(Source: Business Wire)
JDA®
Software Group, Inc. (NASDAQ: JDAS) today announced financial
results for the third quarter ended September 30, 2009. JDA reported
total revenues of $95.9 million and software revenues of $17.3 million
for third quarter 2009, compared to total revenues of $98.4 million and
software revenues of $23.0 million for third quarter 2008. For the nine
months ended September 30, 2009, JDA reported total revenues of $278.7
million and software revenues of $60.2 million, compared to total
revenues of $284.1 million and software revenues of $58.6 million for
the nine months ended September 30, 2008.
"We guided to a sequentially lower third quarter software sales result,
and the actual third quarter results closed in line with our
expectations," said JDA CEO Hamish Brewer. "We also guided to a
strong software sales result in the fourth quarter, and today we can
reiterate our guidance for second half 2009, including projected
software sales between $26 million to $30 million for fourth quarter
2009. Supported by the strong performance from consulting services, I am
pleased with the overall EBITDA margin of 25% and the $20.0 million of
cash flow generated from operations in third quarter 2009."
Third Quarter 2009 Financial Summary
Adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization) was $24.1 million in the third quarter 2009, compared to
$27.0 million in third quarter 2008.
Adjusted non-GAAP earnings for third quarter 2009 were $0.40 per
share, compared to $0.42 per share in third quarter 2008, and exclude
amortization of acquired software technology and intangibles,
restructuring charges, stock-based compensation and bank charges on a
credit facility commitment for a prior year terminated acquisition.
Adjusted non-GAAP earnings for third quarter 2009 also exclude $8.6
million of cash consideration paid in excess of carrying value on the
repurchase of redeemable preferred stock.
GAAP income applicable to common shareholders for third quarter 2009
was a net loss of $2.3 million or ($0.07) per share, which includes
$8.6 million of cash consideration paid in excess of carrying value on
the repurchase of redeemable preferred stock, compared to GAAP income
applicable to common shareholders of $8.2 million or $0.23 per share
in third quarter 2008.
Service revenues increased 16% to $33.6 million in third quarter 2009
compared to third quarter 2008, and service margins improved
year-over-year from 21% in third quarter 2008 to 26% in third quarter
2009.
Cash flow from operations was $20.0 million in third quarter 2009,
compared to cash flow of $18.8 million in third quarter 2008.
Cash and cash equivalents were $85.5 million at September 30, 2009,
compared to $32.7 million at December 31, 2008, and there was no debt
at the end of either period. During third quarter 2009, approximately
$30.1 million in cash was used to repurchase redeemable preferred
stock.
Third Quarter 2009 Highlights
Regional Sales Performance: JDA closed a total of 57 new
software deals during third quarter 2009, including one contract
exceeding $1.0 million. The following presents a high level summary of
regional performance:
JDA closed $12.6 million in software deals in its Americas region
during third quarter 2009, compared to $17.5 million in third
quarter 2008. Customers that signed licenses included: The
Sports Authority, Ripley's Comercial ECCSA S.A. and Grupo
Comercial Chedraui, S.A. de C.V.
Software sales in JDA's Europe, Middle East and Africa (EMEA)
region were $4.1 million in third quarter 2009, compared to $3.5
million in third quarter 2008. New software deals in the EMEA
region included: Co-operative Group Limited, Aspiag
Service Italia, NorgesGruppen ASA and N.V. Trinfover
S.A.
JDA's Asia Pacific region posted software sales of $542,000 in
third quarter 2009, compared to $2.0 million in third quarter
2008. Wins in this region included: CitiMart Philippines
and Shanxi Meetall United Supermarket Co. Ltd.
Positioned for Growth and Scale: JDA announced changes to its
senior management team during the quarter, including Pete Hathaway who
joined JDA as Executive Vice President and Chief Financial Officer,
and Jason Zintak who assumed the role of Executive Vice President of
Sales and Marketing. Mr. Hathaway and Mr. Zintak are seasoned
executives who have the talent, experience and leadership abilities to
support JDA's long-term growth plans.
