Manhattan Associates Reports Record First Quarter 2014 Results

Manhattan Associates Reports Record First Quarter 2014 Results  Company Raises Full-Year Revenue and EPS Guidance  ATLANTA, April 22, 2014 (GLOBE NEWSWIRE) -- Leading Supply Chain Commerce Solutions provider Manhattan Associates, Inc. (Nasdaq:MANH) today reported record non-GAAP adjusted diluted earnings per share for the first quarter ended March 31, 2014 of $0.26 compared to $0.19 in Q1 2013, on license revenue of $17.1 million and record total revenue of $113.6 million. GAAP diluted earnings per share for Q1 2014 was $0.24 compared to $0.17 in Q1 2013.  "We're very pleased with our performance in the first quarter of 2014. Across the board we executed well serving our customers, extending our supply chain commerce market leadership position and delivering record financial performance," said Eddie Capel, Manhattan Associates president and CEO. "In the new omni-channel world of Supply Chain Commerce, we continue to experience solid demand for our products and innovation. We will continue to strive to enhance our market position and improve our financial results throughout 2014 and beyond."  FIRST QUARTER 2014 FINANCIAL SUMMARY:    *Adjusted diluted earnings per share, a non-GAAP measure, was $0.26 in Q1     2014, compared to $0.19 in Q1 2013.   *GAAP diluted earnings per share was $0.24 in Q1 2014, compared to $0.17 in     Q1 2013.   *Consolidated total revenue was $113.6 million in Q1 2014, compared to     $96.6 million in Q1 2013. License revenue was $17.1 million in Q1 2014,     compared to $14.2 million in Q1 2013.   *Adjusted operating income, a non-GAAP measure, was $32.3 million in Q1     2014, compared to $21.6 million in Q1 2013.   *GAAP operating income was $30 million in Q1 2014, compared to $19.7     million in Q1 2013.   *Cash flow from operations was $19.1 million in Q1 2014, compared to $20.1     million in Q1 2013. Days Sales Outstanding was 53 days at March 31, 2014,     compared to 61 days at December 31, 2013.   *Cash and investments at March 31, 2014 was $125.9 million, compared to     $133.0 million at December 31, 2013.   *During the three months ended March 31, 2014, the Company repurchased     694,547 shares of Manhattan Associates common stock under the share     repurchase program authorized by the Board of Directors, for a total     investment of $25.5 million. In April 2014, the Board of Directors     approved raising the Company's share repurchase authority to an aggregate     of $50.0 million of the Company's outstanding common stock.  SALES ACHIEVEMENTS:    *Four contracts of $1.0 million or more in recognized license revenue     during the first quarter of 2014.   *Completing software license wins with new customers such as: DCG     Fulfillment, Dunham's Sports, Express-1, Floor and Decor Outlets of     America, Hastings Deering, ICA Sverige, Kapal Api, LifeShield, Norix     Group, Ulta, Vente-Privee, and West Coast Distribution.   *Expanding relationships with existing customers such as: The Apparel     Group, Automotive Holdings Group (AHG), C&J Clark International Ltd.,     Cabela's, Donaldson Europe BVBA, Federal-Mogul, GENCO Holdings, Genesco,     The Harvard Drug Group, Jasco Products Company, Just Group, Knight     Transportation, Movianto, Nassau Candy, Nordstrom, Northern Tool +     Equipment, Ozburn-Hessey Logistics (OHL), Performance Team Freight     Systems, Rhee Brothers, Samsung India Electronics, Simplehuman, Sodimac     Colombia, Southeastern Freight Lines, Speed Global Services, Stella & Dot,     and Thai Beverage Logistics.  2014 GUIDANCE  Manhattan Associates provides the following updated revenue and diluted earnings per share guidance for the full year 2014:                                           Guidance Range - 2014 Full Year ($'s in millions, except EPS)            $ Range            % Growth Range                                                                    Total revenue - current guidance         $460      $465     11%       12%                                                                    Total revenue - previous guidance        $450      $455     9%        10%                                                                    Diluted earnings per share (EPS):                                   Adjusted EPS^(1) - current guidance      $1.06     $1.08    15%       17% GAAP EPS - current guidance              $0.99     $1.01    15%       17%                                                                    Adjusted EPS^(1) - previous guidance     $1.01     $1.03    10%       12% GAAP EPS - previous guidance             $0.94     $0.96    10%       12%                                                                    ^(1) Adjusted EPS is a Non-GAAP measure which excludes the impact of equity-based compensation  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, especially in the current uncertain economic environment. 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). Beginning the close of business on June 15, 2014, Manhattan Associates will observe a "Quiet Period" during which Manhattan Associates and its representatives will not comment concerning previously published financial expectations. Prior to the start of the Quiet Period, the public can continue to rely on the expectations published in this 2014 Guidance section as being Manhattan Associates' current expectation on matters covered, unless Manhattan Associates publishes a notice stating otherwise. During the Quiet Period, previously published expectations should be considered historical only, speaking only as of or prior to the Quiet Period, and Manhattan Associates disclaims any obligation to update any previously published financial expectations during the Quiet Period. The Quiet Period will extend until publication of Manhattan Associates' next quarterly earnings release, currently scheduled for the third full week of July 2014.  