Many companies need help in handling the logistics of supply chain management, and Manhattan Associates (NASDAQ:MANH) offers tools that can help retailers and other businesses better manage the way the goods they need get from point A to point B. As the economy grows, more companies become willing to spend money on improving efficiency and productivity, and that trend has helped Manhattan Associates over the years. Coming into its second-quarter financial report on Tuesday, Manhattan investors were looking for continued growth from the supply chain management software company, and the company delivered on those expectations and then some. Let's take a closer look at just how well Manhattan Associates did and whether it can keep up its momentum for the rest of the year and beyond.
Records keep on falling at Manhattan Associates
Manhattan Associates' second-quarter results once again included some unprecedented performance from the company. Revenue climbed 11% to $154.9 million, once again setting a new top-line record for the company. Net income weighed in at $33.3 million, up 28% from year-ago levels. After allowing for certain extraordinary items, adjusted earnings of $0.49 per share were a nickel higher than the consensus forecast among those following the stock and also represented a new record.
Taking a closer look at how Manhattan Associates, many of the past trends the company has followed continued to remain in place, but with some subtle differences. The services segment kept its leadership role by providing growth of almost 12% in sales, compared to just 4% growth for software licensing revenue. However, the long-struggling hardware segment actually posted a 20% jump in revenue, reversing year-over-year declines in past quarters.
Manhattan Associates once again relied on business from the Americas for the bulk of its overall success, but other regions were also encouraging. Americas revenue rose 12% to $131 million, making up about 85% of the company's total sales. But the Asia-Pacific segment posted even faster 19% growth in revenue, and the Europe/Middle East/Africa region brought up the rear with 6% gains. Profits from the segments showed a similar story, with Asia-Pacific adjusted operating income doubling from year-ago levels and Europe/Middle East/Africa seeing operating profits jump by more than half. That compared well with still-impressive operating profit gains of 22% in the Americas.
The number of high-volume licensing revenue contracts that Manhattan Associates brought in remained relatively low, with just three new relationships producing revenue of $1 million or more during the quarter. However, more than a half-dozen new customers on the software licensing front including Tommy Bahama produced wins for Manhattan, and the company listed more than three dozen existing customers with which it expanded its relationships.
CEO Eddie Capel is still pleased with how well Manhattan Associates has done. "We continue to execute well serving our customers," Capel said, and "we continue to invest in omni-channel, retail store, and distribution management solutions to drive growth and enhance our market leadership position." The CEO noted that global macroeconomic conditions have been quick to change but that Manhattan is staying ahead of the curve in giving customers what they need.
Can Manhattan Associates keep growing?
Manhattan Associates' optimism also showed up in its guidance for the remainder of the year. The company didn't change its sales guidance for 2016, keeping its previous range of between $615 million and $620 million given the fact that its second-quarter results came in very close to projected figures. On the earnings front, however, Manhattan Associates upped its guidance by a nickel per share, matching the company's outperformance on the bottom line compared to expectations and working out to a new range of between $1.78 and $1.81 per share in adjusted earnings.
Manhattan Associates also kept moving forward with its buyback program. The supply chain toolmaker spent $35 million to repurchase just over 550,000 shares. Given the Manhattan board's recent decision to boost its buyback authorization by $50 million, the company will have the ability to keep up that pace for at least another quarter.
Manhattan Associates shareholders celebrated the results, sending the stock upward by almost 3% in after-hours trading following the announcement. By providing value to its customers, Manhattan Associates is demonstrating that it can stand up to tough economic conditions and still thrive.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Manhattan Associates. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.