The Hackett Group Announces Third Quarter 2013 Results

  The Hackett Group Announces Third Quarter 2013 Results

  *Q3 2013 revenue of $57.9 million up 4% and pro forma EPS of $0.12 up 9%
    from prior year, both at mid point of guidance
  *Board increases remaining stock repurchase authorization to $10.0 million
  *Company declares annual dividend of $0.10 for holders of record on
    December 10, 2013

Business Wire

MIAMI -- November 5, 2013

The Hackett Group, Inc. (NASDAQ:HCKT), a global strategic advisory and
business transformation and technology consulting firm, today announced its
financial results for the third quarter of 2013, which ended September 27,
2013.

Third quarter 2013 revenue was $57.9 million, up 4% from prior year. Pro forma
diluted earnings per share were $0.12, up 9% 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 $0.08 for both the third quarter of 2013 and 2012.

At the end of the third quarter of 2013, the Company's cash balances were
$15.4 million and the Company had $15.0 million outstanding on its credit
facility.

Subsequent to September 27, 2013, the Company completed its tender offer
through which it bought back approximately 1.0 million shares at a purchase
price of $7.00 per share for an aggregate cost of approximately $6.9 million,
excluding fees and expenses. The tender offer was funded by drawing $7.0
million on the Company's amended and restated credit agreement, which brings
the current outstanding balance on the credit facility to $22.0 million.

In its recent meeting, the Company's Board of Directors declared the payment
of a dividend of $0.10 for holders of record on December 10, 2013. This
dividend will be paid on December 20, 2013. Additionally, the Board of
Directors approved to increase the stock repurchase program authorization by
an additional $5.0 million. This brings the Company's remaining stock
repurchase authorization to $10.0 million.

"We reported solid quarterly results driven by strong US demand which was
somewhat offset by weaker than expected results in Europe and Australia,"
stated Ted A. Fernandez, Chairman & CEO of The Hackett Group, Inc. "We now
expect continuing deterioration in both Europe and Australia to more than
offset continued year on year US improvements in the fourth quarter. However,
as we enter the new year, we expect our increased investment in EPM
capabilities in Europe to strengthen our overall market offering and
performance in 2014."

Based on the current economic outlook, the Company estimates total revenue for
the fourth quarter of 2013 to be in the range of $51.0 million to $53.0
million, and estimates pro forma diluted earnings per share to be in the range
of $0.07 to $0.09.

Other Highlights

Offshoring Research Update - New research from The Hackett Group found that
large companies in North America and Europe are now losing over 250,000 jobs
each year in IT, finance, and other key business services areas, due to the
combined impact of offshoring, technology-driven productivity improvements,
and the low-growth business environment. While the number of jobs being lost
annually will decline over the next few years, The Hackett Group now estimates
that by 2017 nearly half of all back office jobs at these companies that
existed in North America and Europe in 2002 will have disappeared -- a total
loss of 3.7 million jobs.

Global Operating Model Research - New research from The Hackett Group found
that while many large companies are aggressively pursuing globalization of
their products and brands, the large majority are flying blind, without the
ability to truly see what is happening globally or make adjustments. Hackett's
new "Global Operating Model" Book of Numbers research, which looks at the
performance of more than 100 companies, found a strong acceleration of the
trend towards globalization of business, with most companies moving toward
high levels of globalization for their products and services lines and
expanding the globalization of delivery of business services over the next few
years. In large part these trends are being driven by high growth rates in
China and other emerging markets combined with stagnation in developed
markets.

European Best Practices Conference - The Hackett Group held its 2013 European
Best Practices Conference in Berlin October 30-31 for over 200 attendees. The
theme was "Borderless Business: Integrating the Enterprise for Sustainable
Success," and the conference featured presentations by senior executives from
more than 15 global companies, including: ABB Switzerland, Airbus/EADS, Amway,
Antalis, Atos, Bayer, Coca-Cola Enterprises, Deutsche Bank, Glaxo SmithKline,
National Grid, Nestlé, OC Oerlikon Management, Rio Tinto, Tetra Pak
International, and Unilever.

