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CST: 19/09/2020 20:49:56   

Manhattan Associates Reports Record First Quarter 2019 Performance

515 Days ago

Company raises full-year Revenue and EPS guidance

ATLANTA, April 23, 2019 (GLOBE NEWSWIRE) -- Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported record total revenue of $148.4 million for the first quarter ended March 31, 2019, applying the new revenue recognition standard retrospectively. GAAP diluted earnings per share for Q1 2019 was $0.32 compared to $0.33 in Q1 2018. Non-GAAP adjusted diluted earnings per share for Q1 2019 was $0.41 compared to $0.37 in Q1 2018.

“We’re very pleased with our start to 2019, delivering record Q1 total revenue and solid earnings per share growth on strong software and global services revenue. Market leading investments in our suite of Manhattan Active™ omnichannel, inventory and supply chain solutions are fueling demand and revenue growth,” said Eddie Capel, Manhattan Associates President and CEO. “Omnichannel, inventory management and supply chain evolution in our target markets have created an acute need for Manhattan’s software, enabling our clients to accelerate growth and Push Possible®. We remain committed to investing in innovation and are bullish on our growth opportunity in 2019 and beyond,” added Mr. Capel.

FIRST QUARTER 2019 FINANCIAL SUMMARY:

  • Consolidated total revenue was $148.4 million in Q1 2019, compared to $130.6 million in Q1 2018. License revenue was $12.4 million in Q1 2019, compared to $7.6 million in Q1 2018. Cloud subscription revenue was $7.9 million in Q1 2019, compared to $4.5 million in Q1 2018. Service revenue was $88.6 million in in Q1 2019, compared to $78.8 million in Q1 2018.

  • GAAP diluted earnings per share was $0.32 in Q1 2019 compared to $0.33 in Q1 2018.

  • Adjusted diluted earnings per share, a non-GAAP measure, was $0.41 in Q1 2019, compared to $0.37 in Q1 2018. 

  • GAAP operating income was $28.3 million in Q1 2019, compared to $27.8 million in Q1 2018.

  • Adjusted operating income, a non-GAAP measure, was $35.6 million in Q1 2019, compared to $32.3 million in Q1 2018.

  • Cash flow from operations was $35.2 million in Q1 2019, compared to $51.3 million in Q1 2018. Days Sales Outstanding was 65 days at March 31, 2019, compared to 64 days at December 31, 2018.

  • Cash and investments totaled $104.9 million at March 31, 2019, compared to $100.6 million at December 31, 2018.

  • During the three months ended March 31, 2019, the Company repurchased 463,680 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $24.9 million. In April 2019, our Board authorized the Company to repurchase up to an aggregate of $50 million of the Company’s common stock.

2019 GUIDANCE

Manhattan Associates provides the following updated revenue, operating margin and diluted earnings per share guidance for the full year 2019:

    Guidance Range - 2019 Full Year
   
  ($'s in millions, except operating margin and EPS) $ Range     % Growth Range    
                             
  Total revenue - current guidance $ 582     $ 592     4 %   6 %    
                             
  Total revenue - previous guidance $ 564     $ 576     1%   3%    
                             
  Operating Margin:                          
  GAAP operating margin - current guidance   15.6 %     15.8 %            
  Equity-based compensation   5.4 %     5.4 %            
  Adjusted operating margin(1) - current guidance   21.0 %     21.2 %            
                             
  GAAP operating margin - previous guidance   15.5 %     15.8 %            
  Equity-based compensation   5.5 %     5.4 %            
  Adjusted operating margin(1) - previous guidance   21.0 %     21.2 %            
                             
  Diluted earnings per share (EPS):                          
  GAAP EPS - current guidance $ 1.05     $ 1.09     -34 %   -31 %    
  Equity-based compensation, net of tax   0.37       0.37              
  Adjusted EPS(1) - current guidance $ 1.42     $ 1.46     -21 %   -18 %    
                             
  GAAP EPS - previous guidance $ 1.03     $ 1.07     -35%   -32%    
  Equity-based compensation, net of tax   0.35       0.35              
  Adjusted EPS(1) - previous guidance $ 1.38     $ 1.42     -23%   -21%    
                             
                             
  (1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based    
  compensation and acquisition-related costs, and the related income tax effects of these items if applicable.    
                             

