Manhattan Associates, Inc. reports 26.8% EBITDA decline in 2018 and 7.3 pp EBITDA Margin decline from 32.7% to 25.5%
02/05/2019 • About Manhattan Associates, Inc. (
$MANH) • By InTwits
Manhattan Associates, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Manhattan Associates, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $13m in FY2018, $62m in FY2017, $62m in FY2016, $76m in FY2015, $39m in FY2014
- The company has highly profitable business model: ROIC is 80.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 6.0%. Annual revenue decline showed slowdown in 18Q4 - revenue showed almost no change in 18Q4. Revenue decline was accelerating on average at -6.4 pp per annum in the last 5 years. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.3 pp from 32.7% to 25.5% in 2018. During the last 5 years EBITDA Margin topped in 2016 at 33.6% and was declining since that time.
Gross Margin decreased slightly on 1.8 pp from 58.7% to 56.9% in 2018. During 2014-2018 Gross Margin topped in 2017 at 58.7%. SG&A as a % of Revenue increased on 2.8 pp from 15.7% to 18.6% in 2018. During 2014-2018 SG&A as a % of Revenue bottomed in 2017 at 15.7%. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 0.82 pp from 2.7% to 3.6% in 2018. SBC as a % of Revenue stuck to a growing trend at 0.33 pp per annum in the last 5 years.
Net Income margin decreased slightly on 0.87 pp from 19.6% to 18.7% in 2018. During 2014-2018 Net Income margin topped in 2016 at 20.5% and was declining since that time. The efficient tax rate was 23.2% in 2018 while the average for the last five years was 34.3%.
Investments (CAPEX, working capital and M&A)
Manhattan Associates, Inc.'s CAPEX/Revenue was 1.3% in 2018. Manhattan Associates, Inc.'s CAPEX/Revenue decreased slightly on 0.76 pp from 2.1% in 2015 to 1.3% in 2018. For the last three years the average CAPEX/Revenue was 1.2%.
Accounts receivable as a % of Revenue increased on 2.4 pp from 15.5% to 17.9% in 2018. Accounts payable as a % of Revenue increased slightly on 1.8 pp from 5.7% to 7.5% in 2018.
Return on investment
The company operates at high and attractive ROIC (80.9%) and ROE (65.0%). ROIC dropped on 21.6 pp from 103% to 80.9% in 2018. ROE decreased on 2.7 pp from 67.7% to 65.0% in 2018. During 2014-2018 ROIC topped in 2017 at 103%. During 2014-2018 ROE topped in 2016 at 68.1% and was declining since that time.
Leverage (Debt)
The company has no debt. Cash dropped on 21.0%.
Valuation and dividends
Manhattan Associates, Inc.'s trades at EV/EBITDA 23.3x and P/E 32.6x.
Management team
Manhattan Associates, Inc.'s CEO Eddie Capel is a founder and has spent 6 years with the company. CEO total compensation was
$4,486,523 in 2018 which included
$575,000 salary. The company's CFO Dennis B Story has spent 13 years with the company.
The company has 1.5% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 3,000 employees. The number of employees increased on 7.5%. Average revenue per employee in 2018 was
$186,386 and it dropped on 12.5%.
