The Hackett Group Announces First Quarter 2018 Results

CASME Alliance - The Hackett Group, Inc. and CASME launched an alliance that will provide procurement clients of both companies with access to additional insights, research assets and networking opportunities. Through the reciprocal alliance, members of The Hackett Group’s Procurement Advisory Programs will benefit from access to CASME’s extensive spend category-specific market intelligence and indirect spending expertise, as well as selected Webcasts, RoundTables, virtual events and other peer networking opportunities. CASME clients will gain access to select research insights from The Hackett Group’s procurement membership advisory teams. The Hackett Group will also host Webcasts and provide seats at selected virtual events for CASME members.

On Tuesday, February 19, 2019 senior management will discuss fourth quarter results in a conference call at 5:00 P.M. ET. The number for the conference call is (800) 593-0486, [Passcode: Fourth Quarter]. For International callers, please dial (517) 308-9371.

Please dial in at least 5-10 minutes prior to start time. If you are unable to participate on the conference call, a rebroadcast will be available beginning at 8:00 P.M. ET on Tuesday, February 19, 2019 and will run through 5:00 P.M. ET on Tuesday, March 5, 2019. To access the rebroadcast, please dial (866) 458-4758. For International callers, please dial (203) 369-1315. In addition, The Hackett Group will also be webcasting this conference call live through the StreetEvents.com service. To participate, simply visit http://www.thehackettgroup.com approximately 10 minutes prior to the start of the call and click on the conference call link provided. An online replay of the call will be available after 8:00 P.M. ET on Tuesday, February 19, 2019 and will run through 5:00 P.M. ET on Tuesday, March 5, 2019. To access the replay, visit www.thehackettgroup.com or http://www.streetevents.com.

About The Hackett Group

The Hackett Group (HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices digital transformation firm to global companies, offering digital transformation including robotic process automation and enterprise cloud application implementation. Services include business transformation, enterprise analytics and global business services. The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement and information technology, including its award-winning Oracle and SAP practices.

The Hackett Group has completed more than 16,500 benchmarking and performance studies with major corporations and government agencies, including 97% of the Dow Jones Industrials, 89% of the Fortune 100, 87% of the DAX 30 and 59% of the FTSE 100. These studies drive Hackett’s Digital Transformation Platform which includes the firm's benchmarking metrics, best practices repository and best practice configuration guides and process flows, which enable The Hackett Group’s clients and partners to achieve world-class performance.

More information on The Hackett Group is available at: www.thehackettgroup.cominfo@thehackettgroup.com, or by calling (770) 225-3600.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause The Hackett Group's actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Factors that impact such forward-looking statements include, among others, the ability of our products, services, or offerings mentioned in this release to deliver the desired effect, our ability to effectively integrate acquisitions into our operations, our ability to retain existing business, our ability to attract additional business, our ability to effectively market and sell our product offerings and other services, including those referenced above, the timing of projects and the potential for contract cancellations by our customers, changes in expectations regarding the business consulting and information technology industries, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable due to the bankruptcy or financial difficulties of our customers, risks of competition, price and margin trends, foreign currency fluctuations, changes in general economic conditions and interest rates, our ability to obtain debt financing through additional borrowings under an amendment to our existing credit facility as well as other risks detailed in our Company's Annual Report on Form 10-K for the most recent fiscal year filed with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The Hackett Group, Inc.

