JDA® Software Group, Inc. (NASDAQ: JDAS),
The Supply Chain Company®, today announced financial results for
the first quarter ended March 31, 2010. JDA reported record total
revenues of $131.6 million, a 58 percent increase from $83.3
million of revenue reported in first quarter 2009. Software license
and subscription revenues increased 87 percent in the first quarter
2010 to $28.7 million from $15.3 million in first quarter 2009, and
adjusted EBITDA increased 88 percent to $31.4 million in first
quarter 2010 from $16.7 million in first quarter 2009.
JDA also reported adjusted non-GAAP earnings for first quarter
2010 of $0.38 per share, an increase of 46 percent from $0.26 per
share in first quarter 2009. The GAAP loss applicable to common
shareholders for first quarter 2010 was $4.3 million or ($0.11) per
share, and includes acquisition-related costs, compared to GAAP net
income of $2.6 million or $0.08 per share in first quarter 2009.
Results for 2010 include the completion of the acquisition of i2
Technologies, Inc. (“i2”) as of January 28, 2010.
“I am pleased to report that we delivered solid results in a
quarter that featured our largest acquisition to date,” said JDA
president and chief executive officer Hamish Brewer. “In the 90
days since completing the i2 acquisition we have fully integrated
teams across all regions and functional areas of the company and
completed a new JDA product roadmap that demonstrates the breadth,
depth and future direction of our powerful suite of planning,
optimization and execution solutions.”
First Quarter 2010 Financial Summary
- Adjusted non-GAAP earnings per
share for first quarter 2010 were $0.38 using 40.0 million fully
diluted shares compared to $0.26 per share in first quarter 2009
using 35.1 million fully diluted shares. 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.
- The GAAP net loss applicable to
common shareholders for first quarter 2010 was $4.3 million or
($0.11) per share, compared to net income of $2.6 million or $0.08
per share in first quarter 2009.
- DSO increased to 74 days at the
end of first quarter 2010 from 71 days at the end of first quarter
2009, primarily due to the receivables acquired from i2. JDA is
applying its focused collection process to the new receivables as a
part of the overall company integration process, with the goal of
reducing the overall DSO.
- Cash flow from operations was
$12.2 million in first quarter 2010 compared to cash flow from
operations of $33.1 million in first quarter 2009. The change in
operating cash flow in the current period was primarily driven by
lower cash provided by working capital as compared to first quarter
2009. This is primarily due to the increase in the receivables from
higher revenue in the current year, the payment of approximately
$6.7 million of acquisition-related costs in first quarter 2010, as
well as the collection of a significant receivable in the first
quarter of 2009.
- Cash and cash equivalents,
including restricted cash, were $167.5 million at March 31, 2010,
compared to $363.8 million at December 31, 2009, which included net
proceeds from the issuance of $275.0 million of Senior Notes that
were used to complete the acquisition of i2 on January 28,
2010.
First Quarter 2010 Highlights
“Our strong sales performance this quarter demonstrates a vote
of customer confidence in our strategy to build a world-class
supply chain company through both organic and acquisition growth,”
commented Brewer. “We saw little to no deal erosion as a result of
the i2 acquisition, and in fact believe that companies now, more
than ever, understand the value of solutions from a company that
specializes in supply chain. As a result, JDA continues to be the
technology provider of choice for companies around the world.”
The following presents a high-level summary of JDA’s regional
sales performance:
- JDA reported $18.9 million in
software license and subscription revenues in its Americas region
during first quarter 2010, compared to $19.1 million in fourth
quarter 2009 and $11.1 million in first quarter 2009. Customers
that signed new software licenses included: Anna’s Linens
Company, Cabela’s Incorporated, Compania Embotelladora Del Fuerte,
The Forzani Group, Ltd., SABMiller Latin America and OM
HealthCare LogisticsSM, a third-party logistics service
of Owens & Minor, Inc.
