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| 8-K - JDAS_FORM 8-K - JDA SOFTWARE GROUP INC | jdas-09302011x8ker.htm |
JDA Software Group, Inc. NEWS RELEASE | Contact Information at End of Release | |
JDA Software Announces Third Quarter 2011 Results
Strong Organic Software Sales Drive Record Revenue and Earnings
Scottsdale, Ariz. - October 27, 2011 - JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company®, today announced financial results for the third quarter ended September 30, 2011. JDA reported record third quarter revenue of $171.6 million, an 8 percent increase from $158.4 million of revenue reported in third quarter 2010. Adjusted EBITDA increased 29 percent to a record $51.1 million in third quarter 2011 compared to $39.7 million in the third quarter of 2010, generating an increase in adjusted EBITDA margin to 30 percent in the current quarter compared to 25 percent in the third quarter of 2010.
JDA also reported adjusted non-GAAP earnings per share for third quarter 2011 of $0.64, a 36 percent increase from $0.47 per share reported in the third quarter 2010. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and costs related to the acquisition and transition of i2 Technologies, Inc. (i2). GAAP net income attributable to common shareholders for third quarter 2011 was $16.8 million or $0.39 per diluted share, compared to $8.3 million or $0.20 per share in third quarter 2010.
“In the third quarter, we saw strength across our business despite the current economic environment, and are especially pleased with our year-to-date software license growth, spurred by success in many of our major markets,” said JDA Software President and Chief Executive Officer Hamish Brewer. “We continue to execute on our business plan. Our strong competitive third-quarter wins demonstrate the importance of strategic supply chain management in these uncertain times, and JDA's ability to deliver differentiated solutions to address today's business challenges. Additionally, our financial position remains extremely robust as we continue to generate consistently strong free cash flow.”
Software and Subscription
Software and subscription revenue increased 67 percent to $36.9 million in the third quarter 2011 compared to $22.0 million in the third quarter 2010. The increase was primarily due to a 65 percent increase in sales in the Americas, and sales in the EMEA region more than doubling, compared to the same quarter last year. The Company closed 49 software deals, including nine deals in excess of $1 million in the current quarter, compared to 40 deals, including one over $1 million in the year ago period. Additionally, the average sales price for the trailing 12 months ended September 30, 2011 increased to $786,000 from $573,000 for the trailing 12 months ended September 30, 2010.
Maintenance and Support Services
Maintenance revenue increased 6 percent to $68.3 million in the third quarter 2011 from $64.2 million in the third quarter 2010. This increase was due to a continued strong retention rate of 95.7 percent and the high level of attachment of maintenance contracts to new license deals and the favorable impact of foreign currency exchange rates.
Consulting Services
Consulting services revenue was $66.4 million in the third quarter 2011 compared to $72.2 million in the third quarter 2010. The third quarter 2010 consulting revenue included approximately $7.6 million related to work performed earlier in 2010 that was unable to be recognized in prior periods. Consulting services gross margins remained at 23 percent for both the third quarter 2011 and the third quarter 2010 and increased substantially from 17.5 percent in the second quarter of 2011.
Other Financial Data
• | Operating expenses as a percent of revenue continue to reflect disciplined cost-management. Product development expenses as a percent of revenue remained constant at 11 percent in the third quarter 2011 compared to the third quarter 2010, reflecting the ongoing commitment to enhancing the Company's technology and solutions. Sales and marketing expenses as a percent of revenue increased to 15 percent in the third quarter 2011 compared to 13 percent in the third quarter 2010, reflecting the current year investment in the sales organization and higher commissions due to increased sales in the current quarter. General and administrative expenses as a percent of revenue improved to 9 percent in the third quarter 2011 compared to 11 percent in the third quarter 2010, driven by continued cost containment and a reduction in legal expenses. |
• | Cash flow provided by operations was $38.5 million in third quarter 2011 compared to cash flow provided by operations of $29.4 million in third quarter 2010 driven primarily by higher net income. |
• | Cash and cash equivalents, including restricted cash, increased $144.1 million to $326.8 million at September 30, 2011, from $182.7 million at September 30, 2010. |
Third Quarter 2011 Highlights
The following presents a high-level summary of JDA's regional software sales performance:
• | JDA reported $27.4 million in software license and subscription revenues in its Americas region during third quarter 2011, an increase of 65 percent from $16.6 million in third quarter 2010. Companies signing new software licenses in third quarter 2011 include: Cooper Tire & Rubber Company; Cypress Semiconductor Corporation; General Dynamics Electric Boat, General Dynamics Bath Iron Works; ProBuild Holdings LLC; PSS World Medical, Inc.; Reckitt Benckiser Group Plc; Terry's Tire Town; and 7-Eleven, Inc. |
• | Software license and subscription revenues in the Europe, Middle East and Africa (EMEA) region |
JDA Software Announces Third Quarter 2011 Results
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more than doubled to $7.9 million in third quarter 2011 from $3.4 million in third quarter 2010. New software deals in the EMEA region include: East Coast Main Line Ltd, Engen Petroleum Ltd, Gloria Jeans, Just On Cosmetics (Pty) Ltd, Megamark S.R.L., and Optimera AB.
