businesses definitely saw a palpable improvement in the capital purchases of their medical equipment in the quarter, and we have no sense that was pent up or one time. We'll find out in the next quarter or two, but that was not the read-through from the conversations we had with our customers. In fact, NDI had record bookings in the quarter. We go through the industrial businesses, Struers, we definitely saw an improvement across the portfolio of industrial businesses through the quarter with Struers having record March bookings, which shows that there's some sort of gradual improvement there to continue. On the Process Technologies businesses, there was just nice I would call that very similar to what we saw at Struers in industrial. March got better than February was better than January. Oh, great. That's helpful. Strong deleveraging in the quarter. You talked about an active pipeline, maybe more comfort towards the end of the year. Any change to thinking, just given the strong performance so far, obviously strong cash flow characteristics, that you would have some comfort level of staying slightly above your comfort range at this point? Are you still focused on getting that down in terms of the net debt leverage? Allison, it was a great start to the deleveraging for Q1. That certainly helps boost our ability to pay down the debt faster, and we'll continue to do that throughout the year. As Neil mentioned, we're making sure the pipeline is active, and there's some exciting things that we're looking at in the early stages, and we'll be ready to deploy capital at some point. For right now, we're really focused on the deleveraging. The next question is from Joe Giordano from Cowen. Please go ahead. Hey. Good morning, guys. Good morning. Good morning. Hey, Joe. Hey, Rob, I'm going to pick on the guide a little bit. Revenue for the year, you're expecting 6%-7%. It was kind of mid-single-digit plus before. Came in pretty good in the Q1, good margins. We're kind of passing through the Q1 beat, essentially, maybe a tad higher than that for the full-year. How would you kind of argue that? Are you seeing anything incrementally challenging? It sounds like everything seems to be at least at plan, if not a bit above. I want to think through the framework there. Yeah, I think that's right. I think it was one quarter, right? We had a really nice first quarter, and we felt it prudent to raise the guide because it certainly gives us more confidence for the rest of the year. It was one quarter, and this is an unusual environment where we're coming off of a sort of, hopefully, a once in a lifetime pandemic, and so we're trying to be balanced in the outlook and sort of what we do with the businesses. Yeah, that's fair. Neil, maybe can you talk us through just the structural differences between the lab software businesses in the U.S. and in Europe, and how businesses in each region are differently positioned, and why Clinisys is able to do so well here? Yeah, in the U.S., as we've talked about quite a bit, the lab was the first part of the hospital to become automated. 20 years later, with government stimulus, there was the hospitals deploy electronic medical records. Those EMRs, the hospitals, as a general matter, appreciated and wanted the connectivity of the lab software to the EMR, that's how we had sort of the competitive headwinds for four or five years at Sunquest. When you look at Europe, that dynamic does not exist. The health systems are different, first of all. They're country-driven. There is not the concept of an EMR landscape on a country-by-country basis. It's very different. It's characterized by local providers, characterized by country-specific providers. As a result, Clinisys lab software is not just. We highlighted the U.K. wins and strength in this quarter. They've just been doing a great job pan-European, in France and Benelux, emerging presence in Germany, bought a small business last year in Spain to be able to consolidate the laboratory infrastructure across Europe. Each of the countries, in their own way, are going through a laboratory consolidation and a way to save money for the health system itself. We, being basically the only scaled provider with demonstrable success at scale, have been able to win market share at a meaningful clip there. Just so I understand, what gives you the confidence that sort of like integration of lab with the broader hospital systems is not something that's a near-term threat to the business? Yeah, I think it's essentially the way that, for instance, the primary competitor in the U.S. is Epic. Epic, for instance, basically doesn't have a presence in Europe, and when they do, it's a country-specific presence. They might be in a very small country or a small region of a country, and it's sort of isolated there, given that it's a country-specific decision process. Also, that competitive activity just isn't there. Our next question comes from Blake Gendron from Wolfe Research. Please go ahead. Thanks. Good morning. First question on free cash flow. The conversion from EBITDA has been exceedingly strong over the last several quarters. On top of already strong margins, how should we think about conversion moving forward through the year, relative to what you accomplished in Q4 and Q1? I'd imagine the recovery in non-recurring software is helping the working capital profile. Really just wondering how sustainable that trend is as the recovery kind of moderates through the year. Sure. I think in the first quarter, there's no federal tax payments, that's always a high cash conversion quarter. That normalizes more when we start making federal payments in Q2. Really, as I mentioned a little bit earlier, it's great growth from the software businesses. They have negative working capital, therefore the cash performance is very strong. The more software growth you have, you drive working capital further negative. It's a very structural part of the model. High