Manhattan Associates currently intends to publish in each quarterly earnings release certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. Those statements, including the guidance provided above, do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release.

Manhattan Associates will make its earnings release and published expectations available on its website (www.manh.com). Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance above, should be considered historical only, and Manhattan Associates disclaims any obligation to update them.

CONFERENCE CALL

The Company’s conference call regarding its first quarter financial results will be held today, April 23, 2019, at 4:30 p.m. Eastern Time. We invite investors to a live webcast of the conference call through the Investor Relations section of Manhattan Associates' website at www.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software.

Those who cannot listen to the live broadcast may access a replay shortly after the call by dialing +1.855.859.2056 in the U.S. and Canada, or +1.404.537.3406 outside the U.S., and entering the conference identification number ­­­­­­­­1797903 or via the web at www.manh.com. The phone replay will be available for two weeks after the call, and the Internet webcast will be available until Manhattan Associates’ second quarter 2019 earnings release.

GAAP VERSUS NON-GAAP PRESENTATION

The Company provides adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with – or alternatives to – GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The Company believes the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the three months ended March 31, 2019. 

Non-GAAP adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation, acquisition-related costs and the amortization of these costs, and (from time to time) restructuring charges – all net of income tax effects, and the impact of the Tax Cuts and Jobs Act. We include reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments in the supplemental information attached to this release.

ABOUT MANHATTAN ASSOCIATES

Manhattan Associates is a technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers. 

Manhattan Associates designs, builds and delivers leading edge cloud and on-premise solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com.

This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release include, without limitation, the information set forth under “2019 Guidance,” statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate,” and similar expressions. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: uncertainty about the global economy, risks related from transitioning our business from a traditional perpetual license software company (generally hosted by our customers on their own premises and equipment) to a subscription-based software-as-a service/cloud-based model, disruption in the retail sector, the possible effect of new U.S. tariffs on imports from other countries (and possible responsive tariffs on U.S. exports by other countries) on international commerce, delays in product development, competitive pressures, software errors, information security breaches and the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and in Item 1A of Part II in subsequent Quarterly Reports on Form 10-Q. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.

 
 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
 
  Three Months Ended March 31,
  2019     2018
  (unaudited)     (unaudited)
Revenue:            
Cloud subscriptions $ 7,859     $ 4,469
Software license   12,414       7,555
Maintenance   36,099       36,397
Services   88,631       78,757
Hardware   3,401       3,391
Total revenue   148,404       130,569
Costs and expenses:            
Cost of software license   592       1,308
Cost of cloud subscriptions, maintenance and services   66,578       56,486
Research and development   21,213       17,059
Sales and marketing   14,781       12,884
General and administrative   15,050       12,800
Depreciation and amortization   1,914       2,202
Total costs and expenses   120,128       102,739
Operating income   28,276       27,830
Other (loss) income, net   (371 )     721
Income before income taxes   27,905       28,551
Income tax provision   6,933       5,899
Net income $ 20,972     $ 22,652
             
Basic earnings per share $ 0.32     $ 0.34
Diluted earnings per share $ 0.32     $ 0.33
             
Weighted average number of shares:            
Basic   64,909       67,553
Diluted   65,204       67,736
             


 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
 
  Three Months Ended March 31,  
  2019     2018  
               
Operating income $ 28,276     $ 27,830  
Equity-based compensation (a)   7,182       4,343  
Purchase amortization (c)   108       107  
Adjusted operating income (Non-GAAP) $ 35,566     $ 32,280  
               
