manh-8k_20201022.htm
false 0001056696 0001056696 2020-10-22 2020-10-22

 

 

United States

Securities And Exchange Commission

Washington, DC 20549

______________

FORM 8-K

_____________

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  October 22, 2020

 

Manhattan Associates, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Georgia

 

0-23999

 

58-2373424

(State or Other Jurisdiction of
Incorporation or organization)

 

(Commission
File Number)

 

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

 

2300 Windy Ridge Parkway, Tenth Floor, Atlanta, Georgia

30339

(Address of Principal Executive Offices)

(Zip Code)

 

(770) 955-7070

(Registrant’s telephone number, including area code)

 

NONE

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.    

 

 

 


Item 2.02  Results of Operations and Financial Condition.

 

On October 22, 2020, Manhattan Associates, Inc. (“we”, “our”, or the “Company”) issued a press release providing its financial results for the three and nine months ended September 30, 2020. A copy of this press release is attached as Exhibit 99.1. Pursuant to General Instruction B.2 of Form 8-K, this exhibit is “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.

Non-GAAP Financial Measures in the Press Release

The press release includes, as additional information regarding our operating results, our adjusted operating income and margin, adjusted income tax provision, adjusted net income, adjusted diluted earnings per share and certain adjusted cost measures (collectively, “adjusted results”), which variously exclude the impact of equity-based compensation and acquisition-related costs, and the related income tax effects of these items. We have developed our internal reporting, compensation and planning systems using these additional financial measures.

These various measures are not in accordance with, or alternatives for, financial measures calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) and may be different from similarly titled non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP.

Non-GAAP measures used in the press release exclude the impact of the items described above for the following reasons:

 

 

Equity-based compensation expense typically does not require cash settlement by the Company. We do not include this expense when assessing our operating performance and believe our peers also typically present non-GAAP results that exclude equity-based compensation expense. We similarly exclude the tax benefits or deficiencies of vested stock awards caused by differences in the amount deductible for tax purposes related to the stock award from the compensation expense recorded for financial reporting purposes.

 

 

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 believe reporting adjusted results facilitates investors’ understanding of our historical operating trends because it provides supplemental measurement information in evaluating the operating results of our business. We also believe that adjusted results provide a basis for comparisons to other companies in the industry and enable investors to evaluate our operating performance in a manner consistent with our internal basis of measurement. Management refers to adjusted results in making operating decisions because we believe they provide meaningful supplemental information regarding our operational performance and our ability to invest in research and development and fund acquisitions and

2

 


capital expenditures. In addition, adjusted results facilitate management’s internal comparisons to our historical operating results and comparisons to competitors’ operating results.

Further, we rely on adjusted results as primary measures to review and assess the operating performance of our Company and our management team in connection with our executive compensation and bonus plans.

 

Item 9.01  Financial Statements and Exhibits.

(d)Exhibits.

Exhibit

 

Number

Description

99.1

Press Release, dated October 22, 2020

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

3

 

 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

Manhattan Associates, Inc.

 

 

 

By:  /s/ Dennis B. Story

Dennis B. Story

Executive Vice President, Chief Financial Officer and Treasurer

 

 

 

Dated:  October 22, 2020

 

4

 

manh-ex991_6.htm

Exhibit 99.1

 

 

Contact:

 

Matt Humphries, CFA

 

Rick Fernandez

 

 

Senior Director,

Investor Relations

 

Director, 

Corporate Communications

 

 

Manhattan Associates, Inc.

 

Manhattan Associates, Inc.

 

 

678-597-6574

 

678-597-6988

 

 

mhumphries@manh.com

 

rfernandez@manh.com

 

 

 

 

 

 

Manhattan Associates Reports Third Quarter 2020 Results

Company raises full-year Revenue, Operating Margin and EPS guidance

 

 

ATLANTA – October 22, 2020 – Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported revenue of $149.8 million for the third quarter ended September 30, 2020. GAAP diluted earnings per share for Q3 2020 was $0.39 compared to $0.42 for Q3 2019. Non-GAAP adjusted diluted earnings per share for Q3 2020 and Q3 2019 was $0.51.

