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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 September 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 October 31, 2020, the latest practicable date, is as follows: 63,526,398 shares of common stock, $0.01 par value per share.

 

 


MANHATTAN ASSOCIATES, INC.

FORM 10-Q

Quarter Ended September 30, 2020

TABLE OF CONTENTS

PART I

 

 

Financial Information

 

 

 

 

Item 1.

Financial Statements.

 

 

 

 

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

3

 

 

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

4

 

 

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

5

 

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

6

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three months and nine months ended September 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.

27

 

 

 

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)

 

 

 

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

 

 

 

 

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 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Net income

 

$

24,966

 

 

$

27,107

 

 

$

66,700

 

 

$

69,004

 

Foreign currency translation adjustment

 

 

1,589

 

 

 

(1,925

)

 

 

(1,546

)

 

 

(1,688

)

Comprehensive income

 

$

26,555

 

 

$

25,182

 

 

$

65,154

 

 

$

67,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

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

 

 

 

 

 

 

 

 

 

 

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 September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2020 (unaudited)

 

 

63,518,968

 

 

$

635

 

 

$

-

 

 

$

173,125

 

 

$

(20,982

)

 

$

152,778

 

Repurchase of common stock

 

 

(3,963

)

 

 

-

 

 

 

(9,012

)

 

 

8,644

 

 

 

-

 

 

 

(368

)

Restricted stock units issuance

 

 

11,101

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Equity-based compensation

 

 

-

 

 

 

-

 

 

 

9,012

 

 

 

-

 

 

 

-

 

 

 

9,012

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,589

 

 

 

1,589

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24,966

 

 

 

-

 

 

 

24,966

 

Balance, September 30, 2020 (unaudited)

 

 

63,526,106

 

 

$

635

 

 

$

-

 

 

$

206,735

 

 

$

(19,393

)

 

$

187,977

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019 (audited)

 

 

63,456,986

 

 

$

635

 

 

$

-

 

 

$

159,490

 

 

$

(17,847

)

 

$

142,278

 

Repurchase of common stock

 

 

(561,901

)

 

 

(6

)

 

 

(24,062

)

 

 

(19,455

)

 

 

-

 

 

 

(43,523

)

Restricted stock units issuance

 

 

631,021

 

 

 

6

 

 

 

(6

)

 

 

-

 

 

 

-

 

 

 

-

 

Equity-based compensation

 

 

-

 

 

 

-

 

 

 

24,068

 

 

 

-

 

 

 

-

 

 

 

24,068

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,546

)

 

 

(1,546

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

66,700

 

 

 

-

 

 

 

66,700

 

Balance, September 30, 2020 (unaudited)

 

 

63,526,106

 

 

$

635

 

 

$

-

 

 

$

206,735

 

 

$

(19,393

)

 

$

187,977

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2019 (unaudited)

 

 

64,322,067

 

 

$

643

 

 

$

-

 

 

$

170,668

 

 

$

(16,624

)

 

$

154,687

 

Repurchase of common stock

 

 

(432,995

)

 

 

(4

)

 

 

(8,002

)

 

 

(28,215

)

 

 

-

 

 

 

(36,221

)

Restricted stock units issuance

 

 

11,456

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Equity-based compensation

 

 

-

 

 

 

-

 

 

 

8,002

 

 

 

-

 

 

 

-

 

 

 

8,002

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,925

)

 

 

(1,925

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

27,107

 

 

 

-

 

 

 

27,107

 

Balance, September 30, 2019 (unaudited)

 

 

63,900,528

 

 

$

639

 

 

$

-

 

 

$

169,560

 

 

$

(18,549

)

 

$

151,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018 (audited)

 

 

64,860,419

 

 

$

649

 

 

$

-

 

 

$

163,359

 

 

$

(16,861

)

 

$

147,147

 

Repurchase of common stock

 

 

(1,306,193

)