• | JDA's Asia-Pacific region posted software license and subscription revenues of $1.5 million in third quarter 2011 compared to $2.0 million in third quarter 2010. New software deals in the APAC region include: Huawei Technologies Co., Ltd. and Hisense Electric Co., Ltd. |
Nine Months Ended September 30, 2011 Results
• | Revenue for the nine months ended September 30, 2011 increased 11 percent to $497.6 million from $448.4 million for the nine months ended September 30, 2010. The overall revenue increase was driven by a 17 percent increase in software and subscription revenue, a 10 percent increase in maintenance revenue, and a 9 percent increase in services revenue. |
• | Adjusted EBITDA increased 14 percent to $127.8 million for the first nine months of September 30, 2011 from $112.4 million in the first nine months of 2010. |
• | Adjusted non-GAAP earnings per share for the nine months ended September 30, 2011 increased 15 percent to $1.54 compared to $1.34 per share for the nine months ended September 30, 2010. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and costs related to the acquisition and transition of i2. Adjusted non-GAAP earnings for the nine months ended September 30, 2011 also exclude a $37.5 million pre-tax credit associated with the favorable settlement of the patent infringement case against Oracle Corporation. |
• | The GAAP net income applicable to common shareholders for the nine months ended September 30, 2011 was $72.5 million or $1.70 per share, compared to net income of $11.9 million or $0.29 per share for the nine months ended September 30, 2010. Results for the nine months ended September 30, 2011 include a $37.5 million pre-tax credit associated with the favorable settlement of the patent infringement case against Oracle Corporation. Results for nine months ended September 30, 2010 include the completion of the acquisition of i2 as of January 28, 2010. |
• | Cash flow from operations was $132.6 million for the nine months ended September 30, 2011 compared to cash flow from operations of $39.0 million for the nine months ended September 30, 2010. The increase in operating cash flow in the current period was primarily due to increased net income, the $37.5 million settlement received from the favorable patent litigation settlement and improvements in working capital. |
Conference Call Information
JDA Software Group, Inc. will host a conference call at 4:45 p.m. EDT today to discuss earnings results for its third quarter ended September 30, 2011. To participate in the call, dial 1-877-941-1427 (United States) or 1-480-629-9664 (International) and ask the operator for the "JDA Software Group, Inc. Third Quarter 2011 Earnings Conference Call." A live audio webcast of the conference call and detailed slide deck can be accessed by logging onto www.jda.com in the Investor Relations section.
JDA Software Announces Third Quarter 2011 Results
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A replay of the conference call will begin on October 27, 2011 at approximately 7:45 p.m. EDT and will end on November 30, 2011. To hear a replay of the call over the Internet, access JDA's website at www.jda.com.
About JDA Software Group, Inc.
JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company®, is a leading global provider of innovative supply chain management, merchandising and pricing excellence solutions. JDA empowers more than 6,000 companies of all sizes to make optimal decisions that improve profitability and achieve real results in the discrete and process manufacturing, wholesale distribution, transportation, retail, and services industries. With an integrated solutions offering that spans the entire supply chain from materials to the consumer, JDA leverages the powerful heritage and knowledge capital of acquired market leaders including i2 Technologies®, Manugistics®, E3®, Intactix® and Arthur®. JDA's multiple service options, delivered via the JDA® Private Cloud, provide customers with flexible configurations, rapid time-to-value, lower total cost of ownership and 24/7 functional and technical support and expertise. To learn more, visit www.jda.com or e-mail info@jda.com.
JDA Investor Relations Contact:
Mike Burnett, GVP, Treasury and Investor Relations
mike.burnett@jda.com
480-308-3392
JDA Corporate Communications Contact:
Beth Elkin, Sr. Director, Corporate Communications
beth.elkin@jda.com
469-357-4225
JDA Software Announces Third Quarter 2011 Results
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JDA SOFTWARE GROUP, INC. | |||||||||||
Q3 2011 FINANCIAL RESULTS | |||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||
($ in thousands, except per share data, unaudited) | |||||||||||
Three Months Ended September 30, | |||||||||||
2011 | % of Revenues | 2010 | % of Revenues | % Increase (Decrease) | |||||||
REVENUES: | |||||||||||
Software licenses | $ | 33,139 | 19% | $ | 16,276 | 10% | 104% | ||||