CONFERENCE CALL  The Company's conference call regarding its first quarter financial results will be held today, April 22, 2014, at 4:30 p.m. Eastern Time. Investors are invited to listen 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.  For those who cannot listen to the live broadcast, a replay can be accessed shortly after the call by dialing +1.800.585.8367 in the U.S. and Canada, or +1.404.537.3406 outside the U.S., and entering the conference identification number 13681816 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 2014 earnings release.  GAAP VERSUS NON-GAAP PRESENTATION  The Company provides adjusted operating income, adjusted net income and adjusted diluted earnings per share in this press release as additional information regarding the Company's operating results. These measures are not in accordance with – or an alternative to – GAAP, and may be different from non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share measures used by other companies. The Company believes that 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 important supplemental information in evaluating the operating results of its business, as distinct from results that include items that are not indicative of ongoing operating results, and because the Company's competitors and 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 quarter ended March 31, 2014.  Non-GAAP adjusted operating income, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation and acquisition-related costs and the amortization thereof – all net of income tax effects. Reconciliations of the Company's GAAP financial measures to non-GAAP adjustments are included in the supplemental information attached to this release.  ABOUT MANHATTAN ASSOCIATES  Manhattan Associates brings companies closer to their customers. We design, build and deliver market-leading Supply Chain Commerce Solutions that drive top line growth by converging front-end sales with back-end supply chain execution and efficiency. Our software, platform technology and unmatched experience help our customers around the world adapt to the challenges of the omni-channel 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 the information set forth under "2014 Guidance." 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, delays in product development, competitive pressures, software errors, and the additional risk factors set forth in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2013. 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,                                   2014           2013                                   (unaudited) Revenue:                                          Software license                  $17,107      $14,245 Services                          86,913         74,887 Hardware and other                9,543          7,469 Total revenue                     113,563        96,601 Costs and expenses:                              Cost of license                   1,613          1,778 Cost of services                  38,460         35,046 Cost of hardware and other        7,479          6,214 Research and development          11,803         11,476 Sales and marketing               12,020         11,434 General and administrative        10,649         9,508 Depreciation and amortization     1,488          1,484 Total costs and expenses          83,512         76,940 Operating income                   30,051        19,661 Other (loss) income, net           (233)         151 Income before income taxes         29,818         19,812 Income tax provision               11,106         6,457 Net income                         $18,712      $13,355                                                  Basic earnings per share           $0.25        $0.17 Diluted earnings per share         $0.24        $0.17                                                  Weighted average number of shares:                Basic                              75,817        77,308 Diluted                            76,795        78,740                                                   MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP to Non-GAAP Measures (in thousands, except per share amounts)                                                                                                Three Months Ended March 31,                                         2014           2013                                                        Operating income                         $30,051      $19,661 Equity-based compensation (b)            2,274         1,907 Purchase amortization (c)                1             2 Adjusted operating income (Non-GAAP)     $32,326      $21,570                                                                                                               Income tax provision                     $11,106      $6,457 Equity-based compensation (b)            844           671 Purchase amortization (c)                --           1 Adjusted income tax provision (Non-GAAP) $11,950      $7,129                                                                                                               Net income                               $18,712      $13,355 Equity-based compensation (b)            1,430         1,236 Purchase amortization (c)                1             1 Adjusted net income (Non-GAAP)           $20,143      $14,592                                                                                                               Diluted EPS (a)                          $0.24        $0.17 Equity-based compensation (a,b)          0.02          0.02 Purchase amortization (a,c)              --           -- Adjusted diluted EPS (Non-GAAP) (a)      $0.26        $0.19                                                        Fully diluted shares                     76,795        78,740                                                         (a) On December 19, 2013, our Board of Directors approved a four-for-one stock split of the Company's Common Stock, effected in the form of a stock dividend. All references made to shares or per share amounts have been restated to reflect the effect of this four-for-one stock split for all periods presented. (b) To be consistent with other companies in the software industry, we began to report adjusted results excluding all equity-based compensation.The equity-based compensation is included in the following GAAP operating expense lines for the three months ended March 30, 2014 and 2013:                                 Three Months Ended March 31,                                2014           2013                                               Cost of services                $370         $249 Research and development        417           298 Sales and marketing             310           512 General and administrative      1,177         848 Total equity-based compensation $2,274       $1,907  (c) Adjustments represent purchased intangibles amortization from prior acquisitions.Such amortization is commonly excluded from GAAP net income by companies in our industry and we therefore exclude these amortization costs to provide more relevant and meaningful comparisons of our operating results to that of our competitors.    MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands, except share and per share data)                                                                                                          March 31, 2014 December 31, 2013                                              (unaudited)     ASSETS                                                       Current Assets:                                              Cash and cash equivalents                     $116,649     $124,375 Short term investments                        9,285         8,581 Accounts receivable, net of allowance of $3,844 and $3,156 in 2014 and 2013,           66,779        71,136 respectively Deferred income taxes                         7,321         7,300 Prepaid expenses and other current assets     10,571        7,346 Total current assets                         210,605       218,738                                                             Property and equipment, net                   14,108        14,342 Goodwill, net                                 62,272        62,272 Deferred income taxes                         438           427 Other assets                                  3,321         2,049 Total assets                                 $290,744     $297,828                                                                                                                         LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                     Current liabilities:                                         Accounts payable                              $8,281       $11,555 Accrued compensation and benefits             17,661        19,465 Accrued and other liabilities                 12,092        12,225 Deferred revenue                              59,449        53,812 Income taxes payable                          2,446         7,131 Total current liabilities                    99,929        104,188                                                             Other non-current liabilities                 13,125        12,054                                                             Shareholders' equity:                                        Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or        --           -- outstanding in 2014 and 2013 Common stock, $.01 par value; 100,000,000 shares authorized; 75,831,405 and 76,374,180  758           764 shares issued and outstanding atMarch 31, 2014 and December 31, 2013, respectively Retained earnings                             183,695       188,604 Accumulated other comprehensive loss          (6,763)       (7,782) Total shareholders' equity                   177,690       181,586 Total liabilities and shareholders' equity   $290,744     $297,828                                                                                                                          MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands)                                                                                                                  Three Months Ended March 31,                                                  2014           2013                                                  (unaudited) Operating activities:                                            Net income                                        $18,712      $13,355 Adjustments to reconcile net income to net cash                  provided by operating activities: Depreciation and amortization                     1,488         1,484 Equity-based compensation                         2,274         1,907 (Gain) loss on disposal of equipment             (17)          1 Tax benefit of stock awards exercised/vested     6,547         4,206 Excess tax benefits from equity-based             (6,509)       (4,163) compensation Deferred income taxes                             1,302         1,682 Unrealized foreign currency loss (gain)           90            (75) Changes in operating assets and liabilities:                     Accounts receivable, net                          4,496         2,255 Other assets                                      (4,447)       (594) Accounts payable, accrued and other liabilities   (5,638)       (6,652) Income taxes                                      (4,647)       (3,720) Deferred revenue                                  