conversion is embedded in everything that we do. We expect that free cash flow conversion to continue to get better over time as we've improved the quality of our portfolio. We feel good about the rest of the year and continue to have high cash conversion and continuing that double-digit cash flow compounding that we all expect to achieve. Excellent. Just wanted to circle back on M&A. Plenty of puts and takes, with potential U.S. tax increases and yields moving higher. I'm wondering if you could help us think about these inputs in the context of historical private software pricing in the pipeline. If some of these changes come through, taxes rise, yields rise, how would you expect asset pricing to evolve? Or how has it evolved in the past? I think we've discussed this before. Yep about it being a net positive for Roper. Yeah, we certainly believe, on balance, that's the case. Obviously when taxes went down, private prices went up a touch. I think it was 14x, 15x for Deltek, and 16x for PowerPlan, really the only difference in the market there was the tax change. That gives you a sense of the order of magnitude, maybe a couple turns, but it depends on what the magnitude of the tax change is. Relative to interest rates going up, we think that does greatly benefit us in the compounding model. If you think as interest rates go up, we're competing against private equity firms who have a levered acquisition model. As interest rates go up, the amount of leverage they can put on a transaction goes down, and subsequently, the total equity that they put into a deal goes down and multiples compress. More so with interest rates going up, I think, than what you'd see conversely with taxes. In our case, the majority of our acquisition proceeds come from our cash that we generate, and so we're relatively insensitive to interest rate, where our competitors for acquisitions are. In the long arc of time, that's a good thing for us. The next question comes from Steve Tusa from JPMorgan. Please go ahead. Hey, guys. Good morning. Good morning, Steve. Thanks for joining us. Thanks for having me. Just to clarify on the answer before on kind of the degree of leverage you're comfortable with before doing a new deal, is kind of 3x a bit of a line in the sand there where you would get back down to below that before doing another deal, or maybe just talk about that 3x level and how that kind of plays into your thoughts? Yeah, sure. I wouldn't say a line in the sand. I think once you get into the low threes, that certainly it's more reasonable. We spent a lot of time with the rating agencies when we did our last couple of acquisitions. I think they understand the high quality of the cash flow that we have and our incredibly high cash conversion. It's really about how good our business model is, how fast we can pay down any leverage that we put on the business. I think we've demonstrated that time and time again, and we can do it pretty quickly. Once we get into the low threes, I think we have the ability to deploy capital. Okay, great. Then just lastly, when you kind of look out to next year, you're obviously not going to have any deals here, at least in the near term. Are there any moving parts and items from a headwinds perspective, whether it's the Vertafore tax benefit, or some of these Sunquest deals around COVID? How do those play out for next year? Do they generally offset? Are they offset by growth in some of the other businesses? Maybe if there's anything mechanical that kind of happens next year that you want to call out. Let me just hit a couple things. I think Neil Hunn wants to add on. Yeah, you're right. There's this $100 million-plus tax benefit around Vertafore that we talked about that will hit throughout Q2 through Q4. We did not benefit from that in the first quarter. There's about $60 million or so of this payroll tax deferral, which is a bad guy this year for the rest of the year, given that was part of the COVID rules, that you can defer some of those payments. There's always going to be pluses and minuses in sort of that part of the world. I'll let Neil Hunn talk about some of the growth. Well, I think it's always appreciated in a quarter that we have hear you highlight the headwinds going into next year, Steve. We appreciate that. As a general matter, year two out of a pandemic should be pretty good. The next question comes from Alex Blanton from Clear Harbor Asset Management. Please go ahead. Hi. Good morning. Congratulations. That's a great quarter, and it looks like you're going to have a very good year. I just wanted to comment that so far there have been seven analysts, and every one of them has been cut off before they finished with their second question. None of them said thank you, and I'd like to ask the moderator to please stop doing that, because that is really not a very good way to conduct a call. You need to allow dialogue with the management on the second question. Don't cut people off before they say thank you. Let them finish, please. I wanted to ask about the backlog of opportunities that you mentioned that you might get back to accessing at the end of the year as you start to deploy capital. Could you elaborate a little more on the nature of that pipeline, the size of the companies that in there? As you get bigger, it's obviously important to find bigger and bigger companies in order to keep the growth rate constant. Could you just give us a little bit on that and perhaps characterize the kinds of markets those companies are in that you're looking at in the pipeline? Alex, it's Neil here. Appreciate the question and appreciate your opening comments. Let me give you a broader view to your question. First, why we're active now with our M&A pipeline and we're meeting with companies is that every company of size that we bought from 2016 forward, we met with roughly nine to 12 months at the earliest at a minimum before buying the company. We're establishing a relationship, getting