This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Manhattan Associates Reports Record Third Quarter 2012 Performance

The non-GAAP adjusted operating income, adjusted net income and adjusted earnings per share exclude the impact of acquisition-related costs and the amortization thereof; equity-based compensation; and assets impairment charges and related reversals – all net of income tax effects and unusual tax adjustments. 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, INC.

Manhattan Associates continues to deliver on its 22-year heritage of providing global supply chain excellence to more than 1,200 customers worldwide that consider supply chain optimization core to their strategic market leadership. The Company's supply chain innovations include: Manhattan SCOPE®, a portfolio of software solutions and technology that leverages a Supply Chain Process Platform to help organizations optimize their supply chains from planning through execution; Manhattan SCALE™, a portfolio of distribution management and transportation management solutions built on Microsoft .NET technology; and Manhattan Carrier™, a suite of supply chain solutions specifically addressing the needs of the motor carrier industry. 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 "2012 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, 2011. 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 September 30, Nine Months Ended September 30,
  2012 2011 2012 2011
  (unaudited)
Revenue:        
Software license   $ 16,164  $ 13,565  $ 47,096  $ 37,674
Services  71,886 63,594 211,578 183,446
Hardware and other  7,791 8,443 22,215 24,594
Total revenue  95,841 85,602 280,889 245,714
Costs and expenses:         
Cost of license  2,086 1,196  5,351 4,259
Cost of services  32,614 28,054  94,646 80,474
Cost of hardware and other  6,428 6,695  18,416 19,452
Research and development  11,400 10,877  33,753 31,936
Sales and marketing  10,999 10,865  34,817 33,774
General and administrative  9,258 9,342  28,806 27,256
Depreciation and amortization  1,379 1,698  4,141 5,922
Recovery of previously impaired investment  --  (2,519)  --  (2,519)
Total costs and expenses  74,164 66,208  219,930 200,554
Operating income  21,677  19,394  60,959  45,160
Other (expense) income, net  (247)  862  431  1,214
Income before income taxes 21,430 20,256  61,390 46,374
Income tax provision 7,621 5,379  22,007 11,992
Net income  $ 13,809  $ 14,877  $ 39,383  $ 34,382
         
Basic earnings per share  $ 0.71  $ 0.74  $ 1.99  $ 1.67
Diluted earnings per share  $ 0.69  $ 0.70  $ 1.93  $ 1.59
         
Weighted average number of shares:        
Basic  19,568  20,156  19,745  20,623
Diluted  20,130  21,125  20,372  21,656
 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
         
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2012 2011 2012 2011
         
GAAP Operating income  $ 21,677  $ 19,394  $ 60,959  $ 45,160
Equity-based compensation (a)  2,158  2,503  5,795  7,317
Purchase amortization (b)  2  293  5  1,170
Recovery of previously impaired investment (c)  --  (2,519)  --  (2,519)
Adjusted operating income (Non-GAAP)  $ 23,837  $ 19,671  $ 66,759  $ 51,128
         
         
GAAP Income tax provision  $ 7,621  $ 5,379  $ 22,007  $ 11,992
Equity-based compensation (a)  777  838  2,086  2,451
Purchase amortization (b)  1  98  2  392
Unusual tax adjustments (d)  --   115  --   227
Adjusted income tax provision (Non-GAAP)  $ 8,399  $ 6,430  $ 24,095  $ 15,062
         
         
GAAP Net income  $ 13,809  $ 14,877  $ 39,383  $ 34,382
Equity-based compensation (a)  1,381  1,665  3,709  4,866
Purchase amortization (b)  1  195  3  778
Recovery of previously impaired investment (c)  --  (2,519)  --  (2,519)
Unusual tax adjustments (d)  --  (115)  --  (227)
Adjusted net income (Non-GAAP)  $ 15,191  $ 14,103  $ 43,095  $ 37,280
         
         
GAAP Diluted EPS  $ 0.69  $ 0.70  $ 1.93  $ 1.59
Equity-based compensation (a)  0.07  0.08  0.18  0.22
Purchase amortization (b)  --  0.01  --  0.04
Recovery of previously impaired investment (c)  --  (0.12)  --  (0.12)
Unusual tax adjustments (d)  --  (0.01)  --  (0.01)
Adjusted diluted EPS (Non-GAAP)  $ 0.75  $ 0.67  $ 2.12  $ 1.72
         
Fully diluted shares  20,130  21,125  20,372  21,656
         
         
(a) To be consistent with other companies in the software industry, we report adjusted results excluding all equity-based compensation. The equity-based compensation is included in the following GAAP operating expense lines for the three and nine months ended September 30, 2012 and 2011:
 
  Three Months Ended September 30, Nine Months Ended September 30,
  2012 2011 2012 2011
         
Cost of services  $ 305  $ 374  $ 490  $ 1,077
Research and development  435  415  1,134  1,173
Sales and marketing  517  585  1,667  1,733
General and administrative  901  1,129  2,504  3,334
Total equity-based compensation  $ 2,158  $ 2,503  $ 5,795  $ 7,317
         
(b) 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.
         