     

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Quarter Ended

 

Twelve Months Ended

December 28,

December 29,

December 28,

December 29,

2018

2017

2018

2017

Revenue:
Revenue before reimbursements ("net revenue") $ 61,595 $ 62,307 $ 264,523 $ 255,131
Reimbursements   4,940   4,622   21,364   21,468
Total revenue 66,535 66,929 285,887 276,599
 
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses 35,979 35,744 159,614 153,357
Non-cash stock compensation expense 900 1,015 3,815 4,409
Acquisition-related compensation expense (benefit) 14 540 (535) 1,582
Acquisition-related non-cash stock compensation expense 575 795 2,027 2,515
Reimbursable expenses   4,940   4,622   21,364   21,468
Total cost of service 42,408 42,716 186,285 183,331
 
Selling, general and administrative costs 14,352 14,880 58,516 57,473
Non-cash stock compensation expense 743 903 3,238 3,330
Amortization of intangible assets 580 615 2,369 2,090
Acquisition-related costs 378
Acquisition-related contingent consideration liability (614) (4,364)
Impairment of assets (3) 6,269 6,269
Restructuring costs         1,293
Total selling, general, and administrative expenses 21,330 16,398 66,028 64,564
       
Total costs and operating expenses   63,738   59,114   252,313   247,895
 
Income from operations 2,797 7,815 33,574 28,704
 
Other expense:
Interest expense   (123)   (183)   (638)   (584)
 
Income from continuing operations before income taxes 2,674 7,632 32,936 28,120
Income tax expense (benefit)   (41)   (1,203)   5,577   2,564
Income from continuing operations 2,715 8,835 27,359 25,556
Gain (loss) from discontinued operations   (2,851)   606   (3,450)   1,798
Net income (loss) $ (136) $ 9,441 $ 23,909 $ 27,354
 
 
Weighted average common shares outstanding:
Basic 29,517 28,735 29,379 28,852
Diluted 32,677 32,022 32,330 32,196
 
 
Basic net income per common share:
Income per common share from operations $ 0.09 $ 0.31 $ 0.93 $ 0.89
Income (loss) per common share from discontinued operations (2)   (0.09)   0.02   (0.12)   0.06
Net income per common share $ (0.00) $ 0.33 $ 0.81 $ 0.95
 
 
Diluted net income per common share:
Income per common share from operations $ 0.08 $ 0.27 $ 0.85 $ 0.79
Income (loss) per common share from discontinued operations   (0.08)   0.02   (0.11)   0.06
Net income per common share $ (0.00) $ 0.29 $ 0.74 $ 0.85
 
Pro forma data (1):
Income from operations before income taxes $ 2,674 $ 7,632 $ 32,936 $ 28,120
Non-cash stock compensation expense 1,643 1,918 7,053 7,739
Acquisition-related compensation expense (benefit) 14 540 (535) 1,582
Acquisition-related non-cash stock compensation expense 575 795 2,027 2,515
Acquisition-related costs 378
Acquisition-related contingent consideration liability (614) (4,364)
Impairment of assets (3) 6,269 6,269
Restructuring costs 1,293
Amortization of intangible assets   580   615   2,369   2,090
Pro forma income before income taxes 11,141 11,500 45,755 43,717
Pro forma income tax expense   2,785   3,450   11,439   13,115
Pro forma net income $ 8,356 $ 8,050 $ 34,316 $ 30,602
 
Pro forma basic net income per common share $ 0.28 $ 0.28 $ 1.17 $ 1.06
Weighted average common shares outstanding 29,517 28,735 29,379 28,852
 
Pro forma diluted net income per common share $ 0.26 $ 0.25 $ 1.06 $ 0.95
Weighted average common and common equivalent shares outstanding 32,677 32,022 32,330 32,196
 
 

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(1) The Company provides pro forma earnings results (which exclude the amortization of intangible assets, stock compensation expense, acquisition-related one-time expense, cash and stock compensation expense (benefit), restructuring and impairment charges and include a normalized tax rate, which is our long term projected cash tax rate) as a complement to results provided in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP results are provided to enhance the overall users' understanding of the Company's current financial performance and its prospects for the future. The Company believes the non-GAAP results provide useful information to both management and investors and by excluding certain expenses that it believes are not indicative of its core operating results. The non-GAAP measures are included to provide investors and management with an alternative method for assessing operating results in a manner that is focused on the performance of ongoing operations and to provide a more consistent basis for comparison between quarters. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting in future periods. In addition, since the Company has historically reported non-GAAP results to the investment community, it believes the continued inclusion of non-GAAP results provides consistency in its financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.

