JDA Software Group (JDAS)

Q1 2011 Earnings Call

April 26, 2011 4:45 pm ET

Executives

Mike Burnett - Group Vice President of Treasury & Investor Relations

Peter Hathaway - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Hamish Brewer - Chief Executive Officer, President and Director

Analysts

Jeffrey Van Rhee - Craig-Hallum Capital Group LLC

Brian Murphy - Sidoti & Company, LLC

Gregg McDowell

Richard Williams - Cross Research

Presentation

Operator

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Good day, ladies and gentlemen. Thank you for standing by. Welcome to the JDA Software Group Inc. First Quarter 2011 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Tuesday, April 26, 2011. I would now like to turn the conference over to our host, Mr. Mike Burnett, Vice President of Investor Relations. Please go ahead, sir.

Mike Burnett

Thank you, Camille. Good afternoon, and welcome to the JDA Software earnings call for the first quarter ending March 31, 2011.

We have begun 2011 with a solid performance led by broad-based strength in each line of business and across the geographic regions in which we operate. Record first quarter revenues drove strong earnings and cash flow to kick off the year.

On our call today, we will discuss the operational and financial results for the first quarter. With me on the call is Hamish Brewer, Chief Executive Officer of JDA Software; and Peter Hathaway, our Chief Financial Officer.

Before we begin discussing our results, let me remind you that our comments today will contain certain forward-looking statements that often involve risks, uncertainties and assumptions. All statements other than statements of historical facts are statements that could be deemed to be forward-looking. These risks are described from time to time in our SEC reports including, but not limited to, our annual report on Form 10-K for the year ended December 31, 2010.

Our presentation also includes certain non-GAAP measures, which JDA uses internally in budgeting and performance monitoring activities to gauge our business performance. We believe these measures provide useful information to our investors in evaluating JDA's ongoing business results. We prepared a reconciliation of each of these measures to the most directly comparable GAAP measure in our press release, which is posted on our website at jda.com. Additionally, we have posted a supplemental presentation slide deck on our Investor Relations website to accompany the review of our results.

With what, I will now turn the call over to Hamish Brewer for a discussion of the operating results and trends. Hamish?

Hamish Brewer

Thank you, Mike. As many of you may remember, in January this year, we laid out an ambitious plan to accelerate the pace of organic growth of the company driven by sales. I'm very pleased to be able to report that although there still remains much to be done this year, after the first quarter, I believe we're on track to achieve our annual goal.

We generated record first quarter revenues in all our major revenue lines, and we did this coming off the back of the biggest fourth quarter in the history of the company. Today, I'd like to take you through the major lines of business and provide some more color on our achievements, but before I do that, I'd like to highlight some of the most objective reasons why I believe we are succeeding.

Focusing on innovation and competitiveness, there's no doubt in my mind that the recent recession has brought the need for superior supply chain execution firmly into focus for most companies in our target market. When you combine the recent downturn with increasing volatility in commodities markets, supply capacity disconnects and, of course, unexpected disruptions like the recent tragedy in Japan, what you see is a confluence of factors, all of which lead companies to focus on better planning, superior agility and optimized decision-making across global supply networks. This kind of business performance is almost impossible to achieve without advanced planning and optimization tools. While many companies have tried to achieve these capabilities with their traditional ERP systems, the evidence suggests overwhelmingly that specialized suite of solutions consistently outperformed the more generic functionality provided by ERP.

Today, JDA owns the broadest suite of specialized merchandising, pricing and supply chain solutions available anywhere, providing a unique combination of broad suite capabilities along with in-depth specialized optimization. So as we integrate the JDA and i2 suites of products together into 1 seamless offering, a process which will be substantially complete by the end of 2012, this integration will yield transformational capabilities for manufacturers, distributors and retailers everywhere.

Combined with the advantages of this broad suite, our focus on in-depth innovation in each functional domain provides a unique and compelling offering. The depth of our ongoing innovation is reflected in our patent portfolio, where we hold an unmatched 240 patents in this domain, and we have another 102 U.S. patents in process.

So while the results of the first quarter are impressive and satisfying in themselves, I'd also like you to know that I feel very optimistic about our market positioning, competitiveness and the benefits that we have yet to unlock as we complete the delivery of our 3-year roadmap, which is still only 1/3 complete but on track to deliver over the next 2 years. For example, this year alone, we will deliver major new capabilities in the areas of sales and operations planning, inventory optimization and assortment management. So our first quarter financial results are excellent, but they're also built on something which is fundamental and durable in our business.

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