(c) During the quarter ended September 30, 2008, we recorded an impairment charge of $3.5 million on an investment in an auction rate security. We reduced the carrying value to zero due to credit downgrades of the underlying issuer and the bond insurer as well as increasing publicly reported exposure to bankruptcy risk by the issuer. However, during the quarter ended September 30, 2011, we were able to sell the auction rate security and recovered over 70%, or $2.5 million, of our original investment. We previously excluded the asset impairment charge recorded in 2008 to write down the value of the auction rate security because we typically invest our treasury funds in cash, cash equivalents or other liquid investments, not illiquid, risky securities. We believed the write-down in value of the auction rate security was due to unusual changes in the characteristics of the auction rate security since our initial investment in it, including failed auctions and default risk for a municipal obligor. Consistent with our prior exclusion of the charge, we have excluded the reversal of the charge from adjusted non-GAAP results because it is not indicative of ongoing operating performance. 
         
(d) For the three and nine months ended September 30, 2011, the adjustments represent tax benefits from disqualifying dispositions of incentive stock options that were previously expensed. As discussed above, we excluded equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry. Therefore, we also excluded the related tax benefit generated upon their disposition. 
 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
     
     
  September 30, 2012 December 31, 2011
  (unaudited)  
ASSETS    
Current Assets:    
Cash and cash equivalents  $ 99,090  $ 92,180
Short term investments  7,715  6,079
Accounts receivable, net of allowance of $5,524 and $4,816 in 2012 and 2011, respectively  73,241  56,264
Deferred income taxes  7,835  7,599
Income taxes receivable  --   4,859
Prepaid expenses and other current assets  7,465  7,533
Total current assets  195,346  174,514
     
Property and equipment, net  13,681  13,321
Long-term investments  --   855
Goodwill, net  62,260  62,261
Deferred income taxes  2,668  5,696
Other assets  1,874  2,953
Total assets  $ 275,829  $ 259,600
     
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable  $ 8,069  $ 8,090
Accrued compensation and benefits  16,857  16,503
Accrued and other liabilities  12,733  13,648
Deferred revenue  52,573  49,882
Income tax payable  7,066  -- 
Total current liabilities  97,298  88,123
     
Other non-current liabilities  8,971  9,397
     
Shareholders' equity:    
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2012 or 2011  --   -- 
Common stock, $.01 par value; 100,000,000 shares authorized; 19,905,903 and 20,415,946 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively  199  204
Additional paid-in capital  --   -- 
Retained earnings  173,248  166,989
Accumulated other comprehensive loss  (3,887)  (5,113)
Total shareholders' equity  169,560  162,080
Total liabilities and shareholders' equity  $ 275,829  $ 259,600
 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
     
  Nine Months Ended September 30,
  2012 2011
  (unaudited)
Operating activities:    
Net income  $ 39,383  $ 34,382
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization  4,141  5,922
Recovery of previously impaired investment  --   (2,519)
Equity-based compensation  5,795  7,317
(Gain) loss on disposal of equipment  (46)  22
Tax benefit of stock awards exercised/vested   7,034  3,345
Excess tax benefits from equity-based compensation  (5,726)  (1,416)
Deferred income taxes  2,807  (1,821)
Unrealized foreign currency loss (gain)  411  (513)
Changes in operating assets and liabilities:    
Accounts receivable, net  (16,772)  (9,370)
Other assets  1,215  (1,546)
Accounts payable, accrued and other liabilities  (1,595)  (3,325)
Income taxes  12,266  6,250
Deferred revenue  2,494  4,267
Net cash provided by operating activities  51,407  40,995
     
Investing activities:    
Purchase of property and equipment  (4,336)  (3,672)
Net (purchases) maturities of investments   (236)  465
Net cash used in investing activities  (4,572)  (3,207)
     
Financing activities:    
Purchase of common stock  (71,667)  (95,569)
Proceeds from issuance of common stock from options exercised  25,708  30,265
Excess tax benefits from equity-based compensation  5,726  1,416
Net cash used in financing activities  (40,233)  (63,888)
     
Foreign currency impact on cash  308  (491)
     
