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The Hackett Group Announces Second Quarter 2013 Results



  The Hackett Group Announces Second Quarter 2013 Results

  * Q2 2013 revenue of $59.0 million and pro forma EPS of $0.13 cents, exceed
    guidance
  * Hackett Group announces it intends to repurchase $35.75 million of stock
    through tender offer

Business Wire

MIAMI -- August 6, 2013

The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic advisory and
business transformation consulting firm, today announced its financial results
for the second quarter of 2013, which ended June 28, 2013.

Second quarter 2013 revenue was $59.0 million, up 8% sequentially and 2% from
the same period in 2012. Pro forma diluted earnings per share were $0.13, up
18% when compared to $0.11 for the same period in 2012. 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 three months ended June 28,
2013, as compared to $0.12 in the same period in 2012. Excluding the impact of
the accounting for deferred taxes in 2012, GAAP diluted earnings per share
would have been $0.08 for the three months ended June 29, 2012.

The Company also announced that it intends to launch a modified "Dutch
auction" tender offer to purchase up to $5.5 million in shares of its common
stock, at a price ranging from $5.75 to $6.50. The tender offer would allow
the Company to repurchase approximately 17% of its outstanding common shares
at the high-end of the pricing range. The Company intends to pay for the share
repurchase from the expansion of its credit facility.

"The strong US demand for our services allowed us to exceed both revenue and
pro forma EPS guidance," stated Ted A. Fernandez, Chairman & CEO of The
Hackett Group, Inc. "I am also pleased to see that our operating execution and
our sound balance sheet provide us with the opportunity to launch a $35.75
million tender offer that enables us to return capital to shareholders while
maintaining the flexibility to continue to pursue our growth initiatives."

At the end of the second quarter of 2013, the Company's cash balances were
$11.3 million. During the quarter the Company paid down $5.5 million of its
credit facility, leaving a $15.0 million balance at quarter end. Additionally,
during the second quarter of 2013, cash was utilized to repurchase 124
thousand shares of its common stock at an average cost of $4.80 per share, for
a total of $594 thousand. The Company's remaining repurchase authorization at
the end of the second quarter of 2013 was $5.0 million.

Based on the current economic outlook, the Company estimates total revenue for
the third quarter of 2013 to be in the range of $57.0 million to $59.0
million, and estimates pro forma diluted earnings per share to be in the range
of $0.11 to $0.13.

Other Highlights

REL 1000 Working Capital Research - New research from REL Consultancy, a
division of The Hackett Group, and CFO Magazine found that the ability of
companies to generate cash from operations deteriorated in 2012, as the
opportunity for working capital improvement at 1,000 of the largest U.S.
public companies rose dramatically, topping $1 trillion for the first time.

The research, which examines the ability of companies to collect from
customers, manage inventory, and pay suppliers, found that as revenue grew by
5% in 2012, profitability -- as measured by EBIT margin decreased. At the same
time, working capital levels increased by 6%, to levels 25% higher than three
years ago. Actual Days Working Capital remained flat, however cash conversion
efficiency deteriorated for the second year in a row, indicating that
companies are taking longer to convert sales into cash. In addition, free cash
flow, which is a key indicator of the health of corporate cash flows and
represents the cash companies are able to generate after laying out money to
maintain or expand their asset base, fell by 14% year over year, indicating
poor cash flow management.

Finance Key Issues Research - New Finance Key Issues research from The Hackett
Group found that despite continued cuts in staffing and budgets this year,
finance organizations are compelled to respond to the challenges and
opportunities presented by the new "borderless business environment". The new
study details how finance leaders are forging ahead with high-value analytics
and business partnering programs while continuing to work on reducing
operational costs.

HR Key Issues Research - New HR Key Issues research from The Hackett Group
found that in the face of significant staff and budget reductions, HR
executives face continuing pressure and new challenges in 2013, driven in part
by the new "borderless business environment." According to The Hackett Group's
research, leaders are focusing on several HR strategy issues for 2013: process
improvement, including cost reduction and standardization of processes, data,
technology and organizational culture; improving the effectiveness of talent
management; obtaining more value from data to enable better decisions; and
expanding the use of technology.

