HCKT Hackett Group Inc

The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic advisory and operations improvement consulting firm, today announced its financial results for the third quarter, which ended October 1, 2010.

Third quarter 2010 revenue was $52.3 million, a 54% increase from the same period in 2009. Pro forma diluted earnings per share were $0.08 for the third quarter of 2010, as compared to $0.03 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 third quarter of 2010, as compared to $0.02 for the same period in 2009.

At the end of the third quarter of 2010, the Company’s cash balances were $24.9 million. During the quarter ended October 1, 2010, the Company repurchased 482 thousand shares of its common stock at an average cost of $3.22 per share, for a total cost of approximately $1.6 million. The Company’s current remaining authorization is approximately $6.9 million.

“Demand from our US-based clients contributed to our strong performance this quarter,” stated Ted A. Fernandez, Chairman & CEO of The Hackett Group. “Although the volatile economic recovery will continue to create some market uncertainty, we believe our offerings are well-aligned with the performance improvements companies will continue to address.”

Based on the current economic outlook, the Company estimates total revenue for the fourth quarter of 2010 to be in the range of $46.5 million to $48.5 million, and estimates pro forma diluted earnings per share to be in the range of $0.05 to $0.07. At the midpoint of this guidance, quarterly revenues will be up 37 percent (29 percent organically) on a year-over-year basis.

Other Highlights

Hewlett-Packard (“HP”) Receives World-Class Award for HR - The Hackett Group recognized HP as a world-class performer in Human Resources. The award was based on the results of an in-depth HR benchmark performed by The Hackett Group, and recognizes HP’s status as an organization demonstrating top quartile efficiency and effectiveness in HR operations. The company's performance was measured across more than a hundred HR metrics and compared with results from more than 200 recent benchmarks performed with Global 1000 companies, state and federal government organizations, and academic institutions. HP currently has more than 300,000 employees and conducts business in over 170 countries.

Eastman Chemical Receives World-Class Award for Finance – The Hackett Group recognized Eastman Chemical Company as a world-class performer in finance. The award was based on the results of an in-depth benchmark performed by The Hackett Group in early 2010. It recognizes Eastman’s status as an organization demonstrating top quartile efficiency and effectiveness in corporate finance operations. Eastman, headquartered in Kingsport, Tennessee, is a chemicals, fibers, and plastics company with 2009 sales of $5.0 billion.

Answerthink Joins SAP Fast-Start Program - The Hackett Group’s Answerthink division announced that it has joined the SAP Business All-in-One fast-start program. The program provides midsize companies with tools and methodologies to improve software acquisition and shorten implementation times. Through Answerthink’s participation in the Fast-Start program, growing pharmaceutical companies can now reap the benefits of Answerthink’s EzLifeScience™ solutions, which are qualified SAP Business All-in-One partner solutions, in a pre-packaged fixed scope fashion.

At 5:00 P.M. ET on Tuesday, November 9, 2010 the senior management of The Hackett Group will host a conference call to discuss third quarter earnings results for the period ending October 1, 2010.

The number for the conference call is (800) 857-9601, [Passcode: Third 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, November 9, 2010 and will run through 5:00 P.M. ET on Tuesday, November 23, 2010. To access the rebroadcast, please dial (866) 462-8978. For International callers, please dial (203) 369-1364.

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, November 9, 2010 and will run through 5:00 P.M. ET on Tuesday, November 23, 2010. To access the replay, visit http://www.thehackettgroup.com or http://www.streetevents.com.

About The Hackett Group, Inc.

The Hackett Group (NASDAQ: HCKT), a global strategic business 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 5,000 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 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, EzLifeScience 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 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 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 Nine Months Ended  

October 1, 2010

 

October 2, 2009

 

October 1, 2010

 

