The Hackett Group Announces Fourth Quarter 2012 Results

  The Hackett Group Announces Fourth Quarter 2012 Results

  *Q4 2012 revenue of $57.1 million, up 3% and exceeds high-end of guidance
  *Q4 2012 pro forma EPS of 11 cents, up 22% and at high-end of guidance
  *Fiscal 2012 revenue of $234.1 million, up 4% and pro forma EPS of $0.40,
    up 21%
  *In Q4 2012 the Company initiated and paid annual dividend of $0.10 per
    share

Business Wire

MIAMI -- February 19, 2013

The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic advisory and
business transformation consulting firm, today announced its financial results
for the fourth quarter and fiscal year 2012, which ended December 28, 2012.

Fourth quarter 2012 revenue was $57.1 million, a 3% increase (4% on a constant
currency basis) from the same period in 2011. Pro forma diluted earnings per
share were $0.11 for the fourth quarter of 2012, as compared to $0.09 for the
same period in 2011. Fiscal year 2012 revenue was $234.1 million, an increase
of 4% (5% on a constant currency basis) from the previous fiscal year. Pro
forma diluted net earnings per share for 2012 was $0.40, as compared to $0.33
in fiscal year 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 was $0.21 for the fourth quarter of 2012, as
compared to $0.23 in the same period in 2011. GAAP net income for the fourth
quarter of 2012 and 2011 included a net tax benefit of $2.7 million, or $0.09
cents per diluted share, and $4.9 million, or $0.12 per dilutive share,
respectively, due to the release of deferred tax valuation allowance. GAAP
diluted earnings per share in fiscal 2012 was $0.50, as compared to $0.52 in
the previous fiscal year. GAAP net income for 2012 and 2011 includes a net tax
benefit of $0.5 million, or $0.01 per diluted share, and $4.5 million, or
$0.11 per diluted share, respectively, due to the release of deferred tax
valuation allowance.

At the end of the fourth quarter of 2012, the Company’s cash balances were
$17.6 million. During the fourth quarter, the Company announced and paid a
$3.1 million dividend, and paid down $3.0 million of its credit facility,
leaving a $25.0 million balance at quarter end. Subsequent to quarter end, the
Company paid down an additional $4.5 million on the credit facility.

"We reported solid fourth quarter and fiscal year results in what continues to
be a volatile environment for our clients," stated Ted A Fernandez, Chairman
and CEO of the Hackett Group, Inc. "As we look back at the year, we are
especially proud of our ability to return a significant amount of capital to
our shareholders through a $55 million share repurchase tender offer and our
recently initiated annual dividend which we declared and paid prior to year
end. As we look forward, we continue to believe that our unique intellectual
capital and expanding brand permission coupled with our terrific talent bodes
well for our future prospects."

Based on the current economic outlook, the Company estimates total revenue for
the first quarter of 2013 to be in the range of $55.0 million to $57.0
million, and estimates pro forma diluted earnings per share to be in the range
of $0.09 to $0.11. This guidance excludes the operating results of our Oracle
ERP implementation practice which we agreed to sell on February 15, 2013.

Other Highlights

Annual Dividend Program - In December 2012, the Company announced that its
Board of Directors has approved the initiation of an annual cash dividend
program in the amount of $0.10 per share, which is intended to be paid
annually. The first dividend was paid on December 28, 2012, to shareholders of
record as of the close of business on December 20, 2012.

Enterprise Key Issues Research - A new Enterprise Key Issues study from The
Hackett Group found that for 2013, the new "borderless" business environment
will present the greatest opportunities to companies in IT, finance, HR and
other business services areas, as companies strive to reduce costs and meet
aggressive revenue projections. The research identified new opportunities for
companies to roll out a flexible, virtual, data-enabled model for service
delivery. Companies are also continuing to dramatically accelerate their use
of Global Business Services (GBS) operations, an evolution beyond shared
services which integrates and consolidates multiple business functions.

World-Class HR Profile - New Book of Numbers^™ research from The Hackett Group
found that world-class HR organizations operate at 27% lower cost per employee
than typical companies and also utilize 24% fewer staff, while still achieving
higher effectiveness. The Hackett Group's research detailed three important
elements of HR strategy that drive operational excellence at world-class HR
organizations: an emphasis on enhancing HR’s operational excellence and
helping the company achieve its strategic goals; a systematic integrated
approach to talent management; and an ability to create strong, strategic
working relationships with the business.