- Software license and
subscription revenues in the Europe, Middle East and Africa (EMEA)
region were $5.4 million in first quarter 2010, compared to $6.4
million in fourth quarter 2009 and $3.2 million in first quarter
2009. New software deals in the EMEA region included: Casio
France, Crai Secom SpA, La Gardenia Beauty SpA and SSAB.
- JDA’s Asia Pacific region posted
software license and subscription revenues of $4.4 million in first
quarter 2010, compared to $3.1 in fourth quarter 2009 and $1.1
million in first quarter 2009. Wins in this region included: LG
Electronics Inc., Rustan Commercial Corporation and Suning
Appliance Co., Ltd.
Conference Call Information
JDA Software Group, Inc. will host a conference call at 4:45
p.m. Eastern time today to discuss earnings results for its first
quarter ended March 31, 2010. To participate in the call, dial
1-877-941-8416 (United States) or 1-480-629-9808 (International)
and ask the operator for the “JDA Software Group, Inc. First
Quarter 2010 Earnings Conference Call.” A live audio webcast of the
conference call can be accessed by logging onto www.jda.com in the
Investor Relations section.
A replay of the conference call will begin on April 27, 2010 at
8:00 p.m. Eastern time and will end on May 27, 2010. 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 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 SOFTWARE GROUP,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
amounts, unaudited)
March 31,2010
December 31,2009
ASSETS Current Assets:
Cash and cash equivalents
$ 155,817 $ 75,974 Restricted cash 11,698 287,875
Accounts receivable, net
107,881
68,883
Income tax receivable 1,050
--
Deferred tax asset
57,828 19,142
Prepaid expenses and other current
assets
29,705 15,667
Total current assets
363,979 467,541
Non-Current Assets:
Property and equipment, net
43,296
40,842
Goodwill
201,316 135,275 Other Intangibles, net:
Customer-based intangibles
167,395 99,264
Technology-based intangibles
44,264 20,240
Marketing-based intangibles
13,960 157
Deferred tax asset
268,821 44,350
Other non-current assets
17,154 13,997
Total non-current assets
756,206 354,125
Total Assets
$
1,120,185 $
821,666
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
Liabilities:
Accounts payable
$ 11,063 $ 7,192
Accrued expenses and other
liabilities
74,068 45,523 Income taxes payable
--
3,489
Deferred revenue
127,905 65,665
Total current liabilities
213,036 121,869
Non-Current Liabilities: Long-term debt
272,333 272,250 Accrued exit and disposal obligations 6,458 7,341
Liability for uncertain tax positions 14,215 8,770 Deferred revenue
28,942
--
Total non-current liabilities
321,948 288,361
Total Liabilities
534,984 410,230
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 43,528,992 and 36,323,245
shares, respectively
435
363
Additional paid-in capital
553,705 361,362 Deferred compensation (15,906 ) (5,297 )
Retained earnings
69,746 74,014
Accumulated other comprehensive
income
2,706 3,267 Less treasury stock, at cost, 1,901,490 and 1,785,715
shares, respectively
(25,485 )
(22,273 )
Total stockholders' equity
585,201 411,436
Total liabilities and
stockholders' equity
$
1,120,185 $
821,666
JDA SOFTWARE GROUP,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands,
except earnings per share data, unaudited)
Three Months EndedMarch
31,
2010 2009 REVENUES: Software licenses $ 24,437
$ 14,357 Subscriptions and other recurring revenues 4,287 968
Maintenance services
57,060 42,997
Product revenues
85,784 58,322
Consulting services
43,002 23,034
Reimbursed expenses
2,845 1,977
Service revenues
45,847 25,011
Total revenues
131,631 83,333
COST OF REVENUES: Cost of software licenses
1,008 602 Amortization of acquired software technology 1,576 1,008
Cost of maintenance services
12,033
10,549
Cost of product revenues
14,617 12,159
Cost of consulting services
35,269 19,382
Reimbursed expenses
2,845 1,977
Cost of service revenues
38,114 21,359
Total cost of revenues
52,731 33,518
GROSS PROFIT 78,900 49,815
OPERATING
EXPENSES: Product development 17,277 12,573
Sales and marketing
21,112 14,252
General and administrative
17,697 11,026
Amortization of intangibles
8,566 6,076
Restructuring charges
7,758 1,430 Acquisition-related costs
6,743
--
Total operating expenses
79,153 45,357
OPERATING INCOME (LOSS)
(253 ) 4,458 Interest expense and amortization of loan fees
(6,086 ) (239 )
Interest income and other, net
1,123 (243
) INCOME (LOSS) BEFORE INCOME TAXES
(5,216 ) 3,976
Income tax (provision) benefit
948 1,332
NET INCOME (LOSS)
$
(4,268 ) $
2,644
BASIC EARNINGS (LOSS) PER SHARE $
(.11
) $
.08 DILUTED EARNINGS (LOSS)
PER SHARE $
(.11 ) $
.08
SHARES USED TO COMPUTE:
Basic earnings (loss) per
share
39,343 34,961
Diluted earnings (loss) per
share
39,343 35,075
JDA SOFTWARE GROUP,
INC.
