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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

[Mark One]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number:  0-23999

MANHATTAN ASSOCIATES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Georgia

 

 

58-2373424

(State or Other Jurisdiction of

Incorporation or Organization)

 

 

(I.R.S. Employer

Identification No.)

 

2300 Windy Ridge Parkway, Tenth Floor

 

 

 

Atlanta, Georgia

 

 

30339

(Address of Principal Executive Offices)

 

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (770) 955-7070

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock

MANH

Nasdaq Global Select Market

 

 

 

Indicate by check mark whether the Registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.   Yes     No  

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging Growth Company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes     No  

The number of shares of the Registrant’s class of capital stock outstanding as of July 22, 2020, the latest practicable date, is as follows: 63,521,369 shares of common stock, $0.01 par value per share.

 

 


MANHATTAN ASSOCIATES, INC.

FORM 10-Q

Quarter Ended June 30, 2020

TABLE OF CONTENTS

PART I

 

 

Financial Information

 

 

 

 

Item 1.

Financial Statements.

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019

3

 

 

Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2020 and 2019 (unaudited)

4

 

 

Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2020 and 2019 (unaudited)

5

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited)

6

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three months and six months ended June 30, 2020 and 2019 (unaudited)

7

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

8

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

15

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

28

 

 

 

Item 4.

Controls and Procedures.

28

 

 

 

 

PART II

 

 

 

 

 

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings.

29

 

 

 

Item 1A.

Risk Factors.

29

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

29

 

 

 

Item 3.

Defaults Upon Senior Securities.

29

 

 

 

Item 4.

Mine Safety Disclosures.

29

 

 

 

Item 5.

Other Information.

29

 

 

 

Item 6.

Exhibits.

30

 

 

 

Signatures.

31

 

 

 

 

2


PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

June 30, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

123,638

 

 

$

110,678

 

Accounts receivable, net of allowance of $4,078 and $2,826, at June 30, 2020 and December 31, 2019, respectively

 

 

108,099

 

 

 

100,937

 

Prepaid expenses and other current assets

 

 

20,022

 

 

 

20,426

 

Total current assets

 

 

251,759

 

 

 

232,041

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

19,458

 

 

 

22,725

 

Operating lease right-of-use assets

 

 

31,791

 

 

 

35,896

 

Goodwill, net

 

 

62,237

 

 

 

62,237

 

Deferred income taxes

 

 

2,529

 

 

 

6,814

 

Other assets

 

 

12,615

 

 

 

12,566

 

Total assets

 

$

380,389

 

 

$

372,279

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

16,262

 

 

$

20,561

 

Accrued compensation and benefits

 

 

27,779

 

 

 

45,991

 

Accrued and other liabilities

 

 

19,184

 

 

 

19,325

 

Deferred revenue

 

 

118,795

 

 

 

94,371

 

Income taxes payable

 

 

1,401

 

 

 

1,348

 

Total current liabilities

 

 

183,421

 

 

 

181,596

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities, long-term

 

 

28,431

 

 

 

32,416

 

Other non-current liabilities

 

 

15,759

 

 

 

15,989

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2020 and 2019

 

 

-

 

 

 

-

 

Common stock, $0.01 par value; 200,000,000 shares authorized; 63,518,968 and 63,456,986 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 

 

635

 

 

 

635

 

Retained earnings

 

 

173,125

 

 

 

159,490

 

Accumulated other comprehensive loss

 

 

(20,982

)

 

 

(17,847

)

Total shareholders' equity

 

 

152,778

 

 

 

142,278

 

Total liabilities and shareholders' equity

 

$

380,389

 

 

$

372,279

 

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

 

3


Item 1.

Financial Statements (continued)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud subscriptions

 

$

18,503

 

 

$

9,009

 

 

$

35,763

 

 

$

16,868

 

Software license

 

 

5,681

 

 

 

11,721

 

 

 

15,416

 

 

 

24,135

 

Maintenance

 

 

35,898

 

 

 

37,323

 

 

 

71,642

 

 

 

73,422

 

Services

 

 

71,778

 

 

 

93,951

 

 

 

159,184

 

 

 

182,582

 

Hardware

 

 

3,770

 

 

 

2,337

 

 

 

7,528

 

 

 

5,738

 

Total revenue

 

 

135,630

 

 

 

154,341

 

 

 

289,533

 

 

 

302,745

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of software license

 

 

591

 

 

 

623

 

 

 

1,146

 

 

 

1,215

 

Cost of cloud subscriptions, maintenance and services

 

 

62,434

 

 

 

70,955

 

 

 

136,710

 

 

 

137,533

 

Research and development

 

 

19,931

 

 

 

21,997

 

 

 

43,259

 

 

 

43,210

 

Sales and marketing

 

 

9,709

 

 

 

14,520

 

 

 

22,797

 

 

 

29,301

 

General and administrative

 

 

14,016

 

 

 

16,805

 

 

 

30,130

 

 

 

31,855

 

Depreciation and amortization

 

 

2,257

 

 

 

1,859

 

 

 

4,603

 

 

 

3,773

 

Total costs and expenses

 

 

108,938

 

 

 

126,759

 

 

 

238,645

 

 

 

246,887

 

Operating income

 

 

26,692

 

 

 

27,582

 

 

 

50,888

 

 

 

55,858

 

Other (loss) income, net

 

 

(158

)

 

 

(71

)

 

 

1,262

 

 

 

(442

)

Income before income taxes

 

 

26,534

 

 

 

27,511

 

 

 

52,150

 

 

 

55,416

 

Income tax provision

 

 

7,330

 

 

 

6,586

 

 

 

10,416

 

 

 

13,519

 

Net income

 

$

19,204

 

 

$

20,925

 

 

$

41,734

 

 

$

41,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.30

 

 

$

0.32

 

 

$

0.66

 

 

$

0.65

 

Diluted earnings per share

 

$

0.30

 

 

$

0.32

 

 

$

0.65

 

 

$

0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

63,509

 

 

 

64,623

 

 

 

63,550

 

 

 

64,765

 

Diluted

 

 

64,126

 

 

 

65,093

 

 

 

64,234

 

 

 

65,148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

 

4


Item 1.

