Manugistics Announces Third Quarter Fiscal 2006 Results
ROCKVILLE, Md.--Jan. 5, 2006--Manugistics Group, Inc. (NASDAQ:MANU), a leading global provider of synchronized supply chain and revenue management solutions, today reported results for its fiscal 2006 third quarter ended November 30, 2005.
For the third quarter, total revenue was $39.9 million, down 11 percent from $45.0 million in the prior year quarter. Software license revenue was $4.1 million, down 39 percent from $6.7 million in the prior year quarter. Support revenue was $21.1 million, up 2 percent from $20.7 million in the prior year quarter. Product revenue, which is composed of software license and support revenue, was 63 percent of total revenue compared to 61 percent of total revenue in the prior year quarter. Services revenue, excluding reimbursed expenses, was $13.2 million, down 18 percent from $16.2 million in the prior year quarter.
For the third quarter, the Company reported GAAP net loss of $4.6 million, or $0.06 per basic and diluted share, compared to GAAP net loss of $13.3 million, or $0.16 per basic and diluted share, in the prior year quarter. For the third quarter, the Company reported GAAP operating loss of $3.6 million compared to GAAP operating loss of $11.5 million in the prior year quarter. GAAP net loss and GAAP operating loss for the quarters ended November 30, 2005 and 2004 included $1.3 million and $2.9 million, respectively, in exit and disposal charges primarily related to the abandonment of offices with lease commitments and severance and related benefits for involuntary terminations.
For the third quarter, the Company reported adjusted operating income of $0.2 million compared to adjusted operating loss of $3.3 million in the prior year quarter. The Company reported adjusted net loss of $1.4 million, or $0.02 per basic and diluted share for the third quarter, compared to adjusted net loss of $5.1 million, or $0.06 per basic and diluted share, in the prior year quarter.
Adjusted operating income or loss, adjusted net loss and adjusted net loss per basic and diluted share referred to in this press release are non-GAAP measures and exclude the following items: amortization of intangibles and acquired technology, charges and benefits from exit and disposal activities, asset impairment charge, benefit from tax refund and adjustments and non-cash stock option compensation charges. A reconciliation of GAAP results to adjusted results has been provided in the financial statement tables following the text of this press release. For further information, please refer to the section of the press release titled, "Reasons for Presentation of Non-GAAP Financial Measures."
Headcount at the end of the third quarter was 766 compared to 765 from the end of the prior quarter. As previously announced, the Company intends to increase headcount and development capacity in India and to reduce its headcount and development capacity at its U.S. development organization by the end of fiscal 2006. As a result of reducing its product development costs in the U.S., the Company thereby plans to reduce its overall product development costs from its third quarter of fiscal 2005 by $2.0 million to $3.0 million per quarter by the end of fiscal 2006.
Business Metrics - Third Quarter Ended November 30, 2005
-- Cash used in operations was $6.8 million.
-- Cash, cash equivalents, marketable securities and long-term
investments were approximately $126.5 million as of November
30, 2005, down from $136.1 million as of August 31, 2005,
primarily as a result of cash usage for operating activities,
including the $4.4 million semi-annual interest payment on our
long-term debt and $2.8 million in payments of previously
enacted exit and disposal activities.
-- Capitalized software development costs were $0.8 million for
the quarter while the amortization of capitalized software
development costs for the same period was $2.3 million for a
net expense of $1.5 million.
-- The Company closed 10 significant software license
transactions - software license transactions (excluding those
recognized on a percentage-of-completion or ratable basis) of
$100,000 or greater recognized in the quarter.
-- There were no significant software license transactions of
$1.0 million or greater.
-- The average selling price for significant software license
transactions was approximately $288,000.
-- 20 percent of software license revenue from significant
software license transactions related to new clients.
-- 77 percent of software license revenue came from international
sales.
-- Days Sales Outstanding (DSO) for receivables was 84 days,
compared to 78 days for the quarter ended August 31, 2005.
-- Bookings for the quarter were $0.5 million. Bookings are
defined as the amount of software license revenue we expect to
recognize in future periods from software license transactions
signed during the quarter.
Manugistics does not provide forward-looking guidance on software license revenue, total revenue, operating income or net income performance nor does the Company intend to provide performance updates prior to the next release of quarterly results.
Conference Call Information
Manugistics will conduct a simultaneous conference call and audio Web-cast on Thursday, January 5, 2006 at 5:00 PM EST to discuss the Company`s financial performance for its third quarter. Interested parties may listen to the Web-cast by going to www.manugistics.com/ir/.
A recording of the call will be available from 7:00 PM EST Thursday, January 5, 2006 through approximately 7:00 PM EST on Monday, January 9, 2006. To listen to the recording, callers within North America may call 800-633-8284. Callers outside North America may call 402-977-9140. Callers to the recording will be required to enter the access number for this call, which is 21276744. In addition, a recording of the Web-cast will be archived until the Company`s next earnings call on the Manugistics website at www.manugistics.com/ir/.