Net change in cash and cash equivalents  6,910  (26,591)
Cash and cash equivalents at beginning of period  92,180  120,744
Cash and cash equivalents at end of period  $ 99,090  $ 94,153
 
MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
                   
                   
1. GAAP and Adjusted earnings (loss) per share by quarter are as follows:
 
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
GAAP Diluted EPS  $ 0.32  $ 0.57  $ 0.70  $ 0.50  $ 2.09  $ 0.55  $ 0.70  $ 0.69  $ 1.93
Adjustments to GAAP:                  
Equity-based compensation  0.07  0.07  0.08  0.09  0.32  0.05  0.06  0.07  0.18
Purchase amortization  0.01  0.01  0.01  --   0.04  --   --   --   -- 
Recovery of previously impaired investment  --   --   (0.12)  --   (0.12)  --   --   --   -- 
Unusual tax adjustments   --   --   (0.01)  --   (0.01)  --   --   --   -- 
Adjusted Diluted EPS  $ 0.41  $ 0.65  $ 0.67  $ 0.60  $ 2.32  $ 0.60  $ 0.76  $ 0.75  $ 2.12
                   
                   
2. Revenues and operating income (loss) by reportable segment are as follows (in thousands):
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
Revenue:                  
Americas  $ 60,185  $ 72,634  $ 70,663  $ 69,377  $ 272,859  $ 73,195  $ 77,094  $ 79,657  $ 229,946
EMEA  8,336  11,075  10,041  8,843  38,295  12,407  12,334  10,589  35,330
APAC  3,189  4,693  4,898  5,319  18,099  5,879  4,139  5,595  15,613
   $ 71,710  $ 88,402  $ 85,602  $ 83,539  $ 329,253  $ 91,481  $ 93,567  $ 95,841  $ 280,889
                   
GAAP Operating Income (Loss):                  
Americas  $ 7,087  $ 15,749  $ 17,183  $ 13,531  $ 53,550  $ 13,685  $ 18,130  $ 17,718  $ 49,533
EMEA  909  1,963  1,334  1,033  5,239  2,580  2,944  2,707  8,231
APAC  (443)  501  877  1,639  2,574  1,675  268  1,252  3,195
   $ 7,553  $ 18,213  $ 19,394  $ 16,203  $ 61,363  $ 17,940  $ 21,342  $ 21,677  $ 60,959
                   
Adjustments (pre-tax):                  
Americas:                  
Equity-based compensation  $ 2,409  $ 2,405  $ 2,503  $ 3,055  $ 10,372  $ 1,660  $ 1,977  $ 2,158  $ 5,795
Purchase amortization   439  438  293  2  1,172  2  1  2  5
Recovery of previously impaired investment   --   --   (2,519)  --   (2,519)  --   --  --   -- 
   $ 2,848  $ 2,843  $ 277  $ 3,057  $ 9,025  $ 1,662  $ 1,978  $ 2,160  $ 5,800
                   
Adjusted non-GAAP Operating Income (Loss):                  
Americas  $ 9,935  $ 18,592  $ 17,460  $ 16,588  $ 62,575  $ 15,347  $ 20,108  $ 19,878  $ 55,333
EMEA  909  1,963  1,334  1,033  5,239  2,580  2,944  2,707  8,231
APAC  (443)  501  877  1,639  2,574  1,675  268  1,252  3,195
   $ 10,401  $ 21,056  $ 19,671  $ 19,260  $ 70,388  $ 19,602  $ 23,320  $ 23,837  $ 66,759
                   
                   
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):
                   
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
Professional services  $ 35,184  $ 42,150  $ 41,403  $ 38,057  $ 156,794  $ 46,621  $ 45,497  $ 47,082  $ 139,200
Customer support and software enhancements  20,894  21,624  22,191  22,555  87,264  23,749  23,825  24,804  72,378
Total services revenue  $ 56,078  $ 63,774  $ 63,594  $ 60,612  $ 244,058  $ 70,370  $ 69,322  $ 71,886  $ 211,578
                   
                   
4. Hardware and other revenue includes the following items (in thousands):
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
                   
Hardware revenue  $ 5,504  $ 5,540  $ 5,597  $ 3,895  $ 20,536  $ 3,054  $ 5,740  $ 4,234  $ 13,028
Billed travel  2,366  2,741  2,846  2,465  10,418  2,470  3,160  3,557  9,187
Total hardware and other revenue  $ 7,870  $ 8,281  $ 8,443  $ 6,360  $ 30,954  $ 5,524  $ 8,900  $ 7,791  $ 22,215
                   
                   
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):
                   
