The Hackett Group Announces First Quarter 2014 Results *Q1 2014 revenue of $54.9 million and pro forma EPS of $0.08 at high-end of revised guidance Business Wire MIAMI -- May 6, 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 first quarter, which ended March 28, 2014. First quarter 2014 revenue was $54.9 million. Pro forma diluted earnings per share were $0.08 for the first quarter of 2014, as compared to $0.10 for the same period in 2013. 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 loss per share was $0.07 for the first quarter of 2014, as compared to diluted earnings per share $0.06 in the first quarter of 2013. GAAP loss per share for the first quarter of 2014 included a $3.6 million restructuring charge primarily related to organizational actions taken in Europe. During the first quarter the Company utilized cash to repurchase approximately 716 thousand shares of the Company's common stock at an average price of $6.06 per share, for a total cost of $4.3 million. As of the end of the first quarter of 2014, the Company's remaining stock repurchase program authorization was $5.3 million. "As a result of our actions taken in Europe, the strong Hackett North America momentum and the Application Management Services acquisition, we now have the opportunity to meet or exceed last year's second quarter results. This is in spite of having only neutralized the European contribution impact at this point," stated Ted A. Fernandez, Chairman & CEO of The Hackett Group, Inc. Based on the current economic outlook, the Company estimates total revenue for the second quarter of 2014 to be in the range of $56.0 million to $58.0 million, and estimates pro forma diluted earnings per share to be in the range of $0.12 to $0.14. Other Highlights Technolab Acquisition - The Hackett Group announced the acquisition of Technolab International Corporation's U.S., Canada and Uruguay operations. The acquisition brings many strategic synergies. The Hackett Group’s EPM practice represents the company’s single largest practice area, and Technolab adds a group of highly skilled associates based primarily out of its Montevideo, Uruguay, Global Application Management Services Center. The acquisition provides The Hackett Group with new application management services and offshore development support capabilities which will strongly complement existing EPM and BI offerings. Finance Key Issues Research - New Finance Key Issues research from The Hackett Group found that corporate finance leaders are expecting budgets to be slightly up while staffing will continue to be reduced in 2014. In the face of a significant drive toward revenue growth, this will translate into another year of pressure on finance organization to deliver productivity improvements. As business strategies are focusing on innovation to realize much of this growth, finance also needs to make significant shifts in staff and services to support this enterprise agenda. Procurement Key Issues Research - New Procurement Key Issues research from The Hackett Group found that procurement leaders are expanding their priorities for 2014, moving beyond a historic emphasis on reducing purchase costs and adding focus on expanding and deepening the scope of spend influence as well as supporting supplier-led product innovation. On Tuesday, May 6, 2014, senior management will discuss first quarter results in a conference call at 5:00 P.M. ET. The number for the conference call is (800) 779-3138, [Passcode: First 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, May 6, 2014 and will run through 5:00 P.M. ET on Tuesday, May 20, 2014. To access the rebroadcast, please dial (800) 216-6081. For International callers, please dial (402) 220-3895. 