The Hackett Group, Inc. (NASDAQ: HCKT), a global
strategic advisory firm, today announced its financial results for
the fourth quarter and fiscal year, which ended January 1,
2010.
Fourth quarter 2009 revenue was $34.6 million, a 29% decrease
from the same period in 2008. Pro forma diluted net loss per share
was ($0.02) in the fourth quarter of 2009, as compared to pro forma
diluted net earnings per share of $0.10 in the fourth quarter of
2008. Fourth quarter 2009 earnings were unfavorably impacted by
approximately $0.04 due to losses recognized on a technology
implementation project. 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 net loss per share was ($0.22) in the fourth
quarter of 2009, as compared to diluted net earnings per share of
$0.14 in the fourth quarter of 2008. GAAP net loss for the fourth
quarter of 2009 includes $5.9 million, or $0.15 per dilutive share,
for restructuring and other one-time charges, relating to the
acquisition of Archstone Consulting which we announced in November
2009.
Fiscal year 2009 revenue was $142.7 million, a decrease of 26%
from the previous fiscal year. Pro forma diluted net earnings per
share for 2009 was $0.05, as compared to $0.33 in fiscal year 2008.
GAAP diluted net loss per share in fiscal 2009 was ($0.18), as
compared to net earnings per share of $0.43 in the previous fiscal
year. GAAP net loss for 2009 includes acquisition-related
restructuring and one-time charges of $5.9 million, non-cash stock
compensation expense of $3.0 million, and amortization expense of
$1.1 million.
At the end of the fourth quarter of 2009, the Company’s cash
balances were $16.5 million. During the fourth quarter of 2009, the
Company repurchased approximately 1.1 million shares of its common
stock at $2.78, for a total cost of $2.9 million. For the fiscal
year 2009, the Company repurchased approximately 2.6 million shares
at an average price of $2.43, for a total cost of approximately
$6.4 million. On February 19, 2010, the Board of Directors
authorized an additional $5.0 million increase to the share buyback
program, bringing the total remaining authorization to
approximately $5.5 million.
“Although 2009 proved to be a very challenging year, we believe
the prospects for our business are improving noticeably as we start
2010,” stated Ted A. Fernandez, Chairman & CEO of The Hackett
Group. “Our acquisition of Archstone Consulting has expanded our
ability to serve clients across the entire enterprise. We are also
pleased that we added this expanded capability with limited
dilution as a result of our active stock repurchase activity
throughout 2009.”
Based on the current economic outlook, the Company estimates
total revenue for the first quarter of 2010 to be in the range of
$43.0 million to $45.0 million and estimates pro forma diluted
earnings per share to be in the range of $0.03 to $0.05.
Other Highlights
NRI Alliance - Hackett announced a strategic alliance with the
consulting division of the Nomura Research Institute, Ltd (NRI), a
$3.5 billion company that is one of Japan’s largest consultancies.
As part of the alliance, in 2010 the two companies will launch a
Hackett benchmarking services offering in Japan, China, Taiwan,
South Korea, Philippines, and Indonesia. The relationship provides
NRI with exclusive rights to position, sell and execute Hackett
benchmark services in Japan, and non-exclusive rights in the other
countries. NRI has formed a dedicated Benchmark Solutions sales
team to position and sell Hackett benchmarks in these
geographies.
Jobless Recovery Research – Hackett’s research found that the
increase in job losses is being driven by a number of factors,
including the lack of economic growth, deep cuts in response to
budget pressures, improvements in productivity and automation, and
the increased use of offshore labor resources.
Talent Maturity Research – New research from Hackett found that
companies with more mature Talent Management capabilities reap
stronger bottom-line benefits, including earnings that are 18%
higher than typical Global 1000 companies. The study, which
examined the performance at more than 60 companies over a
three-year period, found that in addition to higher earnings,
leaders saw significantly improved net profit margin and greater
return on equity and assets.
Learn.com Alliance – Hackett and Learn.com, the leader in
on-demand workforce development and productivity, announced a
global implementation alliance. Under the terms of the alliance
agreement, Hackett will be the preferred provider of global
implementation services for the Learn.com’s LearnCenter® platform,
the world’s most popular learning and talent management suite.