               
Income tax provision $ 6,933     $ 5,899  
Equity-based compensation (a)   1,760       1,064  
Tax (deficiency) benefit of stock awards vested (b)   (96 )     749  
Purchase amortization (c)   26       26  
U.S. Tax Cuts and Jobs Act impact (d)   -       348  
Adjusted income tax provision (Non-GAAP) $ 8,623     $ 8,086  
               
               
Net income $ 20,972     $ 22,652  
Equity-based compensation (a)   5,422       3,280  
Tax (deficiency) benefit of stock awards vested (b)   96       (749 )
Purchase amortization (c)   82       81  
U.S. Tax Cuts and Jobs Act impact (d)   -       (348 )
Adjusted net income (Non-GAAP) $ 26,572     $ 24,916  
               
               
Diluted EPS $ 0.32     $ 0.33  
Equity-based compensation (a)   0.08       0.05  
Tax (deficiency) benefit of stock awards vested (b)   -       (0.01 )
Purchase amortization (c)   -       -  
U.S. Tax Cuts and Jobs Act impact (d)   -       (0.01 )
Adjusted diluted EPS (Non-GAAP) $ 0.41     $ 0.37  
               
Fully diluted shares   65,204       67,736  

(a)  Adjusted results exclude all equity-based compensation, to facilitate comparison with our peers and for the other reasons explained in our Current Report on Form 8-K filed today with the SEC on the date hereof. Equity-based compensation is included in the following GAAP operating expense lines for the three months ended March 31, 2019 and 2018:

  Three Months Ended March 31,
  2019     2018
             
Cost of services $ 2,097     $ 1,117
Research and development   1,376       921
Sales and marketing   819       558
General and administrative   2,890       1,747
Total equity-based compensation $ 7,182     $ 4,343

(b)  Adjustments represent the excess tax benefits and tax deficiencies of the stock awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible for an award of equity instruments on our tax return is more (less) than the cumulative compensation cost recognized for financial reporting purposes. As discussed above, we excluded equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. Therefore, we also excluded the related tax benefit (expense) generated upon their vesting.

(c)  Adjustments represent purchased intangibles amortization from a prior acquisition. We exclude that amortization from adjusted results to facilitate comparison with our peers, to facilitate comparisons of the results of our core operations from period to period and for the other reasons explained in our Current Report on Form 8-K filed with the SEC.

(d)  In the fourth quarter of 2017, we recorded a provisional net one-time tax of $2.8 million due to the enactment of the Tax Cuts and Jobs Act in December 2017. We calculated that amount based on a reasonable estimate of the income tax effects, primarily from a tax on accumulated foreign earnings and the remeasurement of deferred tax assets. We adjusted our estimate by $0.3 million during the three months ended March 31, 2018.

 
 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
 
  March 31, 2019     December 31, 2018  
  (unaudited)          
ASSETS              
Current assets:              
Cash and cash equivalents $ 104,879     $ 99,126  
Short-term investments   -       1,440  
Accounts receivable, net of allowance of $2,162 and $2,589, respectively   107,352       100,108  
Prepaid expenses and other current assets   19,065       14,708  
Total current assets   231,296       215,382  
               
Property and equipment, net   13,327       14,318  
Operating lease right-of-use assets   39,869       -  
Goodwill, net   62,237       62,240  
Deferred income taxes   3,664       5,442  
Other assets   9,118       9,768  
Total assets $ 359,511     $ 307,150  
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current liabilities:              
Accounts payable $ 16,940     $ 18,181  
Accrued compensation and benefits   27,164       29,485  
Accrued and other liabilities   20,736       12,161  
Deferred revenue   94,363       81,894  
Income taxes payable   6,331       3,543  
Total current liabilities   165,534       145,264  
               
Operating lease liabilities, long-term   35,896       -  
Other non-current liabilities   12,681       14,739  
               