“This was a strong quarter for Manhattan Associates, despite the continued impact that the COVID-19 pandemic is having globally,” said Manhattan Associates president and CEO Eddie Capel. “Our cloud business continues to trend positively as more and more customers look for modern, agile and scalable supply chain and omnichannel commerce solutions to help them operate in a rapidly evolving world.”

“We are starting to see some positive signs that economic conditions are beginning to stabilize, and interest in our solutions continues to grow.” Mr. Capel continued, “As a result of our strong performance and our view through the end of the year, we are raising our full-year revenue, operating margin and EPS guidance.”

“We remain confident in the long-term outlook for our business and expect to continue to invest into our business to drive further market penetration while expanding our addressable market globally,” Mr. Capel concluded.

THIRD QUARTER 2020 FINANCIAL SUMMARY:

 

Consolidated total revenue was $149.8 million for Q3 2020, compared to $162.3 million for Q3 2019.

 

 

o

Cloud subscription revenue was $21.1 million for Q3 2020, compared to $14.2 million for Q3 2019.

 


 

 

 

 

o

License revenue was $13.2 million for Q3 2020, compared to $15.5 million for Q3 2019.

 

 

o

Service revenue was $73.5 million for Q3 2020, compared to $91.6 million for Q3 2019.

 

 

GAAP diluted earnings per share was $0.39 for Q3 2020, compared to $0.42 for Q3 2019.

 

 

Adjusted diluted earnings per share, a non-GAAP measure, was $0.51 both for Q3 2020 and Q3 2019.

 

 

GAAP operating income was $35.0 million for both Q3 2020 and Q3 2019.

 

 

Adjusted operating income, a non-GAAP measure, was $44.1 million for Q3 2020, compared to $43.1 million for Q3 2019.

 

 

Cash flow from operations was $42.5 million for Q3 2020, compared to $39.9 million for Q3 2019. Days Sales Outstanding was 65 days at September 30, 2020, compared to 73 days at June 30, 2020.

 

 

Cash and investments totaled $166.3 million at September 30, 2020, compared to $123.6 million at June 30, 2020.

 

 

In April 2020, the Company suspended its share repurchase program because of COVID-19-related considerations. Accordingly, during the three months ended September 30, 2020, the Company did not repurchase any shares of Manhattan Associates common stock under the share repurchase program. The Company’s authorized repurchase limit remains at $50 million.

 

NINE MONTH 2020 FINANCIAL SUMMARY:

 

Consolidated revenue for the nine months ended September 30, 2020, was $439.3 million, compared to $465.0 million for the nine months ended September 30, 2019.

 

 

o

Cloud subscription revenue was $56.8 million for the nine months ended September 30, 2020, compared to $31.1 million for the nine months ended September 30, 2019.

 


 

 

 

 

o

License revenue was $28.6 million for the nine months ended September 30, 2020, compared to $39.6 million for the nine months ended September 30, 2019

 

 

o

Service revenue was $232.7 million for the nine months ended September 30, 2020, compared to $274.2 million for the nine months ended September 30, 2019.

 

 

GAAP diluted earnings per share for the nine months ended September 30, 2020, was $1.04, compared to $1.06 for the nine months ended September 30, 2019.  

 

 

Adjusted diluted earnings per share, a non-GAAP measure, was $1.32 for the nine months ended September 30, 2020, compared to $1.34 for the nine months ended September 30, 2019.

 

 

GAAP operating income was $85.9 million for the nine months ended September 30, 2020, compared to $90.9 million for the nine months ended September 30, 2019.

 

 

Adjusted operating income, a non-GAAP measure, was $110.3 million for the nine months ended September 30, 2020, compared to $114.8 million for the nine months ended September 30, 2019. 

 

 

Cash flow from operations was $102.9 million for the nine months ended September 30, 2020, compared to $112.3 million for the nine months ended September 30, 2019.

 

 

During the nine months ended September 30, 2020, the Company repurchased 337,007 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors, for a total investment of $25.0 million. However, as noted above, the Company’s share repurchase program has been suspended since April 2020.