 

(2) Discontinued operations relate to the discontinuance of the Company's REL Working Capital group.

 
(3) The charge for the impairment of assets relates to the discontinuance of the Hackett Performance Exchange and the Working Capital training course.

The Hackett Group, Inc.

   

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

December 28,

December 29,

2018

2017

ASSETS

Current assets:
Cash and cash equivalents $ 13,808 $ 17,512
Accounts receivable and unbilled revenue, net 54,807

52,267

Prepaid expenses and other current assets 4,339 2,511
Assets related to discontinued operations (4)   137   2,995
Total current assets 73,091

75,285

 
Property and equipment, net 19,750 18,851
Other assets 3,704 6,021
Goodwill, net   84,207   85,074
Total assets $ 180,752 $

185,231

 

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 7,429 $ 8,434
Accrued expenses and other liabilities 34,498 42,685
Liabilities related to discontinued operations (4)   2,300   329
Total current liabilities 44,227 51,448
Non-current accrued expenses and other liabilities - 1,268
Long-term deferred tax liability, net 6,435 6,240
Long-term debt   6,500   19,000
Total liabilities 57,162 77,956
 
Shareholders' equity   123,590   107,275
Total liabilities and shareholders' equity $ 180,752 $ 185,231
 
 
(4) The assets and liabilities related to discontinued operations relate to the discontinuance of the Company's European Working Capital Group.

The Hackett Group, Inc.

     

SUPPLEMENTAL FINANCIAL DATA

(unaudited)

 

Quarter Ended

December 28,

December 29,

September 28,

2018

2017

2018

Revenue Breakdown by Group:

(in thousands)
The Hackett Group (5) $ 52,906 $ 52,435 $ 60,225
SAP Solutions (6)   8,689   9,872   7,958
Net revenue (7) $ 61,595 $ 62,307 $ 68,183
 

Revenue Concentration:

(% of total revenue)
Top customer 4% 4% 7%
Top 5 customers 16% 13% 19%
Top 10 customers 24% 20% 26%
 

Key Metrics and Other Financial Data:

 

Total Company:

Consultant headcount 1,003 1,011 1,046
Total headcount 1,246 1,243 1,290
Days sales outstanding (DSO) 75 72 70
Cash provided by operating activities (in thousands) $ 8,056 $ 7,559 $ 9,521
Pro forma return on equity (8) 30% 32% 32%
Depreciation (in thousands) $ 609 $ 601 $ 652
Amortization (in thousands) $ 580 $ 615 $ 585
 
 

Remaining Plan authorization:

Shares purchased (in thousands) 15 - -
Cost of shares repurchased (in thousands) $ 240 $ $
Average price per share of shares purchased $ 16.01 $ $
Remaining Plan authorization (in thousands) $ 6,934 $ 3,138 $ 7,174
 

Shares Purchased to Satisfy Employee Net Vesting Obligations:

Shares purchased (in thousands) 14 6 8
Cost of shares purchased (in thousands) $ 274 $ 89 $ 118
Average price per share of shares purchased $ 19.74 $ 15.37 $ 15.77
 
(5) The Hackett Group encompasses the Benchmarking, Business Transformation and Executive Advisory groups, and EPM Groups and excludes AMS.
(6) SAP Solutions encompasses Best Practice Implementation of ERP Software, the SAP group, approximately 50% of which are offshore resources.
(7) Net revenue excludes reimbursable expenses which are primarily travel-related expenses passed through to a client with no associated margin.
(8) Twelve months of pro forma net income divided by average shareholder's equity
(9) Certain reclassifications have been made to conform with current reporting requirements.

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Source : https://finance.yahoo.com/news/hackett-group-announces-fourth-quarter-213200999.html

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