JDA Software Announces Third Quarter 2012 Results

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JDA Software Announces Third Quarter 2012 Results

Strong Cash Flow Drives Cash Balance Over $400 Million

SCOTTSDALE, Ariz.--(BUSINESS WIRE)-- JDA®Software Group, Inc. (NAS: JDAS) , The Supply Chain Company®, today announced financial results for the third quarter ended Sept. 30, 2012. In a separate announcement made today, JDA reported that it has entered into a definitive merger agreement with entities affiliated with RedPrairie under which JDA shareholders will receive $45.00 per share in an all-cash transaction.


JDA reported third quarter revenue of $164.5 million, compared to $173.1 million of revenue reported in third quarter 2011. Adjusted EBITDA was $44.5 million in third quarter 2012 compared to $52.9 million in the third quarter of 2011, generating an adjusted EBITDA margin of 27 percent in the current quarter compared to 31 percent in the third quarter of 2011.

JDA also reported adjusted non-GAAP earnings per share for third quarter 2012 of $0.53, compared to $0.67 per share reported in the third quarter 2011. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and costs related to the revenue recognition investigation and restatement in 2012. GAAP net income attributable to common shareholders for third quarter 2012 was $11.1 million or $0.26 per diluted share, compared to $18.3 million or $0.43 per share in the third quarter 2011.

Conference Call Information

In view of the separate announcement made today that JDA has entered into a definitive merger agreement with entities affiliated with RedPrairie, under which JDA shareholders will receive $45.00 per share in an all-cash transaction, JDA has cancelled its third quarter 2012 earnings conference call scheduled for 4:45 EDT on Nov 5, 2012. During the pendency of the transaction, the Company will report quarterly results consistent with its current schedule, but will not host quarterly conference calls.

Software and Subscription

Software and subscription revenue was $31.5 million in the third quarter 2012 compared to $38.5 million in the third quarter 2011. In 2012, the Europe, Middle East and Africa (EMEA) region license sales in Europe and license sales to manufacturing customers in North America were negatively impacted by the overall macro-economic conditions. License sales in the Asia-Pacific region continued to show a recovery as sales in this region increased 88 percent over Q3 2011, to $3.2 million. The Company closed 37 software deals, including six deals in excess of $1 million in the current quarter, compared to 49 deals, including 10 over $1 million in the prior year period. Additionally, the average sales price for the trailing 12 months ended Sept. 30, 2012 was $724,000 compared to $843,000 for the trailing 12 months ended Sept. 30, 2011.

Maintenance and Support Services

Maintenance revenue increased 2 percent to $68.8 million in the third quarter 2012 from $67.6 million in the third quarter 2011. This increase was due to a continued strong retention rate of 95.3 percent, compared to 95.7 percent in the third quarter 2011, and the high level of attachment of maintenance contracts to new license deals. Maintenance gross margins remained solid at 79.5 percent in the third quarter 2012 compared to 79.8 percent in the third quarter 2011.

Consulting Services

Consulting services revenue was $64.3 million in the third quarter 2012 compared to $67.0 million in the third quarter 2011. Consulting revenue was negatively impacted due to a large year-over-year reduction in scope of work from a customer in the Asia-Pacific region. Consulting services gross margins declined to 20.8 percent in the third quarter 2012 compared to 24.6 percent in the third quarter 2011 due to a decrease in billable hours, partially offset by an increase in average billing rates. Sequentially, consulting gross margins decreased slightly from 21.6 percent in the second quarter 2012.

Other Financial Data

  • Product development expenses as a percent of revenue remained constant at 11 percent in the third quarter 2012 compared to the third quarter 2011, reflecting the ongoing commitment to enhancing the Company's technology and solutions. Sales and marketing expenses as a percent of revenue remained at 15 percent in the third quarter 2012 compared to the third quarter 2011. General and administrative expenses as a percent of revenue were 13 percent in the third quarter 2012 compared to 9 percent in the third quarter 2011. The increase in the third quarter 2012 amounts are primarily due to increased personnel and infrastructure systems costs, and also include $1.7 million of costs associated with the revenue recognition investigation and restatement completed in the quarter.
  • Cash flow provided by operations increased to $40.4 million in third quarter 2012 as compared to cash flow provided by operations of $36.9 million in third quarter 2011 driven primarily by strong collections in the current period.
  • Cash and cash equivalents, including restricted cash, sequentially increased by $45.3 million to $411.7 million at Sept. 30, 2012, from $366.4 million at June 30, 2012.

Third Quarter 2012 Regional License Deals

The following presents a high-level summary of JDA's regional software sales performance:

  • JDA reported $23.3 million in software license and subscription revenues in its Americas region during third quarter 2012, compared to $29.4 million in third quarter 2011. Companies signing new software licenses in third quarter 2012 include: Colombia Sportswear Company, Coppel S.A. de C.V., CVS Corporation, DIN S.A. (Abcdin), Federated Co-operative Ltd., IPSCO Tubulars, Inc., L.L. Bean, Inc., Ollie's Bargain Outlet, and Via Rail Canada.
  • Software license and subscription revenues in the EMEA region were $4.9 million in third quarter 2012 compared to $7.4 million in third quarter 2011. New software deals in the EMEA region include: Cape Union Mart International (PTY) Ltd., Massmart (PTY) Ltd., and Shoprite Checkers (PTY) Ltd.
  • JDA's Asia-Pacific region software license and subscription revenues increased 88 percent to $3.2 million in third quarter 2012 compared to $1.7 million in third quarter 2011. New software deals in the Asia-Pacific region include: Pernod Ricard China, and Shoppers Stop Ltd.