 



 

 

 

2020 GUIDANCE

Manhattan Associates provides the following updated revenue, operating margin and diluted earnings per share guidance for the full year 2020:

 

 

Guidance Range - 2020 Full Year

 

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

$ Range

 

 

% Growth Range

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue - current guidance

$

574

 

 

$

579

 

 

-7%

 

 

-6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue - previous guidance

$

554

 

 

$

570

 

 

-10%

 

 

-8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin - current guidance

 

17.8

%

 

 

18.4

%

 

 

 

 

 

 

 

 

 

 

Equity-based compensation

 

5.7

%

 

 

5.6

%

 

 

 

 

 

 

 

 

 

 

Adjusted operating margin(1) - current guidance

 

23.5

%

 

 

24.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin - previous guidance

 

17.3

%

 

 

17.7

%

 

 

 

 

 

 

 

 

 

 

Equity-based compensation

 

5.6

%

 

 

5.4

%

 

 

 

 

 

 

 

 

 

 

Adjusted operating margin(1) - previous guidance

 

22.9

%

 

 

23.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share (EPS):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP EPS - current guidance

$

1.23

 

 

$

1.27

 

 

-7%

 

 

-4%

 

 

 

Equity-based compensation, net of tax

 

0.44

 

 

 

0.44

 

 

 

 

 

 

 

 

 

 

 

Excess tax benefit on stock vesting

 

(0.06

)

 

 

(0.06

)

 

 

 

 

 

 

 

 

 

 

Adjusted EPS(1) - current guidance

$

1.62

 

 

$

1.66

 

 

-7%

 

 

-5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP EPS - previous guidance

$

1.17

 

 

$

1.23

 

 

-11%

 

 

-7%

 

 

 

Equity-based compensation, net of tax

 

0.42

 

 

 

0.42

 

 

 

 

 

 

 

 

 

 

 

Excess tax benefit on stock vesting

 

(0.06

)

 

 

(0.06

)

 

 

 

 

 

 

 

 

 

 

Adjusted EPS(1) - previous guidance

$

1.53

 

 

$

1.59

 

 

-12%

 

 

-9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

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

 

 

 

 

 

 

 

Manhattan Associates currently intends to publish in each quarterly earnings release certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. See our cautionary note regarding “forward-looking statements” below. We note in particular that the severity, duration and ultimate impact of the COVID-19 pandemic are difficult to predict at this time. In addition, those statements do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release.

Manhattan Associates will make its earnings release and published expectations available on the investor relations section of the Manhattan Associates website at ir.manh.com. Following


 

 

 

publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance above, should be considered historical only, and Manhattan Associates disclaims any obligation to update them.

CONFERENCE CALL

The Company’s conference call regarding its third quarter 2020 financial results will be held today, October 22, 2020, at 4:30 p.m. Eastern Time. The Company will also discuss its business and expectations for the year and next quarter in additional detail during the call. We invite investors to a live webcast of the conference call through the Investor Relations section of the Manhattan Associates website at ir.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software.

Those who cannot listen to the live broadcast may access a replay shortly after the call by dialing +1.855.859.2056 in the U.S. and Canada, or +1.404.537.3406 outside the U.S., and entering the conference identification number 5090349 or via the web at ir.manh.com. The phone replay will be available for two weeks after the call, and the Internet webcast will be available until Manhattan Associates’ fourth quarter 2020 earnings release.

GAAP VERSUS NON-GAAP PRESENTATION

The Company provides adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with, or alternatives to, GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The Company believes the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the three and nine months ended September 30, 2020.


 

 

 

Non-GAAP adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation, acquisition-related costs and the amortization of these costs, and (from time to time) restructuring charges – all net of income tax effects. We include reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments in the supplemental information attached to this release.

ABOUT MANHATTAN ASSOCIATES

Manhattan Associates is a technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers. 

Manhattan Associates designs, builds and delivers leading edge cloud and on-premise solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com.

