Georgia

0-23999

58-2373424

(State or Other Jurisdiction of
Incorporation or organization)

(Commission
File Number)

(I.R.S. Employer
Identification No.)

•

Equity-based compensation expense typically does not require cash settlement by the Company. We do not include this expense and the related income tax effects when assessing our operating performance, and believe our peers also typically present non-GAAP results that exclude equity-based compensation expense.

•

From time to time, we incur acquisition-related costs consisting primarily of (i) accounting and legal expenses, whether or not we ultimately consummate a proposed acquisition, (ii) certain unusual costs, such as employee retention benefits, resulting from pre-acquisition arrangements, and (iii) amortization of acquisition-related intangible assets.  These costs are difficult to predict and, if and when incurred, generally are not expenses associated with our core operations.  We exclude these costs and the related income tax effects from our internal assessments of our operating performance, and believe our peers also typically present non-GAAP results that exclude similar acquisition-related costs.

•

We do not believe that the restructuring charge related to a reduction in our workforce recorded in the second quarter of 2017 is a common cost that results from normal operating activities; rather, we believe that it relates to the headwinds in the retail sector and a realignment of our capacity with demand forecasts. We have excluded the charge from our internal assessment of our operating performance and non-GAAP results.  

Exhibit

Number

Description

99.1

Press Release, dated July 20, 2017

Exhibit

Number

Description

99.1

Press Release, dated July 20, 2017

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

•

GAAP diluted earnings per share was $0.45 in Q2 2017, compared to $0.46 in Q2 2016.

•

Adjusted diluted earnings per share, a non-GAAP measure, was $0.50 in Q2 2017, compared to $0.49 in Q2 2016.

•

Consolidated total revenue was $154.1 million in Q2 2017, compared to $154.9 million in Q2 2016. License revenue was $22.4 million in Q2 2017, compared to $20.6 million in Q2 2016.

•

GAAP operating income was $49.3 million in Q2 2017, compared to $52.3 million in Q2 2016.

•

Adjusted operating income, a non-GAAP measure, was $55.2 million in Q2 2017, compared to $55.9 million in Q2 2016.

•

Cash flow from operations was $11.3 million in Q2 2017, compared to $19.1 million in Q2 2016. Days Sales Outstanding was 57 days at June 30, 2017, compared to 53 days at March 31, 2017.

•

Cash and investments totaled $86.6 million at June 30, 2017, compared to $101.3 million at March 31, 2017.

•

During the three months ended June 30, 2017, the Company repurchased 535,340 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors, for a total investment of $25.0 million. In July 2017, the Board of Directors authorized the Company to repurchase up to an aggregate of $50 million of the Company’s common stock.

•

GAAP diluted earnings per share for the six months ended June 30, 2017 was a record $0.85, compared to $0.84 for the six months ended June 30, 2016.  

•

Adjusted diluted earnings per share, a non-GAAP measure, was a record $0.92 for the six months ended June 30, 2017, compared to $0.91 for the six months ended June 30, 2016.

•

Consolidated revenue for the six months ended June 30, 2017, was $297.6 million, compared to $304.8 million for the six months ended June 30, 2016. License revenue was a record $45.2 million for the six months ended June 30, 2017, compared to $41.2 million for the six months ended June 30, 2016.  

•

GAAP operating income was $91.0 million for the six months ended June 30, 2017, compared to $95.4 million for the six months ended June 30, 2016.

•

Adjusted operating income, a non-GAAP measure, was $101.5 million for the six months ended June 30, 2017, compared to $103.8 million for the six months ended June 30, 2016. 

•

Cash flow from operations was a record $72.6 million in the six months ended June 30, 2017, compared to $59.5 million in the six months ended June 30, 2016.

•

During the six months ended June 30, 2017, the Company repurchased 1,539,208 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors, for a total investment of $75.0 million.

•

Recognized license revenue of $1.0 million or more on four new contracts during Q2 2017.

•

Completed software license wins with new customers such as: Avalon Express, B&H Foto & Electronics, Coolblue, Continental Express, Delta Galil, dōTERRA, Francois Marine Services, Freymiller Trucking, Nationwide Truck Brokers, New Wave Group Canadian Distribution, Nissan International, Office Depot International, Renault, s.Oliver, Sub-Zero Group, Vineyard Vines and Vision Media Management & Fulfillment.