Subscriptions and other recurring revenues | 3,738 | 2% | 5,758 | 4% | -35% | ||||||
Maintenance services | 68,261 | 40% | 64,186 | 41% | 6% | ||||||
Product revenues | 105,138 | 61% | 86,220 | 54% | 22% | ||||||
Consulting services | 60,392 | 35% | 65,947 | 42% | -8% | ||||||
Reimbursed expenses | 6,033 | 4% | 6,276 | 4% | -4% | ||||||
Services revenue | 66,425 | 39% | 72,223 | 46% | -8% | ||||||
Total Revenues | 171,563 | 100% | 158,443 | 100% | 8% | ||||||
COST OF REVENUES: | |||||||||||
Cost of software licenses | 1,009 | 1% | 1,103 | 1% | -9% | ||||||
Amortization of acquired software technology | 1,726 | 1% | 1,833 | 1% | -6% | ||||||
Cost of maintenance services | 13,704 | 8% | 12,932 | 8% | 6% | ||||||
Cost of product revenues | 16,439 | 10% | 15,868 | 10% | 4% | ||||||
Cost of consulting services | 44,821 | 26% | 48,976 | 31% | -8% | ||||||
Reimbursed expenses | 6,033 | 4% | 6,276 | 4% | -4% | ||||||
Cost of service revenue | 50,854 | 30% | 55,252 | 35% | -8% | ||||||
Total Cost of Revenues | 67,293 | 39% | 71,120 | 45% | -5% | ||||||
GROSS PROFIT | 104,270 | 61% | 87,323 | 55% | 19% | ||||||
OPERATING EXPENSES: | |||||||||||
Product development | 18,946 | 11% | 17,373 | 11% | 9% | ||||||
Sales and marketing | 26,144 | 15% | 20,258 | 13% | 29% | ||||||
General and administrative | 16,018 | 9% | 17,546 | 11% | -9% | ||||||
Amortization of intangibles | 9,562 | 6% | 9,966 | 6% | -4% | ||||||
Restructuring charges | 768 | 0% | 4,172 | 3% | -82% | ||||||
Acquisition-related costs | — | 0% | 473 | 0% | -100% | ||||||
Litigation settlement | — | 0% | — | 0% | NM | ||||||
Total Operating Expenses | 71,438 | 42% | 69,788 | 44% | 2% | ||||||
OPERATING INCOME | 32,832 | 19% | 17,535 | 11% | 87% | ||||||
Interest expense and amortization of loan fees | 6,435 | 4% | 6,169 | 4% | 4% | ||||||
Interest income and other, net | (521 | ) | 0% | (558 | ) | 0% | NM | ||||
INCOME BEFORE INCOME TAXES | 26,918 | 16% | 11,924 | 8% | 126% | ||||||
Income tax provision | 10,115 | 6% | 3,651 | 2% | 177% | ||||||
NET INCOME | $ | 16,803 | 10% | $ | 8,273 | 5% | 103% | ||||
EARNINGS PER SHARE: | |||||||||||
Basic | $ | 0.40 | $ | 0.20 | 100% | ||||||
Diluted | $ | 0.39 | $ | 0.20 | 95% | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||
Basic | 42,511 | 41,774 | 2% | ||||||||
Diluted | 42,795 | 42,234 | 1% | ||||||||
Note: Subtotals may not add due to rounding. | |||||||||||
JDA Software Announces Third Quarter 2011 Results
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JDA SOFTWARE GROUP, INC. | |||||||||||
Q3 2011 FINANCIAL RESULTS | |||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||
($ in thousands, except per share data, unaudited) | |||||||||||
Nine Months Ended September 30, | |||||||||||
2011 | % of Revenues | 2010 (1) | % of Revenues | % Increase (Decrease) | |||||||
REVENUES: | |||||||||||
Software licenses | $ | 91,534 | 18% | $ | 72,865 | 16% | 26% | ||||
Subscriptions and other recurring revenues | 12,582 | 3% | 15,851 | 4% | -21% | ||||||
Maintenance services | 199,129 | 40% | 181,840 | 41% | 10% | ||||||
Product revenues | 303,245 | 61% | 270,556 | 60% | 12% | ||||||
Consulting services | 177,069 | 36% | 164,204 | 37% | 8% | ||||||
Reimbursed expenses | 17,265 | 3% | 13,687 | 3% | 26% | ||||||
Services revenue | 194,334 | 39% | 177,891 | 40% | 9% | ||||||
Total Revenues | 497,579 | 100% | 448,447 | 100% | 11% | ||||||
COST OF REVENUES: | |||||||||||
Cost of software licenses | 3,139 | 1% | 3,020 | 1% | 4% | ||||||
Amortization of acquired software technology | 5,393 | 1% | 5,212 | 1% | 3% | ||||||
Cost of maintenance services | 42,362 | 9% | 39,192 | 9% | 8% | ||||||
Cost of product revenues | 50,894 | 10% | 47,424 | 11% | 7% | ||||||
Cost of consulting services | 138,998 | 28% | 124,987 | 28% | 11% | ||||||
Reimbursed expenses | 17,265 | 3% | 13,687 | 3% | 26% | ||||||
Cost of service revenue | 156,263 | 31% | 138,674 | 31% | 13% | ||||||
Total Cost of Revenues | 207,157 | 42% | 186,098 | 41% | 11% | ||||||
GROSS PROFIT | 290,422 | 58% | 262,349 | 59% | 11% | ||||||
OPERATING EXPENSES: | |||||||||||
Product development | 58,889 | 12% | 54,131 | 12% | 9% | ||||||
Sales and marketing | 77,748 | 16% | 65,830 | 15% | 18% | ||||||
General and administrative | 54,420 | 11% | 55,044 | 12% | -1% | ||||||
Amortization of intangibles | 28,872 | 6% | 28,447 | 6% | 1% | ||||||
Restructuring charges | 1,749 | 0% | 16,478 | 4% | -89% | ||||||
Acquisition-related costs | — | 0% | 8,081 | 2% | -100% | ||||||
Litigation settlement | (37,500 | ) | -8% | — | 0% | NM | |||||
Total Operating Expenses | 184,178 | 37% | 228,011 | 51% | -19% | ||||||
OPERATING INCOME | 106,244 | 21% | 34,338 | 8% | 209% | ||||||
Interest expense and amortization of loan fees | 19,085 | 4% | 18,437 | 4% | 4% | ||||||
Interest income and other, net | (2,672 | ) | -1% | (1,039 | ) | 0% | NM | ||||
INCOME BEFORE INCOME TAXES | 89,831 | 18% | 16,940 | 4% | 430% | ||||||