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, May 6, 2014 and will run through 5:00 P.M. ET on Tuesday, May 20, 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 March 28, March 29, 2014 2013 Revenue: Revenue before $ 49,418 $ 48,871 reimbursements Reimbursements 5,487 5,478 Total revenue 54,905 54,349 Costs and expenses: Cost of service: Personnel costs before reimbursable expenses (includes $615 and $823 of stock compensation expense in the quarters ended March 28, 2014 and March 29, 2013, 33,253 32,042 respectively) Reimbursable expenses 5,487 5,478 Total cost of service 38,740 37,520 Selling, general and administrative costs (includes $653 and $699 of stock compensation expense in the quarters ended March 28, 2014 and March 29, 2013, 14,241 13,300 respectively) Restructuring costs 3,604 - Total costs and operating 56,585 50,820 expenses (Loss) income from (1,680 ) 3,529 operations Other income (expense): Interest income 1 1 Interest expense (124 ) (142 ) (Loss) income from continuing operations before (1,803 ) 3,388 income taxes Income tax expense 243 1,359 (Loss) income from (2,046 ) 2,029 continuing operations Loss from discontinued - (71 ) operations Net (loss) income $ (2,046 ) $ 1,958 Basic net (loss) income per common share: (Loss) income per common share from continuing $ (0.07 ) $ 0.07 operations Loss per common share from - (0.01 ) discontinued operations Net (loss) income per common $ (0.07 ) $ 0.06 share Diluted net (loss) income per common share: (Loss) income per common share from continuing $ (0.07 ) $ 0.06 operations Loss per common share from - - discontinued operations Net (loss) income per common $ (0.07 ) $ 0.06 share Weighted average common shares outstanding: Basic 29,120 30,292 Diluted 29,120 31,473 Pro forma data (1): (Loss) income from continuing operations before $ (1,803 ) $ 3,388 income taxes Stock compensation expense 1,268 1,522 Acquisition-related costs 120 - Restructuring costs 3,604 - Amortization of intangible 557 150 assets Pro forma income before 3,746 5,060 income taxes Pro forma income tax expense 1,423 2,024 Pro forma net income $ 2,323 $ 3,036 Pro forma basic net income $ 0.08 $ 0.10 per common share Weighted average common 29,120 30,292 shares outstanding Pro forma diluted net income $ 0.08 $ 0.10 per common share Weighted average common and common equivalent shares 29,869 31,473 outstanding (1) The Company provides pro forma earnings results (which exclude the amortization of intangible assets, stock compensation expense, restructuring 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) March 28, December 27, 2014 2013 ASSETS Current assets: Cash and cash equivalents $ 12,694 $ 18,199 Accounts receivable and unbilled revenue, net 36,911 34,011 Deferred tax asset, net 3,610 5,130 Prepaid expenses and other current assets 2,638 2,283 Total current assets 55,853 59,623 Restricted cash 654 354 Property and equipment, net 12,814 13,019 Other assets 4,704 1,039 Goodwill, net 83,576 76,283 Total assets $ 157,601 $ 150,318 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,043 $ 8,080 Accrued expenses and other liabilities 33,994 25,646 Current portion of long-term debt 2,400 - Total current liabilities 41,437 33,726 Long-term deferred tax liability, net 2,919 4,387 Long-term debt 26,325 19,029 Total liabilities 70,681 57,142 Shareholders' equity 86,920 93,176 Total liabilities and shareholders' equity $ 157,601 $ 150,318 The Hackett Group, Inc. SUPPLEMENTAL FINANCIAL DATA (unaudited) Quarter Ended March 28, March 29, December 27, 2014 2013 2013 Revenue Breakdown by Group: (in thousands) The Hackett Group $ 46,133 $ 43,612 $ 44,152 (2) ERP Solutions (3) 8,772 10,737 8,452 Total revenue $ 54,905 $ 54,349 $ 52,604 Revenue Concentration: (% of total revenue) Top customer 4 % 4 % 3 % Top 5 customers 13 % 14 % 11 % Top 10 customers 22 % 23 % 19 % Key Metrics and Other Financial Data: Total Company: Consultant headcount 770 719 702 Total headcount 971 906 891 Days sales 61 56 59 outstanding (DSO) Cash (used in) provided by $ (7,987 ) $ (547 ) $ 15,224 operating activities (in thousands) Depreciation (in $ 653 $ 499 $ 466 thousands) Amortization (in $ 557 $ 150 $ 151 thousands) The Hackett Group (in thousands): The Hackett Group annualized revenue $ 336 $ 329 $ 332 per professional (2) ERP Solutions: ERP Solutions consultant 76 % 75 % 71 % utilization rate (3) ERP Solutions gross billing rate per $ 127 $ 137 $ 127 hour (3) Share Repurchase Plan (4): Shares purchased in the quarter (in 716 - 894 thousands) Cost of shares repurchased in the $ 4,337 $ - $ 5,368 quarter (in thousands) Average price per share of shares $ 6.06 $ - $ 6.00 purchased in the quarter Remaining authorization (in $ 5,257 $ 556 $ 4,594 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 First Quarter 2014 Results
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