The Hackett Group Announces First Quarter 2014 Results

  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 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
                                       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
rramirez@thehackettgroup.com
 
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