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
                   
Revenue  $ 282  $ 1,743  $ 1,140  $ 110  $ 3,275  $ (136)  $ (1,251)  $ (958)  $ (2,345)
Costs and expenses  386  1,513  1,038  (668)  2,269  (848)  (2,067)  (1,845)  (4,760)
Operating income  (104)  230  102  778  1,006  712  816  887  2,415
Foreign currency gains (losses) in other income  (207)  77  575  367  812  (370)  571  (564)  (363)
   $ (311)  $ 307  $ 677  $ 1,145  $ 1,818  $ 342  $ 1,387  $ 323  $ 2,052
                   
                   
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):
                   
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
                   
Operating income  $ (53)  $ (82)  $ (76)  $ 727  $ 516  $ 704  $ 1,193  $ 1,161  $ 3,058
Foreign currency (losses) gains in other income  (112)  53  653  638  1,232  (144)  724  (500)  80
Total impact of changes in the Indian Rupee  $ (165)  $ (29)  $ 577  $ 1,365  $ 1,748  $ 560  $ 1,917  $ 661  $ 3,138
                   
                   
6. Other income (expense) includes the following components (in thousands):
                   
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
                   
Interest income  $ 225  $ 269  $ 298  $ 280  $ 1,072  $ 264  $ 228  $ 278  $ 770
Foreign currency (losses) gains  (207)  77  575  367  812  (370)  571  (564)  (363)
Other non-operating (expense) income  --  (12)  (11)  3  (20)  (18)  3  39  24
Total other income (expense)  $ 18  $ 334  $ 862  $ 650  $ 1,864  $ (124)  $ 802  $ (247)  $ 431
                   
                   
7. Total equity-based compensation is as follows (in thousands except per share amounts):
                   
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
                   
Stock options  $ 512  $ 487  $ 486  $ 518  $ 2,003  $ 120  $ 140  $ 138  $ 398
Restricted stock  1,897  1,918  2,017  2,537  8,369  1,540  1,837  2,020  5,397
Total equity-based compensation  2,409  2,405  2,503  3,055  10,372  1,660  1,977  2,158  5,795
Income tax provision  807  806  838  1,075  3,526  598  711  777  2,086
Net income  $ 1,602  $ 1,599  $ 1,665  $ 1,980  $ 6,846  $ 1,062  $ 1,266  $ 1,381  $ 3,709
Diluted earnings per share  $ 0.07  $ 0.07  $ 0.08  $ 0.09  $ 0.32  $ 0.05  $ 0.06  $ 0.07  $ 0.18
                   
Diluted earnings per share - stock options  $ 0.02  $ 0.01  $ 0.02  $ 0.02  $ 0.06  $ 0.00  $ --   $ --   $ 0.01
Diluted earnings per share - restricted stock  $ 0.06  $ 0.06  $ 0.06  $ 0.08  $ 0.26  $ 0.05  $ 0.06  $ 0.07  $ 0.17
                   
                   
8. Capital expenditures are as follows (in thousands):
                   
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
                   
Capital expenditures  $ 1,338  $ 658  $ 1,676  $ 1,402  $ 5,074  $ 1,796  $ 1,454  $ 1,086  $ 4,336
                   
                   
9. Stock Repurchase Activity (in thousands):
                   
  2011 2012
  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr YTD
                   
Shares purchased under publicly-announced buy-back program  826  1,079  845  857  3,607  653  346  419  1,418
Shares withheld for taxes due upon vesting of restricted stock  65  4  4  5  78  66  3  5  74
Total shares purchased  891  1,083  849  862  3,685  719  349  424  1,492
                   
Total cash paid for shares purchased under publicly-announced buy-back program  $ 25,621  $ 38,286  $ 29,414  $ 37,390  $ 130,711  $ 30,647  $ 16,616  $ 21,202  $ 68,465
Total cash paid for shares withheld for taxes due upon vesting of restricted stock  1,960  129  159  185  2,433  2,840  132  230  3,202
Total cash paid for shares repurchased  $ 27,581  $ 38,415  $ 29,573  $ 37,575  $ 133,144  $ 33,487  $ 16,748  $ 21,432  $ 71,667
CONTACT: Dennis Story
         Chief Financial Officer
         Manhattan Associates, Inc.
         678-597-7115
         dstory@manh.com
         
         Will Haraway
         Director, North America Public Relations
         Manhattan Associates, Inc.
         678-597-7466
         wharaway@manh.com

3 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,215.84 -63.90 -0.37%
S&P 500 1,997.42 -12.98 -0.65%
NASDAQ 4,531.5380 -48.2510 -1.05%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs