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 email@example.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 firstname.lastname@example.org
The Hackett Group Announces Fourth Quarter and Fiscal 2013 Results
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