Please ensure Javascript is enabled for purposes of website accessibility

Manhattan Associates Supplies Another Big Win for Investors

By Dan Caplinger - Apr 19, 2016 at 5:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

New record results for the supply-chain management technology company show the health of the industry.

Image: Manhattan Associates.

It's hard to appreciate the logistical challenges involved in bringing goods to market. With the help of Manhattan Associates (MANH 0.33%), many companies are able to handle their supply chains much more effectively, and companies ranging from athletic apparel giant Under Armour (UAA 0.52%) to much smaller retailers use Manhattan Associates' products to perform these critical functions more efficiently.

Coming into Manhattan Associates' first-quarter financial report on Tuesday, investors had hoped that the company would continue its record-setting ways, but even they were surprised by the extent to which its results exceeded expectations. Let's look more closely at the latest results from Manhattan Associates and what they indicate about the supply chain specialist's future.

Manhattan Associates posts another record quarter
Investors have gotten spoiled by Manhattan Associates' long run of records, which continued in the first quarter. Revenue climbed 12% to $149.9 million, setting another new record and easily topping the $145 million consensus forecast by analysts. Net income rose 18% to $27.5 million, and after adjusting for equity-based compensation, adjusted earnings of $0.42 per share weighed in $0.03 better than most investors had expected.

Looking more closely at Manhattan Associates' results, you can see facets that are similar to previous quarters. Its services segment led the way higher, providing a 15% boost to revenue and making up more than three-quarters of overall sales. Software licensing revenue rose at a more modest pace of 7%, and hardware-related revenue actually declined slightly from year-ago levels.

As in past quarters, Manhattan Associates found the most success within its home territory in the Americas, where revenue posted a 17% increase and adjusted operating income climbed 27%. Business in the Asia-Pacific region was more sluggish, with minimal gains in sales and income, and the Europe/Middle East/Africa segment posted double-digit percentage declines on its top and bottom lines.

The pace of new big-ticket customers coming to Manhattan Associates fell slightly, with just three new relationships bringing in licensing revenue of $1 million or more. However, the company had several software licensing wins with new customers, and existing relationships with Under Armour and two dozen other companies showed the breadth of the appeal of Manhattan Associates supply chain tracking platform.

CEO Eddie Capel once again celebrated the company's progress. "We posted record financial results," he said, "and our competitive win rates remain strong as our associates continue to execute very well serving our customers." He also noted that investments in the omnichannel area should continue to produce more growth in 2016 and beyond.

What's ahead for Manhattan Associates?
Manhattan Associates sees itself as well-positioned to grow in line with expectations, and its guidance highlighted its commitment to growth. The company's new full-year 2016 revenue range rose to between $615 million and $620 million, corresponding to growth of 10.5% to 11.5% for the year, up a percentage point from last quarter's projections. Manhattan Associates also added $0.04 per share to its adjusted earnings range and is now calling for between $1.73 and $1.76 per share in adjusted earnings for 2016.

Under Armour has played a big role in demonstrating Manhattan Associates' ability to help companies grow. The supply chain manager has used Under Armour as a case study, pointing to the implementation of its warehouse management, extended enterprise management, and slotting optimization solutions. In the face of extremely fast growth, Under Armour had to find ways to provide enhanced automated capabilities to its workforce, and replace its older systems for managing its warehouses. Because it was using Manhattan's platform, Under Armour has been more comfortable making commitments to purchasers and customers, and both companies hope that this profitable collaboration will continue.

Manhattan Associates shareholders were quite pleased with the results, as the stock jumped 7% in the first hour of after-market trading following the announcement. As long as it can keep demonstrating its value to existing and future customers, Manhattan Associates will have a chance to keep climbing.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Manhattan Associates, Inc. Stock Quote
Manhattan Associates, Inc.
$118.05 (0.33%) $0.39
Under Armour, Inc. Stock Quote
Under Armour, Inc.
$9.69 (0.52%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.