The Hackett Group Announces Fourth Quarter and Fiscal 2013 Results

  The Hackett Group Announces Fourth Quarter and Fiscal 2013 Results

  *Q4 2013 revenue of $52.6 million and pro forma EPS of $0.08, at mid-point
    of guidance
  *Fiscal 2013 revenue of $223.8 million and pro forma EPS of $0.41, with
    EBITDA of $24.5 million
  *Company declares and pays annual dividend of $0.10 per share during
    quarter
  *Board authorizes additional $5.0 million for stock repurchase program

Business Wire

MIAMI -- February 24, 2014

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

Fourth quarter 2013 revenue was $52.6 million, down 4% from prior year. Pro
forma diluted earnings per share were $0.08, down 27% when compared to $0.11
for the same period in 2012. Fiscal year 2013 revenue was $223.8 million,
slightly up from fiscal year 2012 revenue of $222.7 million. Fiscal year pro
forma diluted earnings per share were $0.41, as compared to $0.40 in fiscal
year 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 was $0.04 for the fourth quarter of 2013, as
compared to $0.21 in the same period in 2012, which included a $0.13 benefit
from tax valuation allowances. GAAP diluted earnings per share in fiscal 2013
was $0.27, as compared to $0.50 in the previous fiscal year, which included a
$0.20 benefit from tax valuation allowances. No deferred tax valuation
allowance was released in 2013.

At the end of the fourth quarter of 2013, the Company’s cash balances were
$18.6 million. During the fourth quarter, the Company paid its annual $0.10
per share dividend. In addition, during the fourth quarter, the Company
borrowed a net of $4.0 million on its credit facility to finance its Dutch
tender offer and other share repurchases, leaving a $19.0 million balance at
quarter end.

Including shares repurchased in the tender offer during the fourth quarter of
2013, the Company repurchased approximately 1.9 million shares of its common
stock at an average of $6.53 per share, for a total cost of $12.3 million. As
of fiscal year end 2013, the Company's remaining stock repurchase program
authorization was $4.6 million. Subsequent to year end, the Company's Board of
Directors approved to increase the stock repurchase program authorization by
an additional $5.0 million.

"The significant decrease in our European revenues in the quarter, offset the
solid growth in our US business and negatively impacted our fourth quarter and
year end results," stated Ted A. Fernandez, Chairman & CEO of The Hackett
Group, Inc. "Although we have taken actions to strengthen our European
operations, we will continue to make the necessary changes, in order to
recapture our momentum and contribution in the region."

Based on the current economic outlook, the Company estimates total revenue for
the first quarter of 2014 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 $0.06 to $0.07.

Other Highlights

World-Class IT Research - The Hackett Group's research details how
top-performing IT organizations focus on automation and complexity reduction
as essential IT strategy elements. This research from The Hackett Group found
that world-class IT organizations achieve higher levels of effectiveness,
meeting ROI expectations nearly twice as often, and support up to 80% higher
levels of business process automation, all at 15% less cost than typical
companies. The research also spotlights four fundamental practices that
differentiate world-class IT organizations from typical companies.

Finance - Ambition vs Reality Research - In early February, The Hackett Group
issued research showing that while most corporate finance organizations say
they are highly committed to moving to global standards, more than half are
failing to see success in this area. Over the past two years, minimal
improvements have occurred at typical companies, and most dramatically
underestimate the commitment required to execute on this key finance strategy
and achieve true transformation, The Hackett Group's research found. The new
findings are drawn from The Hackett Group's 2013 Global Finance Organization
Model Study. In order to affect change, The Hackett Group's research
recommends that companies more effectively prioritize transformation projects,
create teams dedicated to change, and focus on developing the skills required
to support a globalized operating model.

On Monday, February 24, 2014, 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 Monday, February 24, 2014 and will run through 5:00 P.M. ET
on Monday, March 10, 2014. To access the rebroadcast, please dial(866)
505-9257. For International callers, please dial (203) 369-1881.

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 Monday, February 24, 2014 and
will run through 5:00 P.M. ET on Monday, March 10, 2014. 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 10,000 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 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, 83% 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               Twelve Months Ended
                           December       December     December      December
                           27,            28,          27,           28,
                           2013           2012         2013          2012
Revenue:
Revenue before          $  47,203       $ 49,430     $ 200,391     $ 199,749
reimbursements
Reimbursements             5,401         5,612       23,439       22,987  
Total revenue              52,604         55,042       223,830       222,736
                                                                     
Costs and expenses:
Cost of service:
Personnel costs
before reimbursable
expenses (includes
$744 and $788 and
$3,284 and $2,990 of                                                 
stock compensation
expense in the
quarters and twelve                                                  
months ended
December 27, 2013
and December 28,           31,081         31,520       130,456       125,912
2012, respectively)
Reimbursable               5,401         5,612       23,439       22,987  
expenses
Total cost of              36,482         37,132       153,895       148,899
service
                                                                     
Selling, general and
administrative costs
(includes $673 and
$664 and $2,835 and                                                  
$2,524 of stock
compensation expense
in the quarters and                                                  
twelve months ended
December 27, 2013
and December 28,           13,726         13,749       54,208        56,997
2012, respectively)
Restructuring              -             108         -            (211    )
expense (benefit)
Total costs and            50,208        50,989      208,103      205,685 
operating expenses
Income from                2,396          4,053        15,727        17,051
operations
Other income
(expense):
Interest income            1              1            7             20
Interest expense           (111    )      (160   )     (472    )     (630    )
Income from
continuing                 2,286          3,894        15,262        16,441
operations before
income taxes
Income tax expense         1,080         (2,743 )     6,398        (478    )
(benefit)
Income from
continuing                 1,206          6,637        8,864         16,919
operations
Income (loss) from
discontinued               -             46          (135    )     (222    )
operations
Net income              $  1,206       $ 6,683     $ 8,729      $ 16,697  
                                                                     