Category Insight Research - In early October, The Hackett Group announced a
significant new capability as part of its services for Procurement leaders, a
series of Category Insight Reports. Each report offers empirical analysis to
streamline the market research and intelligence efforts of procurement
professionals. Initial reports will cover an array of indirect spend areas,
including: commercial printing, maintenance, repair, and operations suppliers,
temporary labor, and facilities management. The Category Insight Reports are
designed to complement the operational research, advisory, procurement
strategy and insights, benchmarks, consulting expertise, and other research
and transformation capabilities The Hackett Group offers.

On Tuesday, November 5, 2013, 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 Tuesday, November 5, 2013 and will run through 5:00 P.M. ET
on Tuesday, November 19, 2013. To access the rebroadcast, please dial (866)
411-8824. For International callers, please dial (203) 369-0662.

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, November 5, 2013 and
will run through 5:00 P.M. ET on Tuesday, November 19, 2013. To access the
replay, visit http://www.thehackettgroup.com or http://www.streetevents.com.

About The Hackett Group

The Hackett Group, Inc. (NASDAQ:HCKT), a global strategic business advisory
and business transformation and technology consulting firm, is a leader in
best practice advisory, benchmarking, and transformation consulting services
including enterprise performance management and business intelligence,
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 and application management 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                 Nine Months Ended
                       September      September      September      September
                       27,            28,            27,            28,
                       2013           2012           2013           2012
Revenue:
Revenue before     $   51,976     $   49,806     $   153,188    $   150,319
reimbursements
Reimbursements         5,940          5,841          18,038         17,375
Total revenue          57,916         55,647         171,226        167,694
                                                                    
Costs and
expenses:
Cost of service:
Personnel costs
before
reimbursable
expenses
(includes $854 and
$685 and $2,540
and $2,202 of
stock compensation
expense in the
quarters and nine
months ended
September 27, 2013
and
September 28,
2012,                  33,970         31,665         99,375         94,392
respectively)
Reimbursable           5,940          5,841          18,038         17,375
expenses
Total cost of          39,910         37,506         117,413        111,767
service
                                                                    
Selling, general
and administrative
costs
(includes $681 and
$674 and $2,162
and $1,860 of
stock compensation
expense in the
quarters and nine
months ended
September 27, 2013
and
September 28,
2012,                  13,289         13,922         40,482         43,248
respectively)
Restructuring          -              (319)          -              (319)
benefit
Total costs and        53,199         51,109         157,895        154,696
operating expenses
Income from            4,717          4,538          13,331         12,998
operations
Other income
(expense):
Interest income        2              2              6              19
Interest expense       (94)           (196)          (361)          (470)
Income from
continuing             4,625          4,344          12,976         12,547
operations before
income taxes
Income tax expense     1,926          1,751          5,318          2,265
Income from
continuing             2,699          2,593          7,658          10,282
operations
(Loss) income from
discontinued           (64)           43             (135)          (268)
operations
Net income         $   2,635      $   2,636      $   7,523      $   10,014
                                                                    
Basic net income
per common share:
Income per common
share from         $   0.09       $   0.09       $   0.25       $   0.32
continuing
operations
(Loss) income per
common share from      (0.00)         0.00           (0.00)         (0.01)
discontinued
operations
Net income per     $   0.09       $   0.09       $   0.25       $   0.31
common share
                                                                    
Diluted net income
per common share:
Income per common
share from         $   0.08       $   0.08       $   0.24       $   0.30
continuing
operations
(Loss) income per
common share from      (0.00)         0.00           (0.00)         (0.01)
discontinued
operations
Net income per     $   0.08       $   0.08       $   0.23       $   0.29
common share
                                                                    