Other Highlights and Developments
--Third Quarter Global Client Wins: The Company recognized ten significant software license transactions in key industries in the Americas, Europe and Asia, with third quarter global wins including, among others: Elemica; Fosters Group; Merial; and Thales Information Systems (Midland Mainline).
--Manugistics Clients to Showcase Retail Strategies at National Retail Federation (NRF) Convention: The Company announced that McDonald`s Corporation and Limited Brands will participate in the Manugistics-sponsored Supply Chain Strategies track at the NRF Show in New York City, January 16-18. The Company will also showcase its retail solutions as an exhibitor (Booth #1327).
About Manugistics Group, Inc.
Manugistics powers the synchronized supply chain. Clients depend on Manugistics to position them one step ahead of demand. With Manugistics` unparalleled supply chain and revenue management solutions, clients achieve improved forecast and inventory accuracy and leverage industry leading pricing and yield management solutions to maximize profits while ensuring optimum supply for constantly changing demand. Its clients include industry leaders such as Boeing, Canadian Tire, Cingular, Circuit City, Coca-Cola Bottling, Coty International, DHL, Diageo, Dixons, DuPont, Eurostar Group Ltd., Georgia-Pacific, Great North Eastern Railway (GNER), Harley-Davidson, Harrah`s Entertainment, H.J. Heinz, L.L. Bean, Limited Brands, Kraft Foods, Marriott, McCormick, Nestle, RadioShack, The Scotts Company, Sears, Roebuck & Co., Sinotrans, Unilever and Wickes Building Supplies. For more information, visit our website at www.manugistics.com.
Reasons for Presentation of Non-GAAP Financial Measures
The non-GAAP financial measures presented in the text of this press release and accompanying supplementary financial information (also referred to as "adjusted") represent the financial measures used by the Company`s management to evaluate the quarterly operating performance of the Company and to conduct its business operations. These non-GAAP financial measures are also used by management to evaluate return on investment, income contribution and future impact to operating results of potential mergers and acquisitions. In addition, these non-GAAP financial measures facilitate management`s internal comparisons to competitors` operating results and the software industry in general. This non-GAAP financial information is provided as additional information for investors and is not in accordance with, or an alternative to, GAAP. In addition, the non-GAAP financial information provided may be different than similar measures used by other companies. However, the Company`s management believes these non-GAAP measures provide useful information to investors, potential investors, securities analysts and others so each group can evaluate the Company`s current and future prospects in the same manner as management if they so choose. The Company believes its non-GAAP measures of operating performance better reflect the underlying economics of its business and better align with the cash flow performance of the Company as measured under GAAP than it does with operating results as presented under GAAP, which include or may include, from time to time, non-cash charges for amortization expense and purchased research and development related to acquisitions, impairment losses on long-lived assets, exit and disposal activities, one-time tax benefits and non-cash stock option compensation charges. A reconciliation of GAAP results to adjusted results has been provided in the financial statement tables that accompany this press release.
Forward-Looking Statements
This release contains forward-looking statements that refer to plans and expectations for the future and involve risks and uncertainties that could cause actual results to differ materially, including, but not limited to, the following: (1) the Company`s ability to generate sufficient cash flow to meet its existing debt obligations and effectively conduct its business operations; (2) the implementation of the Company`s exit and disposal plans and other cost reduction measures to align its cost structure with its revenue; (3) recent significant changes in the Company`s organizational structure and senior management; (4) the Company`s ability to motivate, hire and retain its highly skilled and qualified workforce; (5) continued softness in the market conditions for enterprise application software, as well as political upheaval and unrest; (6) the Company`s ability to overcome its difficulties in sales execution; (7) the ability of the Company`s management to accurately forecast revenue or to adjust the Company`s cost structure, most of which is fixed in the short-term, quickly enough to align it with revenue; (8) the ability of the Company`s management to accurately project cost savings from exit and disposal activities and other cost saving initiatives; (9) the Company`s ability to maintain its competitive place in the markets for its products and services, to keep pace with the rapid technological advances or to introduce new products or product versions that satisfy customer demand, achieve market acceptance or meet competitive challenges; and (10) the Company`s ability to remain competitive in its markets as the enterprise application software sector consolidates. With respect to the exit and disposal plans and changes in organizational structure and senior management, there can be no assurances as to the effectiveness of these plans and changes on the Company`s overall financial performance and condition, that further similar initiatives will not be undertaken in the future, or that these plans will not have an adverse impact on the Company`s ability to successfully operate its business.
Forward-looking statements may be identified by the use of words such as "anticipate," "assume," "believe," "confident," "deliver," "expect," "focus," "forecast," "goal," "intend," "might," "objectives," "pipeline," "plan," "predict," "probably," "should," "strategy," "target," or "would." Additional information about factors that potentially could affect Manugistics` financial results is included in the Company`s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended February 28, 2005 and its Quarterly Report on Form 10-Q for the quarter ended August 31, 2005. Manugistics assumes no obligation to update the forward-looking information contained in this announcement.
Manugistics is a registered trademark, and the Manugistics logo and Manugistics NetWORKS are trademarks of Manugistics, Inc. All other product or company names mentioned are used for identification purposes only, and may be trademarks of their respective owners.
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