The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic
advisory and operations improvement consulting firm, today
announced its financial results for the second quarter, which ended
July 2, 2010.
Second quarter 2010 revenue was $53.7 million, a 55% increase
from the same period in 2009. Pro forma diluted earnings per share
were $0.08 for the second quarter of 2010, as compared to $0.02 for
the same period in 2009. 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 were $0.10 for
the second quarter of 2010, as compared to $0.00 for the same
period in 2009.
At the end of the second quarter of 2010, the Company’s cash
balances were $19.1 million. During the quarter ended July 2, 2010,
the Company repurchased 682 thousand shares of its common stock at
an average cost of $3.02 per share for a total cost of
approximately $2.1 million. On August 5, 2010 the Board of
Directors increased the Company’s stock repurchase plan
authorization by an additional $5.0 million. As a result, the
Company’s current remaining authorization is approximately $7.4
million.
“We had an outstanding quarter with improved performance across
all service groups,” stated Ted A. Fernandez, Chairman & CEO of
The Hackett Group, Inc. “We feel that our offerings are
well-aligned with the current economic recovery which requires
organizations to stay highly focused on market conditions and
strong operational execution.”
Based on the current economic outlook, the Company estimates
total revenue for the third quarter of 2010 to be in the range of
$51.5 million to $53.5 million, and estimates pro forma diluted
earnings per share to be in the range of $0.07 to $0.09.
Other Highlights
REL Working Capital Research – New working capital research was
released by REL, a division of The Hackett Group, and CFO Magazine,
showing that the impact of the global recession made it
dramatically harder for the 1000 largest public companies in the
U.S. to collect from customers and manage inventory last year. The
research, which was featured in a cover story in the June issue of
CFO, showed that the largest U.S. companies saw working capital
performance deteriorate by over 8% in 2009, the largest decline in
more than 5 years. According to REL's research, top performing
companies collected from customers 17 days more quickly than
typical companies in 2009. They also operated with less than half
the inventory on hand, and extended payment terms by an additional
10 days.
Supplier Diversity Research – New research from Hackett found
that while world-class procurement organizations continue to
outperform their peers in driving supplier diversity spending, most
companies still make major errors in how they operate and measure
the performance of their supplier diversity efforts. Most rely on
overly simplistic measures to evaluate the progress of supplier
diversity programs, and never truly assess whether programs are
meeting corporate objectives. Most companies also fail to consider
whether having a few large suppliers or many smaller suppliers best
supports their corporate goals.
SAP Qualifies Answerthink’s EzIMC™ solution - Answerthink, a
division of The Hackett Group, Inc. (NASDAQ: HCKT) announced that
its EzIMC offering for the industrial machinery and components
industry is now a qualified SAP Business All-in-One partner
solution. Answerthink's EzIMC supports the entire business value
chain from design to service, including product life-cycle
management, order-to-cash management, supply chain planning and
execution, engineer to order, make to order and/or make to stock
strategies, procure to pay process, service management and
financial management. The package is a completely preconfigured,
documented, industry-specific, and ready-to-run version of the SAP
ERP application combined with SAP Best Practices offerings and
Answerthink's expertise with industrial machinery and components
companies.
At 5:00 P.M. ET on Tuesday, August 10, 2010 the senior
management of The Hackett Group will host a conference call to
discuss second quarter earnings results for the period ending July
2, 2010.
The number for the conference call is (800) 857-9601, [Passcode:
Second 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, August 10,
2010 and will run through 5:00 P.M. ET on Tuesday, August 24, 2010.
To access the rebroadcast, please dial (866) 513-4383. For
International callers, please dial (203) 369-1982.
In addition, The Hackett Group will also be webcasting this
conference call live through the StreetEvents.com service. To
participate, simply visit 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, August 10, 2010 and will run through
5:00 P.M. ET on Tuesday, August 24, 2010. To access the replay,
visit http://www.thehackettgroup.com or
www.streetevents.com.
About The Hackett Group, Inc.
The Hackett Group (NASDAQ: HCKT), a global strategic advisory
and operations improvement consulting firm, is a leader in best
practice advisory, benchmarking, and transformation consulting
services including strategy and operations, working capital
management, and globalization advice. 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 consulting services
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 completed over 5,000
benchmark studies 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.
More information on The Hackett Group is available: by phone at
(770) 225-7300; by e-mail at info@thehackettgroup.com.
Copyright © 2010 The Hackett Group, Inc. All rights reserved.
Answerthink, EzIMC as well as their respective logos are trademarks
or registered trademarks of The Hackett Group, Inc.