Income tax provision | 17,381 | 3% | 5,069 | 1% | 243% | ||||||
NET INCOME | $ | 72,450 | 15% | $ | 11,871 | 3% | 510% | ||||
EARNINGS PER SHARE: | |||||||||||
Basic | $ | 1.71 | $ | 0.29 | 490% | ||||||
Diluted | $ | 1.70 | $ | 0.29 | 486% | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||
Basic | 42,334 | 40,939 | 3% | ||||||||
Diluted | 42,715 | 41,517 | 3% | ||||||||
(1) Includes results of i2 acquisition as of January 28, 2010. | |||||||||||
Note: Subtotals may not add due to rounding. | |||||||||||
JDA Software Announces Third Quarter 2011 Results
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JDA SOFTWARE GROUP, INC. | |||||||||||||||||||||||
Q3 2011 FINANCIAL RESULTS | |||||||||||||||||||||||
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) | |||||||||||||||||||||||
($ in thousands, except per share data, unaudited) | |||||||||||||||||||||||
Three Months Ended September 30, | %Increase (Decrease) | ||||||||||||||||||||||
2011 GAAP | Adj. | 2011 Non-GAAP | 2010 GAAP | Adj. | 2010 Non-GAAP | Non-GAAP | |||||||||||||||||
TOTAL COST OF REVENUES | $ | 67,293 | $ | (2,420 | ) | $ | 64,873 | $ | 71,120 | $ | (2,360 | ) | $ | 68,760 | -6% | ||||||||
Stock-based compensation: | |||||||||||||||||||||||
Cost of maintenance services | 13,704 | (168 | ) | 13,536 | 12,932 | (126 | ) | 12,806 | |||||||||||||||
Cost of consulting services | 44,821 | (526 | ) | 44,295 | 48,976 | (401 | ) | 48,575 | |||||||||||||||
Amortization: | |||||||||||||||||||||||
Amortization of acquired software technology | 1,726 | (1,726 | ) | — | 1,833 | (1,833 | ) | — | |||||||||||||||
TOTAL OPERATING EXPENSES | $ | 71,438 | $ | (12,655 | ) | $ | 58,783 | $ | 69,788 | $ | (16,547 | ) | $ | 53,241 | 10% | ||||||||
Stock-based compensation: | |||||||||||||||||||||||
Product development | 18,946 | (437 | ) | 18,509 | 17,373 | (204 | ) | 17,169 | |||||||||||||||
Sales and marketing | 26,144 | (611 | ) | 25,533 | 20,258 | (542 | ) | 19,716 | |||||||||||||||
General and administrative | 16,018 | (1,277 | ) | 14,741 | 17,546 | (992 | ) | 16,554 | |||||||||||||||
Amortization of intangibles | 9,562 | (9,562 | ) | — | 9,966 | (9,966 | ) | — | |||||||||||||||
Restructuring charges | 768 | (768 | ) | — | 4,172 | (4,172 | ) | — | |||||||||||||||
Acquisition-related costs | — | — | — | 473 | (473 | ) | — | ||||||||||||||||
Non-recurring transition costs to integrate acquisition | — | — | — | 198 | (198 | ) | — | ||||||||||||||||
OPERATING INCOME | $ | 32,832 | $ | 15,075 | $ | 47,907 | $ | 17,535 | $ | 18,907 | $ | 36,442 | 31% | ||||||||||
OPERATING MARGIN % | 19 | % | 28 | % | 11 | % | 23 | % | 5% | ||||||||||||||
INCOME TAX EFFECTS (2) | $ | 10,115 | $ | 4,583 | $ | 14,698 | $ | 3,651 | $ | 7,140 | $ | 10,791 | 36% | ||||||||||
NET INCOME | $ | 16,803 | $ | 27,295 | $ | 8,273 | $ | 20,040 | 36% | ||||||||||||||
DILUTED EARNINGS PER SHARE | $ | 0.39 | $ | 0.64 | $ | 0.20 | $ | 0.47 | 36% | ||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 42,795 | 42,795 | 42,234 | 42,234 | 1% | ||||||||||||||||||
2011 Non-Adjusted | Adj. | 2011 Adjusted | 2010 Non-Adjusted | Adj. | 2010 Adjusted | ||||||||||||||||||
Net income | 16,803 | $ | 8,273 | ||||||||||||||||||||
Income tax provision | 10,115 | 3,651 | |||||||||||||||||||||
Interest expense and amortization of loan fees | 6,435 | 6,169 | |||||||||||||||||||||
Amortization of acquired software technology | 1,726 | 1,833 | |||||||||||||||||||||
Amortization of intangibles | 9,562 | 9,966 | |||||||||||||||||||||
Depreciation | 3,227 | 3,218 | |||||||||||||||||||||
EBITDA | $ | 47,868 | $ | 33,110 | |||||||||||||||||||
Restructuring charges | 768 | $ | 4,172 | ||||||||||||||||||||
Stock-based compensation | 3,019 | 2,265 | |||||||||||||||||||||
Acquisition-related costs | — | 473 | |||||||||||||||||||||
Interest income and other, net | (521 | ) | (558 | ) | |||||||||||||||||||
Non-recurring transition costs to integrate acquisition | — | 198 | |||||||||||||||||||||
EBITDA | $ | 47,868 | $ | 3,266 | $ | 51,134 | $ | 33,110 | $ | 6,550 | $ | 39,660 | 29% | ||||||||||
EBITDA MARGIN % | 28 | % | 30 | % | 21 | % | 25 | % | |||||||||||||||
(1) This presentation includes Non-GAAP measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures. | |||||||||||||||||||||||
(2) Non-GAAP income tax effect calculated by using the Federal statutory rate of 35%. | |||||||||||||||||||||||
JDA Software Announces Third Quarter 2011 Results
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JDA SOFTWARE GROUP, INC. | |||||||||||||||||||||||
Q3 2011 FINANCIAL RESULTS | |||||||||||||||||||||||
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) | |||||||||||||||||||||||
($ in thousands, except per share data, unaudited) | |||||||||||||||||||||||
Nine Months Ended September 30, | %Increase (Decrease) | ||||||||||||||||||||||
2011 GAAP | Adj. | 2011 Non-GAAP | 2010 GAAP | Adj. | 2010 Non-GAAP | Non-GAAP | |||||||||||||||||
