The Hackett Group, Inc. : The Hackett Group Announces Q1 Results
05/08/2012| 04:15pm US/Eastern
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Q1 2012 revenue of $57.0 million and pro forma EPS of $0.08, both at
high-end of guidance
Stock tender offer completed with the purchase of 11.0 million shares
or 27% of shares outstanding
The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic advisory and
operations improvement consulting firm, today announced its financial
results for the first quarter of 2012, which ended March 30, 2012.
First quarter 2012 revenue was $57.0 million, an 8% increase from the
same period in 2011. Pro forma diluted earnings per share were $0.08 for
the first quarter of 2012, as compared to $0.07 for the same period in
2011. Pro forma information is provided to enhance the understanding of
the Company's financial performance and is reconciled to the Company's
GAAP information in the accompanying tables. GAAP diluted earnings per
share were $0.09 for the first quarter of 2012, as compared to $0.08 in
the first quarter of 2011.
At the end of the first quarter of 2012, the Company's cash balances
were $13.5 million. On March 21, 2012, the Company completed a tender
offer to purchase 11.0 million shares of its common stock at a purchase
price of $5.00 per share for an aggregate cost of approximately $56.1
million, including fees and expenses. The transaction was funded using
$40.0 million from a new credit facility, along with cash on hand.
"We are pleased with our operating results and with the momentum we
built during the quarter," stated Ted A. Fernandez, Chairman & CEO of
The Hackett Group. "This momentum and the favorable reaction experienced
from the successful execution of our recently completed stock tender
offer demonstrate the confidence we have in our ability to strategically
deliver value to our clients and shareholders."
Based on the current economic outlook, the Company estimates total
revenue for the second quarter of 2012 to be in the range of $58.5
million to $60.5 million, and estimates pro forma diluted earnings per
share to be in the range of $0.10 to $0.12.
Other Highlights
Key Issues Study Results - 2012 Key Issues Study results from The
Hackett Group charted the impact of increased volatility, globalization,
and other elements of the "New Normal," for finance, IT, and other
business services functions. At an enterprise level, The Hackett Group
found that companies are heavily focused on improving accuracy and
timeliness of information to enable improved decision-making, and on
leveraging global standards, resources, and organizational models as
they struggle to "do more with less."
Offshoring Research Update - New offshoring research from The
Hackett Group found that corporations in the U.S. and Europe will move
an additional 750,000 jobs in IT, finance, and other business services
to India and other low-cost geographies by 2016. However, levels of
additional offshoring in these areas will begin to decline by 2014, and
in the next 8 to10 years the flow of jobs offshore is likely to cease,
as companies simply run out of business services jobs suitable for
moving to low-cost countries.
US Postal Service Collections Research - REL Consulting, a
division of The Hackett Group, found that the U.S. Postal Service's
decision to eliminate next-day delivery of first-class mail could cost
typical large U.S. companies up to $100 million each year by making it
significantly harder to collect from customers quickly. REL also offered
guidance that companies can use to address the impact of the Postal
Service's change.
Strategic Alliance with the Chemical Information Service -
Chemical Information Services (CIS) and The Hackett Group announced a
strategic alliance which will offer CIS clients access to select Hackett
research and insights. CIS is a leading provider of product and producer
information to the chemical and pharmaceutical industries.
Answerthink Receives Awards from SAP - Answerthink, a division of
The Hackett Group, received the Overall SAP Channel Partner of the Year
Award, North America from SAP Americas. Awards were presented during the
SAP North America Field Kick-Off Meeting to the top-performing SAP
channel partners and SAP services partners.
On Tuesday, May 8, 2012, the senior management will discuss first
quarter results in a conference call at 5:00 P.M. ET.
The number for the conference call is (800) 779-3138, [Passcode: First
Quarter, Leader: Ted A. Fernandez]. For International callers, please
dial (517) 308-9381.
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, May 8, 2012 and will run
through 5:00 P.M. ET on Tuesday, May 22, 2012. To access the
rebroadcast, please dial (800) 947-6258. For International callers,
please dial (402) 220-3482.
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, May 8, 2012 and will run
through 5:00 P.M. ET on Tuesday, May 22, 2012. To access the replay,
visit http://www.thehackettgroup.com
or http://www.streetevents.com.
About The Hackett Group, Inc.
The
Hackett Group (NASDAQ: HCKT), a global strategic business
advisory and operations improvement consulting firm, is a leader in
best practice advisory, benchmarking, and transformation consulting
services including strategy and operations, working capital management,
shared services and globalization advice. Utilizing best practices and
implementation insights from more than 7,000 benchmarking engagements,
executives use The Hackett Group's empirically-based approach to quickly
define and implement initiatives to enable world-class performance.
Through its REL group, The Hackett Group offers working capital
solutions focused on delivering significant cash flow improvements.
Through its Archstone Consulting group, The Hackett Group offers
Strategy & Operations consulting services in the Consumer and Industrial
Products, Pharmaceutical, Manufacturing and Financial Services industry
sectors. Through its Hackett Technology Solutions group, The Hackett
Group offers business application consulting services that help maximize
returns on IT investments. The Hackett Group has completed benchmark
studies with over 3,000 major corporations and government agencies,
including 97% of the Dow Jones Industrials, 86% of the Fortune 100, 90%
of the DAX 30 and 48% of the FTSE 100.