to know the management team, getting to know the business, and then sort of, if you will, have a running start when the business actually comes for sale. We're active, and the work we're doing now is going to pay dividends nine, 12, 18 months from now in terms of deploying capital and our ability to do that in companies that we have a high level of conviction in. To your question about doing bigger and bigger deals, I would beg to differ with that a little bit. When you look at our model over the next seven years, we have to deploy somewhere on a run rate basis, $2 billion to $2.5 billion a year based on our cash flow and the leverage profile that we just talked about. In doing so, when you're looking at the types of businesses that we look to buy, small market, vertically focused, leading software type or software type business models, I think the sweet spot in that is going to be somewhere in the $750 million to a billion and a half range. We're talking about doing a couple-ish deals a year, and then we'll always do a small number of tuck-ins or bolt-ons to the existing portfolio. I think we can, at least for the next seven years on a per year basis, we don't have to do bigger and bigger deals to keep the growth rate at the sustained double-digit rate. Would you say that these companies, the margins and the cash flow and the EBITDA and so on are such that you can keep increasing Those metrics like EBITDA margin and operating margin and gross margin, the way you've done for many, many years by buying companies that have margins that are above the corporate average, can you keep doing that? I think so. The answer to that is yes, Alex. It's really about the businesses that we target, right? Businesses that have higher organic growth than Roper has historically. Businesses that have very good margins, often better than Roper, at least at the same level now that we've improved ours over many, many years. We buy those businesses. They grow. We believe we can make them better. They accelerate growth, they generate more cash, and you get this compounding effect. It's really the same strategy that, I appreciate you follow us for a long time, we've had for over a decade now. The good news is, as you get more and more into software and these types of opportunities, we find more and more companies that fit that model that will allow us to continue to improve all those metrics for many, many more years to come. Right. Well, this has been the company strategy since I started following it in 1992 when you went public. It's been a great ride. Thank you very much. Thank you. Thank you, Alex. Next question comes from Richard Eastman from Robert W. Baird. Please go ahead. Yes. Good morning, and thank you. Hi, Richard. Wait to speak. Yes, good morning. Just a question or two around the application software business. When we look at the lab software business as part of that in aggregate around Clinisys and Sunquest, you've spoken nicely about Clinisys' share gains in Europe and the rationale for that. Could you just talk a little bit and maybe characterize the U.S. business around Sunquest? Has Sunquest's share stabilized and maybe post-COVID? What does the recovery environment look like for Sunquest domestically? Sunquest, they were benefited. Let me back up. You mentioned two companies, Clinisys and Sunquest. We ought to include a third, which is Data Innovations, which is a middleware business. They're a very global business, but they're domiciled in the U.S. Specific to your question about Sunquest, the U.S. laboratory business. They were benefited last year and into this quarter with the COVID tailwind, standing up COVID testing. They continued to invest in their public health offering and their molecular offering. Leadership team's done a nice job in that. That's good news. The unfortunate part of that news is it just delayed the bottoming of this business, which we thought was going to be this year-ish if it weren't for COVID. Now it's going to be pushed out a year or two before that business sort of gets through all the known attrition and then is baselined from which it can grow from. Okay. How much of that lab software business now is domestic when you put those three businesses together, Clinisys, Sunquest, and Data Innovations? How much is domestic versus international? Is it a 50/50? I'm going to let Rob take a look at this. We might have to get back with you. Yeah, I'd like to circle. It's approaching probably 50-50, given the growth in the Clinisys business, the fact the DI business is very global and the Sunquest business is mostly U.S. Yeah. As a group, it's probably about half. I understand. Just a follow-up question. Around Measurement Analytical in the Process businesses, could you just talk about pricing there? I know you usually allow your GMs to price according to margin targets and things. Can you talk about price and how proactive you've been able to be on the M&A business as well, M&A as in Measurement & Analytical in the Process side? I think the characteristics of these businesses is, of all Roper businesses, is they price based on the value that's created. A great example there is in our Hansen business, where they've had a couple innovations in their refrigeration valve business product line with coatings and some sensors to allow it to identify clearly when it's been triggered. Very low cost increase to bill of materials, massive increase to value. You're seeing very nice price increases on situations like that. On a like-for-like basis, the businesses are agile. They've been very good at being able to push through any increase to bill of materials because of supply chain, otherwise taking normal price. Okay. All right. Well, thank you. Thank you. Thank you. Okay. This concludes our question-and-answer session. We will now return back 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. The conference is now concluded. Thank you for attending today's presentation.