Financial and operational results
FY ended 12/31/2018
Manhattan Associates, Inc. ($MANH) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 492.1 | 556.4 | 604.6 | 594.6 | 559.2 | -6.0% |
| Gross Profit | 279.5 | 320.9 | 354.7 | 348.9 | 318.3 | -8.8% |
| SG&A | 97.1 | 97.9 | 96.5 | 93.5 | 103.9 | 11.1% |
| EBITDA | 133.5 | 169.2 | 203.4 | 194.7 | 142.5 | -26.8% |
| EBIT | 127.1 | 161.4 | 194.3 | 185.6 | 133.9 | -27.9% |
| Tax | 46.0 | 59.4 | 71.9 | 68.4 | 31.5 | -53.9% |
| Net Income | 82.0 | 103.5 | 124.2 | 116.5 | 104.7 | -10.1% |
| Stock Based Compensation | 9.7 | 14.6 | 15.9 | 16.2 | 19.9 | 22.4% |
Balance Sheet
|
|---|
| Cash | 115.7 | 118.4 | 95.6 | 125.5 | 99.1 | -21.0% |
| Accounts Receivable | 86.8 | 97.4 | 100.3 | 92.2 | 100.1 | 8.5% |
| Accounts Payable | 12.5 | 11.2 | 12.1 | 14.0 | 18.2 | 29.6% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 9.4 | 11.5 | 6.8 | 6.2 | 7.3 | 17.9% |
| Acquisitions | 2.8 | | | | | |
Ratios
|
|---|
| Revenue growth | 18.7% | 13.1% | 8.7% | -1.6% | -6.0% | |
| EBITDA growth | 24.6% | 26.7% | 20.2% | -4.3% | -26.8% | |
|
|---|
| Gross Margin | 56.8% | 57.7% | 58.7% | 58.7% | 56.9% | -1.8% |
| EBITDA Margin | 27.1% | 30.4% | 33.6% | 32.7% | 25.5% | -7.3% |
| EBIT Margin | 25.8% | 29.0% | 32.1% | 31.2% | 23.9% | -7.3% |
| SG&A, % of revenue | 19.7% | 17.6% | 16.0% | 15.7% | 18.6% | 2.8% |
| SBC, % of revenue | 2.0% | 2.6% | 2.6% | 2.7% | 3.6% | 0.8% |
| Net Income Margin | 16.7% | 18.6% | 20.5% | 19.6% | 18.7% | -0.9% |
| CAPEX, % of revenue | 1.9% | 2.1% | 1.1% | 1.0% | 1.3% | 0.3% |
|
|---|
| ROIC | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% | -21.6% |
| ROE | 45.1% | 54.8% | 68.1% | 67.7% | 65.0% | -2.7% |
| Net Debt/EBITDA | -0.9x | -0.7x | -0.5x | -0.6x | -0.7x | -0.1x |
People
|
|---|
| Insider ownership | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 0.0% |
| Employees | 2,770 | 2,930 | 1,550 | 2,790 | 3,000 | 7.5% |
| Revenue/Employee, th. $ | 178 | 190 | 390 | 213 | 186 | -12.5% |
Manhattan Associates, Inc. ($MANH) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 131 | 142 | 142 | 144 | | -9.0% | -8.0% | -6.9% | 0.2% |
| EBITDA | 30 | 38 | 38 | 36 | | -31.7% | -26.5% | -28.3% | -20.7% |
| Net Income | 23 | 28 | 28 | 26 | | -19.7% | -11.2% | -12.7% | 5.7% |
Balance Sheet
|
|---|
| Cash | 107 | 79 | 90 | 99 | | 19.6% | 3.0% | -28.1% | -21.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 55.7% | 58.4% | 57.0% | 56.5% | | -1.3% | -1.2% | -1.7% | -2.8% |
| EBITDA Margin | 23.0% | 26.7% | 26.9% | 25.1% | | -7.7% | -6.7% | -8.0% | -6.6% |
| Net Income Margin | 17.3% | 19.5% | 20.0% | 18.0% | | -2.3% | -0.7% | -1.3% | 0.9% |
Peers in Application Software
Below you can find Manhattan Associates, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| Manhattan Associates, Inc. ($MANH) | | 13.1% | 8.7% | -1.6% | -6.0% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| Manhattan Associates, Inc. ($MANH) | 56.8% | 57.7% | 58.7% | 58.7% | 56.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Manhattan Associates, Inc. ($MANH) | 27.1% | 30.4% | 33.6% | 32.7% | 25.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| Manhattan Associates, Inc. ($MANH) | 1.9% | 2.1% | 1.1% | 1.0% | 1.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| The Trade Desk, Inc. ($TTD) | | 63.3% | 42.1% | 30.0% | 32.2% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.9x | -0.6x |
|---|
| Manhattan Associates, Inc. ($MANH) | -0.9x | -0.7x | -0.5x | -0.6x | -0.7x |