China Growth Strategy Underway: Just one quarter after
announcing an initiative to drive growth in China through a
combination of organic expansion and a wider partner network, JDA has
secured its first major win with Shanxi Meetall. This promising start
to JDA's program of growth supports the belief that the Chinese market
is now ready and willing to buy advanced planning and optimization
solutions.
Nine Month 2009 Results
Adjusted EBITDA increased to $69.5 million for the nine months ended
September 30, 2009, compared to $69.3 million for the nine months
ended Septmber 30, 2008.
Adjusted non-GAAP earnings for the nine months ended September 30,
2009 were $1.24 per share, compared to adjusted non-GAAP earnings per
share of $1.04 for the nine months ended September 30, 2008, and
exclude amortization of acquired software technology and intangibles,
restructuring charges, stock-based compensation and banking charges on
a credit facility commitment for a prior year terminated acquisition.
Adjusted non-GAAP earnings for the nine months ended September 30,
2009 also exclude $8.6 million of cash consideration paid in excess of
carrying value on the repurchase of redeemable preferred stock.
GAAP income applicable to common shareholders for the nine months
ended September 30, 2009 was $9.2 million or $0.26 per share, which
includes $8.6 million of cash consideration paid in excess of carrying
value on the repurchase of redeemable preferred stock, compared to
GAAP income applicable to common shareholders of $16.7 million or
$0.47 per share in the nine months ended September 30, 2008.
Cash flow from operations in the first nine months of 2009 was $80.5
million, compared to $70.7 million for the nine months ended September
30, 2008.
Conference Call Information
JDA Software Group, Inc. will host a conference call at 4:45 p.m.
(Eastern) today to discuss earnings results for its third quarter ended
September 30, 2009. To participate in the call, dial 1-877-941-2068
(United States) or 1-480-629-9712 (International) and ask the operator
for the "JDA Software Group, Inc. Third Quarter 2009 Earnings Conference
Call." To participate in the webcast, visit the following web page at
the time of the conference call: http://viavid.net/dce.aspx?sid=00006AB3.
A replay of the conference call will begin Monday, October 19, 2009 at
7:45 p.m. (Eastern) and will end on Thursday, November 19, 2009 at 11:59
p.m. (Eastern). You can hear the replay by dialing 1-800-406-7325
(United States) or 1-303-590-3030 (International) using access 4164779.
About JDA Software Group, Inc.
JDA®
Software Group, Inc. (NASDAQ:
JDAS) is the world's leading supply chain solutions provider, helping
companies optimize operations and improve profitability. JDA drives
business efficiency for its global customer base of more than 5,800
retailers, manufacturers, wholesaler-distributors and services
industries companies through deep domain expertise and innovative
solutions. JDA's combination of unmatched services, together with its
integrated yet modular solutions for merchandising, supply chain
planning and execution and revenue management, leverage the strong
heritage and knowledge capital of market leaders including Manugistics,
E3, Intactix and Arthur. When supply chain results matter, companies
turn to JDA. For more information about JDA, visit www.jda.com
or contact us at info@jda.com or call
+1.800.479.7382 / +1.480.308.3000.
"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. In this press release, such
forward-looking statements include, without limitation, Mr. Brewer's
statement that the Company is reiterating its guidance for second half
2009 including projected software sales between $26 million to $30
million for fourth quarter 2009. The occurrence of future events may
involve a number of risks and uncertainties, including, but not limited
to: (i) the possibility that the current economic downturn will persist
and cause a decline in the demand for our solutions, thereby negatively
impacting our financial results; and, (ii) other 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
operating 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 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 and adjustments to acquisition-related
reserves 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.
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.
