The Hackett Group Announces Third Quarter 2012 Results

  The Hackett Group Announces Third Quarter 2012 Results

  *Q3 2012 revenue of $58.6 million, at the high-end of guidance
  *Pro forma EPS of 11 cents, at high-end of guidance, and up 22% from prior

Business Wire

MIAMI -- November 05, 2012

The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic advisory and
operations improvement consulting firm, today announced its financial results
for the third quarter of 2012, which ended September 28, 2012.

Third quarter 2012 revenue was $58.6 million, a 1% increase (3% on a constant
currency basis) from the same period in 2011. Pro forma diluted earnings per
share were $0.11 for the third quarter of 2012, as compared to $0.09 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 $0.08 for the third quarter of 2012, as
compared to $0.10 from the same period in 2011. For comparison purposes, GAAP
earnings per share for the third quarter of 2012 were unfavorably impacted by
U.S. federal income tax expense of approximately $0.05 per diluted share,
resulting from the release of tax valuation reserves and recognition of the
corresponding deferred tax assets at the end of 2011.

“We reported solid operating results in spite of the volatility we experienced
in Europe as we entered the quarter,” stated Ted A. Fernandez, Chairman and
CEO of The Hackett Group. “We continue to believe our offerings are well
aligned with the complexities of the global economy and provide us with
opportunities to continue to improve our financial performance.”

At the end of the third quarter of 2012, the Company’s cash balances were
$15.2 million. During the third quarter of 2012, the Company repaid $4.0
million of its new credit facility, leaving a $28.0 million balance at quarter
end. Subsequent to quarter end, the Company repaid an additional $3.0 million.

Based on the current economic outlook, the Company estimates total revenue for
the fourth quarter of 2012 to be in the range of $54.0 million to $56.0
million, and estimates pro forma diluted earnings per share to be in the range
of $0.09 to $0.11.

Other Highlights

European Best Practices Conference - Over 125 executives from Europe's largest
companies attended The Hackett Group's 2012 European Best Practices Conference
in London in early October. Attendees heard presentations by executives from
more than a dozen of the world's most successful companies, including Bayer,
BSkyB, First Data, Henkel, Lafarge, Nedbank, Rio Tinto, Royal
FrieslandCampina, and Vodafone.

REL 1000 Working Capital Research Results - The ability of the largest U.S.
companies to collect from customers and manage inventory improved just
slightly in 2011, while payables performance worsened, according to the 14th
annual working capital survey from REL, a division of The Hackett Group, and
CFO Magazine. Overall, working capital performance improved slightly for 1000
of the largest U.S. public companies in the REL/CFO analysis. The study found
a tremendous improvement opportunity in working capital management. Companies
in the study now have over $900 billion in excess working capital, a figure
that represents nearly 7% of the U.S. Gross Domestic Product and is the
largest opportunity in this area in the past five years.

Economic Uncertainty Research - In the face of increasing business volatility
and shrinking GDP growth projections, The Hackett Group issued research
detailing six operational imperatives designed to help companies combat
economic uncertainty by enhancing the efficiency and effectiveness of their
operations, including the finance, human resource, information technology,
procurement, and supply chain areas. According to The Hackett Group's
research, by focusing on six imperatives and making significant process
improvements and other changes to various elements of their Service Delivery
Model for back-office services, a typical global company (with $33.4 billion
in revenue) could cut the cost of these services by up to $302 million, or
more than 25%. At the same time, companies can improve the quality and
timeliness of performance information and decision-making processes, and also
enhance business agility and responsiveness.

Talent Management Book of Numbers^™ Findings - New Book of Numbers research
from The Hackett Group found that finance, information technology,
procurement, and other business service areas are in the midst of a growing
talent crisis, and the failure of human resource and business service leaders
to effectively collaborate is in large part to blame. According to the
research, business service organizations are seeing dangerous deficits in
talent and skills, and are highly dissatisfied with the level of support they
receive from human resources on talent issues. This dissatisfaction is
primarily being driven by the extremely low levels of service that human
resources is providing, and lack of effective communication and collaboration
between business service leaders and human resources.

On Monday, November 5, 2012,senior management will discuss third quarter
results in a conference call at 5:00 P.M. ET.

The number for the conference call is (800) 779-3138, [Passcode: Third
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 Monday, November 5, 2012 and will run through 5:00 P.M. ET
on Monday, November 19, 2012. To access the rebroadcast, please dial (800)
551-8152. For International callers, please dial (203) 369-3810.

In addition, The Hackett Group will also be webcasting this conference call
live through the service. To participate, simply visit 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 Monday, November 5, 2012 and
will run through 5:00 P.M. ET on Monday, November 19, 2012. To access the
replay, visit or