Weighted average
common shares
outstanding:
Basic                  30,627         29,401         30,484         32,405
Diluted                32,797         31,489         32,174         34,312
                                                                    
Pro forma data
(1):
Income from
continuing         $   4,625      $   4,344      $   12,976     $   12,547
operations before
income taxes
Stock compensation     1,535          1,359          4,702          4,062
expense
Restructuring          -              (319)          -              (319)
benefit
Amortization of        150            137            451            410
intangible assets
Pro forma income
before income          6,310          5,521          18,129         16,700
taxes
Pro forma income       2,524          2,208          7,252          6,680
tax expense
Pro forma net      $   3,786      $   3,313      $   10,877     $   10,020
income
                                                                    
Pro forma basic
net income per     $   0.12       $   0.11       $   0.36       $   0.31
common share
Weighted average
common shares          30,627         29,401         30,484         32,405
outstanding
                                                                    
Pro forma diluted
net income per     $   0.12       $   0.11       $   0.34       $   0.29
common share
Weighted average
common and common      32,797         31,489         32,174         34,312
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)
                                               September 27,    December 28,
                                                2013              2012
                                                                  
  ASSETS
  Current assets:
  Cash and cash equivalents                   $ 14,851          $ 16,906
  Accounts receivable and unbilled revenue,     37,367            36,869
  net
  Deferred tax asset, net                       4,194             4,741
  Prepaid expenses and other current assets     3,116             2,335
  Total current assets                          59,528            60,851
                                                                  
  Restricted cash                               522               683
  Property and equipment, net                   13,032            12,859
  Other assets                                  1,093             1,598
  Goodwill, net                                 75,967            76,220
  Non-current deferred tax asset, net           -                 1,710
  Total assets                                $ 150,142         $ 153,921
                                                                  
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Accounts payable                            $ 4,852           $ 7,711
  Accrued expenses and other liabilities        21,831            26,484
  Current portion of long-term debt             -                 2,895
  Total current liabilities                     26,683            37,090
  Long-term deferred tax liability, net         2,677             -
  Long-term debt                                15,026            22,105
  Total liabilities                             44,386            59,195
                                                                  
  Shareholders' equity                          105,756           94,726
  Total liabilities and shareholders' equity  $ 150,142         $ 153,921


The Hackett Group, Inc.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)

                                Quarter Ended
                                September 27,      June 28,      September 28,
                                2013               2013          2012
Revenue Breakdown by Group:
(in thousands)
The Hackett Group (2)       $   48,689         $   47,659     $  45,429
ERP Solutions (3)               9,227              11,302        10,218
                            $   57,916         $   58,961     $  55,647
                                                                 
Revenue Concentration:
(% of total revenue)
Top customer                    3%                 3%            3%
Top 5 customers                 12%                16%           11%
Top 10 customers                22%                24%           20%
                                                                 
Key Metrics and Other
Financial Data:
                                                                 
Total Company:
Consultant headcount            718                735           726
Total headcount                 912                926           932
Days sales outstanding          59                 55            57
(DSO)
Cash provided by operating  $   3,858          $   5,720      $  4,857
activities (in thousands)
Depreciation (in thousands) $   456            $   461        $  492
Amortization (in thousands) $   150            $   151        $  136
                                                                 
The Hackett Group (in
thousands):
The Hackett Group
annualized revenue per      $   358            $   358        $  338
professional (2)
                                                                 
ERP Solutions:
ERP Solutions consultant        72%                83%           74%
utilization rate (3)
ERP Solutions gross billing $   132            $   130        $  130
rate per hour (3)
                                                                 
Share Repurchase Plan:
Shares purchased in the         -                  124           -
quarter (in thousands)
Cost of shares repurchased
in the quarter (in          $   -              $   594        $  -
thousands)
Average price per share of
shares purchased in the     $   -              $   4.80       $  -
quarter
Remaining authorization (in $   4,963          $   4,963      $  556
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,
the SAP group, approximately 45% of which are offshore resources.

Contact:

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