Shareholders' equity:              
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2019 and 2018   -       -  
Common stock, $0.01 par value; 200,000,000 shares authorized; 64,593,909 and 64,860,419 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively   646       649  
Retained earnings   161,356       163,359  
Accumulated other comprehensive loss   (16,602 )     (16,861 )
Total shareholders' equity   145,400       147,147  
Total liabilities and shareholders' equity $ 359,511     $ 307,150  
 


 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
  Three Months Ended March 31,  
  2019     2018  
  (unaudited)     (unaudited)  
Operating activities:              
Net income $ 20,972     $ 22,652  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation and amortization   1,914       2,202  
Equity-based compensation   7,182       4,343  
Loss (gain) on disposal of equipment   6       (3 )
Deferred income taxes   1,782       1,587  
Unrealized foreign currency loss (gain)   381       (333 )
Changes in operating assets and liabilities:              
Accounts receivable, net   (7,478 )     7,502  
Other assets   (3,021 )     (4,223 )
Accounts payable, accrued and other liabilities   (809 )     5,435  
Income taxes   1,831       2,286  
Deferred revenue   12,427       9,853  
Net cash provided by operating activities   35,187       51,301  
               
Investing activities:              
Purchase of property and equipment   (616 )     (2,174 )
Net maturities (purchases) of investments   1,439       (12,598 )
Net cash provided by (used in) investing activities   823       (14,772 )
               
Financing activities:              
Purchase of common stock   (30,160 )     (55,815 )
Net cash used in financing activities   (30,160 )     (55,815 )
               
Foreign currency impact on cash   (97 )     432  
               
Net change in cash and cash equivalents   5,753       (18,854 )
Cash and cash equivalents at beginning of period   99,126       125,522  
Cash and cash equivalents at end of period $ 104,879     $ 106,668  
 
 

MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION

1. GAAP and Adjusted earnings per share by quarter are as follows:

  2018     2019  
  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Full Year     1st Qtr  
GAAP Diluted EPS $ 0.33     $ 0.42     $ 0.43     $ 0.40     $ 1.58     $ 0.32  
Adjustments to GAAP:                                              
Equity-based compensation   0.05       0.06       0.06       0.06       0.23       0.08  
Tax benefit of stock awards vested   (0.01 )     -       -       -       (0.01 )     -  
Purchase amortization   -       -       -       -       -       -  
U.S. Tax Cuts and Jobs Act impact   (0.01 )     -       -       -       -       -  
Adjusted Diluted EPS $ 0.37     $ 0.47     $ 0.49     $ 0.46     $ 1.79     $ 0.41  
Fully Diluted Shares   67,736       66,535       65,901       65,526       66,434       65,204  

2. Revenues and operating income by reportable segment are as follows (in thousands):

  2018     2019  
  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Full Year     1st Qtr  
Revenue:  
Americas $ 104,615     $ 112,945     $ 113,886     $ 114,040     $ 445,486     $ 114,873  
EMEA   19,164       21,356       21,181       23,043       84,744       26,288  
APAC   6,790       7,570       7,284       7,283       28,927       7,243  
  $ 130,569     $ 141,871     $ 142,351     $ 144,366     $ 559,157     $ 148,404  
                                               
GAAP Operating Income:  
Americas $ 20,318     $ 26,589     $ 26,200     $ 24,422     $ 97,529     $ 18,051  
EMEA   5,475       6,252       7,413       7,297       26,437       7,734  
APAC   2,037       2,844       2,483       2,557       9,921       2,491  
  $ 27,830     $ 35,685     $ 36,096     $ 34,276     $ 133,887     $ 28,276  
                                               
Adjustments (pre-tax):  
Americas:                                              
Equity-based compensation $ 4,343     $ 4,927     $ 5,303     $ 5,291     $ 19,864     $ 7,182  
Purchase amortization   107       108       107       108       430       108  
  $ 4,450     $ 5,035     $ 5,410     $ 5,399     $ 20,294     $ 7,290  
                                               