Best Practices Conference - Over 225 senior-level executives from the world's
most respected brands attended The Hackett Group's 2013 North American Best
Practices Conference, "Borderless Business: Integrating the Enterprise for
Sustainable Success," in Miami on May 20-22. The conference focused on how
companies are addressing the opportunities and challenges of today's global
economy. This year's best practices conference brought together speakers from
17 of the world’s most successful companies, including CEOs, CFOs, CIOs, and
leaders in procurement, human resources, and global business services from:
Becton, Dickinson and Company; Citigroup; Coca Cola Refreshments USA; Cytec
Industries; FedEx; Fidelity Investments; General Electric; General Mills;
Hertz; Kimberly-Clark; Kronos; Lennox International; Meritor; MetLife; Office
Depot; SAP AG; and TE Connectivity.

On Tuesday, August 6, 2013, senior management will discuss second quarter
results in a conference call at 5:00 P.M. ET.

The number for the conference call is (800) 779-3138, [Passcode: Second
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, August 6, 2013 and will run through 5:00 P.M. ET
on Tuesday, August 20, 2013. To access the rebroadcast, please dial (800)
925-0562. For International callers, please dial (203) 369-3629.

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, August 6, 2013 and
will run through 5:00 P.M. ET on Tuesday, August 20, 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 8,500 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 ERP 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 3,500
major corporations and government agencies, including 97% of the Dow Jones
Industrials, 84% of the Fortune 100, 87% 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.

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, 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                    Six Months Ended
                      June 28,         June 29,        June 28,      June 29,
                      2013             2012            2013          2012
Revenue:
Revenue before     $  52,341        $  51,469        $ 101,212     $ 100,513
reimbursements
Reimbursements        6,620            6,495           12,098        11,534   
Total revenue         58,961           57,964          113,310       112,047
                                                                      
Costs and
expenses:
Cost of
service:
Personnel costs
before
reimbursable
expenses
(includes $863
and $759 and
$1,686 and
$1,517
of stock
compensation
expense in the
quarters and
six months
ended June 28,
2013 and June         33,363           32,167          65,405        62,727
29, 2012,
respectively)
Reimbursable          6,620            6,495           12,098        11,534   
expenses
Total cost of         39,983           38,662          77,503        74,261
service
                                                                      
Selling,
general and
administrative
costs
(includes $782
and $679 and
$1,481 and
$1,186 of stock
compensation
expense in the
quarters and
six months
ended June 28,
2013 and June         13,893           14,819          27,193        29,326   
29, 2012,
respectively)
Total costs and
operating             53,876           53,481          104,696       103,587  
expenses
Income from           5,085            4,483           8,614         8,460
operations
Other income
(expense):
Interest income       3                8               4             17
Interest              (125    )        (247    )       (267    )     (274    )
expense
Income from
continuing
operations            4,963            4,244           8,351         8,203
before income
taxes
Income tax            2,033            406             3,392         514      
expense
Income from
continuing            2,930            3,838           4,959         7,689
operations
Income (loss)
from                  -                7               (71     )     (311    )
discontinued
operations
Net income         $  2,930         $  3,845         $ 4,888       $ 7,378    
                                                                      
Basic net
income per
common share:
Income per
common share       $  0.10          $  0.13          $ 0.16        $ 0.23
from continuing
operations
Income (loss)
per common
share from            -                -               -             (0.01   )
discontinued
operations
Net income per     $  0.10          $  0.13          $ 0.16        $ 0.22     
common share
                                                                      
Diluted net
income per
common share:
Income per
common share       $  0.09          $  0.12          $ 0.16        $ 0.22
from continuing
operations
Income (loss)
per common
share from            -                -               (0.00   )     (0.01   )
discontinued
operations
Net income per     $  0.09          $  0.12          $ 0.15        $ 0.21     
common share
                                                                      
Weighted
average common
shares
outstanding:
Basic                 30,532           29,290          30,412        33,907
Diluted               32,251           31,509          31,862        35,724
                                                                      