Hackett will offer full life-cycle implementation services and
consulting for global enterprises inside and outside of the United
States.
At 5:00 P.M. ET on Tuesday, February 23, 2010 the senior
management of The Hackett Group, Inc. will host a conference call
to discuss fourth quarter earnings results for the period ending
January 1, 2010.
The number for the conference call is (800) 857-9601, [Passcode:
Fourth Quarter, Leader: Ted A. Fernandez]. For International
callers, please dial (210) 234-8000.
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, February
23, 2010 and will run through 5:00 P.M. ET on Tuesday, March 9,
2010. To access the rebroadcast, please dial (866) 479-2458. For
International callers, please dial (203) 369-1533.
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, February 23, 2010
and will run through 5:00 P.M. ET on Tuesday, March 9, 2010. To
access the call, visit http://www.thehackettgroup.com or
http://www.streetevents.com.
About The Hackett Group, Inc.
The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic
advisory firm, is a leader in best practice advisory, benchmarking,
and enterprise transformation consulting services, including shared
services, offshoring and outsourcing implementation. Utilizing best
practices and implementation insights from more than 4,000
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 in the Consumer and Industrial Products, Pharmaceutical,
Manufacturing and Financial Services industry sectors. Through its
Hackett Technology Solutions group, The Hackett Group offers
business application consulting services that help maximize returns
on IT investments. The Hackett Group has worked with 2,700 major
corporations and government agencies, including 97% of the Dow
Jones Industrials, 73% of the Fortune 100, 73% of the DAX 30 and
50% of the FTSE 100.
Founded in 1991, The Hackett Group was acquired by Answerthink,
Inc. in 1997. Answerthink was renamed The Hackett Group, Inc. in
2008. The Hackett Group has global offices in the United States,
Europe and Asia/Pacific.
More information on The Hackett Group is available: by phone at
(770) 225-7300; by e-mail at info@thehackettgroup.com; or on the
Web at www.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 practices 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 information technology industry, our ability to attract and
retain skilled employees, possible changes in collections of
accounts receivable, risks of competition, price and margin trends,
foreign currency fluctuations, changes in general economic
conditions and interest rates 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
January 1,
2010
January 2,
2009
January 1,
2010
January 2,
2009
Revenue: Revenue before reimbursements $ 30,959 $ 43,846 $
129,019 $ 173,217 Reimbursements 3,606 4,909 13,681 18,884 Total
revenue 34,565 48,755 142,700 192,101 Costs and expenses:
Cost of service: Personnel costs before reimbursable expenses
(includes $673 and $324 and $2,204 and $1,234 of stock compensation
expense in the quarters and twelve months ended January 1, 2010 and
January 2, 2009, respectively) 22,329 24,034 84,407 96,844
Reimbursable expenses 3,606 4,909 13,681 18,884
Total cost of service 25,935 28,943 98,088 115,728 Selling,
general and administrative costs (includes $240 and $646 and $800
and $2,824 of stock compensation expense in the quarters and twelve
months ended January 1, 2010 and January 2, 2009, respectively)
12,110 14,206 46,215 58,474 Restructuring costs 5,437 - 5,437 -
Total costs and operating expenses 43,482 43,149 149,740 174,202
(Loss) income from operations (8,917) 5,606 (7,040) 17,899 Other
income (expense): Interest income 9 54 51 442 Loss on marketable
investments - - (35) - (Loss) income before income taxes (8,908)
5,660 (7,024) 18,341 Income tax (benefit) expense (281) 212 (212)
465 Net (loss) income $ (8,627) $ 5,448 $ (6,812) $ 17,876
Basic net (loss) income per common share: Net (loss) income per
common share $ (0.22) $ 0.14 $ (0.18) $ 0.44 Weighted average
common shares outstanding 38,973 38,936 38,240 40,471
Diluted net (loss) income per common share: Net (loss) income per
common share $ (0.22) $ 0.14 $ (0.18) $ 0.43
Weighted average common and common