TOTAL COST OF REVENUES | $ | 207,157 | $ | (7,610 | ) | $ | 199,547 | $ | 186,098 | $ | (6,794 | ) | $ | 179,304 | 11% | ||||||||
Stock-based compensation: | |||||||||||||||||||||||
Cost of maintenance services | 42,362 | (509 | ) | 41,853 | 39,192 | (403 | ) | 38,789 | |||||||||||||||
Cost of consulting services | 138,998 | (1,708 | ) | 137,290 | 124,987 | (1,179 | ) | 123,808 | |||||||||||||||
Amortization: | |||||||||||||||||||||||
Amortization of acquired software technology | 5,393 | (5,393 | ) | — | 5,212 | (5,212 | ) | — | |||||||||||||||
TOTAL OPERATING EXPENSES | $ | 184,178 | $ | (3,977 | ) | $ | 180,201 | $ | 228,011 | $ | (61,896 | ) | $ | 166,115 | 8% | ||||||||
Stock-based compensation: | |||||||||||||||||||||||
Product development | 58,889 | (1,673 | ) | 57,216 | 54,131 | (710 | ) | 53,421 | |||||||||||||||
Sales and marketing | 77,748 | (3,471 | ) | 74,277 | 65,830 | (2,292 | ) | 63,538 | |||||||||||||||
General and administrative | 54,420 | (5,712 | ) | 48,708 | 55,044 | (4,250 | ) | 50,794 | |||||||||||||||
Amortization of intangibles | 28,872 | (28,872 | ) | — | 28,447 | (28,447 | ) | — | |||||||||||||||
Restructuring charges | 1,749 | (1,749 | ) | — | 16,478 | (16,478 | ) | — | |||||||||||||||
Acquisition-related costs | — | — | — | 8,081 | (8,081 | ) | — | ||||||||||||||||
Non-recurring transition costs to integrate acquisition | — | — | — | 1,638 | (1,638 | ) | — | ||||||||||||||||
Litigation settlement | (37,500 | ) | 37,500 | — | — | — | — | ||||||||||||||||
OPERATING INCOME | $ | 106,244 | $ | 11,587 | $ | 117,831 | $ | 34,338 | $ | 68,690 | $ | 103,028 | 14% | ||||||||||
OPERATING MARGIN % | 21 | % | 24 | % | 8 | % | 23 | % | 1% | ||||||||||||||
INCOME TAX EFFECTS (2) | $ | 17,381 | $ | 18,115 | $ | 35,496 | $ | 5,069 | $ | 24,902 | $ | 29,971 | 18% | ||||||||||
NET INCOME | $ | 72,450 | $ | 65,922 | $ | 11,871 | $ | 55,659 | 18% | ||||||||||||||
DILUTED EARNINGS PER SHARE | $ | 1.70 | $ | 1.54 | $ | 0.29 | $ | 1.34 | 15% | ||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 42,715 | 42,715 | 41,517 | 41,517 | 3% | ||||||||||||||||||
2011 Non-Adjusted | Adj. | 2011 Adjusted | 2010 Non-Adjusted | Adj. | 2010 Adjusted | ||||||||||||||||||
Net income | $ | 72,450 | $ | 11,871 | |||||||||||||||||||
Income tax provision | 17,381 | 5,069 | |||||||||||||||||||||
Interest expense and amortization of loan fees | 19,085 | 18,437 | |||||||||||||||||||||
Amortization of acquired software technology | 5,393 | 5,212 | |||||||||||||||||||||
Amortization of intangibles | 28,872 | 28,447 | |||||||||||||||||||||
Depreciation | 9,997 | 9,368 | |||||||||||||||||||||
EBITDA | $ | 153,178 | $ | 78,404 | |||||||||||||||||||
Restructuring charges | $ | 1,749 | $ | 16,478 | |||||||||||||||||||
Stock-based compensation | 13,073 | 8,834 | |||||||||||||||||||||
Acquisition-related costs | — | 8,081 | |||||||||||||||||||||
Interest income and other, net | (2,672 | ) | (1,039 | ) | |||||||||||||||||||
Non-recurring transition costs to integrate acquisition | — | 1,638 | |||||||||||||||||||||
Litigation settlement | (37,500 | ) | — | ||||||||||||||||||||
EBITDA | $ | 153,178 | $ | (25,350 | ) | $ | 127,828 | $ | 78,404 | $ | 33,992 | $ | 112,396 | 14% | |||||||||
EBITDA MARGIN % | 31 | % | 26 | % | 17 | % | 25 | % | |||||||||||||||
(1) This presentation includes Non-GAAP measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures. | |||||||||||||||||||||||
(2) Includes results of i2 acquisition as of January 28, 2010. | |||||||||||||||||||||||
(3) Non-GAAP income tax effect calculated by using the Federal statutory rate of 35%. | |||||||||||||||||||||||
JDA Software Announces Third Quarter 2011 Results
Page 9
JDA SOFTWARE GROUP, INC. | ||||||
Q3 2011 FINANCIAL RESULTS | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
($ in thousands, unaudited) | ||||||
September 30, 2011 | December 31, 2010 | |||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 289,658 | $ | 171,618 | ||
Restricted cash | 37,148 | 34,855 | ||||
Accounts receivable, net | 118,379 | 102,118 | ||||
Deferred tax assets—current portion | 42,880 | 43,753 | ||||
Prepaid expenses and other current assets | 39,155 | 27,723 | ||||
Total Current Assets | 527,220 | 380,067 | ||||
Non-Current Assets: | ||||||
Property and equipment, net | 44,954 | 47,447 | ||||
Goodwill | 226,863 | 226,863 | ||||
Other intangibles, net | 153,134 | 187,398 | ||||
Deferred tax assets—long-term portion | 241,606 | 255,386 | ||||
Other non-current assets | 17,069 | 16,367 | ||||
Total Non-Current Assets | 683,626 | 733,461 | ||||
TOTAL ASSETS | $ | 1,210,846 | $ | 1,113,528 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current Liabilities: | ||||||
Accounts payable | $ | 8,381 | $ | 21,092 | ||
Accrued expenses and other liabilities | 96,813 | 83,938 | ||||
Income taxes payable | 1,652 | 318 | ||||
Deferred revenue—current portion | 114,925 | 88,055 | ||||
