Manhattan Associates Reports Record Fourth Quarter and Full Year 2019 Revenue

ATLANTA, Feb. 04, 2020 (GLOBE NEWSWIRE) -- Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates Inc. (NASDAQ: MANH) today reported record total revenue of $152.9 million for the fourth quarter ended December 31, 2019, applying the new revenue recognition standard retrospectively. GAAP diluted earnings per share for Q4 2019 was $0.26 compared to $0.40 in Q4 2018. Non-GAAP adjusted diluted earnings per share for Q4 2019 was $0.40 compared to $0.46 in Q4 2018.

“Q4 was another strong quarter for Manhattan Associates, wrapping up a record revenue year and positioning us well for 2020 and beyond,” said Manhattan Associates president and CEO Eddie Capel.  “The performance of our market-leading innovation and suite of Manhattan Active® omnichannel, inventory and supply chain solutions during a record setting 2019 peak season was a great success with overwhelmingly positive feedback from our customers, giving us further confidence as we progress in our Cloud transition. Importantly, global demand for our Cloud solutions continues to grow from new and existing customers.”

“We remain bullish on the market opportunity that lies ahead, despite continued global macro volatility, as demand for innovative solutions in the retail and supply chain markets has never been greater.  Our focus continues to be on enabling our customers to Push Possible®, while positioning the business for long-term, sustainable growth,” added Mr. Capel. 

FOURTH QUARTER 2019 FINANCIAL SUMMARY:

• Consolidated total revenue was $152.9 million in Q4 2019, compared to $144.4 million in Q4 2018.
  
  
  • Cloud subscription revenue was $15.7 million in Q4 2019, compared to $6.8 million in Q4 2018.
    
    
  • License revenue was $9.2 million in Q4 2019, compared to $13.3 million in Q4 2018.
    
    
  • Service revenue was $86.3 million in Q4 2019, compared to $84.5 million in Q4 2018.
    
    
• GAAP diluted earnings per share was $0.26 in Q4 2019 compared to $0.40 in Q4 2018.
  
  
• Adjusted diluted earnings per share, a non-GAAP measure, was $0.40 in Q4 2019, compared to $0.46 in Q4 2018.
  
  
• GAAP operating income was $25.1 million in Q4 2019, compared to $34.3 million in Q4 2018.
  
  
• Adjusted operating income, a non-GAAP measure, was $33.4 million in Q4 2019, compared to $39.7 million in Q4 2018.
  
  
• Cash flow from operations was $34.6 million for Q4 2019, compared to $34.0 million for Q4 2018. Days Sales Outstanding was 61 days at both December 31, 2019, and September 30, 2019.
  
  
• Cash and investments totaled $110.7 million at December 31, 2019, compared to $113.6 million at September 30, 2019.
  
  
• During the three months ended December 31, 2019, the Company repurchased 444,852 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $35.0 million. In January 2020, our Board authorized the Company to repurchase up to an aggregate of $50 million of the Company’s common stock.
  
  

FULL YEAR 2019 FINANCIAL SUMMARY:

• Consolidated total revenue for the twelve months ended December 31, 2019 was a record $617.9 million, compared to $559.2 million for the twelve months ended December 31, 2018.
  
  
  • Cloud subscription revenue was $46.8 million for the twelve months ended December 31, 2019, compared to $23.1 million for the twelve months ended December 31, 2018.
    
    
  • License revenue was $48.9 million for the twelve months ended December 31, 2019, compared to $45.4 million for the twelve months ended December 31, 2018. 
    
    
  • Service revenue was $360.5 million for the twelve months ended December 31, 2019, compared to $329.7 million, for the twelve months ended December 31, 2018.
    
    
• GAAP diluted earnings per share for the twelve months ended December 31, 2019 was $1.32, compared to $1.58 for the twelve months ended December 31, 2018.  
  
  
• Adjusted diluted earnings per share a non-GAAP measure, was $1.74 for the twelve months ended December 31, 2019, compared to $1.79 for the twelve months ended December 31, 2018.
  
  
• GAAP operating income was $115.9 million for the twelve months ended December 31, 2019, compared to $133.9 million for the twelve months ended December 31, 2018.
  
  
• Adjusted operating income, a non-GAAP measure, was $148.2 million for the twelve months ended December 31, 2019, compared to $154.2 million for the twelve months ended December 31, 2018. 
  
  
• Cash flow from operations was $146.9 million for the twelve months ended December 31, 2019, compared to $137.3 million for the twelve months ended December 31, 2018.
  
  
• During the twelve months ended December 31, 2019, the Company repurchased 1,640,055 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors, for a total investment of $115.9 million.
  
  

2020 GUIDANCE

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

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. Those statements, including the guidance provided above, 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 its website (www.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 fourth quarter and twelve months ended December 31, 2019 financial results will be held today, February 4, 2020, at 4:30 p.m. Eastern Time. We invite investors to a live webcast of the conference call through the Investor Relations section of Manhattan Associates' website at www.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 ­­­­­­­­7226618 or via the web at www.manh.com. The phone replay will be available for two weeks after the call, and the Internet webcast will be available until Manhattan Associates’ first 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 twelve months ended December 31, 2019. 

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, (from time to time) restructuring charges – all net of income tax effects, and the impact of the enactment of the Tax Cuts and Jobs Act. 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,” 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 such 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 such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: uncertainty about the global economy, risks related from transitioning our business from a traditional perpetual license software company (generally hosted by our customers on their own premises and equipment) to a subscription-based software-as-a service/cloud-based 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 pressures, software errors, information security breaches and the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 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)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP to Non-GAAP Measures
(in thousands, except per share amounts)

(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 these limitations.  Thus, we have 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.  To effect this change, we have trued up our GAAP to Adjusted tax adjustment for 2019 in the fourth quarter of 2019.

(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 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.

(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 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 finalized our calculations, resulting in a tax benefit of $0.2 million during the twelve months ended December 31, 2018.

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)

MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION

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

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

3.    Impact of Currency Fluctuation

The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands):

Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):

4.    Other income includes the following components (in thousands):

5.    Capital expenditures are as follows (in thousands):

6.    Stock Repurchase Activity (in thousands):

7.     Remaining Performance Obligations

Under the new revenue recognition standard, we now disclose revenue we expect to recognize from our remaining performance obligations. Our reported performance obligations primarily represent cloud subscriptions with a non-cancelable term greater than one year (including cloud deferred revenue as well as amounts we will invoice and recognize as revenue from our performance of cloud services in future periods). Our deferred revenue on the balance sheet primarily relates to our maintenance contracts, which are typically one year in duration and are not included in the remaining performance obligations.  Below are our remaining performance obligations as of the end of each period (in thousands):