The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic
advisory and operations improvement consulting firm, today
announced its financial results for the second quarter of 2012,
which ended June 29, 2012.
Second quarter 2012 revenue was $61.3 million, a 4% increase (6%
on a constant currency basis) from the same period in 2011. Pro
forma diluted earnings per share were $0.11 for the second quarter
of 2012, as compared to $0.09 for the same period in 2011. 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 $0.12 for the second
quarter of 2012, as compared to $0.10 from the same period in 2011.
For comparison purposes, the second quarter of 2012 GAAP earnings
per share were unfavorably impacted by a penny, when compared to
the same quarter in 2011, as a result of the 2011 year end release
of the deferred tax valuation allowance.
"The momentum that we built entering the second quarter was
tempered only by the higher than expected impact of foreign
exchange fluctuations on our earnings," stated Ted A. Fernandez,
Chairman and CEO of The Hackett Group. "Even though our third
quarter results will be unfavorably impacted by our European
Operations, we continue to believe our focus on Operating
Excellence and Enterprise Performance Management is well aligned
with the complexity of the global economy."
At the end of the second quarter of 2012, the Company’s cash
balances were $14.5 million. During the second quarter of 2012, the
Company repaid $8.0 million of its new credit facility, leaving a
$32.0 million balance at quarter end.
Based on the current economic outlook, the Company estimates
total revenue for the third quarter of 2012 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 $0.09 to $0.11.
Other Highlights
Procurement Key Issues Study Results - The Hackett Group's 2012
Procurement Key Issues Study found that procurement organizations
can expect to see small budget and staff increases in 2012. The
Hackett Group's research also found that procurement organizations
are heavily focused on addressing demand and pricing volatility
that is the "New Normal."
Working Capital Performance Study Results - REL Consulting, a
division of The Hackett Group, issued results from a working
capital performance study showing that despite a global business
environment where companies can be harshly punished by Wall Street
for even small missteps in predicting revenue or earnings, most
large companies say they cannot correctly forecast operational
basics like inventory, receivables, payables, and the underlying
cash requirements to support them. According to the REL study,
typical companies potentially miss quarterly working capital
forecasts (including inventory, receivables, and payables) by up to
23%, which amounts to up to $600 million for a typical Global 1000
company (with $29 billion annual revenue).
Reshoring Research - The Hackett Group issued research showing
some companies are reshoring a portion of their manufacturing
capacity, and this trend is expected to reach a crucial tipping
point over the next two to three years, as the total landed cost
gap between U.S. and China continues to shrink, driven in part by
rising wage inflation in China and continued productivity
improvements in the U.S.
Answerthink SAP Go-Live at Exact Sciences - Answerthink, a
division of The Hackett Group focused on providing and supporting
SAP® solutions, announced that while leveraging SAP's fast-start
implementation approach, it has delivered a successful go-live
implementation of EzLifeSciences™, a qualified SAP Business
All-in-One partner solution for the life sciences industry, at
Exact Sciences Corporation.
On Tuesday, August 7, 2012 the senior management will discuss
second quarter results in a conference call at 5:00 P.M. ET.
The number for the conference call is (800) 779-3138, [Passcode:
Second 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, August 7,
2012 and will run through 5:00 P.M. ET on Tuesday, August 21, 2012.
To access the rebroadcast, please dial (800) 324-4693. For
International callers, please dial (203) 369-3245.
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, August 7, 2012 and will run through
5:00 P.M. ET on Tuesday, August 21, 2012. 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 operations
improvement consulting firm, is a leader in best practice advisory,
benchmarking, and transformation consulting services including
strategy and operations, working capital management, shared
services and globalization advice. Utilizing best practices and
implementation insights from more than 7,000 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 over 3,000 major corporations and government agencies,
including 97% of the Dow Jones Industrials, 86% of the Fortune 100,
90% 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.
EzLifeSciences is a trademark of The Hackett Group.
SAP and all SAP logos are trademarks or registered trademarks of
SAP AG in Germany and in several other countries.
