Behind every business, there's a host of other companies on which that business relies to give its customers what they want. For companies that produce goods, logistical management can be a nightmare, but Manhattan Associates (NASDAQ:MANH) aims at making that task a lot easier. With hardware and software products that help businesses manage their supply chains more efficiently and effectively, Manhattan Associates helps business from retailing giants to vehicle manufacturers and dealers get their products into their customers' hands. With Manhattan Associates having reported its fourth-quarter financials Tuesday afternoon, investors had hoped that the company would end 2014 on a high-growth note, and the logistics specialist gave its shareholders even more than they'd bargained for. Let's look at how Manhattan Associates performed in the fourth quarter and what those results mean for 2015 and beyond.
Manhattan Associates closes out a record 2014
Manhattan Associates enjoyed strong results in its fourth quarter that helped cap a great year for the company. Revenue of $130.4 million was almost 10% higher than investors had expected and represented 21% growth from the year ago quarter. Adjusted earnings per share came in at $0.30, up 25% from last year's levels and beating consensus estimates by $0.02 per share.
For the full year, Manhattan Associates also gave investors a stellar performance. Adjusted earnings per share of $1.16 set a new record for the Atlanta-based company, and revenue of $492 million climbed almost 19% from 2013 levels.
Digging into Manhattan Associates' different sources of revenue, the company posted solid gains in all three of its segments. The Services division was the top performer, as revenue jumped 25% for the quarter, and gross margins for the division held almost completely steady. The lower-margin Hardware segment was the slowest growth performer with gains of just under 10%, but the Software License business grew sales by 13%.
Manhattan Associates also continued to bring in lucrative new business opportunities. In its report, the company listed four contracts with $1 million or more of recognized license revenue during the quarter, and the company listed more than half a dozen major new customers for software licensing. Also important were its expanded relationships with key existing clients, including Ulta Salon, Cosmetics, & Fragrance (NASDAQ:ULTA) and Tractor Supply (NASDAQ:TSCO).
How Manhattan Associates wants to keep growing
Manhattan Associates was happy about its 2014 success, but it also sees further opportunities ahead. As CEO Eddie Capel said, "We were able to improve our competitive position and continue to successfully expand beyond our core business into the retail store." That has become an increasingly important initiative, as the need for retail businesses to cater not only to traditional in-store shoppers but also online-savvy customers who want to treat physical store locations as showrooms and pick-up points rather than sales centers has required logistics companies like Manhattan Associates to shift gears with their retailer clients. Capel described that trend as "the emerging omnichannel market," and he sees the company continuing to invest in research and technology to meet its clients' needs.
Manhattan Associates' guidance for its 2015 financial results reflects that optimism, and investors should respond favorably to it. The company foresees sales gains of between 8% and 10% for 2015, with total revenue of $531 million to $541 million easily topping the $521 million consensus that analysts shared coming into the meeting. Similarly, Manhattan Associates gave guidance for adjusted earnings per share between $1.28 and $1.30, growing 10% to 12% and also topping investors' expectations.
Moreover, Manhattan Associates expressed interest in its stock by expanding its share repurchase program. During the quarter, the company spent more than $25 million buying back its own shares, but last month, Manhattan's board expanded its buyback authorization to allow as much as $50 million in future repurchases.
Logistics challenges aren't likely to disappear anytime soon, and as long as they exist, companies will need Manhattan Associates to help them manage those challenges as well as they can. With the logistics specialist faring so well even at a time when the global economy is going through tough times, Manhattan Associates has plenty of upside if improvements abroad start taking root.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Ulta Salon, Cosmetics & Fragrance. 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.