Year-End Gamesmanship Research - REL, a division of The Hackett Group, issued
research detailing how many large U.S. companies continue to try to "game the
system" at year-end, artificially improving their balance sheets by
manipulating receivables, payables, and inventory. The study found that their
efforts do have a positive impact in the fourth quarter. However, these
companies pay a harsh price in the first quarter, when working capital bounces
back to even worse levels than before.

Cash Flow Forecasting Study Launch - REL Consulting, a division of The Hackett
Group, launched a new performance study designed to help companies compare
their cash forecasting practices with top performers. Forecasting cash
positions and cash needs continues to be an issue for most organizations.
Given the current volatility and uncertainty in the markets, it becomes all
the more important for companies to forecast their cash requirements as
accurately as possible. By participating in REL's newly-launched Operating
Cash Flow Forecasting study, companies can find out how their performance in
forecasting operating cash flow compares with other organizations.

On Tuesday, February 19, 2013, 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) 779-3138, [Passcode: Fourth
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, February 19, 2013 and will run through 5:00 P.M.
ET on Tuesday, March 5, 2013. To access the rebroadcast, please dial (800)
937-2485. For International callers, please dial (203) 369-3858.

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, 2013
and will run through 5:00 P.M. ET on Tuesday, March 5, 2013. To access the
replay, visit http://www.thehackettgroup.com or http://www.streetevents.com.

For additional information on The Hackett Group, please visit our website at
www.thehackettgroup.com.

About The Hackett Group

The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic business advisory
and business transformation 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.

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                Twelve Months Ended
                          December        December     December      December
                          28,             30,          28,           30,
                          2012            2011         2012          2011
Revenue:
    Revenue before     $  51,147        $ 49,522     $ 209,278     $ 200,435
    reimbursements
    Reimbursements        5,990          5,989       24,782       24,682  
    Total revenue         57,137          55,511       234,060       225,117
                                                                     
Costs and expenses:
    Cost of
    service:
    Personnel costs
    before
    reimbursable
    expenses
    (includes $789
    and $518 and
    $2,998 and
    $2,847 of stock
    compensation
    expense in the
    quarters and          32,782          30,607       133,974       126,421
    twelve months
    ended December
    28, 2012 and
    December 30,
    2011,
    respectively)
    Reimbursable          5,990          5,989       24,782       24,682  
    expenses
    Total cost of         38,772          36,596       158,756       151,103
    service
                                                                     
    Selling,
    general and
    administrative
    costs
    (includes $664
    and $586 and
    $2,524 and
    $1,758 of stock
    compensation
    expense in the
    quarters and          14,158          14,174       58,686        56,773
    twelve months
    ended December
    28, 2012 and
    December 30,
    2011,
    respectively)
    Restructuring
    expense               108            -           (211    )     -       
    (benefit)
    Total costs and
    operating             53,038         50,770      217,231      207,876 
    expenses
Income from               4,099           4,741        16,829        17,241
operations
Other income
(expense):
    Interest income       1               9            20            33
    Interest              (160    )       -           (630    )     -       
    expense
Income before             3,940           4,750        16,219        17,274
income taxes
Income tax expense        1,246           332          3,511         780
Release of                (3,989  )       (5,275 )     (3,989  )     (5,275  )
valuation allowance
Net income             $  6,683        $ 9,693     $ 16,697     $ 21,769  
                                                                     
Basic net income
per common share:
    Net income per     $  0.23          $ 0.25       $ 0.53        $ 0.55
    common share
    Weighted
    average common        29,599          39,476       31,704        39,895
    shares
    outstanding
                                                                     
Diluted net income
per common share:
    Net income per     $  0.21          $ 0.23       $ 0.50        $ 0.52
    common share
    Weighted
    average common
    and common            31,107          41,596       33,511        41,875
    equivalent
    shares
    outstanding
                                                                     
Pro forma data (1):
    Income before      $  3,940         $ 4,750      $ 16,219      $ 17,274
    income taxes
    Stock
    compensation          1,453           1,104        5,522         4,605
    expense
    Restructuring
    expense               108             -            (211    )     -
    (benefit)
    Amortization of
    intangible            136            204         547          811     
    assets
    Pro forma
    income before         5,637           6,058        22,077        22,690
    income taxes
    Pro forma
    income tax            2,255          2,423       8,831        9,076   
    expense
    Pro forma net      $  3,382        $ 3,635     $ 13,246     $ 13,614  
    income
                                                                     