NON-GAAP MEASURES OF
PERFORMANCE
(in thousands, except share
data, unaudited)
Three Months EndedMarch
31,
2010 2009
Reconciliation of GAAP Net Income (Loss) to
EBITDA and Adjusted EBITDA
Net Income (Loss) (GAAP BASIS) $ (4,268 ) $ 2,644
Income tax provision (benefit) (948 ) 1,332 Interest expense and
amortization of loan fees 6,086 239 Amortization of acquired
software technology 1,576 1,008 Amortization of intangibles 8,566
6,076 Depreciation
3,006
2,327 EBITDA (earnings before interest, tax,
depreciation and amortization) 14,018 13,626 Restructuring
charges 7,758 1,430 Stock-based compensation 3,277 1,410
Acquisition-related costs 6,743
--
Non-recurring transition costs to integrate acquisition 717
--
Interest income and other non-operating (income) expense, net
(1,123 ) 243
Adjusted EBITDA $
31,390 $
16,709 EBITDA, as a percentage of
revenue 11 %
16 % Adjusted EBITDA, as a
percentage of revenue 24 %
20 %
NON-GAAP EARNINGS PER SHARE
Income (loss) before income taxes (GAAP BASIS) $
(5,216 ) $ 3,976 Amortization of acquired software
technology 1,576 1,008 Amortization of intangibles 8,566 6,076
Restructuring charges 7,758 1,430 Stock-based compensation 3,277
1,410 Acquisition-related costs 6,743
--
Non-recurring transition costs to integrate acquisition
717
--
Adjusted income before income taxes 23,421 13,900
Adjusted income tax expense
8,197
4,865 Adjusted net income $
15,224 $
9,035 Adjusted
non-GAAP diluted earnings per share $
0.38
$
0.26 Shares used to compute non-GAAP
diluted earnings per share 40,025
35,075
Three Months EndedMarch
31,
2010 2009
CASH FLOW INFORMATION
Net cash provided by (used in)
operating activities
$ 12,195 $ 33,055 Net cash provided by (used in) investing
activities: Change in restricted cash $ 276,177
$
--
Purchase of i2 Technologies, Inc. (213,427 )
--
Payment of direct costs related to acquisitions (850 ) (817 )
Purchase of other property and equipment (533 ) (1,003 ) Proceeds
from disposal of property and equipment
17
16 $
61,384 $
(1,804 ) Net cash provided by
(used in) financing activities: Issuance of common stock under
equity plans $ 10,904 $ 2,506 Purchase of treasury stock and other,
net
(3,392 ) (
3,219 ) $
7,512 $
(713 )
Acquisition of i2 Technologies, Inc. –
Preliminary Allocation
Identifiable assets acquired: Fair value of current assets
acquired $ 300,097 Fair value of fixed assets acquired 3,116
Customer-based intangibles 76,200 Technology-based intangibles
25,600 Marketing-based intangibles 14,300 Long-term deferred tax
assets acquired 218,322 Fair value of other non-current assets
acquired
3,925 Total identifiable assets
acquired 641,560 Goodwill
66,041 Total
assets acquired
707,601
Liabilities assumed: Fair value of deferred revenue assumed (62,614
) Fair value of other current liabilities assumed (41,128 ) Fair
value of non-current liabilities assumed
(4,105
) Total liabilities assumed
(107,847 ) Net assets acquired
from i2 Technologies, Inc. $
599,754
Total consideration transferred to acquire i2 Technologies,
Inc.: Fair value of JDA common stock issued as merger
consideration 167,979 Cash acquired 218,348 Cash expended to
acquire i2 Technologies, Inc.