5,493         10,414 Net cash provided by operating activities         19,144        20,100                                                                 Investing activities:                                            Purchase of property and equipment                (1,156)       (598) Net purchases of investments                     (427)         (1,115) Net cash used in investing activities             (1,583)       (1,713)                                                                 Financing activities:                                            Purchase of common stock                          (33,179)      (20,474) Proceeds from issuance of common stock from       730           2,623 options exercised Excess tax benefits from equity-based             6,509         4,163 compensation Net cash used in financing activities             (25,940)      (13,688)                                                                 Foreign currency impact on cash                   653           (343)                                                                 Net change in cash and cash equivalents           (7,726)       4,356 Cash and cash equivalents at beginning of period  124,375       96,737 Cash and cash equivalents at end of period        $116,649     $101,093                                                                  MANHATTAN ASSOCIATES, INC. SUPPLEMENTAL INFORMATION                                                                                                                                         1. GAAP and Adjusted earnings per share by quarter are as follows:                                                                     On December 19, 2013, our Board of Directors approved a four-for-one stock split of the Company's Common Stock, effected in the form of a stock dividend. All references made to shares or per share amounts have been restated to reflect the effect of this four-for-one stock split for all periods presented.                                                                                                                                                           2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    Full Year  1st Qtr GAAP Diluted EPS   $0.17   $0.22    $0.25    $0.22    $0.86    $0.24 Adjustments to                                                       GAAP: Equity-based      0.02     0.02      0.01      0.02      0.06      0.02 compensation Purchase          --      --       --       --       --       -- amortization Adjusted Diluted   $0.19   $0.24    $0.26    $0.24    $0.92    $0.26 EPS Fully Diluted      78,740   78,036    77,552    77,256    77,932    76,795 Shares                                                                                                                                         2. Revenues and operating income by reportable segment are as follows (in thousands):                                                                                       2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    Full Year  1st Qtr Revenue:                                                             Americas           $79,820 $83,600  $87,977  $86,947  $338,344 $91,355 EMEA               11,431   11,964    12,686    14,333    50,414    15,679 APAC               5,350    6,952     7,139     6,319     25,760    6,529                   $96,601 $102,516 $107,802 $107,599 $414,518 $113,563                                                                     GAAP Operating                                                       Income: Americas           $16,964 $21,256  $25,613  $19,618  $83,451  $24,133 EMEA               1,753    2,736     2,633     3,166     10,288    4,058 APAC               944      2,195     2,526     1,883     7,548     1,860                   $19,661 $26,187  $30,772  $24,667  $101,287 $30,051                                                                     Adjustments                                                          (pre-tax): Americas:                                                            Equity-based      $1,907  $2,133   $1,209   $2,076   $7,325   $2,274 compensation Purchase          2        1         2         1         6         1 amortization                   $1,909  $2,134   $1,211   $2,077   $7,331   $2,275                                                                                                                                         Adjusted non-GAAP                                                    Operating Income: Americas           $18,873 $23,390  $26,824  $21,695  $90,782  $26,408 EMEA               1,753    2,736     2,633     3,166     10,288    4,058 APAC               944      2,195     2,526     1,883     7,548     1,860                   $21,570 $28,321  $31,983  $26,744  $108,618 $32,326                                                                                                                                         3. Our services revenue consists of fees generated from professional services and customer support and software enhancements related to our software products as follows (in thousands):                                                                                       2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    Full Year  1st Qtr Professional       $49,151 $52,492  $57,690  $51,490  $210,823 $59,422 services Customer support and software       25,736   25,711    27,335    26,296    105,078   27,491 enhancements Total services     $74,887 $78,203  $85,025  $77,786  $315,901 $86,913 revenue                                                                                                                                         4. Hardware and other revenue includes the following items (in thousands):                   2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    Full Year  1st Qtr                                                                     Hardware revenue   $4,175  $4,285   $3,904   $8,557   $20,921  $5,946 Billed travel      3,294    3,892     4,105     3,989     15,280    3,597 Total hardware    $7,469  $8,177   $8,009   $12,546  $36,201  $9,543 and other revenue                                                                                                                                         5. 