    Pro forma basic
    net income per     $  0.11          $ 0.09       $ 0.42        $ 0.34
    common share
    Weighted
    average common        29,599          39,476       31,704        39,895
    shares
    outstanding
                                                                     
    Pro forma
    diluted net        $  0.11          $ 0.09       $ 0.40        $ 0.33
    income per
    common share
    Weighted
    average common
    and common            31,107          41,596       33,511        41,875
    equivalent
    shares
    outstanding
                                                                     
    The Company provides pro forma earnings results (which exclude the
(1) amortization of intangible assets, stock compensation expense and
    restructuring expense and 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
    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)
                                      December 28, 2012     December 30, 2011
                                                             
  ASSETS
Current assets:
  Cash and cash equivalents          $ 16,906              $ 32,936
  Accounts receivable and unbilled     36,869                35,209
  revenue, net
  Deferred tax asset, net              4,741                 6,975
  Prepaid expenses and other           2,335                 2,344
  current assets
  Total current assets                 60,851                77,464
                                                             
Restricted cash                        683                   885
Property and equipment, net            12,859                11,696
Other assets                           1,598                 1,823
Goodwill, net                          76,220                75,558
Non-current deferred tax asset,        1,710                 -
net
  Total assets                       $ 153,921             $ 167,426
                                                             
  LIABILITIES AND SHAREHOLDERS'
  EQUITY
Current liabilities:
  Accounts payable                   $ 7,711               $ 7,433
  Accrued expenses and other           26,484                28,018
  liabilities
  Current portion of long-term         2,895                 -
  debt
  Total current liabilities            37,090                35,451
Long-term deferred tax liability,      -                     1,727
net
Long-term debt                         22,105                -
  Total liabilities                    59,195                37,178
                                                             
Shareholders' equity                   94,726                130,248
  Total liabilities and              $ 153,921             $ 167,426
  shareholders' equity
                                                             

                                                            
The Hackett Group, Inc.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
           
                              Quarter Ended
                              December 28,      September 28,    December 30,
                              2012              2012             2011
Revenue Breakdown by
Group:
(in thousands)
The Hackett Group (2)         $   45,130        $  45,429        $  45,246
ERP Solutions (3)                12,007         13,192         10,265  
Total revenue                 $   57,137       $  58,621       $  55,511  
                                                                 
Revenue Concentration:
(% of total revenue)
Top customer                      3       %        3       %        5       %
Top 5 customers                   13      %        11      %        16      %
Top 10 customers                  21      %        20      %        26      %
                                                                 
                                                                 
Key Metrics and Other
Financial Data:
                                                                 
Total Company:
Consultant headcount              747              756              713
Total headcount                   947              962              914
Days sales outstanding            59               57               58
(DSO)
Cash provided by
operating activities (in      $   9,219         $  4,857         $  16,945
thousands)
Depreciation (in              $   483           $  492           $  600
thousands)
Amortization (in              $   136           $  136           $  204
thousands)
                                                                 
The Hackett Group (in
thousands):
The Hackett Group
annualized revenue per        $   342           $  338           $  353
professional (2)
                                                                 
ERP Solutions:
ERP Solutions consultant          69      %        76      %        65      %
utilization rate (3)
ERP Solutions gross           $   147           $  146           $  139
billing rate per hour (3)
                                                                 
Share Repurchase Plan
(4):
Shares purchased in the           -                -                561
quarter (in thousands)
Cost of shares
repurchased in the            $   -             $  -             $  1,947
quarter (in thousands)
Average price per share
of shares purchased in        $   -             $  -             $  3.47
the quarter
Remaining authorization       $   556           $  556           $  556
(in thousands)
          
(2)        The Hackett Group encompasses the Benchmarking, Business
           Transformation and Executive Advisory groups, and EPM Technologies.
(3)        ERP Solutions encompasses 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, during Q1 2012.
           

Contact:

The Hackett Group, Inc.
Robert A. Ramirez, CFO, 305-375-8005
rramirez@thehackettgroup.com
 
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