                                               
Adjusted non-GAAP Operating Income:  
Americas $ 24,768     $ 31,624     $ 31,610     $ 29,821     $ 117,823     $ 25,341  
EMEA   5,475       6,252       7,413       7,297       26,437       7,734  
APAC   2,037       2,844       2,483       2,557       9,921       2,491  
  $ 32,280     $ 40,720     $ 41,506     $ 39,675     $ 154,181     $ 35,566  
                                               

3. Impact of Currency Fluctuation

The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands):

  2018     2019  
  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Full Year     1st Qtr  
Revenue $ 2,781     $ 1,699     $ (581 )   $ (1,068 )   $ 2,831     $ (2,419 )
Costs and expenses   2,328       831       (1,177 )     (1,774 )     208       (2,686 )
Operating income   453       868       596       706       2,623       267  
Foreign currency gains
  (losses) in other income
  366       705       1,431       (1,185 )     1,317       (590 )
  $ 819     $ 1,573     $ 2,027     $ (479 )   $ 3,940     $ (323 )

Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):

  2018     2019  
  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Full Year     1st Qtr  
Operating income $ (360 )   $ 359     $ 828     $ 1,066     $ 1,893     $ 981  
Foreign currency gains
  (losses) in
  other income
  210       1,120       1,572       (1,074 )     1,828       (182 )
Total impact of
  changes in the
  Indian Rupee
$ (150 )   $ 1,479     $ 2,400     $ (8 )   $ 3,721     $ 799  

4. Other income includes the following components (in thousands):

  2018     2019  
  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Full Year     1st Qtr  
Interest income $ 347     $ 241     $ 201     $ 278     $ 1,067     $ 231  
Foreign currency gains (losses)   366       705       1,431       (1,185 )     1,317       (590 )
Other non-operating
  income (expense)
  8       40       (94 )     6       (40 )     (12 )
Total other income (loss) $ 721     $ 986     $ 1,538     $ (901 )   $ 2,344     $ (371 )

5. Capital expenditures are as follows (in thousands):

  2018     2019  
  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Full Year     1st Qtr  
Capital expenditures $ 2,174     $ 1,881     $ 1,481     $ 1,770     $ 7,306     $ 616  

6. Stock Repurchase Activity (in thousands):

  2018     2019  
  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Full Year     1st Qtr  
Shares purchased under publicly-announced buy-back program   1,158       1,082       389       519       3,148       464  
Shares withheld for taxes due upon vesting of restricted stock   111       1       3       -       115       106  
Total shares purchased   1,269       1,083       392       519       3,263       570  
                                               
Total cash paid for shares purchased under publicly-announced buy-back program $ 49,972     $ 47,876     $ 20,669     $ 24,757     $ 143,274     $ 24,927  
Total cash paid for shares withheld for taxes due upon vesting of restricted stock   5,843       23       175       7       6,048       5,233  
Total cash paid for shares repurchased $ 55,815     $ 47,899     $ 20,844     $ 24,764     $ 149,322     $ 30,160  

7. Remaining Performance Obligations

Under the new revenue recognition standard, we now disclose revenue we expect to recognize from our remaining performance obligations. Our reported performance obligations primarily represent cloud subscriptions with a non-cancelable term greater than one year (including cloud deferred revenue as well as amounts we will invoice and recognize as revenue from our performance of cloud services in future periods). Our deferred revenue on the balance sheet primarily relates to our maintenance contracts, which are typically one year in duration and are not included in the remaining performance obligations. Below are our remaining performance obligations as of the end of each period (in thousands):

  March 31, 2018     June 30, 2018     September 30, 2018     December 31, 2018     March 31, 2019  
Remaining Performance Obligations $ 33,999     $ 58,434     $ 64,175     $ 76,990     $ 100,532  
                                       


         
Contact:   Dennis Story   Rick Fernandez
    Chief Financial Officer   Senior Manager, Corporate Communications
    Manhattan Associates, Inc.   Manhattan Associates, Inc.
    770-955-7070   678-597-6988
    dstory@manh.com   rfernandez@manh.com

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