This press release contains “forward-looking statements” relating to Manhattan Associates, Inc.  Forward-looking statements in this press release include, without limitation, the information set forth under “2020 Guidance,” any statements about the future effect of the COVID-19 pandemic on our business, customers or the global economy, our business prospects following the pandemic, statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate,” and similar expressions. Prospective investors are cautioned that any of those forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by those forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by those forward-looking statements are: the risk that the duration and severity of the COVID-19 pandemic, and its ultimate effects on the global economy, our customers and our business, may be worse than expected; risks related to transitioning our business from a traditional perpetual license software company (generally hosted by our customers on their own premises and equipment) to a subscription/cloud-based software-as-a service model; disruption in the retail sector; the possible effect of new U.S. tariffs on imports from other countries (and possible responsive tariffs on U.S. exports by other countries) on international commerce; delays in product development; competitive and pricing pressures; software errors and information technology failures, disruption and security breaches; risks related to our products’ technology and customer implementations; and the other risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and in Item 1A of Part II in subsequent Quarterly Reports on Form 10-Q. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.

 

###

 


 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud subscriptions

 

$

21,064

 

 

$

14,242

 

 

$

56,827

 

 

$

31,110

 

Software license

 

 

13,233

 

 

 

15,486

 

 

 

28,649

 

 

 

39,621

 

Maintenance

 

 

37,305

 

 

 

37,763

 

 

 

108,947

 

 

 

111,185

 

Services

 

 

73,470

 

 

 

91,626

 

 

 

232,654

 

 

 

274,208

 

Hardware

 

 

4,685

 

 

 

3,158

 

 

 

12,213

 

 

 

8,896

 

Total revenue

 

 

149,757

 

 

 

162,275

 

 

 

439,290

 

 

 

465,020

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of software license

 

 

527

 

 

 

748

 

 

 

1,673

 

 

 

1,963

 

Cost of cloud subscriptions, maintenance and services

 

 

64,672

 

 

 

73,618

 

 

 

201,382

 

 

 

211,151

 

Research and development

 

 

20,454

 

 

 

22,614

 

 

 

63,713

 

 

 

65,824

 

Sales and marketing

 

 

11,399

 

 

 

12,125

 

 

 

34,196

 

 

 

41,426

 

General and administrative

 

 

15,536

 

 

 

16,236

 

 

 

45,666

 

 

 

48,091

 

Depreciation and amortization

 

 

2,193

 

 

 

1,937

 

 

 

6,796

 

 

 

5,710

 

Total costs and expenses

 

 

114,781

 

 

 

127,278

 

 

 

353,426

 

 

 

374,165

 

Operating income

 

 

34,976

 

 

 

34,997

 

 

 

85,864

 

 

 

90,855

 

Other (loss) income, net

 

 

(891

)

 

 

810

 

 

 

371

 

 

 

368

 

Income before income taxes

 

 

34,085

 

 

 

35,807

 

 

 

86,235

 

 

 

91,223

 

Income tax provision

 

 

9,119

 

 

 

8,700

 

 

 

19,535

 

 

 

22,219

 

Net income

 

$

24,966

 

 

$

27,107

 

 

$

66,700

 

 

$

69,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.39

 

 

$

0.42

 

 

$

1.05

 

 

$

1.07

 

Diluted earnings per share

 

$

0.39

 

 

$

0.42

 

 

$

1.04

 

 

$

1.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

63,524

 

 

 

64,247

 

 

 

63,541

 

 

 

64,591

 

Diluted

 

 

64,427

 

 

 

64,992

 

 

 

64,298

 

 

 

65,112

 

 

 


 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Reconciliation of Selected GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

34,976

 

 

$

34,997

 

 

$

85,864

 

 

$

90,855

 

Equity-based compensation (a)

 

 

9,012

 

 

 

8,002

 

 

 

24,068

 

 

 

23,646

 

Purchase amortization (c)

 

 

107

 

 

 

108

 

 

 

324

 

 

 

323

 

Adjusted operating income (Non-GAAP)

 

$

44,095

 

 

$

43,107

 

 

$

110,256

 

 

$

114,824

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

$

9,119

 

 

$

8,700

 

 

$

19,535

 

 

$

22,219

 

Equity-based compensation (a)

 

 

898

 

 

 

1,960

 

 

 

2,547

 

 

 

5,793

 

Tax benefit of stock awards vested (b)

 

 

119

 

 

 

88

 

 

 