More information on The Hackett Group is available: by phone at (770)
225-7300; by e-mail at info@thehackettgroup.com.
Book of Numbers is a trademark of The Hackett Group.
EzLifeSciences is a trademark of The Hackett Group.
SAP and all SAP logos are trademarks or registered trademarks of SAP AG
in Germany and in several other countries.
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, 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 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
March 30, 2012
April 1, 2011
Revenue:
Revenue before reimbursements
$
51,590
$
46,957
Reimbursements
5,428
5,905
Total revenue
57,018
52,862
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses
(includes $760 and $752 of stock compensation expense in the
quarters
ended March 30, 2012 and April 1, 2011, respectively)
33,149
30,260
Reimbursable expenses
5,428
5,905
Total cost of service
38,577
36,165
Selling, general and administrative costs
(includes $507 and $174 of stock compensation expense in the
quarters
ended March 30, 2012 and April 1, 2011, respectively)
14,782
13,211
Total costs and operating expenses
53,359
49,376
Income from operations
3,659
3,486
Other expense, net:
Interest income
9
1
Interest expense
(27
)
-
Income before income taxes
3,641
3,487
Income taxes
108
160
Net income
$
3,533
$
3,327
Basic net income per common share:
Net income per common share
$
0.09
$
0.08
Weighted average common shares outstanding
38,524
40,406
Diluted net income per common share:
Net income per common share
$
0.09
$
0.08
Weighted average common and common equivalent shares outstanding
39,938
41,775
Pro forma data (1):
Income before income taxes
$
3,641
$
3,487
Stock compensation expense
1,267
926
Amortization of intangible assets
137
200
Pro forma income before income taxes
5,045
4,613
Pro forma income tax expense
2,018
1,845
Pro forma net income
$
3,027
$
2,768
Pro forma basic net income per common share
$
0.08
$
0.07
Weighted average common shares outstanding
38,524
40,406
Pro forma diluted net income per common share
$
0.08
$
0.07
Weighted average common and common equivalent shares outstanding
39,938
41,775
(1)
The Company provides pro forma earnings results (which exclude the
amortization of intangible assets and stock compensation expense,
and include
a normalized 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 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.
The Hackett Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 30, 2012
December 30, 2011
ASSETS
Current assets:
Cash and cash equivalents
$
12,794
$
32,936
Accounts receivable and unbilled revenue, net
35,195
35,209
Prepaid expenses and other current assets
9,333
9,319
Total current assets
57,322
77,464
Restricted cash
682
885
Property and equipment, net
12,022
11,696
Other assets
2,067
1,823
Goodwill, net
76,016
75,558
Total assets
$
148,109
$
167,426
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
4,423
$
7,433
Accrued expenses and other liabilities
22,010
28,018
Current portion of long-term debt
4,737
-
Total current liabilities
31,170
35,451
Accrued expenses and other liabilities, non-current
1,531
1,727
Long-term debt
35,263
-
Total liabilities
67,964
37,178
Shareholders' equity
80,145
130,248
Total liabilities and shareholders' equity
$
148,109
$
167,426
The Hackett Group, Inc.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
Quarter Ended
March 30, 2012
December 30, 2011
April 1, 2011
Revenue Breakdown by Group:
(in thousands)
The Hackett Group (2)
$
47,124
$
45,246
$
42,816
ERP Solutions (3)
9,894
10,265
10,046
Total revenue
$
57,018
$
55,511
$
52,862
Revenue Concentration:
(% of total revenue)
Top customer
5
%
5
%
4
%
Top 5 customers
15
%
16
%
15
%
Top 10 customers
26
%
26
%
26
%
Key Metrics and Other Financial Data:
Total Company:
Consultant headcount
730
713
691
Total headcount
933
914
895
Days sales outstanding (DSO)
56
58
59
Cash provided by (used in) operating activities (in thousands)
$
(3,833
)
$
16,945
$
(5,243
)
Depreciation (in thousands)
$
614
$
600
$
452
Amortization (in thousands)
$
137
$
204
$
200
The Hackett Group (in thousands):
The Hackett Group annualized revenue per professional (2)
$
374
$
353
$
360
ERP Solutions:
ERP Solutions consultant utilization rate (3)
71
%
65
%
82
%
ERP Solutions gross billing rate per hour (3)
$
134
$
139
$
128
Share Repurchase Plan (4):
Shares purchased in the quarter (in thousands)
-
561
673
Cost of shares repurchased in the quarter (in thousands)
$
-
$
1,947
$
2,412
Average price per share of shares purchased in the quarter
$
-
$
3.47
$
3.58
Remaining authorization (in thousands)
$
556
$
556
$
2,102
(2) The Hackett Group encompasses Benchmarking, Business
Transformation and Executive Advisory groups, and includes EPM
Technologies.
(3) Best Practice Implementation of ERP Software, which includes
Oracle and SAP.
(4) The Share Repurchase Plan information does not include 11.0
million shares purchased pursuant to the Dutch Tender Offer at
$5.00 per share for a total of $55.0 million, excluding fees.
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