Pro forma data
(1):
Income from
continuing
operations         $  4,963         $  4,244         $ 8,351       $ 8,203
before income
taxes
Stock
compensation          1,645            1,438           3,167         2,703
expense
Amortization of
intangible            151              137             301           274      
assets
Pro forma
income before         6,759            5,819           11,819        11,180
income taxes
Pro forma
income tax            2,704            2,328           4,728         4,472    
expense
Pro forma net      $  4,055         $  3,491         $ 7,091       $ 6,708    
income
                                                                      
Pro forma basic
net income per     $  0.13          $  0.12          $ 0.23        $ 0.20
common share
Weighted
average common        30,532           29,290          30,412        33,907
shares
outstanding
                                                                      
Pro forma
diluted net        $  0.13          $  0.11          $ 0.22        $ 0.19
income per
common share
Weighted
average common
and common            32,251           31,509          31,862        35,724
equivalent
shares
outstanding
                                                                      
                                                                      
                                                                      
(1) The Company provides pro forma earnings results (which exclude the
amortization of intangible assets and stock compensation expense, and results
from discontinued operations 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)
                                                  June 28,     December 28,

                                                  2013         2012
                                                                
ASSETS
Current assets:
Cash and cash equivalents                       $ 10,811     $ 16,906
Accounts receivable and unbilled revenue, net     35,601       36,869
Deferred tax asset, net                           3,858        4,741
Prepaid expenses and other current assets         3,357        2,335
Total current assets                              53,627       60,851
                                                                
Restricted cash                                   522          683
Property and equipment, net                       13,082       12,859
Other assets                                      1,232        1,598
Goodwill, net                                     75,247       76,220
Non-current deferred tax asset, net               -            1,710
Total assets                                    $ 143,710    $ 153,921
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                                $ 5,076      $ 7,711
Accrued expenses and other liabilities            22,825       26,484
Current portion of long-term debt                 -            2,895
Total current liabilities                         27,901       37,090
Long-term deferred tax liability, net             666          -
Long-term debt                                    15,026       22,105
Total liabilities                                 43,593       59,195
                                                                
Shareholders' equity                              100,117      94,726
Total liabilities and shareholders' equity      $ 143,710    $ 153,921
                                                                

                          
The Hackett Group, Inc.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
                                                                     
                                 Quarter Ended
                                 June 28,           March 29,       June 29,

                                 2013               2013            2012
Revenue Breakdown by
Group:
(in thousands)
The Hackett Group (2)        $   47,659         $   43,612       $  50,104
ERP Solutions (3)                11,302             10,737          7,860    
Total revenue                $   58,961         $   54,349       $  57,964
                                                                     
Revenue Concentration:
(% of total revenue)
Top customer                     3        %         4        %      5       %
Top 5 customers                  16       %         14       %      14      %
Top 10 customers                 24       %         23       %      23      %
                                                                     
Key Metrics and Other
Financial Data:
                                                                     
Total Company:
Consultant headcount             735                719             749
Total headcount                  926                906             956
Days sales outstanding           55                 56              55
(DSO)
Cash provided by (used
in) operating activities     $   5,720          $   (547     )   $  10,109
(in thousands)
Depreciation (in             $   461            $   499          $  491
thousands)
Amortization (in             $   151            $   150          $  137
thousands)
                                                                     
The Hackett Group (in
thousands):
The Hackett Group
annualized revenue per       $   358            $   329          $  379
professional (2)
                                                                     
ERP Solutions:
ERP Solutions consultant         83       %         75       %      71      %
utilization rate (3)
ERP Solutions gross
billing rate per hour        $   130            $   137          $  122
(3)
                                                                     
Share Repurchase Plan:
Shares purchased in the          124                -               -
quarter (in thousands)
Cost of shares
repurchased in the           $   594            $   -            $  -
quarter (in thousands)
Average price per share
of shares purchased in       $   4.80           $   -            $  -
the quarter
Remaining authorization      $   4,963          $   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 is currently SAP.
                                                                  

Contact:

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