3,861

 

 

 

146

 

Purchase amortization (c)

 

 

27

 

 

 

26

 

 

 

81

 

 

 

79

 

Adjusted income tax provision (Non-GAAP)

 

$

10,163

 

 

$

10,774

 

 

$

26,024

 

 

$

28,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

24,966

 

 

$

27,107

 

 

$

66,700

 

 

$

69,004

 

Equity-based compensation (a)

 

 

8,114

 

 

 

6,042

 

 

 

21,521

 

 

 

17,853

 

Tax benefit of stock awards vested (b)

 

 

(119

)

 

 

(88

)

 

 

(3,861

)

 

 

(146

)

Purchase amortization (c)

 

 

80

 

 

 

82

 

 

 

243

 

 

 

244

 

Adjusted net income (Non-GAAP)

 

$

33,041

 

 

$

33,143

 

 

$

84,603

 

 

$

86,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.39

 

 

$

0.42

 

 

$

1.04

 

 

$

1.06

 

Equity-based compensation (a)

 

 

0.13

 

 

 

0.09

 

 

 

0.33

 

 

 

0.27

 

Tax benefit of stock awards vested (b)

 

 

-

 

 

 

-

 

 

 

(0.06

)

 

 

-

 

Purchase amortization (c)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Adjusted diluted EPS (Non-GAAP)

 

$

0.51

 

 

$

0.51

 

 

$

1.32

 

 

$

1.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fully diluted shares

 

 

64,427

 

 

 

64,992

 

 

 

64,298

 

 

 

65,112

 

 

(a)

Adjusted results exclude all equity-based compensation to facilitate comparison with our peers and because it typically does not require cash settlement. As explained in our Current Report on Form 8-K filed today with the SEC, we do not include this expense when assessing our operating performance. We do not receive a GAAP tax benefit for a portion of our equity-based compensation, mainly due to Section 162(m) of the Internal Revenue Code, which limits tax deductions for compensation granted to certain executives. The Tax Cuts and Jobs Act further increased those limitations. Thus, in the fourth quarter of 2019, we changed from applying an overall effective rate in our tax adjustment to using the actual tax benefit for equity-based compensation included in our GAAP results after considering the impact of non-deductible equity-based compensation.

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

$

2,695

 

 

$

2,407

 

 

$

7,306

 

 

$

6,952

 

Research and development

 

 

1,863

 

 

 

1,582

 

 

 

4,926

 

 

 

4,561

 

Sales and marketing

 

 

919

 

 

 

638

 

 

 

2,478

 

 

 

2,433

 

General and administrative

 

 

3,535

 

 

 

3,375

 

 

 

9,358

 

 

 

9,700

 

Total equity-based compensation

 

$

9,012

 

 

$

8,002

 

 

$

24,068

 

 

$

23,646

 

 

(b)

Adjustments represent the excess tax benefits and tax deficiencies of the equity awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible on our tax return for an equity award 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 with 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 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.

 

 


 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

166,254

 

 

$

110,678

 

Accounts receivable, net of allowance of $3,794 and $2,826, at September 30, 2020 and December 31, 2019, respectively

 

 

105,339

 

 

 

100,937

 

Prepaid expenses and other current assets

 

 

16,795

 

 

 

20,426

 

Total current assets

 

 

288,388

 

 

 

232,041

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

17,930

 

 

 

22,725

 

Operating lease right-of-use assets

 

 

31,145

 

 

 

35,896

 

Goodwill, net

 

 

62,244

 

 

 

62,237

 

Deferred income taxes

 

 

4,386

 

 

 

6,814

 

Other assets

 

 

12,888

 

 

 

12,566

 

Total assets

 

$

416,981

 

 

$

372,279

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

18,038

 

 

$

20,561

 

Accrued compensation and benefits

 

 

33,158

 

 

 

45,991

 

Accrued and other liabilities

 

 

19,363

 

 

 

19,325

 

Deferred revenue

 

 

113,205

 

 

 

94,371

 

Income taxes payable

 

 

1,325

 

 

 

1,348

 

Total current liabilities

 

 

185,089

 

 

 

181,596

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities, long-term

 