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. Second, 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.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except share amounts, unaudited)
September 30,2009 December 31,2008
ASSETS
Current Assets:
Cash and cash equivalents $ 85,477 $ 32,696
Accounts receivable, net 60,236 79,353
Income tax receivable 2,298 316
Deferred tax asset 23,221 22,919
Prepaid expenses and other current assets 18,292 14,223
Total current assets 189,524 149,507
Non-Current Assets:
Property and equipment, net 41,608 43,093
Goodwill 135,275 135,275
Other Intangibles, net:
Customer lists 104,848 121,719
Acquired software technology 21,206 24,160
Trademarks 326 1,335
Deferred tax asset 35,996 44,815
Other non-current assets 7,272 4,872
Total non-current assets 346,531 375,269
Total Assets $ 536,055 $ 524,776
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,574 $ 3,273
Accrued expenses and other liabilities 39,381 52,090
Deferred revenue 71,852 62,005
Total current liabilities 119,807 117,368
Non-Current Liabilities:
Accrued exit and disposal obligations 7,269 8,820
Liability for uncertain tax positions 7,447 7,093
Total non-current liabilities 14,716 15,913
Total Liabilities 134,523 133,281
Redeemable Preferred Stock - 50,000
Stockholders' Equity:
Preferred stock, $.01 par value; authorized 2,000,000 shares; none issued or outstanding - -
Common stock, $.01 par value; authorized, 50,000,000 shares; issued 36,269,083 and 32,458,396 shares, respectively 363 325
Additional paid-in capital 361,740 305,564
Deferred compensation (7,681 ) (2,915 )
Retained earnings 65,517 56,268
Accumulated other comprehensive income (loss) 3,589 (2,017 )
Less treasury stock, at cost, 1,774,006 and 1,307,317 shares, respectively (21,996 ) (15,730 )
Total stockholders' equity 401,532 341,495
Total liabilities and stockholders' equity $ 536,055 $ 524,776
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JDA SOFTWARE GROUP, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(in thousands, except earnings per share data, unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
2009 2008 2009 2008
REVENUES:
Software licenses $ 17,250 $ 23,011 $ 60,160 $ 58,593
Maintenance services 45,010 46,388 132,378 138,843
Product revenues 62,260 69,399 192,538 197,436
Consulting services 30,852 26,437 78,965 78,901
Reimbursed expenses 2,747 2,610 7,174 7,780
Service revenues 33,599 29,047 86,139 86,681
Total revenues 95,859 98,446 278,677 284,117
COST OF REVENUES:
Cost of software licenses 580 613 2,417 2,009
Amortization of acquired software technology 966 1,309 2,954 4,270
Cost of maintenance services 10,883 11,513 32,416 34,145
Cost of product revenues 12,429 13,435 37,787 40,424
Cost of consulting services 22,219 20,315 61,732 61,084
Reimbursed expenses 2,747 2,610 7,174 7,780
Cost of service revenues 24,966 22,925 68,906 68,864
Total cost of revenues 37,395 36,360 106,693 109,288
GROSS PROFIT 58,464 62,086 171,984 174,829
OPERATING EXPENSES:
Product development 12,495 13,288 37,732 40,196
Sales and marketing 15,888 15,899 46,310 47,738
General and administrative 12,305 10,440 35,001 32,406
Amortization of intangibles 5,753 6,075 17,880 18,227
Restructuring charges and adjustments to acquisition-related reserves 2,543 399 6,705 3,954
Total operating expenses 48,984 46,101 143,628 142,521
OPERATING INCOME 9,480 15,985 28,356 32,308
Interest expense and amortization of loan fees (346 ) (2,353 ) (971 ) (7,313 )
Interest income and other, net 1,006 51 886 2,127
INCOME BEFORE INCOME TAXES 10,140 13,683 28,271 27,122
Income tax provision 3,877 5,441 10,429 10,451