Basic net income per
common share:
Income per common
share from              $  0.04         $ 0.23       $ 0.29        $ 0.54
continuing
operations
Income (loss) per
common share from          -             -           -            (0.01   )
discontinued
operations
Net income per          $  0.04        $ 0.23      $ 0.29       $ 0.53    
common share
                                                                     
Diluted net income
per common share:
Income per common
share from              $  0.04         $ 0.21       $ 0.28        $ 0.51
continuing
operations
Income (loss) per
common share from          -             -           (0.01   )     (0.01   )
discontinued
operations
Net income per          $  0.04        $ 0.21      $ 0.27       $ 0.50    
common share
                                                                     
Weighted average
common shares
outstanding:
Basic                      29,683         29,599       30,283        31,704
Diluted                    31,941         31,107       32,116        33,511
                                                                     
Pro forma data (1):
Income from
continuing              $  2,286        $ 3,894      $ 15,262      $ 16,441
operations before
income taxes
Stock compensation         1,417          1,452        6,119         5,514
expense
Acquisition-related        188            -            188           -
costs
Restructuring              -              108          -             (211    )
expense (benefit)
Amortization of            151           136         602          547     
intangible assets
Pro forma income           4,042          5,590        22,171        22,291
before income taxes
Pro forma income tax       1,617         2,236       8,868        8,916   
expense
Pro forma net income    $  2,425       $ 3,354     $ 13,303     $ 13,375  
                                                                     
Pro forma basic net
income per common       $  0.08         $ 0.11       $ 0.44        $ 0.42
share
Weighted average
common shares              29,683         29,599       30,283        31,704
outstanding
                                                                     
Pro forma diluted
net income per          $  0.08         $ 0.11       $ 0.41        $ 0.40
common share
Weighted average
common and common          31,941         31,107       32,116        33,511
equivalent shares
outstanding
                                                                     
(1) The Company provides pro forma earnings results (which exclude the
amortization of intangible assets and stock compensation expense,
acquisition-related costs 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)
                                                 December 27,     December 28,
                                                 2013             2012
                                                                  
ASSETS
Current assets:
Cash and cash equivalents                      $ 18,199         $ 16,906
Accounts receivable and unbilled revenue,        34,011           36,869
net
Deferred tax asset, net                          5,130            4,741
Prepaid expenses and other current assets        2,283            2,335
Total current assets                             59,623           60,851
                                                                  
Restricted cash                                  354              683
Property and equipment, net                      13,019           12,859
Other assets                                     1,039            1,598
Goodwill, net                                    76,283           76,220
Non-current deferred tax asset, net              -                1,710
Total assets                                   $ 150,318        $ 153,921
                                                                  
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                               $ 8,080          $ 7,711
Accrued expenses and other liabilities           25,646           26,484
Current portion of long-term debt                -                2,895
Total current liabilities                        33,726           37,090
Long-term deferred tax liability, net            4,387            -
Long-term debt                                   19,029           22,105
Total liabilities                                57,142           59,195
                                                                  
Shareholders' equity                             93,176           94,726
Total liabilities and shareholders' equity     $ 150,318        $ 153,921
                                                                  

                                                            
The Hackett Group, Inc.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
                                                                    
                                Quarter Ended
                                December 27,       September        December
                                                   27,              28,
                                2013               2013             2012
Revenue Breakdown by
Group:
(in thousands)
The Hackett Group (2)      $    44,152          $  48,689        $  45,130
ERP Solutions (3)               8,452             9,227           9,912   
                           $    52,604         $  57,916       $  55,042  
                                                                    
Revenue
Concentration:
(% of total revenue)
Top customer                    3        %         3       %        3       %
Top 5 customers                 11       %         12      %        13      %
Top 10 customers                19       %         22      %        21      %
                                                                    
Key Metrics and Other
Financial Data:
                                                                    
Total Company:
Consultant headcount            702                718              724
Total headcount                 891                912              921
Days sales                      59                 59               59
outstanding (DSO)
Cash provided by
operating activities       $    15,224          $  3,858         $  9,219
(in thousands)
Depreciation (in           $    466             $  456           $  483
thousands)
Amortization (in           $    151             $  150           $  136
thousands)
                                                                    
The Hackett Group (in
thousands):
The Hackett Group
annualized revenue         $    332             $  358           $  342
per professional (2)
                                                                    
ERP Solutions:
ERP Solutions
consultant                      71       %         72      %        68      %
utilization rate (3)
ERP Solutions gross
billing rate per hour      $    127             $  132           $  135
(3)
                                                                    
Share Repurchase Plan
(4):
Shares purchased in
the quarter (in                 894                -                -
thousands)
Cost of shares
repurchased in the         $    5,368           $  -             $  -
quarter (in
thousands)
Average price per
share of shares            $    6.00            $  -             $  -
purchased in the
quarter
Remaining
authorization (in          $    4,594           $  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.
(4) The Share Repurchase Plan information does not include approximately 1.0
million shares purchased pursuant to the Dutch Tender Offer at $7.00 per share
for a total of $6.9 million, excluding fees, during Q4 2013.


Contact:

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