Financial Statements (continued)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(in thousands)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Net income

 

$

19,204

 

 

$

20,925

 

 

$

41,734

 

 

$

41,897

 

Foreign currency translation adjustment

 

 

336

 

 

 

(22

)

 

 

(3,135)

 

 

 

237

 

Comprehensive income

 

$

19,540

 

 

$

20,903

 

 

$

38,599

 

 

$

42,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

 

5


 

Item 1.

Financial Statements (continued)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

(unaudited)

 

Operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

41,734

 

 

$

41,897

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,603

 

 

 

3,773

 

Equity-based compensation

 

 

15,056

 

 

 

15,644

 

Loss (gain) on disposal of equipment

 

 

10

 

 

 

(121

)

Deferred income taxes

 

 

4,234

 

 

 

272

 

Unrealized foreign currency (gain) loss

 

 

(741

)

 

 

156

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(7,469

)

 

 

(312

)

Other assets

 

 

(619

)

 

 

(6,144

)

Accounts payable, accrued and other liabilities

 

 

(21,787

)

 

 

4,238

 

Income taxes

 

 

568

 

 

 

(3,145

)

Deferred revenue

 

 

24,799

 

 

 

16,149

 

Net cash provided by operating activities

 

 

60,388

 

 

 

72,407

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,752

)

 

 

(3,305

)

Net maturities of investments

 

 

-

 

 

 

1,439

 

Net cash used in investing activities

 

 

(1,752

)

 

 

(1,866

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Purchase of common stock

 

 

(43,155

)

 

 

(50,238

)

Net cash used in financing activities

 

 

(43,155

)

 

 

(50,238

)

 

 

 

 

 

 

 

 

 

Foreign currency impact on cash

 

 

(2,521

)

 

 

(28

)

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

12,960

 

 

 

20,275

 

Cash and cash equivalents at beginning of period

 

 

110,678

 

 

 

99,126

 

Cash and cash equivalents at end of period

 

$

123,638

 

 

$

119,401

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

6


Item 1.

Financial Statements (continued)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Equity

 

For the Three Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2020 (unaudited)

 

 

63,495,687

 

 

$

635

 

 

$

-

 

 

$

146,552

 

 

$

(21,318

)

 

$

125,869

 

Repurchase of common stock

 

 

(1,829

)

 

 

-

 

 

 

(7,492

)

 

 

7,369

 

 

 

-

 

 

 

(123

)

Restricted stock units issuance

 

 

25,110

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Equity-based compensation

 

 

-

 

 

 

-

 

 

 

7,492

 

 

 

-

 

 

 

-

 

 

 

7,492

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

336

 

 

 

336

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

19,204

 

 

 

-

 

 

 

19,204

 

Balance, June 30, 2020 (unaudited)

 

 

63,518,968

 

 

$

635

 

 

$

-

 

 

$

173,125

 

 

$

(20,982

)

 

$

152,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019 (audited)

 

 

63,456,986

 

 

$

635

 

 

$

-

 

 

$

159,490

 

 

$

(17,847

)

 

$

142,278

 

Repurchase of common stock

 

 

(557,938

)

 

 

(6

)

 

 

(15,050

)

 

 

(28,099

)

 

 

-

 

 

 

(43,155

)

Restricted stock units issuance

 

 

619,920

 

 

 

6

 

 

 

(6

)

 

 

-

 

 

 

-

 

 

 

-

 

Equity-based compensation

 

 

-

 

 

 

-

 

 

 

15,056

 

 

 

-

 

 

 

-

 

 

 

15,056

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,135

)

 

 

(3,135

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

41,734

 

 

 

-

 

 

 

41,734

 

Balance, June 30, 2020 (unaudited)

 

 

63,518,968

 

 

$

635

 

 

$

-

 

 

$

173,125

 

 

$

(20,982

)

 

$

152,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019 (unaudited)

 

 

64,593,909

 

 

$

646

 

 

$

-

 

 

$

161,356

 

 

$

(16,602

)

 

$

145,400

 

Repurchase of common stock

 

 

(303,292

)

 

 

(3

)

 

 

(8,462

)

 

 

(11,613

)

 

 

-

 

 

 

(20,078

)

Restricted stock units issuance

 

 

31,450

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Equity-based compensation

 

 

-

 

 

 

-

 

 

 

8,462

 

 

 

-

 

 

 

-

 

 

 

8,462

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(22

)

 

 

(22

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

20,925

 

 

 

-

 

 

 

20,925

 

Balance, June 30, 2019 (unaudited)

 

 

64,322,067

 

 

$

643

 

 

$

-

 

 

$

170,668

 

 

$

(16,624

)

 

$

154,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018 (audited)

 

 

64,860,419

 

 

$

649

 

 

$

-

 

 

$

163,359

 

 

$

(16,861

)

 

$

147,147

 

Repurchase of common stock

 

 

(873,198

)