Total Current Liabilities | 221,771 | 193,403 | ||||
Non-Current Liabilities: | ||||||
Long-term debt | 273,077 | 272,695 | ||||
Accrued exit and disposal obligations | 4,220 | 7,360 | ||||
Liability for uncertain tax positions | 4,218 | 6,873 | ||||
Deferred revenue—long-term portion | 5,147 | 9,090 | ||||
Total Non-Current Liabilities | 286,662 | 296,018 | ||||
TOTAL LIABILITIES | $ | 508,433 | $ | 489,421 | ||
Stockholders' Equity: | ||||||
Common stock | 447 | 439 | ||||
Additional paid-in capital | 569,175 | 550,177 | ||||
Retained earnings | 164,182 | 91,732 | ||||
Accumulated other comprehensive income | 996 | 8,980 | ||||
Treasury stock | (32,387 | ) | (27,221 | ) | ||
Total Stockholders’ Equity | 702,413 | 624,107 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,210,846 | $ | 1,113,528 | ||
JDA Software Announces Third Quarter 2011 Results
Page 10
JDA SOFTWARE GROUP, INC. | ||||||
Q3 2011 FINANCIAL RESULTS | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | ||||||
($ in thousands, unaudited) | ||||||
Nine Months Ended September 30, | ||||||
2011 | 2010 | |||||
Cash Flows From Operating Activities: | ||||||
Net income | $ | 72,450 | $ | 11,871 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 44,261 | 43,029 | ||||
Provision for doubtful accounts | — | 999 | ||||
Amortization of loan fees | 1,739 | 1,412 | ||||
Net loss (gain) on disposal of property and equipment | 24 | (8 | ) | |||
Stock-based compensation | 13,073 | 8,834 | ||||
Deferred income taxes | 14,652 | (121 | ) | |||
Changes in assets and liabilities, net of effects from business acquisition: | ||||||
Accounts receivable | (17,674 | ) | 1,281 | |||
Income tax receivable | (3,430 | ) | 2,225 | |||
Prepaid expenses and other assets | (9,342 | ) | (12,948 | ) | ||
Accounts payable | (13,817 | ) | 8,810 | |||
Accrued expenses and other liabilities | 11,185 | (15,837 | ) | |||
Income tax payable | (1,436 | ) | (5,427 | ) | ||
Deferred revenue | 20,935 | (5,127 | ) | |||
Net cash provided by operating activities | $ | 132,620 | $ | 38,993 | ||
Cash Flow From Investing Activities: | ||||||
Change in restricted cash | (2,293 | ) | 277,554 | |||
Purchase of i2 Technologies, Inc. | — | (213,427 | ) | |||
Payment of direct costs related to acquisitions | (2,579 | ) | (2,749 | ) | ||
Purchase of property and equipment | (7,625 | ) | (14,785 | ) | ||
Proceeds from disposal of property and equipment | 51 | 631 | ||||
Net cash (used in) provided by investing activities | $ | (12,446 | ) | $ | 47,224 | |
Cash Flow From Financing Activities: | ||||||
Issuance of common stock—equity plans | 5,261 | 13,836 | ||||
Purchase of treasury stock and other, net | (5,166 | ) | (4,645 | ) | ||
Conversion of warrants | 671 | — | ||||
Debt issuance costs | (1,727 | ) | — | |||
Net cash (used in) provided by financing activities | $ | (961 | ) | $ | 9,191 | |
Effect of exchange rates on cash and cash equivalents | (1,173 | ) | 988 | |||
Net increase in cash and cash equivalents | $ | 118,040 | $ | 96,396 | ||
Cash and Cash Equivalents, Beginning of Period | $ | 171,618 | $ | 75,974 | ||
Cash and Cash Equivalents, End of Period | $ | 289,658 | $ | 172,370 | ||
JDA Software Announces Third Quarter 2011 Results
Page 11
JDA SOFTWARE GROUP, INC. | |||||||||||||||||||||||||
Q3 2011 FINANCIAL RESULTS | |||||||||||||||||||||||||
SUPPLEMENTAL DATA | |||||||||||||||||||||||||
($ in thousands, unaudited) | |||||||||||||||||||||||||
2010 (1) | 2011 | ||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | ||||||||||||||||||
REVENUES: | |||||||||||||||||||||||||
Software licenses | $ | 24,437 | $ | 32,152 | $ | 16,276 | $ | 36,681 | $ | 109,546 | $ | 31,480 | $ | 26,915 | 33,139 | ||||||||||
Subscriptions and other recurring revenues | 4,287 | 5,806 | 5,758 | 5,292 | 21,143 | 4,994 | 3,850 | 3,738 | |||||||||||||||||
Maintenance services | 57,060 | 60,594 | 64,186 | 64,401 | 246,241 | 64,768 | 66,100 | 68,261 | |||||||||||||||||
Product revenues | 85,784 | 98,552 | 86,220 | 106,374 | 376,930 | 101,242 | 96,865 | 105,138 | |||||||||||||||||
Consulting services | 43,003 | 55,255 | 65,947 | 56,213 | 220,418 | 57,644 | 59,033 | 60,392 | |||||||||||||||||
Reimbursed expenses | 2,844 | 4,566 | 6,276 | 6,175 | 19,861 | 4,720 | 6,512 | 6,033 | |||||||||||||||||
Services revenue | 45,847 | 59,821 | 72,223 | 62,388 | 240,279 | 62,364 | 65,545 | 66,425 | |||||||||||||||||
Total Revenues | $ | 131,631 | $ | 158,373 | $ | 158,443 | $ | 168,762 | $ | 617,209 | $ | 163,606 | $ | 162,410 | $ | 171,563 | |||||||||
AS REPORTED REVENUE GROWTH RATES: | |||||||||||||||||||||||||
Software licenses | 70 | % | 21 | % | 0 | % | 33 | % | 29 | % | 29 | % | -16 | % | 104 | % | |||||||||
Subscriptions and other recurring revenues | 343 | % | 483 | % | 543 | % | 422 | % | 446 | % | 16 | % | -34 | % | -35 | % | |||||||||
Maintenance services | 33 | % | 37 | % | 43 | % | 37 | % | 37 | % | 14 | % | 9 | % | 6 | % | |||||||||