Nine Months Ended Sept. 30, 2012 Results

  • Revenue for the nine months ended Sept. 30, 2012 decreased two percent to $495.5 million from $506.1 million for the nine months ended Sept. 30, 2011. The overall revenue decrease was driven by a decrease in software and subscription revenue, partially offset by increases in maintenance and services revenue.
  • Adjusted EBITDA was $127.6 million, or 26 percent of revenue, for the nine months ended Sept. 30, 2012 compared to $137.1 million, or 27 percent of revenue, in the first nine months of 2011.
  • Adjusted non-GAAP earnings per share for the nine months ended Sept. 30, 2012 was $1.51 compared to $1.68 per share for the nine months ended Sept. 30, 2011. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation, costs related to the revenue recognition investigation and restatement in 2012 and a credit associated with the favorable settlement of the patent infringement case in 2011.
  • The GAAP net income applicable to common shareholders for the nine months ended Sept. 30, 2012 was $26.4 million or $0.61 per share, compared to net income of $79.1 million or $1.85 per share for the nine months ended Sept. 30, 2011. Results for the nine months ended Sept. 2012 include $12.5 million of costs related to the revenue recognition investigation and restatement in 2012. Results for the nine months ended Sept. 30, 2011 include a $37.5 million pre-tax credit associated with the favorable settlement of the patent infringement case.
  • Cash flow from operations was $118.2 million for the nine months ended Sept. 30, 2012 compared to cash flow from operations of $130.0 million for the nine months ended Sept. 30, 2011. The decrease in operating cash flow from the prior period was primarily due to $37.5 million received in 2011 from the favorable patent litigation settlement and 2012 improvements in working capital from favorable changes in payables and receivables.

About JDA Software Group

JDA® Software Group, Inc. (NAS: JDAS) , The Supply Chain Company®, is the leading provider of innovative supply chain management, merchandising and pricing excellence solutions worldwide. JDA empowers more than 6,000 companies of all sizes to make optimal decisions that improve profitability and achieve real results in the 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 robust services offering, including complete solution lifecycle management via JDA Cloud Services, provides customers with leading-edge industry practices and supply chain expertise, lower total cost of ownership, long-term business value, and 24/7 functional and technical support. To learn more, visit jda.com or email info@jda.com.

 
JDA SOFTWARE GROUP, INC.
Q3 2012 FINANCIAL RESULTS
CONSOLIDATED STATEMENT OF OPERATIONS
($ in thousands, except per share data, unaudited)
              
  Three Months Ended September 30,  

 

2012 

% of
Revenues

  2011 

% of
Revenues

  

% Increase
(Decrease)

    
REVENUES:
Software licenses$27,54417%$34,72620%-21%
Subscriptions and other recurring revenues3,9092%3,7382%5%
Maintenance services 68,784  42%   67,632  39%2%
Product revenues100,23761%106,09661%-6%
 
Consulting services59,09036%60,97035%-3%
Reimbursed expenses 5,193  3%   6,033  3%-14%
Services revenue64,28339%67,00339%-4%
        
Total Revenues164,520100%173,099100%-5%
 
COST OF REVENUES:
Cost of software licenses1,0341%1,0091%2%
Amortization of acquired software technology1,7021%1,7261%-1%
Cost of maintenance services 14,101  9%   13,654  8%3%
Cost of product revenues16,83710%16,3899%3%
 
Cost of consulting services45,73328%44,50526%3%
Reimbursed expenses 5,193  3%   6,033  3%-14%
Cost of service revenue50,92631%50,53829%1%
        
Total Cost of Revenues67,76341%66,92739%1%
        
GROSS PROFIT96,75759%106,17261%-9%
 
OPERATING EXPENSES:
Product development18,29711%18,74711%-2%
Sales and marketing24,26515%25,75615%-6%
General and administrative21,00913%15,8159%33%
Amortization of intangibles9,5306%9,5626%0%
Restructuring charges(163)0%7680%-121%
        
Total Operating Expenses72,93844%70,64841%3%
        
OPERATING INCOME23,81914%35,52421%-33%
Interest expense and amortization of loan fees6,6084%6,4354%3%
Interest income and other, net(1,253)-1%(641)0%NM
        
INCOME BEFORE INCOME TAXES18,46411%29,73017%-38%
Income tax provision7,4135%11,4437%-35%
        
NET INCOME$11,051  7%  $18,287  11%-40%
 
EARNINGS PER SHARE:
Basic$0.26$0.43-40%
Diluted$0.26$0.43-40%
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic42,96942,5111%
Diluted43,19142,7951%
              
Note: Subtotals may not add due to rounding.
 
 
JDA SOFTWARE GROUP, INC.
YTD Q3 2012 FINANCIAL RESULTS
CONSOLIDATED STATEMENT OF OPERATIONS
($ in thousands, except per share data, unaudited)
              
  Nine Months Ended September 30,  

 

2012 

% of
Revenues

 2011 

% of
Revenues

  

% Increase
(Decrease)

   
REVENUES:
Software licenses$84,97717%$100,59120%-16%
Subscriptions and other recurring revenues11,6952%12,5822%-7%
Maintenance services Read Full Story

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