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 Six Months
Ended
July 2,
2010
July 3, 2009
July 2,
2010
July 3,
2009
Revenue: Revenue before reimbursements $ 47,967 $ 31,382 $ 89,817 $
67,372 Reimbursements 5,718 3,234 10,596 6,760
Total revenue 53,685 34,616 100,413 74,132 Costs and
expenses: Cost of service:
Personnel costs before
reimbursable expenses
(includes $593 and $529 and $1,208 and $1,089 of stock compensation
expense in the quarters and six months ended July 2, 2010 and July
3, 2009, respectively) 29,307 20,381 56,056 42,655 Reimbursable
expenses 5,718 3,234 10,596 6,760 Total
cost of service 35,025 23,615 66,652 49,415 Selling, general
and administrative costs (includes $563 and $218 and $825 and $324
of stock compensation expense in the quarters and six months ended
July 2, 2010 and July 3, 2009, respectively) 14,908 10,791
28,150 23,630 Total costs and operating
expenses 49,933 34,406 94,802 73,045
Income from operations 3,752 210 5,611 1,087 Other income
(expense): Non-cash acquisition earn-out shares re-measurement gain
784 - 1,727 - Interest income 4 11 10 36 Loss on marketable
investments - (35 ) - (35 ) Income before income tax
expense 4,540 186 7,348 1,088 Income tax expense 117 26
227 89 Net income $ 4,423 $ 160
$ 7,121 $ 999 Basic net income per common
share: Net income per common share $ 0.11 $ 0.00 $ 0.18 $ 0.03
Weighted average common shares outstanding 40,597 37,894 40,116
38,169 Diluted net income per common share: Net income per
common share $ 0.10 $ 0.00 $ 0.17 $ 0.03 Weighted average common
and common equivalent shares outstanding 42,548 38,070 41,919
38,387 Pro forma data (1): Income before income tax expense
$ 4,540 $ 186 $ 7,348 $ 1,088 Non-cash acquisition earn-out shares
re-measurement gain (784 ) - (1,727 ) - Stock compensation expense
1,156 747 2,033 1,413 Amortization of intangible assets 515
172 975 332 Pro forma income before income
taxes 5,427 1,105 8,629 2,833 Pro forma income tax expense 2,171
442 3,452 1,133 Pro forma net income $
3,256 $ 663 $ 5,177 $ 1,700 Pro
forma basic net income per common share $ 0.08 $ 0.02 $ 0.13 $ 0.04
Weighted average common shares outstanding 40,597 37,894 40,116
38,169 Pro forma diluted net income per common share $ 0.08
$ 0.02 $ 0.12 $ 0.04 Weighted average common and common equivalent
shares outstanding 42,548 38,070 41,919 38,387
(1)
The Company provides pro forma
earnings results (which exclude the non-cash acquisition earn-out
shares re-measurement gain, stock compensation expense and
amortization of intangible assets, 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) July 2, 2010 January 1,
2010 (unaudited)
ASSETS Current assets: Cash and cash
equivalents $ 17,380 $ 15,004 Accounts receivable and unbilled
revenue, net 31,952 28,653 Prepaid expenses and other current
assets 2,495 2,683 Total current assets 51,827 46,340
Restricted cash 1,680 1,475 Property and equipment, net 7,693 7,137
Other assets 3,732 4,871 Goodwill, net 75,655 76,712 Total assets $
140,587 $ 136,535
LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities: Accounts payable $ 4,713 $ 3,674
Accrued expenses and other liabilities 26,024 31,231 Total current
liabilities 30,737 34,905 Accrued expenses and other liabilities,
non-current 2,249 3,378 Total liabilities 32,986 38,283
Shareholders' equity 107,601 98,252 Total liabilities and
shareholders' equity $ 140,587 $ 136,535
The
Hackett Group, Inc. Supplemental Financial Data
(unaudited) Quarter Ended
July 2, 2010
April 2, 2010 July 3, 2009 Revenue Breakdown by
Group: (in thousands) The Hackett Group (2) (3) $ 39,325
$ 36,582 $ 24,596 Technology Solutions (4) 14,360
10,146 10,020 Total revenue $ 53,685
$ 46,728 $ 34,616
Revenue
Concentration: (% of total revenue) Top customer 7 % 6 %
7 % Top 5 customers 20 % 21 % 20 % Top 10 customers 30 % 33 % 31 %
Key Metrics and Other Financial Data:
Total Company: Consultant headcount (5) 655 623 507 Total
headcount (5) 852 824 679 Days sales outstanding (DSO) 54 63 57
Cash provided by (used in) operating activities (in thousands) $
5,197 $ 788 $ (1,337 ) Depreciation (in thousands) $ 444 $ 454 $
525 Amortization (in thousands) $ 515 $ 460 $ 172
The
Hackett Group: The Hackett Group annualized revenue per
professional (in thousands) (5) $ 380 $ 360 $ 327
Technology Solutions: Technology Solutions consultant
utilization rate (5) 81 % 76 % 60 % Technology Solutions gross
billing rate per hour $ 141 $ 107 $ 144
Share Repurchase
Program: Shares purchased in the quarter (in thousands) 682 33
163 Cost of shares repurchased in the quarter (in thousands) $
2,059 $ 83 $ 346 Average price per share of shares purchased in the
quarter $ 3.02 $ 2.51 $ 2.12 Remaining authorization (in thousands)
$ 3,437 $ 5,496 $ 4,495
----
(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.
(5) Certain items in the quarter ended April 2, 2010 have been
reclassified to conform with the July 2, 2010 presentation.
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