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 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 June 29, 2012 July 1, 2011
June 29, 2012 July 1, 2011 Revenue: Revenue before
reimbursements $ 54,242 $ 52,382 $ 105,832 $ 99,339 Reimbursements
7,042 6,427 12,470 12,332 Total revenue 61,284 58,809
118,302 111,671 Costs and expenses: Cost of service:
Personnel costs before reimbursable expenses (includes $762 and
$812 and $1,522 and $1,564 of stock compensation expense in the
quarters and six months ended June 29, 2012 and July 1, 2011,
respectively) 34,629 32,815 67,778 63,075 Reimbursable expenses
7,042 6,427 12,470 12,332 Total cost of service
41,671 39,242 80,248 75,407 Selling, general and
administrative costs (includes $679 and $489 and $1,186 and $663 of
stock compensation expense in the quarters and six months ended
June 29, 2012 and July 1, 2011, respectively) 15,123 15,064
29,905 28,275 Total costs and operating expenses 56,794
54,306 110,153 103,682 Income from operations 4,490
4,503 8,149 7,989
Other income (expense), net:
Interest income 8 12 17 13 Interest expense (247 ) - (274 ) -
Income before income taxes 4,251 4,515 7,892 8,002 Income taxes 406
112 514 272 Net income $ 3,845 $ 4,403 $ 7,378
$ 7,730 Basic net income per common share: Net income
per common share $ 0.13 $ 0.11 $ 0.22 $ 0.19 Weighted average
common shares outstanding 29,290 40,016 33,907 40,211
Diluted net income per common share: Net income per common share $
0.12 $ 0.10 $ 0.21 $ 0.18 Weighted average common and common
equivalent shares outstanding 31,509 42,258 35,724 42,017
Pro forma data (1): Income before income taxes $ 4,251 $ 4,515 $
7,892 $ 8,002 Stock compensation expense 1,441 1,301 2,708 2,227
Amortization of intangible assets 137 204 274 404 Pro
forma income before income taxes 5,829 6,020 10,874 10,633 Pro
forma income tax expense 2,332 2,408 4,350 4,253 Pro
forma net income $ 3,497 $ 3,612 $ 6,524 $ 6,380
Pro forma basic net income per common share $ 0.12 $ 0.09 $
0.19 $ 0.16 Weighted average common shares outstanding 29,290
40,016 33,907 40,211 Pro forma diluted net income per common
share $ 0.11 $ 0.09 $ 0.18 $ 0.15 Weighted average common and
common equivalent shares outstanding 31,509 42,258 35,724 42,017
(1) The Company provides pro forma earnings results (which
exclude the 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) June 29, 2012 December 30,
2011 ASSETS Current assets: Cash and cash
equivalents $ 13,806 $ 32,936 Accounts receivable and unbilled
revenue, net 37,078 35,209 Prepaid expenses and other current
assets 9,096 9,319 Total current assets 59,980 77,464
Restricted cash 683 885 Property and equipment, net 12,671 11,696
Other assets 1,910 1,823 Goodwill, net 75,633 75,558 Total assets $
150,877 $ 167,426
LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities: Accounts payable $ 6,713 $ 7,433
Accrued expenses and other liabilities 25,848 28,018 Current
portion of long-term debt 6,316 - Total current liabilities 38,877
35,451 Accrued expenses and other liabilities, non-current 1,555
1,727 Long-term debt 25,684 - Total liabilities 66,116 37,178
Shareholders' equity 84,761 130,248 Total liabilities and
shareholders' equity $ 150,877 $ 167,426
The Hackett Group, Inc. SUPPLEMENTAL FINANCIAL
DATA (unaudited) Quarter Ended June 29,
2012 March 30, 2012 July 1, 2011 Revenue
Breakdown by Group: (in thousands) The Hackett Group (2) $
50,104 $ 47,124 $ 46,790 ERP Solutions (3) 11,180
9,894 12,019 Total revenue $ 61,284
$ 57,018 $ 58,809
Revenue
Concentration: (% of total revenue) Top customer 5 % 5 % 3 %
Top 5 customers 14 % 15 % 14 % Top 10 customers 23 % 26 % 25 %
Key Metrics and Other Financial Data:
Total Company: Consultant headcount 749 730 735 Total
headcount 956 933 943 Days sales outstanding (DSO) 55 56 57 Cash
provided by (used in) operating activities (in thousands) $ 10,109
$ (3,833 ) $ 6,879 Depreciation (in thousands) $ 491 $ 614 $ 465
Amortization (in thousands) $ 137 $ 137 $ 204
The Hackett
Group (in thousands)
: The Hackett Group annualized
revenue per professional (2) $ 379 $ 374 $ 377
ERP
Solutions: ERP Solutions consultant utilization rate (3) 73 %
71 % 77 % ERP Solutions gross billing rate per hour (3) $ 140 $ 134
$ 143
Share Repurchase Plan (4): Shares purchased in
the quarter (in thousands) - - 830 Cost of shares repurchased in
the quarter (in thousands) $ - $ - $ 3,631 Average price per share
of shares purchased in the quarter $ - $ - $ 4.38 Remaining
authorization (in thousands) $ 556 $ 556 $ 3,470 (2)
The Hackett Group encompasses Benchmarking, Business Transformation
and Executive Advisory groups, and includes EPM Technologies. (3)
Best Practice Implementation of ERP Software, which includes Oracle
and SAP. (4)
The Share Repurchase Plan information does
not include 11.0 million shares purchased pursuant to the Dutch
Tender Offer at $5.00 per share for a total of $55.0 million,
excluding fees, during Q1 2012.
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