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 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.

•

The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a provisional net one-time charge based on a reasonable estimate of the income tax effects. The charge was primarily from a tax on accumulated foreign earnings and the remeasurement of

deferred tax assets. 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 April 24, 2018

Exhibit

Number

Description

99.1

Press Release, dated April 24, 2018

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

•

Certain line items in prior period financial statements have been reclassified to conform to the current period presentation in the consolidated statements of income due to the business transition to cloud subscriptions.

•

GAAP diluted earnings per share was $0.33 in Q1 2018 compared to $0.40 in Q1 2017.

•

Adjusted diluted earnings per share, a non-GAAP measure, was $0.37 in Q1 2018, compared to $0.42 in Q1 2017.

•

Consolidated total revenue was $130.6 million in Q1 2018, compared to $143.5 million in Q1 2017. License revenue was $7.6 million in Q1 2018, compared to $21.3 million in Q1 2017. Cloud subscriptions revenue was $4.5 million in Q1 2018 compared to $1.5 million in Q1 2017.

•

GAAP operating income was $27.8 million in Q1 2018, compared to $41.7 million in Q1 2017.

•

Adjusted operating income, a non-GAAP measure, was $32.3 million in Q1 2018, compared to $46.3 million in Q1 2017.

•

Cash flow from operations was $51.3 million in Q1 2018, compared to $61.3 million in Q1 2017. Days Sales Outstanding was 59 days at both March 31, 2018, and December 31, 2017.

•

Cash and investments totaled $119.0 million at March 31, 2018, compared to $125.5 million at December 31, 2017.

•

During the three months ended March 31, 2018, the Company repurchased 1,157,696 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors for a total investment of $50.0 million. In April 2018, the Board of Directors authorized the Company to repurchase up to an aggregate of $50 million of the Company’s common stock.

Guidance Range - 2018 Full Year

($'s in millions, except operating margin and EPS)

$ Range

% Growth Range

Total revenue - current guidance

$

546

$

558

-8%

-6%

Operating Margin:

GAAP operating margin – current guidance

20.0

%

20.4

%

-11.2%

-10.8%

Equity-based compensation, net of tax

4.0

%

3.9

%

Adjusted Operating margin⁽¹⁾ - current guidance

24.0

%

24.3

%

-10.5%

-10.2%

Diluted earnings per share (EPS):

GAAP EPS - current guidance

$

1.23

$

1.27

-27%

-24%

Equity-based compensation, net of tax

0.25

0.25

Adjusted EPS⁽¹⁾ - current guidance

$

1.48

$

1.52

-21%

-19%

⁽¹⁾ Adjusted operating margin and adjusted EPS are non-GAAP measures which exclude the impact of equity-based

compensation and acquisition-related costs, and the related income tax effects of these items.

Three Months Ended March 31,

2018

2017

(unaudited)

(unaudited)

Revenue:

Software license

$

7,555

$

21,277

Cloud subscriptions

4,469

1,496

Maintenance

36,397

33,376

Services

78,757

79,781

Hardware ⁽¹⁾

3,391

7,559

Total revenue

130,569

143,489

Costs and expenses:

Cost of license

1,308

1,352

Cost of cloud subscriptions, maintenance and services

56,486

54,899

Cost of hardware ⁽¹⁾

-

5,370

Research and development

17,059

14,225

Sales and marketing

12,884

11,789

General and administrative

12,800

11,872

Depreciation and amortization

2,202

2,262

Total costs and expenses

102,739

101,769

Operating income

27,830

41,720

Other income (loss), net

721

(371

)

Income before income taxes

28,551

41,349

Income tax provision

5,899

13,125

Net income

$

22,652

$

28,224

Basic earnings per share

$

0.34

$

0.40

Diluted earnings per share

$

0.33

$

0.40

Weighted average number of shares:

Basic

67,553

69,973

Diluted

67,736

70,247

(1)

Adoption of the new revenue recognition standard, FASB ASC Topic 606, Revenue from Contracts with Customers, in the first quarter of 2018 resulted in changes in the presentation of hardware revenue and cost of hardware. For further detail, please see note 8 in the supplemental financial information accompanying this press release.

Three Months Ended March 31,

2018

2017

Operating income

$

27,830

$

41,720

Equity-based compensation (a)

4,343

4,472

Purchase amortization (c)

107

107

Adjusted operating income (Non-GAAP)

$

32,280

$

46,299

Income tax provision

$

5,899

$

13,125

Equity-based compensation (a)

1,064

1,632

Tax benefit of stock awards vested (b)

749

1,968

Purchase amortization (c)

26

39

U.S. Tax Cuts and Jobs Act impact (d)

348

-

Adjusted income tax provision (Non-GAAP)

$

8,086

$

16,764

Net income

$

22,652

$

28,224

Equity-based compensation (a)

3,280

2,840

Tax benefit of stock awards vested (b)

(749

)

(1,968

)

Purchase amortization (c)

81

68

U.S. Tax Cuts and Jobs Act impact (d)

(348

)

-

Adjusted net income (Non-GAAP)