About The Hackett Group

The Hackett Group, Inc. (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

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,                                             
(in thousands, except
per share data)
                         Quarter Ended                Nine Months Ended
                          September      September     September     September
                          28,            30,           28,           30,
                          2012          2011         2012         2011
      Revenue before   $  52,299       $ 51,574      $ 158,131     $ 150,913
      Reimbursements      6,322          6,361         18,792        18,693
      Total revenue       58,621         57,935        176,923       169,606
Costs and expenses:
      Cost of service:
      Personnel costs
      (includes $687
      and $765 and
      $2,209 and
      $2,329 of stock
      expense in the
      quarters and        33,414         32,739        101,192       95,814
      nine months
      ended September
      28, 2012 and
      September 30,
      Reimbursable        6,322          6,361         18,792        18,693
      Total cost of       39,736         39,100        119,984       114,507
      Selling, general
      (includes $674
      and $509 and
      $1,860 and
      $1,172 of stock
      expense in the
      quarters and        14,623         14,324        44,528        42,599
      nine months
      ended September
      28, 2012 and
      September 30,
      Restructuring       (319)          -             (319)         -
      Total costs and
      operating           54,040         53,424        164,193       157,106
Income from operations    4,581          4,511         12,730        12,500
Other income
(expense), net:
      Interest income     2              11            19            24
      Interest expense    (196)          -             (470)         -
Income before income      4,387          4,522         12,279        12,524
Income taxes              1,751          176           2,265         448
Net income             $  2,636        $ 4,346       $ 10,014      $ 12,076
Basic net income per
common share:
      Net income per   $  0.09         $ 0.11        $ 0.31        $ 0.30
      common share
      Weighted average
      common shares       29,401         39,683        32,405        40,035
Diluted net income per
common share:
      Net income per   $  0.08         $ 0.10        $ 0.29        $ 0.29
      common share
      Weighted average
      common and
      common              31,489         41,873        34,312        41,969
Pro forma data (1):
      Income before    $  4,387        $ 4,522       $ 12,279      $ 12,524
      income taxes
      compensation        1,361          1,274         4,069         3,501
      Restructuring       (319)          -             (319)         -
      Amortization of
      intangible          137            204           410           608
      Pro forma income
      before income       5,566          6,000         16,439        16,633
      Pro forma income    2,226          2,400         6,576         6,653
      tax expense
      Pro forma net    $  3,340        $ 3,600       $ 9,863       $ 9,980
      Pro forma basic
      net income per   $  0.11         $ 0.09        $ 0.30        $ 0.25
      common share
      Weighted average
      common shares       29,401         39,683        32,405        40,035
      Pro forma
      diluted net      $  0.11         $ 0.09        $ 0.29        $ 0.24
      income per
      common share
      Weighted average
      common and
      common              31,489         41,873        34,312        41,969
      The Company provides pro forma earnings results (which exclude the
      amortization of intangible assets, stock compensation expense and
      restructuring benefit, 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
(1)   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.                                 
(in thousands)
                                     September 28, 2012    December 30, 2011
Current assets:
   Cash and cash equivalents        $ 14,534               $ 32,936
   Accounts receivable and            36,482                 35,209
   unbilled revenue, net
   Deferred tax asset, net            5,026                  6,975
   Prepaid expenses and other         2,426                  2,344
   current assets
   Total current assets               58,468                 77,464
Restricted cash                       683                    885
Property and equipment, net           12,666                 11,696
Other assets                          1,759                  1,823
Goodwill, net                         76,248                 75,558
   Total assets                     $ 149,824              $ 167,426
Current liabilities:
   Accounts payable                 $ 5,154                $ 7,433
   Accrued expenses and other         25,359                 28,018
   Current portion of long-term       4,316                  -
   Total current liabilities          34,829                 35,451
Long-term deferred tax liability,     1,432                  1,727
Long-term debt                        23,684                 -
   Total liabilities                  59,945                 37,178
Shareholders' equity                  89,879                 130,248
   Total liabilities and            $ 149,824              $ 167,426
   shareholders' equity

The Hackett Group, Inc.                                      

                            Quarter Ended
                            September 28,      June 29, 2012     September 30,
                            2012                                 2011
Revenue Breakdown by Group:
(in thousands)
The Hackett Group (2)       $   45,429         $   50,104        $  46,972
ERP Solutions (3)              13,192           11,180         10,963  
          Total revenue     $   58,621        $   61,284       $  57,935  
Revenue Concentration:
(% of total revenue)
Top customer                    3        %         5       %        3       %
Top 5 customers                 11       %         14      %        14      %
Top 10 customers                20       %         23      %        24      %
Key Metrics and Other
Financial Data:
Total Company:
Consultant headcount            756                749              746
Total headcount                 962                956              951
Days sales outstanding          57                 55               60
Cash provided by operating  $   4,857          $   10,109        $  1,734
activities (in thousands)
Depreciation (in thousands) $   492            $   491           $  497
Amortization (in thousands) $   136            $   137           $  204
The Hackett Group (in
The Hackett Group
annualized revenue per      $   338            $   379           $  366
professional (2)
ERP Solutions:
ERP Solutions consultant        76       %         73      %        74      %
utilization rate (3)
ERP Solutions gross billing $   146            $   140           $  134
rate per hour (3)
Share Repurchase Plan (4):
Shares purchased in the         -                  -                269
quarter (in thousands)
Cost of shares repurchased
in the quarter (in          $   -              $   -             $  967
Average price per share of
shares purchased in the     $   -              $   -             $  3.59
Remaining authorization (in $   556            $   556           $  2,503
(2)      The Hackett Group encompasses Benchmarking, Business Transformation
          and Executive Advisory groups, and includes EPM Technologies.
(3)      ERP Solutions encompasses Best Practice Implementation of ERP
          Software, which includes Oracle and SAP.
          The Share Repurchase Plan information does not include 11.0 million
(4)      shares purchased pursuant to the Dutch Tender Offer at $5.00 per
          share for a total of $55.0 million, excluding fees, during Q1 2012.


The Hackett Group, Inc.
Robert A. Ramirez, 305-375-8005
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