Product revenues | 47 | % | 37 | % | 38 | % | 41 | % | 41 | % | 18 | % | -2 | % | 22 | % | |||||||||
Consulting services | 87 | % | 120 | % | 114 | % | 96 | % | 105 | % | 34 | % | 7 | % | -8 | % | |||||||||
Reimbursed expenses | 44 | % | 86 | % | 128 | % | 114 | % | 97 | % | 66 | % | 43 | % | -4 | % | |||||||||
Services revenue | 83 | % | 117 | % | 115 | % | 98 | % | 104 | % | 36 | % | 10 | % | -8 | % | |||||||||
Total Revenues | 58 | % | 59 | % | 65 | % | 58 | % | 60 | % | 24 | % | 3 | % | 8 | % | |||||||||
SOFTWARE LICENSE AND SUBSCRIPTION REVENUES: | |||||||||||||||||||||||||
Americas | $ | 18,917 | $ | 27,080 | $ | 16,590 | $ | 31,026 | $ | 93,613 | $ | 21,104 | $ | 20,786 | $ | 27,440 | |||||||||
EMEA | 5,403 | 4,773 | 3,405 | 7,901 | 21,482 | 12,612 | 7,402 | 7,907 | |||||||||||||||||
ASPAC | 4,404 | 6,105 | 2,039 | 3,046 | 15,594 | 2,758 | 2,577 | 1,530 | |||||||||||||||||
Total Software Revenues | $ | 28,724 | $ | 37,958 | $ | 22,034 | $ | 41,973 | $ | 130,689 | $ | 36,474 | $ | 30,765 | $ | 36,877 | |||||||||
New sales | $ | 8,415 | $ | 8,080 | $ | 2,603 | $ | 8,042 | $ | 27,140 | $ | 4,819 | $ | 9,537 | $ | 7,744 | |||||||||
Install-base sales | 20,309 | 29,878 | 19,431 | 33,931 | 103,549 | 31,665 | 21,228 | 29,133 | |||||||||||||||||
Total Software Revenues | $ | 28,724 | $ | 37,958 | $ | 22,034 | $ | 41,973 | $ | 130,689 | $ | 36,484 | $ | 30,765 | $ | 36,877 | |||||||||
As % of Total | |||||||||||||||||||||||||
New sales | 29 | % | 21 | % | 12 | % | 19 | % | 21 | % | 13 | % | 31 | % | 21 | % | |||||||||
Install-base sales | 71 | % | 79 | % | 88 | % | 81 | % | 79 | % | 87 | % | 69 | % | 79 | % | |||||||||
Total Software Revenues | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
GROSS PROFIT MARGINS BY LINE OF BUSINESS (2) | |||||||||||||||||||||||||
Software | 91.0 | % | 92.9 | % | 86.7 | % | 92.7 | % | 91.4 | % | 92.4 | % | 90.2 | % | 92.6 | % | |||||||||
Maintenance | 78.9 | % | 76.5 | % | 79.9 | % | 79.3 | % | 78.7 | % | 78.4 | % | 77.8 | % | 79.9 | % | |||||||||
Services | 16.9 | % | 24.3 | % | 23.5 | % | 18.2 | % | 21.1 | % | 17.7 | % | 17.5 | % | 23.4 | % | |||||||||
Overall Gross Profit Margin | 59.9 | % | 60.7 | % | 55.1 | % | 60.0 | % | 58.9 | % | 58.4 | % | 55.8 | % | 60.8 | % | |||||||||
MISCELLANEOUS | |||||||||||||||||||||||||
Average sales price (ASP) (3) -TTM | $ | 618 | $ | 608 | $ | 573 | $ | 601 | $ | 720 | $ | 645 | $ | 786 | |||||||||||
Multiple product deals (3) -TTM | 21 | 18 | 17 | 19 | 21 | 24 | 24 | ||||||||||||||||||
Large deal count (greater than $1M) (3) -TTM | 24 | 25 | 25 | 25 | 23 | 26 | 34 | ||||||||||||||||||
Quota carrying sales representatives | 96 | 92 | 98 | 92 | 106 | 111 | 104 | ||||||||||||||||||
Maintenance Retention | 98.3 | % | 97.3 | % | 95.9 | % | 95.6 | % | 98.5 | % | 96.7 | % | 95.7 | % | |||||||||||
FREE CASH FLOW (4) | |||||||||||||||||||||||||
GAAP Operating Cash Flow | $ | 12,195 | $ | (2,627 | ) | $ | 29,425 | $ | 26,179 | $ | 65,172 | $ | 58,683 | $ | 35,477 | 38,460 | |||||||||
Capital Expenditures | (533 | ) | (5,864 | ) | (8,388 | ) | (2,081 | ) | (16,866 | ) | (2,997 | ) | (1,819 | ) | (2,809 | ) | |||||||||
Free Cash Flow (5) | $ | 11,662 | $ | (8,491 | ) | $ | 21,037 | $ | 24,098 | $ | 48,306 | $ | 55,686 | $ | 33,658 | $ | 35,651 | ||||||||
% Growth over prior year | -64 | % | -131 | % | 32 | % | 68 | % | -46 | % | 378 | % | 496 | % | 69 | % | |||||||||
(1) Includes results of i2 acquisition as of January 28, 2010. | |||||||||||||||||||||||||
(2) Gross Profit Margins are calculated using line of business Revenue, less line of business Cost of Revenue, divided by line of business Revenue. | |||||||||||||||||||||||||
(3) Trailing twelve months | |||||||||||||||||||||||||
(4) This presentation includes Non-GAAP measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures. | |||||||||||||||||||||||||
(5)Q1 2011 results Include $35.0 million of cash received from the settlement with Oracle Corporation. | |||||||||||||||||||||||||
JDA Software Announces Third Quarter 2011 Results
Page 12
“Safe Harbor” Statement under the U.S. Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally accompanied by words such as “will,” and “expect” and other words with forward-looking connotations. The occurrence of future events may involve a number of risks and uncertainties, including, but not limited to risks detailed from time to time in the “Risk Factors” section of our filings with the Securities and Exchange Commission. Additional information relating to the uncertainty affecting our business is contained in our filings with the SEC. As a result of these and other risks, actual results may differ materially from those predicted. JDA is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
Use of Non-GAAP Financial Information
This press release and the related conference call contain non-GAAP financial measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.