•

Expanded relationships with existing customers such as: Alidi, American Tack & Hardware Company, APL Logistics Americas, Batory Foods, Boston Scientific Corporation, Costa Del Mar, Custom Goods, Damco Distribution Services, Dirt Cheap,

Donaldson Europe, Fenix Outdoor, Fleet Wholesale Supply Co., Harng Central Department Stores, Hy-Vee, IEH Auto Parts, Keeco, LeSaint Logistics, Logistic Union, lululemon athletica, Office Depot de México, Marr Russia, My Chemist, PepsiCo Russia, Perfect-10 Satellite Distribution, Recreational Equipment, Riffle Machine Works, Skechers, Staples Australia, The Apparel Group, Task International, TwinMed, UPS Supply Chain Solutions and Uniform Advantage.

Guidance Range - 2017 Full Year

($'s in millions, except EPS)

$ Range

% Growth Range

Total revenue - current guidance

$

590

$

600

-2%

-1%

Total revenue - previous guidance

$

606

$

620

0%

3%

Diluted earnings per share (EPS):

GAAP EPS - current guidance

$

1.71

$

1.75

-1%

2%

Equity-based compensation, net of tax

0.11

0.11

Restructuring charge, net of tax

0.03

0.03

Adjusted EPS⁽¹⁾ - current guidance

$

1.85

$

1.89

-1%

1%

GAAP EPS - previous guidance

$

1.77

$

1.81

3%

5%

Equity-based compensation, net of tax

0.12

0.12

Adjusted EPS⁽¹⁾ - previous guidance

$

1.89

$

1.93

1%

3%

⁽¹⁾ Adjusted EPS is a Non-GAAP measure which excludes the impact of equity-based compensation and restructuring

    charge, and the related income tax effects of these items.

Three Months Ended June 30,

Six Months Ended June 30,

2017

2016

2017

2016

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenue:

Software license

$

22,442

$

20,631

$

45,215

$

41,238

Services

116,828

119,833

225,661

236,096

Hardware and other

14,871

14,428

26,754

27,418

Total revenue

154,141

154,892

297,630

304,752

Costs and expenses:

Cost of license

2,355

2,283

4,595

5,435

Cost of services

47,751

48,393

97,494

100,297

Cost of hardware and other

12,207

11,841

21,845

21,598

Research and development

14,102

13,458

28,327

28,164

Sales and marketing

11,732

12,015

23,521

24,603

General and administrative

11,387

12,368

23,259

24,816

Depreciation and amortization

2,326

2,266

4,588

4,472

Restructuring charge

3,022

-

3,022

-

Total costs and expenses

104,882

102,624

206,651

209,385

Operating income

49,259

52,268

90,979

95,367

Other (loss) income, net

(68

)

654

(439

)

1,174

Income before income taxes

49,191

52,922

90,540

96,541

Income tax provision

18,047

19,581

31,172

35,720

Net income

$

31,144

$

33,341

$

59,368

$

60,821

Basic earnings per share

$

0.45

$

0.46

$

0.85

$

0.84

Diluted earnings per share

$

0.45

$

0.46

$

0.85

$

0.84

Weighted average number of shares:

Basic

69,227

71,880

69,610

72,264

Diluted

69,421

72,228

69,844

72,633

Three Months Ended June 30,

Six Months Ended June 30,

2017

2016

2017

2016

Operating income

$

49,259

$

52,268

$

90,979

$

95,367

Equity-based compensation (a)

2,796

3,495

7,268

8,183

Purchase amortization (c)

108

108

215

215

Restructuring charge (d)

3,022

-

3,022

-

Adjusted operating income (Non-GAAP)

$

55,185

$

55,871

$

101,484

$

103,765

Income tax provision

$

18,047

$

19,581

$

31,172

$

35,720

Equity-based compensation (a)

1,021

1,294

2,653

3,028

Tax (expense) benefit of stock awards vested (b)

(93

)