equivalent shares outstanding
38,973 39,786 38,240 41,498 Pro forma data (1): (Loss)
income before income taxes $ (8,908) $ 5,660 $ (7,024) $ 18,341
Acquisition-related costs 505 - 505 - Stock compensation expense
913 970 3,004 4,058 Restructuring costs 5,437 - 5,437 -
Amortization of intangible assets 555 164 1,058 732 Pro forma
(loss) income before income taxes (1,498) 6,794 2,980 23,131 Pro
forma income tax (benefit) expense (599) 2,718 1,192 9,252 Pro
forma net (loss) income $ (899) $ 4,076 $ 1,788 $ 13,879 Pro
forma basic net (loss) income per common share $ (0.02) $ 0.10 $
0.05 $ 0.34 Weighted average common shares outstanding 38,973
38,936 38,240 40,471 Pro forma diluted net (loss) income per
common share $ (0.02) $ 0.10 $ 0.05 $ 0.33
Weighted average common and common
equivalent shares outstanding
38,973 39,786 39,046 41,498
(1)
The Company provides pro forma
earnings results (which exclude acquisition-related costs,
restructuring costs, amortization of intangible assets and stock
compensation expense, 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)
January 1, 2010 January 2, 2009
ASSETS Current assets: Cash and cash equivalents $
15,004 $ 32,060 Marketable investments - 1,727 Accounts receivable
and unbilled revenue, net 28,653 25,481 Prepaid expenses and other
current assets 2,683 3,021 Total current assets 46,340 62,289
Restricted cash 1,475 600 Property and equipment, net 7,137
5,767 Other assets 4,871 1,392 Goodwill, net 76,712 63,616 Total
assets $ 136,535 $ 133,664
LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities: Accounts payable $ 3,674 $ 3,711
Accrued expenses and other liabilities 31,231 34,277 Total current
liabilities 34,905 37,988 Accrued expenses and other liabilities,
non-current 3,378 1,759 Total liabilities 38,283 39,747
Shareholders' equity 98,252 93,917 Total liabilities and
shareholders' equity $ 136,535 $ 133,664
The Hackett Group, Inc.
Supplemental Financial
Data
(unaudited)
Quarter Ended January 1, 2010 October 2,
2009 January 2, 2009 Revenue Breakdown by Group:
(in thousands) The Hackett Group: Benchmarking and Business
Transformation (2) $ 23,974 $ 19,769 $ 30,094 Executive Advisory
Programs (3) 3,055 3,330 3,693 Total The Hackett Group 27,029
23,099 33,787 Hackett Technology Solutions (4) 7,536 10,904
14,968 Total Revenue $ 34,565 $ 34,003 $ 48,755
Revenue Concentration: (% of total revenue) Top
customer 6% 7% 6% Top 5 customers 23% 28% 21% Top 10 customers 36%
40% 30%
Key Metrics and Other Financial Data:
The Hackett Group: The Hackett Group annualized
revenue per professional (in thousands) $ 284 $ 315 $ 409
Technology Solutions: Technology Solutions consultant
utilization rate 73% 72% 64% Technology Solutions gross billing
rate per hour $ 79 $ 139 $ 168
Total Company:
Consultant headcount 644 497 547 Total headcount 810 664 724 Days
sales outstanding (DSO)
68
54 51 Cash (used in) provided by operating activities (in
thousands) $ (3,466) $ 1,399 $ 11,361 Depreciation (in thousands) $
379 $ 422 $ 512 Amortization (in thousands) $ 555 $ 171 $ 164
Share Repurchase Program: Shares purchased in the
quarter (in thousands) 1,052 391 938 Cost of shares repurchased in
the quarter (in thousands) $ 2,926 $ 990 $ 2,889 Average price per
share of shares purchased in the quarter $ 2.78 $ 2.53 $ 3.08
Remaining authorization (in thousands) $ 579 $ 3,505 $ 1,959
(2)
Comparison of a client's demand
drivers, costs and practices to a peer group in order to
empirically identify and define an organization's ability to
improve performance at a process level and to identify and compare
business practices utilized by world-class performers.
Additionally, strategic consulting support that utilizes Hackett
best practice implementation content and tools to enable clients to
accelerate transformation to world-class performance.
(3)
Annual or multi-year contracts
that provide clients with on-demand access to world-class
performance metrics, best practice repository, best practice
research forums and conferences, and advice.
(4)
Best Practice Implementation of
ERP Software, which is primarily Oracle and SAP, and business
performance management solutions, which is primarily EPM
Oracle.
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