Use and Economic Substance of Non-GAAP Financial Measures Used by JDA
The Company uses non-GAAP measures of performance, including adjusted net income, EBITDA (earnings before interest, taxes, depreciation and amortization) and earnings per share, in its public statements. Management uses, and chooses to disclose, these non-GAAP financial measures because (i) such measures provide an additional analytical tool to clarify the Company's results from operations and help the Company to identify underlying trends in its results of operations; (ii) the Company uses non-GAAP earnings measures, including EBITDA, as a measure of profitability because such measures help the Company compare its performance on a consistent basis across time periods; and (iii) these non-GAAP measures are employed by the Company's management in its own evaluation of performance and are utilized in financial and operational decision making processes, such as budget planning and forecasting. The Company also internally uses adjusted EBITDA measures for determining (a) compliance with certain financial covenants in its credit agreement and (b) executive and employee compensation. Set forth below are additional reasons why specific items are excluded from the Company's non-GAAP financial measures:
• | Amortization charges for acquired software technology are excluded because they result from prior acquisitions, rather than ongoing operations, and absent additional acquisitions, are expected to decline over time. |
• | Amortization charges for other intangibles are excluded because they are non-cash expenses, and while tangible and intangible assets support our business, we do not believe the related amortization costs are directly attributable to the operating performance of our business. |
• | Restructuring charges are significant non-routine expenses that cannot be predicted and typically relate to a change in our business model or to a change in our estimate of the costs to complete a plan to exit an activity of an acquired company. The exclusion of these charges promotes period-to-period comparisons and transparency. Such charges are primarily related to severance costs and/or the disposition of excess facilities driven by the changes to our business model. |
• | Stock-based compensation is not an expense that typically requires or will require cash settlement by the Company. |
• | Acquisition-related costs associated with the acquisition of i2, the settlement offer related to inherited i2 litigation and the non-recurring transition costs to integrate the acquisition are significant non-routine expenses. Exclusion of these costs promotes period-to-period comparisons and transparency as we do not believe these costs are directly attributable to the operating performance of our business. |
Material Limitations (and Compensation thereof) Associated with the Use of Non-GAAP Financial Measures
Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP results. In the future, the Company expects to continue reporting non-GAAP financial measures excluding items described above and the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above. Accordingly, exclusion of these and other similar items in our non-GAAP presentation should not be construed as an inference that these costs are unusual, infrequent or non-recurring.
Some of the limitations in relying on non-GAAP financial measures are:
• | Amortization of acquired technology and intangibles, though not directly affecting our current cash position, represent the loss in value as the technology in our industry evolves, is advanced or is replaced over time. The expense associated with this loss in value is not included in the non-GAAP net income presentation and therefore does not reflect the full economic effect of the ongoing cost of maintaining our current technological position in our competitive industry which is addressed through our research and development program. |
• | The Company may engage in acquisition transactions in the future. In addition, we incur other restructuring charges from time to time when necessary to adjust our business model. Restructuring related charges may therefore continue to be incurred and should not be viewed as non-recurring. |
• | Stock-based compensation is an important component of our incentive compensation arrangements and will be reflected as expenses in our GAAP results for the foreseeable future. |
• | Other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure. |
JDA Software Announces Third Quarter 2011 Results
Page 13
We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP financial measures only supplementally. We also provide reconciliations of each non-GAAP financial measure to our most directly comparable GAAP measure, and we encourage investors to review carefully those reconciliations.
Usefulness of Non-GAAP Financial Measures to Investors
The Company believes that the presentation of these non-GAAP financial measures is warranted for several reasons. First, such non-GAAP financial measures provide investors and management an additional analytical tool for understanding the Company's financial performance by excluding the impact of items which may obscure trends in the core operating performance of the business. Third, since the Company has historically reported non-GAAP results to the investment community, the Company believes the inclusion of non-GAAP numbers provides consistency and enhances investors' ability to compare the Company's performance across financial reporting periods.
JDA Software Group, Inc.
14400 N. 87th Street
Scottsdale, Ariz. 85260