Manhattan Associates' CEO Discusses Q4 2011 Results - Earnings Call Transcript

Manhattan Associates (MANH)

Q4 2011 Earnings Call

January 31, 2012 4:30 pm ET

Executives

Dennis B. Story - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Peter F. Sinisgalli - Chief Executive Officer, President and Director

Analysts

Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division

Yun S. Kim - ThinkEquity LLC, Research Division

Alan Weinfeld

Presentation

Operator

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Good afternoon. My name is Jessica, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the Manhattan Associates' Fourth Quarter 2011 Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this call is being recorded today, January 31, 2012. I would now like to introduce Dennis Story, Chief Financial Officer of Manhattan Associates. Mr. Story, you may begin your conference.

Dennis B. Story

Thank you, Jessica, and good afternoon, everyone. Welcome to Manhattan Associates' 2011 Fourth Quarter Earnings Call. I will review our cautionary language and then turn the call over to Pete Sinisgalli, our CEO.

During this call, including the question-and-answer session, we may make forward-looking statements regarding future events or future financial performance of Manhattan Associates. You're cautioned that these forward-looking statements involve risks and uncertainties, are not guarantees of future performance and that actual results may differ materially from those in our forward-looking statements. I refer you to the reports Manhattan Associates files with the SEC for important factors that could cause actual results to differ materially from those in our projections, particularly in our annual report on Form 10-K for fiscal 2010 and the risk factor discussion in that report. We are under no obligation to update these statements. In addition, our comments will cover certain non-GAAP financial measures. These measures are not in accordance with, or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that this presentation of certain non-GAAP measures facilitates investors' understanding of our historical operating trends with useful insight into our profitability, exclusive of unusual adjustments. Our Form 8-K filed today with the SEC and available from our website, manh.com, contains important disclosure about our use of non-GAAP measures. In addition, our earnings release filed with the Form 8-K reconciles our non-GAAP measures to the most directly comparable GAAP measures.

Now I'll turn the call over to Pete.

Peter F. Sinisgalli

Thanks, Dennis, and good afternoon, everyone. Overall, 2011 was a very successful year for Manhattan Associates. Financial results were good. Our competitive position improved. Customer satisfaction increased and we're well-positioned for the future. For the fourth quarter end of year, we posted double-digit revenue growth and considerably faster income growth. Dennis will go into the details in just a moment. Importantly, we posted software license revenue of $16.6 million in Q4, up 31% versus Q4 of 2010. After a disappointing first quarter this year, the license revenue over the final 3 quarters of the year, we posted 15% of license revenue growth.

In Q4, we closed 5 deals with license revenue of $1 million or more. All 5 were in the United States. 4 of the 5 were with new customers and 4 of the 5 were retailers. All included our platform-based Warehouse Management system as well as other Manhattan solutions. In addition to purchasing our warehouse solution, 2 of the companies also purchased our Order Lifecycle Management solution to help drive their multi-channel retail businesses. Two purchased our Extended Enterprise Management solution to collaborate with their supply chain partners. And one also purchased our Transportation Management solution. All in all, we had a solid quarter closing large deals.

Our competitive win rate for the year was strong. In head-to-head sales cycles against our major competitors, we won 75% of the time. In addition, we had a very successful year driving improvements in customer satisfaction and delivering innovative new software solutions. And I'll comment more on these areas following Dennis' financial review. As we look ahead, I believe we are well positioned for 2012 and beyond. We're not expecting the global economy to improve much in 2012. But nonetheless, we're optimistic about our financial outlook for the year ahead. Dennis?

Dennis B. Story

Thanks, Pete. I'm going to cover our non-GAAP results for Q4 and full-year 2011 and get GAAP EPS performance then review our guidance for 2012 and then turn the call back to Pete for the business update.

As you can see, we delivered solid Q4 and full-year financial performance, led by double-digit organic revenue growth with record operating profit and earnings per share for both adjusted and GAAP results. In a global macro environment that continues to struggle with growth recovery, our financial results reflect strong execution and demonstrate the power of acquiring market share through R&D investment in supply chain software innovation to serve our target markets.

We posted Q4 total revenue of $83.5 million, increasing 17% over Q4 2010 on double-digit growth in license and services revenue of 31% and 17%, respectively. On a regional basis, Americas grew total revenue, 16%; EMEA, 21%; and APAC, 17% over Q4 of last year. Full-year 2011 total revenue of $329.3 million grew 11% despite flat year-over-year license revenue growth as services demand continues to expand.

On a regional basis, Americas grew total revenue of 10%; EMEA, 19%; and APAC, 13% over full-year 2010. While cautious, we are continuing to experience solid activity in our target markets, and the demand environment continues to remain quite positive. On strong revenue and operating earnings leverage performance, we delivered record Q4 adjusted earnings per share of $0.60, representing 58% growth over prior year. Full-year 2011 adjusted earnings per share of $2.32 grew 47% over our 2010 full-year performance of $1.58. As mentioned in our prior 2011 earnings call, 2011 full-year adjusted EPS results include a one-time $2 million tax benefit or $0.09 per share resulting from the release of a valuation allowance due to a change in India tax law. So apples to apples, excluding the India income tax benefit, 2011 adjusted EPS of $2.23 grew 41% over 2010. License revenue for the quarter totaled $16.6 million, up 31%, compared to the $12.7 million we delivered in Q4 2010.

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