$

24,916

$

29,164

Diluted EPS

$

0.33

$

0.40

Equity-based compensation (a)

0.05

0.04

Tax benefit of stock awards vested (b)

(0.01

)

(0.03

)

Purchase amortization (c)

-

-

U.S. Tax Cuts and Jobs Act impact (d)

(0.01

)

-

Adjusted diluted EPS (Non-GAAP)

$

0.37

$

0.42

Fully diluted shares

67,736

70,247

(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 months ended March 31, 2018 and 2017:

Three Months Ended March 31,

2018

2017

Cost of services

$

1,117

$

1,141

Research and development

921

720

Sales and marketing

558

667

General and administrative

1,747

1,944

Total equity-based compensation

$

4,343

$

4,472

(b)

Adjustments represent 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. As discussed above, we excluded equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other

reasons explained in our Current Report on Form 8-K filed the SEC.  Therefore, we also excluded the related tax benefit (expense) generated upon their vesting.

(c)

Adjustments represent purchased intangibles amortization from a prior acquisition. We exclude that amortization from adjusted results to facilitate comparison with our peers, to facilitate comparison 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.

(d)

In the fourth quarter of 2017, we recorded a provisional net one-time tax of $2.8 million due to the enactment of the Tax Cuts and Jobs Act (the Act) in December 2017. We calculated that amount based on a reasonable estimate of the income tax effects, primarily from a tax on accumulated foreign earnings and the remeasurement of deferred tax assets. We adjusted our provisional estimate by $0.3 million during the first quarter of 2018.

March 31, 2018

December 31, 2017

(unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

106,668

$

125,522

Short-term investments

12,341

-

Accounts receivable, net of allowance of $2,265 and $2,692, respectively

85,285

92,231

Prepaid expenses and other current assets

14,557

10,320

Total current assets

218,851

228,073

Property and equipment, net

15,758

15,493

Goodwill, net

62,252

62,248

Deferred income taxes

634

1,877

Other assets

9,687

7,304

Total assets

$

307,182

$

314,995

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

14,869

$

14,028

Accrued compensation and benefits

20,894

15,826

Accrued and other liabilities

12,010

12,105

Deferred revenue

85,505

75,068

Income taxes payable

9,527

7,228

Total current liabilities

142,805

124,255

Other non-current liabilities

16,429

15,784

Shareholders' equity:

Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2018 and 2017

-

-

Common stock, $0.01 par value; 200,000,000 shares authorized; 66,819,431 and 67,776,138 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively

668

678

Retained earnings

159,288

186,117

Accumulated other comprehensive loss

(12,008

)

(11,839

)

Total shareholders' equity

147,948

174,956

Total liabilities and shareholders' equity

$

307,182

$

314,995

Three Months Ended March 31,

2018

2017

(unaudited)

(unaudited)

Operating activities:

Net income

$22,652

$28,224

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

Depreciation and amortization

2,202

2,262

Equity-based compensation

4,343

4,472

(Gain) loss on disposal of equipment

(3)

20

Deferred income taxes

1,587

2,531

Unrealized foreign currency (gain) loss

(333)

104

Changes in operating assets and liabilities:

Accounts receivable, net

7,502

16,553

Other assets

(4,223)

(3,939)

Accounts payable, accrued and other liabilities

5,435

(4,063)

Income taxes

2,286

8,172

Deferred revenue

9,853

6,940

Net cash provided by operating activities

51,301

61,276

Investing activities:

Purchase of property and equipment

(2,174)

(789)

Net purchases of investments

(12,598)

(11,630)

Net cash used in investing activities

(14,772)

(12,419)

Financing activities:

Purchase of common stock

(55,815)

(56,619)

Net cash used in financing activities

(55,815)

(56,619)

Foreign currency impact on cash

432

1,355

Net change in cash and cash equivalents

(18,854)

(6,407)

Cash and cash equivalents at beginning of period

125,522

95,615

Cash and cash equivalents at end of period

$106,668

$89,208

1.

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

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

GAAP Diluted EPS

$

0.40

$

0.45

$

0.47

$

0.36

$

1.68

$

0.33

Adjustments to GAAP:

Equity-based compensation

0.04

0.03

0.03

0.05

0.15

0.05

Tax benefit of stock awards vested

(0.03

)

-

-

-

(0.03

)

(0.01

)

Purchase amortization

-

-

-

-

-

-

Restructuring charge

-

0.03

-

-

0.03

-

U.S. Tax Cuts and Jobs Act impact

-

-

-

0.04

0.04

(0.01

)

Adjusted Diluted EPS

$

0.42

$

0.50

$

0.51

$

0.45

$

1.87

$

0.37

Fully Diluted Shares

70,247

69,421

69,135

68,791

69,424

67,736

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

Revenue:

Americas

$

113,115

$

123,658

$

124,833

$

115,543

$

477,149

$

104,615

EMEA

23,360

22,028

18,453

21,508

85,349

19,164

APAC

7,014

8,455

9,597

7,035

32,101

6,790

$

143,489

$

154,141

$

152,883

$

144,086

$

594,599

$

130,569

GAAP Operating Income:

Americas

$

28,713

$

35,717

$

39,295

$

32,968

$

136,693

$

20,318

EMEA

10,754

9,995

7,128

7,952

35,829

5,475

APAC

2,253

3,547

4,673

2,650

13,123

2,037

$

41,720

$

49,259

$

51,096

$

43,570

$

185,645

$

27,830

Adjustments (pre-tax):

Americas:

Equity-based

   compensation

$

4,472

$

2,796

$

3,773

$

5,188

$

16,229

$

4,343

Purchase amortization

107

108

108

107

430

107

Restructuring charge

-

2,908

(77

)

(18

)

2,813

-

$

4,579

$

5,812

$

3,804

$

5,277

$

19,472

$

4,450

EMEA:

Restructuring charge

-

114

-

(6

)

108

-

Adjusted non-GAAP Operating Income:

Americas

$

33,292

$

41,529

$

43,099

$

38,245

$

156,165

$

24,768

EMEA

10,754

10,109

7,128

7,946

35,937

5,475

APAC

2,253

3,547

4,673

2,650

13,123

2,037

$

46,299

$

55,185

$

54,900

$

48,841

$

205,225

$

32,280

3.

Impact of Currency Fluctuation

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

Revenue

$

(1,547

)

$

(1,219

)

$

536

$

1,820

$

(410

)

$

2,781

Costs and expenses

(789

)

(396

)

723

1,485

1,023

2,328

Operating income

(758

)

(823

)

(187

)

335

(1,433

)

453

Foreign currency (losses)

   gains in other income

(646

)

(348

)

(81

)

(771

)

(1,846

)

366

$

(1,404

)

$

(1,171

)

$

(268

)

$

(436

)

$

(3,279

)

$

819

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

Operating income

$

(70

)

$

(326

)

$

(338

)

$

(345

)

$

(1,079

)

$

(360

)

Foreign currency

   (losses) gains in

    other income

(320

)

(190

)

71

(43

)

(482

)

210

Total impact of

   changes in the

   Indian Rupee

$

(390

)

$

(516

)

$

(267

)

$

(388

)

$

(1,561

)

$

(150

)

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

Interest income

$

293

$

264

$

314

$

303

$

1,174

$

347

Foreign currency (losses) gains

(646

)

(348

)

(81

)

(771

)

(1,846

)

366

Other non-operating

   (expense) income

(18

)

16

(26

)

(112

)

(140

)

8

Total other (loss) income

$

(371

)

$

(68

)

$

207

$

(580

)

$

(812

)

$

721

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

Capital expenditures

$

789

$

1,914

$

1,194

$

2,302

$

6,199

$

2,174

6.

Stock Repurchase Activity (in thousands):

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

Shares purchased under publicly-announced buy-back program

1,004

535

-

1,156

2,695

1,158

Shares withheld for taxes due upon vesting of restricted stock

131

1

2

1

135

111

Total shares purchased

1,135

536

2

1,157

2,830

1,269

Total cash paid for shares purchased under publicly-announced buy-back program

$

49,978

$

24,974

$

-

$

49,953

$

124,905

$

49,972

Total cash paid for shares withheld for taxes due upon vesting of restricted stock

6,641

27

80

54

6,802

5,843

Total cash paid for shares repurchased

$

56,619

$

25,001

$

80

$

50,007

$

131,707

$

55,815

7.

Due to the business transition to Cloud Subscriptions, we have revised our presentations of revenue and related cost line items in our consolidated statements of income. We have reclassified certain line items in prior period financial statements to conform to the current period presentation in the consolidated statements of income. These reclassifications include: all revenue line items; cost of license; cost of cloud subscriptions, maintenance and services; and cost of hardware. Such reclassifications did not affect total revenues, operating income or net income. The following table reflects the comparison between the former and new presentation (in thousands):

2016

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

Former Presentation:

Software license

$

20,607

$

20,631

$

21,633

$

22,125

$

84,996

$

22,773

$

22,442

$

18,794

$

17,900

$

81,909

$

12,024

Services

116,263

119,833

119,267

111,923

467,286

108,833

116,828

115,555

110,394

451,610

111,701

Hardware and other

12,990

14,428

11,313

13,544

52,275

11,883

14,871

18,534

15,792

61,080

6,844

$

149,860

$

154,892

$

152,213

$

147,592

$

604,557

$

143,489

$

154,141

$

152,883

$

144,086

$

594,599

$

130,569

Cost of license

$

3,152

$

2,283

$

2,966

$

2,419

$

10,820

$

2,240

$

2,355

$

2,830

$

3,169

$

10,594

$

3,982

Cost of services

51,904

48,393

49,436

47,742

197,475

49,743

47,751

44,750

43,053

185,297

50,348

Cost of hardware and other

9,757

11,841

9,276

10,710

41,584

9,638

12,207

15,492

12,505

49,842

3,464

$

64,813

$

62,517

$

61,678

$

60,871

$

249,879

$

61,621

$

62,313

$

63,072

$

58,727

$

245,733

$

57,794