213,427
Total consideration transferred to acquire i2 Technologies, Inc. $
599,754 JDA Software Group, Inc.
Supplemental Data (dollars in thousands)
Software & Subscription Revenues by Geographic Region
Three Months Ended 3/31/2010
12/31/2009 9/30/2009 6/30/2009
3/31/2009 Americas $ 18,917 $ 19,084 $ 12,624 $ 14,356 $
11,105 EMEA 5,403 6,417 4,084 5,012 3,170 Asia/Pacific 4,404
3,125 542 8,216
1,050 Total $ 28,724 $ 28,626 $ 17,250
$ 27,584 $ 15,325
Business Segment
Data Three Months Ended 3/31/2010
12/31/2009 9/30/2009 6/30/2009
3/31/2009 Supply Chain Total Revenues $ 125,233 $
99,410 $ 88,608 $ 88,161 $ 78,223 Operating Income 39,904 33,882
29,054 29,127 22,111 Operating Income Margin 32 % 34 % 33 % 33 % 28
%
Services Industry Total Revenues $ 6,398 $
7,713 $ 7,251 $ 11,324 $ 5,110 Operating Income 607 986 1027 5744
879 Operating Income Margin 9 % 13 % 14 % 51 % 17 %
New
vs Install-Base Sales Three Months Ended
3/31/2010 12/31/2009 9/30/2009
6/30/2009 3/31/2009 New Sales $ 8,415 29 % $ 4,515 16
% $ 3,317 19 % $ 10,066 36 % $ 5,768 38 % Install-Base Sales
20,309 71 % 24,111 84 % 13,933
81 % 17,518 64 % 9,557 62 % Total $
28,724 $ 28,626 $ 17,250 $ 27,584 $
15,325
ASP, Multi-Product Deals & Large Deal
Counts Last Twelve Months Ended 3/31/2010
12/31/2009 9/30/2009 6/30/2009
3/31/2009 Average Sales Price (ASP) $ 618 $ 630 $ 733 $ 819
$ 697 Multiple-Product Deals 24 23 19 18 19 Large Deal Count (>=
$1 million ) 24 19 16 19 17 Quota Carrying Sales
Representatives 96 75 75 72 68
Summary of Revenue
Contribution in First Quarter 2010
JDA i2 Combined Software and
Subscription Revenues $ 15,878 55 % $ 12,846 45 % $ 28,724
Maintenance Revenues 46,491 81 % 10,569 19 %
57,060 Product Revenues 62,369 73 % 23,415 27 % 85,784
Service Revenues 32,001 70 % 13,846 30 %
45,847 Total Revenues $ 94,370 72 % $ 37,261 28 % $ 131,631
“Safe Harbor” Statement under the U.S. Private Securities
Litigation Reform Act of 1995
We do not believe this press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Nevertheless, if remarks in this press release
are considered to be ``forward-looking'' or to have forward-looking
implications, such as Mr. Brewer’s comments regarding our
accomplishments to date in integrating i2 and that JDA continues to
be the technology provider of choice for companies around the
world, we would remind our investors and prospective investors that
future events may involve risks and uncertainties. Risks and
uncertainties that may affect our business are detailed from time
to time in the ``Risk Factors'' section and other sections of our
filings with the Securities and Exchange Commission. As a result of
these and other risks, actual results may differ materially from
those predicted. We undertake no obligation to update information
in this release, except as required by law.
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 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.
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.
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