NET INCOME $ 6,263 $ 8,242 $ 17,842 $ 16,671
Consideration paid in excess of carrying value on the repurchase of redeemable preferred stock (8,593 ) - (8,593 ) -
INCOME APPLICABLE TO COMMON SHAREHOLDERS $ (2,330 ) $ 8,242 $ 9,249 $ 16,671
EARNINGS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS:
Basic earnings per share $ (.07 ) $ .24 $ .26 $ .49
Diluted earnings per share $ (.07 ) $ .23 $ .26 $ .47
SHARES USED TO COMPUTE EARNINGS PER SHARE:
Basic earnings per share 33,505 34,528 35,076 34,223
Diluted earnings per share 33,505 35,432 35,329 35,261
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JDA SOFTWARE GROUP, INC.NON-GAAP MEASURES OF PERFORMANCE(in thousands, except share data, unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
NON-GAAP OPERATING INCOME AND ADJUSTED EBITDA
Operating income (GAAP BASIS) $ 9,480 $ 15,985 $ 28,356 $ 32,308
Adjustments for non-GAAP measures of performance:
Add back amortization of acquired software technology 966 1,309 2,954 4,270
Add back amortization of intangibles 5,753 6,075 17,880 18,227
Add back restructuring charges 2,543 399 6,705 3,954
Add back stock-based compensation 2,845 911 6,412 3,135
Adjusted non-GAAP operating income 21,587 24,679 62,307 61,894
Add back depreciation 2,482 2,352 7,209 7,412
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) $ 24,069 $ 27,031 $ 69,516 $ 69,306
NON-GAAP OPERATING INCOME AND AJDUSTED EBITDA, as a percentage of revenue
Operating income (GAAP BASIS) 10 % 16 % 10 % 12 %
Adjustments for non-GAAP measures of performance:
Amortization of acquired software technology 1 % 2 % 1 % 2 %
Amortization of intangibles 6 % 6 % 6 % 6 %
Restructuring charges 3 % - % 3 % 1 %
Stock-based compensation 3 % 1 % 2 % 1 %
Adjusted non-GAAP operating income 23 % 25 % 22 % 22 %
Depreciation 2 % 2 % 3 % 2 %
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) 25 % 27 % 25 % 24 %
NON-GAAP EARNINGS PER SHARE
Income before income taxes $ 10,140 $ 13,683 $ 28,271 $ 27,122
Add back amortization of acquired software technology 966 1,309 2,954 4,270
Add back amortization of intangibles 5,753 6,075 17,880 18,227
Add back restructuring charges 2,543 399 6,705 3,954
Add back stock-based compensation 2,845 911 6,412 3,135
Add back bank charges on credit facility commitment - 637 - 637
Adjusted income before income taxes 22,247 23,014 62,222 57,345
Adjusted income tax expense 8,009 8,285 22,261 20,644
Adjusted net income $ 14,238 $ 14,729 $ 39,961 $ 36,701
Adjusted non-GAAP diluted earnings per share $ 0.40 $ 0.42 $ 1.24 $ 1.04
Shares used to compute non-GAAP diluted earnings per share 35,678 35,432 32,348 35,261
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Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
2009 2008 2009 2008
CASH FLOW INFORMATION
Net cash provided by operating activities $ 20,019 $ 18,761 $ 80,528 $ 70,672
Net cash used in investing activities:
Payment of direct costs related to acquisitions $ (2,945 ) $ (2,911 ) $ (4,431 ) $ (5,434 )
Purchase of other property and equipment (4,134 ) (1,568 ) (5,541 ) (6,065 )
Proceeds from disposal of property and equipment 8 46 62 115
$ (7,071 ) $ (4,433 ) $ (9,910 ) $ (11,384 )
Net cash provided by financing activities:
Issuance of common stock under equity plans $ 9,882 $ 307 $ 14,524 $ 6,014
Redemption of Series B convertible preferred stock (28,068 ) ? (28,068 ) ?
Purchase of treasury stock (2,367 ) (239 ) (6,266 ) (1,902 )
Principal payments on term-loan agreement ? (437 ) ? (19,086 )
Loan origination fees ? (3,375 ) ? (3,375 )
Other, net ? ? ? (1,638 )
$ (20,553 ) $ (3,744 ) $ (19,810 ) $ (19,987 )
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