 

27,613

 

 

 

32,416

 

Other non-current liabilities

 

 

16,302

 

 

 

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; 63,526,106 and 63,456,986 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

635

 

 

 

635

 

Retained earnings

 

 

206,735

 

 

 

159,490

 

Accumulated other comprehensive loss

 

 

(19,393

)

 

 

(17,847

)

Total shareholders' equity

 

 

187,977

 

 

 

142,278

 

Total liabilities and shareholders' equity

 

$

416,981

 

 

$

372,279

 

 

 

 


 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

(unaudited)

 

Operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

66,700

 

 

$

69,004

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,796

 

 

 

5,710

 

Equity-based compensation

 

 

24,068

 

 

 

23,646

 

Loss (gain) on disposal of equipment

 

 

15

 

 

 

(436

)

Deferred income taxes

 

 

2,409

 

 

 

(1,331

)

Unrealized foreign currency loss (gain)

 

 

415

 

 

 

(570

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(3,799

)

 

 

(9,178

)

Other assets

 

 

2,331

 

 

 

(7,042

)

Accounts payable, accrued and other liabilities

 

 

(15,446

)

 

 

16,271

 

Income taxes

 

 

547

 

 

 

576

 

Deferred revenue

 

 

18,832

 

 

 

15,696

 

Net cash provided by operating activities

 

 

102,868

 

 

 

112,346

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,928

)

 

 

(11,358

)

Net maturities of investments

 

 

-

 

 

 

1,439

 

Net cash used in investing activities

 

 

(1,928

)

 

 

(9,919

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Purchase of common stock

 

 

(43,523

)

 

 

(86,459

)

Net cash used in financing activities

 

 

(43,523

)

 

 

(86,459

)

 

 

 

 

 

 

 

 

 

Foreign currency impact on cash

 

 

(1,841

)

 

 

(1,476

)

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

55,576

 

 

 

14,492

 

Cash and cash equivalents at beginning of period

 

 

110,678

 

 

 

99,126

 

Cash and cash equivalents at end of period

 

$

166,254

 

 

$

113,618

 

 


 

 


 

MANHATTAN ASSOCIATES, INC.

SUPPLEMENTAL INFORMATION

1.

Corporate Response to COVID-19:

 

Regarding the COVID-19 pandemic, we remain cautious about the global recovery, which we expect to be slow and protracted. In the nine months ended September 30, 2020, we experienced solid demand for our cloud-based supply chain and omnichannel commerce solutions and our competitive win rates remain strong. In May, we launched Manhattan Active® Warehouse Management, the next generation of Warehouse Management solutions. We have rearchitected our warehouse management solution from the ground up as a cloud-native, microservices based, versionless application. The reception has been positive and pipeline opportunities continue to build. Our solutions are mission critical, supporting large and complex global supply chains. While we are experiencing strong demand and expect continued growth for our Cloud solutions, sales cycles could extend as customers and prospects continue to evaluate our industry leading, modern solutions, specifically Manhattan Active Warehouse Management. Our Professional Services revenue through the nine months ended September 30, 2020, is approximately 15% lower, and excluding billed travel, approximately 12% lower than the nine months ending September 30, 2019, as clients delay projects due to COVID-19. We have had no notable cancellations in 2020. For the fourth quarter of 2020, we expect Services revenue to be lower than the previous year, primarily driven by COVID-19, as well as our traditional retail peak season impact, which typically occurs in the fourth quarter.

2.

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

 

2019

 

 

2020

 

 

1st Qtr

 

 

2nd Qtr

 

 

3rd Qtr

 

 

4th Qtr

 

 

Full Year

 

 

1st Qtr

 

 

2nd Qtr

 

 

3rd Qtr

 

 

YTD

 

GAAP Diluted EPS

$

0.32

 

 

$

0.32

 

 

$

0.42

 

 

$

0.26

 

 

$

1.32

 

 

$

0.35

 

 

$

0.30

 

 

$

0.39

 

 

$

1.04

 

Adjustments to GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation

 

0.08

 

 

 

0.10

 

 

 

0.09

 

 

 

0.14

 

 

 

0.42

 

 

 

0.10