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):                                                                                       2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    Full Year  1st Qtr                                                                     Revenue            $(182)  $(150)   $(329)   $(63)    $(724)   $202 Costs and expenses (541)    (262)     (877)     (902)     (2,582)   713 Operating income   359      112       548       839       1,858     915 Foreign currency (losses) gains in  (179)    972       313       (445)     661       (516) other income                   $180    $1,084   $861     $394     $2,519   $399                                                                                                                                         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):                   2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    YTD        1st Qtr                                                                     Operating income   $440    $173     $733     $900     $2,246   $898 Foreign currency (losses) gains in  4        931       204       3         1,142     (141) other income Total impact of changes in the     $444    $1,104   $937     $903     $3,388   $757 Indian Rupee                                                                                                                                         6. Other (loss) income includes the following components (in thousands):                                                                                       2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    Full Year  1st Qtr                                                                     Interest income    $326    $271     $263     $307     $1,167   $267 Foreign currency   (179)    972       313       (445)     661       (516) (losses) gains Other non-operating      4        --        (30)      20        (6)       16 (expense) income Total other       $151    $1,243   $546     $(118)   $1,822   $(233) (loss) income                                                                                                                                         7. Total equity-based compensation is as follows (in thousands except per share amounts):                                                                                       2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    Full Year  1st Qtr                                                                     Stock options      $148    $11      $11      $20      $190     $-- Restricted stock   1,759    2,122     1,198     2,056     7,135     2,274 Total equity-based 1,907    2,133     1,209     2,076     7,325     2,274 compensation Income tax         671      751       451       729       2,602     844 provision Net income         $1,236  $1,382   $758     $1,347   $4,723   $1,430 Diluted earnings   $0.02   $0.02    $0.01    $0.02    $0.06    $0.02 per share                                                                     Diluted earnings per share - stock  $0.00   $0.00    $0.00    $0.00    $0.00    $-- options Diluted earnings per share -        $0.01   $0.02    $0.01    $0.02    $0.06    $0.02 restricted stock                                                                                                                                         8. Capital expenditures are as follows (in thousands):                                                                                       2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    Full Year  1st Qtr                                                                     Capital            $598    $1,035   $1,568   $1,539   $4,740   $1,156 expenditures                                                                                                                                         9. Stock Repurchase Activity (in thousands):                                                                                       2013                                                  2014                   1st Qtr   2nd Qtr    3rd Qtr    4th Qtr    Full Year  1st Qtr                                                                     Shares purchased under              903      785       607       537       2,832     695 publicly-announced buy-back program Shares withheld for taxes due upon 281      1         13        5         300       235 vesting of restricted stock Total shares       1,184    786       620       542       3,132     930 purchased                                                                     Total cash paid for shares purchased under    $15,929 $14,409  $13,533  $15,332  $59,203  $25,459 publicly-announced buy-back program Total cash paid for shares withheld for taxes 4,545    19        280       152       4,996     7,720 due upon vesting of restricted stock Total cash paid for shares         $20,474 $14,428  $13,813  $15,484  $64,199  $33,179 repurchased                                                                      CONTACT: Dennis Story          Chief Financial Officer          Manhattan Associates, Inc.          770-955-7070          dstory@manh.com                   Cameron Smith          Director, Corporate Communications          Manhattan Associates, Inc.          678-597-6841          camsmith@manh.com