October 2, 2009

Revenue: Revenue before reimbursements $ 47,343 $ 30,688 $ 137,160 $ 98,060 Reimbursements 4,962   3,315   15,558   10,075   Total revenue 52,305 34,003 152,718 108,135   Costs and expenses: Cost of service: Personnel costs before reimbursable expenses (includes $560 and $442 and $1,768 and $1,531 of stock compensation expense in the quarters and nine months ended October 1, 2010 and October 2, 2009, respectively) 29,144 19,423 85,200 62,078 Reimbursable expenses 4,962   3,315   15,558   10,075   Total cost of service 34,106 22,738 100,758 72,153   Selling, general and administrative costs (includes $432 and $237 and $1,256 and $560 of stock compensation expense in the quarters and nine months ended October 1, 2010 and October 2, 2009, respectively) 14,285   10,475   42,435   34,105   Total costs and operating expenses 48,391   33,213   143,193   106,258   Income from operations 3,914 790 9,525 1,877 Other income (expense): Non-cash acquisition earn-out shares re-measurement gain - - 1,727 - Interest income 7 6 17 42 Loss on marketable investments -   -   -   (35 ) Income before income taxes 3,921 796 11,269 1,884 Income taxes (186 ) (20 ) 41   69   Net income $ 4,107   $ 816   $ 11,228   $ 1,815     Basic net income per common share: Net income per common share $ 0.10 $ 0.02 $ 0.28 $ 0.05 Weighted average common shares outstanding 40,554 37,651 40,262 37,996   Diluted net income per common share: Net income per common share $ 0.10 $ 0.02 $ 0.27 $ 0.05 Weighted average common and common equivalent shares outstanding 43,058 38,370 42,298 38,381   Pro forma data (1): Income before income taxes $ 3,921 $ 796 $ 11,269 $ 1,884 Acquisition-related costs - 53 - 53 Non-cash acquisition earn-out shares re-measurement gain - - (1,727 ) - Stock compensation expense 992 679 3,024 2,091 Amortization of intangible assets 520   171   1,495   503   Pro forma income before income taxes 5,433 1,699 14,061 4,531 Pro forma income tax expense 2,173   680   5,624   1,812   Pro forma net income $ 3,260   $ 1,019   $ 8,437   $ 2,719     Pro forma basic net income per common share $ 0.08 $ 0.03 $ 0.21 $ 0.07 Weighted average common shares outstanding 40,554 37,651 40,262 37,996   Pro forma diluted net income per common share $ 0.08 $ 0.03 $ 0.20 $ 0.07 Weighted average common and common equivalent shares outstanding 43,058 38,370 42,298 38,381  

(1)

The Company provides pro forma earnings results (which exclude the non-cash acquisition earn-out shares re-measurement gain, stock compensation expense, acquisition-related costs and amortization of intangible assets, and include a normalized tax rate) as a complement to results provided 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)     October 1, 2010 January 1, 2010 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 23,266 $ 15,004 Accounts receivable and unbilled revenue, net 30,100 28,653 Prepaid expenses and other current assets 2,376 2,683 Total current assets 55,742 46,340   Restricted cash 1,682 1,475 Property and equipment, net 8,449 7,137 Other assets 3,280 4,871 Goodwill, net 76,447 76,712 Total assets $ 145,600 $ 136,535   LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,795 $ 3,674 Accrued expenses and other liabilities 27,013 31,231 Total current liabilities 31,808 34,905 Accrued expenses and other liabilities, non-current 1,811 3,378 Total liabilities 33,619 38,283   Shareholders' equity 111,981 98,252 Total liabilities and shareholders' equity $ 145,600 $ 136,535 The Hackett Group, Inc. Supplemental Financial Data (unaudited)       Quarter Ended October 1, 2010 July 2, 2010 October 2, 2009 Revenue Breakdown by Group: (in thousands)   The Hackett Group (2) (3) $ 36,109 $ 39,325 $ 23,099 Technology Solutions (4)   16,196     14,360     10,904   Total revenue $ 52,305   $ 53,685   $ 34,003       Revenue Concentration: (% of total revenue)   Top customer 4 % 7 % 7 % Top 5 customers 15 % 20 % 28 % Top 10 customers 26 % 30 % 40 %     Key Metrics and Other Financial Data:   Total Company: Consultant headcount 676 655 497 Total headcount 876 852 664 Days sales outstanding (DSO) 52 54 54

Cash provided by operating activities (in thousands)

$ 8,365 $ 5,197 $ 1,399 Depreciation (in thousands) $ 474 $ 444 $ 422 Amortization (in thousands) $ 520 $ 515 $ 171   The Hackett Group:

The Hackett Group annualized revenue per professional (in thousands)

$ 351 $ 380 $ 315   Technology Solutions: Technology Solutions consultant utilization rate 84 % 81 % 72 % Technology Solutions gross billing rate per hour $ 147 $ 141 $ 139   Share Repurchase Program: Shares purchased in the quarter (in thousands) 482 682 391 Cost of shares repurchased in the quarter (in thousands) $ 1,551 $ 2,059 $ 990 Average price per share of shares purchased in the quarter $ 3.22 $ 3.02 $ 2.53 Remaining authorization (in thousands) $ 6,886 $ 3,437 $ 3,505    

(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.