-

1,875

-

Purchase amortization (c)

40

39

79

79

Restructuring charge (d)

1,103

-

1,103

-

Adjusted income tax provision (Non-GAAP)

$

20,118

$

20,914

$

36,882

$

38,827

Net income

$

31,144

$

33,341

$

59,368

$

60,821

Equity-based compensation (a)

1,775

2,201

4,615

5,155

Tax expense (benefit) of stock awards vested (b)

93

-

(1,875

)

-

Purchase amortization (c)

68

69

136

136

Restructuring charge (d)

1,919

-

1,919

-

Adjusted net income (Non-GAAP)

$

34,999

$

35,611

$

64,163

$

66,112

-

Diluted EPS

$

0.45

$

0.46

$

0.85

$

0.84

Equity-based compensation (a)

0.03

0.03

0.07

0.07

Tax benefit of stock awards vested (b)

-

-

(0.03

)

-

Purchase amortization (c)

-

-

-

-

Restructuring charge (d)

0.03

-

0.03

-

Adjusted diluted EPS (Non-GAAP)

$

0.50

$

0.49

$

0.92

$

0.91

Fully diluted shares

69,421

72,228

69,844

72,633

(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 with the SEC on the date hereof. Equity-based compensation is included in the following GAAP operating expense lines for the three and six months ended June 30, 2017 and 2016:

Three Months Ended June 30,

Six Months Ended June 30,

2017

2016

2017

2016

Cost of services

$

580

$

868

$

1,721

$

2,147

Research and development

434

620

1,154

1,374

Sales and marketing

393

595

1,060

1,280

General and administrative

1,389

1,412

3,333

3,382

Total equity-based compensation

$

2,796

$

3,495

$

7,268

$

8,183

(b)

During the first quarter of 2017, we adopted Accounting Standards Update (ASU) 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, to improve the accounting for employee share-

based payments. Under the new guidance, all excess tax benefits and certain tax deficiencies are recognized as income tax expense or benefit in the income statements on a prospective basis, rather than recorded in additional paid-in capital. The adjustment represents 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, respectively. 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 (expense) generated upon their vesting.

(c)

Adjustments represent purchased intangibles amortization from prior acquisition. Such amortization is excluded 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 on the date hereof.

(d)

In May 2017, we eliminated about 100 positions due to the headwinds in the retail sector and to align our services capacity with demand. This action does not impair nor alter our strategic investment plans in innovation and sales and marketing to increase market share and extend our competitive advantage. As a result of this initiative, we recorded a charge of approximately $3.0 million in the second quarter of 2017. The charge primarily consists of employee severance, employee transition cost and outplacement services. We do not believe that the charge is common cost that resulted from normal operating activities. Consequently, we have excluded this charge from adjusted non-GAAP results.

June 30, 2017

December 31, 2016

(unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

76,704

$

95,615

Short-term investments

9,898

-

Accounts receivable, net of allowance of $3,394 and $3,595, respectively

96,295

100,285

Prepaid expenses and other current assets

13,935

11,118

Total current assets

196,832

207,018

Property and equipment, net

16,177

17,424

Goodwill, net

62,240

62,228

Deferred income taxes

1,464

2,867

Other assets

8,022

7,603

Total assets

$

284,735

$

297,140

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

13,201

$

12,052

Accrued compensation and benefits

20,102

20,700

Accrued and other liabilities

11,561

12,510

Deferred revenue

73,001

63,457

Income taxes payable

-

8,924

Total current liabilities

117,865

117,643

Other non-current liabilities

9,184

10,131

Shareholders' equity:

Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2017 and 2016

-

-

Common stock, $0.01 par value; 200,000,000 shares authorized; 68,926,397 and 70,233,955 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively

689

702

Retained earnings

170,119

184,558

Accumulated other comprehensive loss

(13,122

)

(15,894

)

Total shareholders' equity

157,686

169,366

Total liabilities and shareholders' equity

$

284,735

$

297,140

Six Months Ended June 30,

2017

2016

(unaudited)

(unaudited)

Operating activities:

Net income

$

59,368

$

60,821

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

4,588

4,472

Equity-based compensation

7,268

8,183

Loss on disposal of equipment

9

14

Tax benefit of stock awards exercised/vested

-

5,069

Excess tax benefits from equity-based compensation

-

(5,074

)

Deferred income taxes

1,966

950

Unrealized foreign currency loss (gain)

42

(403

)

Changes in operating assets and liabilities:

Accounts receivable, net

5,243

4,113

Other assets

(2,985

)

(1,124

)

Accounts payable, accrued and other liabilities

(2,117

)

(10,624

)

Income taxes

(9,336

)

(2,313

)

Deferred revenue

8,549

(4,577

)

Net cash provided by operating activities

72,595

59,507

Investing activities:

Purchase of property and equipment

(2,703

)

(4,107

)

Net (purchases) maturities of investments

(9,457

)

8,113

Net cash (used in) provided by investing activities

(12,160

)

4,006

Financing activities:

Purchase of common stock

(81,620

)

(92,812

)

Proceeds from issuance of common stock from options exercised

-

18

Excess tax benefits from equity-based compensation

-

5,074

Net cash used in financing activities

(81,620

)

(87,720

)

Foreign currency impact on cash

2,274

(1,074

)

Net change in cash and cash equivalents

(18,911

)

(25,281

)

Cash and cash equivalents at beginning of period

95,615

118,416

Cash and cash equivalents at end of period

$

76,704

$

93,135

1.

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

2016

2017

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

YTD

GAAP Diluted EPS

$

0.38

$

0.46

$

0.47

$

0.42

$

1.72

$

0.40

$

0.45

$

0.85

Adjustments to GAAP:

Equity-based

   compensation

0.04

0.03

0.03

0.04

0.14

0.04

0.03

0.07

Tax benefit of stock awards vested

-

-

-

-

-

(0.03

)

-

(0.03

)

Purchase amortization

-

-

-

-

-

-

-

-

Restructuring charge

-

-

-

-

-

-

0.03

0.03

Adjusted Diluted EPS

$

0.42

$

0.49

$

0.50

$

0.46

$

1.87

$

0.42

$

0.50

$

0.92

Fully Diluted Shares

73,020

72,228

71,743

71,148

72,060

70,247

69,421

69,844

2.

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

2016

2017

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

YTD

Revenue:

Americas

$

128,807

$

131,018

$

130,099

$

123,660

$

513,584

$

113,115

$

123,658

$

236,773

EMEA

15,686

18,185

15,078

17,333

66,282

23,360

22,028

45,388

APAC

5,367

5,689

7,036

6,599

24,691

7,014

8,455

15,469

$

149,860

$

154,892

$

152,213

$

147,592

$

604,557

$

143,489

$

154,141

$

297,630

GAAP Operating Income:

Americas

$

37,454

$

44,126

$

46,213

$

37,154

$

164,947

$

28,713

$

35,717

$

64,430

EMEA

4,439

6,854

4,822

5,945

22,060

10,754

9,995

20,749

APAC

1,206

1,288

2,549

2,257

7,300

2,253

3,547

5,800

$

43,099

$

52,268

$

53,584

$

45,356

$

194,307

$

41,720

$

49,259

$

90,979

Adjustments (pre-tax):

Americas:

Equity-based

   compensation

$

4,688

$

3,495

$

3,541

$

4,210

$

15,934

$

4,472

$

2,796

$

7,268

Purchase amortization

107

108

107

108

430

107

108

215

Restructuring charge

-

-

-

-

-

-

2,908

2,908

$

4,795

$

3,603

$

3,648

$

4,318

$

16,364

$

4,579

$

5,812

$

10,391

EMEA:

Restructuring charge

-

-

-

-

-

-

114

114

Adjusted non-GAAP

   Operating Income:

Americas

$

42,249

$

47,729

$

49,861

$

41,472

$

181,311

$

33,292

$

41,529

$

74,821

EMEA

4,439

6,854

4,822

5,945

22,060

10,754

10,109

20,863

APAC

1,206

1,288

2,549

2,257

7,300

2,253

3,547

5,800

$

47,894

$

55,871

$

57,232

$

49,674

$

210,671

$

46,299

$

55,185

$

101,484

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):