- Q4 2013 revenue of $52.6 million and
pro forma EPS of $0.08, at mid-point of guidance
- Fiscal 2013 revenue of $223.8 million
and pro forma EPS of $0.41, with EBITDA of $24.5 million
- Company declares and pays annual
dividend of $0.10 per share during quarter
- Board authorizes additional $5.0
million for stock repurchase program
The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic
advisory and business transformation and technology consulting
firm, today announced its financial results for the fourth quarter
and fiscal year 2013, which ended December 27, 2013.
Fourth quarter 2013 revenue was $52.6 million, down 4% from
prior year. Pro forma diluted earnings per share were $0.08, down
27% when compared to $0.11 for the same period in 2012. Fiscal year
2013 revenue was $223.8 million, slightly up from fiscal year 2012
revenue of $222.7 million. Fiscal year pro forma diluted earnings
per share were $0.41, as compared to $0.40 in fiscal year 2012. 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 was $0.04 for the fourth quarter
of 2013, as compared to $0.21 in the same period in 2012, which
included a $0.13 benefit from tax valuation allowances. GAAP
diluted earnings per share in fiscal 2013 was $0.27, as compared to
$0.50 in the previous fiscal year, which included a $0.20 benefit
from tax valuation allowances. No deferred tax valuation allowance
was released in 2013.
At the end of the fourth quarter of 2013, the Company’s cash
balances were $18.6 million. During the fourth quarter, the Company
paid its annual $0.10 per share dividend. In addition, during the
fourth quarter, the Company borrowed a net of $4.0 million on its
credit facility to finance its Dutch tender offer and other share
repurchases, leaving a $19.0 million balance at quarter end.
Including shares repurchased in the tender offer during the
fourth quarter of 2013, the Company repurchased approximately 1.9
million shares of its common stock at an average of $6.53 per
share, for a total cost of $12.3 million. As of fiscal year end
2013, the Company's remaining stock repurchase program
authorization was $4.6 million. Subsequent to year end, the
Company's Board of Directors approved to increase the stock
repurchase program authorization by an additional $5.0 million.
"The significant decrease in our European revenues in the
quarter, offset the solid growth in our US business and negatively
impacted our fourth quarter and year end results," stated Ted A.
Fernandez, Chairman & CEO of The Hackett Group, Inc. "Although
we have taken actions to strengthen our European operations, we
will continue to make the necessary changes, in order to recapture
our momentum and contribution in the region."
Based on the current economic outlook, the Company estimates
total revenue for the first quarter of 2014 to be in the range of
$51.0 million to $53.0 million, and estimates pro forma diluted
earnings per share to be in the range of $0.06 to $0.07.
Other Highlights
World-Class IT Research - The Hackett Group's research details
how top-performing IT organizations focus on automation and
complexity reduction as essential IT strategy elements. This
research from The Hackett Group found that world-class IT
organizations achieve higher levels of effectiveness, meeting ROI
expectations nearly twice as often, and support up to 80% higher
levels of business process automation, all at 15% less cost than
typical companies. The research also spotlights four fundamental
practices that differentiate world-class IT organizations from
typical companies.
Finance - Ambition vs Reality Research - In early February, The
Hackett Group issued research showing that while most corporate
finance organizations say they are highly committed to moving to
global standards, more than half are failing to see success in this
area. Over the past two years, minimal improvements have occurred
at typical companies, and most dramatically underestimate the
commitment required to execute on this key finance strategy and
achieve true transformation, The Hackett Group's research found.
The new findings are drawn from The Hackett Group's 2013 Global
Finance Organization Model Study. In order to affect change, The
Hackett Group's research recommends that companies more effectively
prioritize transformation projects, create teams dedicated to
change, and focus on developing the skills required to support a
globalized operating model.
On Monday, February 24, 2014, senior management will discuss
fourth quarter results in a conference call at 5:00 P.M. ET.
The number for the conference call is (800) 779-3138, [Passcode:
Fourth 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 Monday, February 24,
2014 and will run through 5:00 P.M. ET on Monday, March 10, 2014.
To access the rebroadcast, please dial(866) 505-9257. For
International callers, please dial (203) 369-1881.
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 Monday, February 24, 2014
and will run through 5:00 P.M. ET on Monday, March 10, 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
Twelve Months Ended December 27, December 28,
December 27, December 28, 2013 2012
2013 2012 Revenue: Revenue before reimbursements $
47,203 $ 49,430 $ 200,391 $ 199,749 Reimbursements 5,401
5,612 23,439 22,987 Total revenue 52,604
55,042 223,830 222,736 Costs and expenses: Cost of service:
Personnel costs before reimbursable expenses (includes $744 and
$788 and $3,284 and $2,990 of stock compensation expense in the
quarters and twelve months ended December 27, 2013 and December 28,
2012, respectively) 31,081 31,520 130,456 125,912
Reimbursable expenses 5,401 5,612 23,439
22,987 Total cost of service 36,482 37,132 153,895 148,899
Selling, general and administrative costs (includes $673 and
$664 and $2,835 and $2,524 of stock compensation expense in the
quarters and twelve months ended December 27, 2013 and December 28,
2012, respectively) 13,726 13,749 54,208 56,997
Restructuring expense (benefit) - 108 - (211 )
Total costs and operating expenses 50,208 50,989
208,103 205,685 Income from operations 2,396 4,053
15,727 17,051 Other income (expense): Interest income 1 1 7 20
Interest expense (111 ) (160 ) (472 ) (630 ) Income from continuing
operations before income taxes 2,286 3,894 15,262 16,441 Income tax
expense (benefit) 1,080 (2,743 ) 6,398 (478 ) Income
from continuing operations 1,206 6,637 8,864 16,919 Income (loss)
from discontinued operations - 46 (135 ) (222 ) Net
income $ 1,206 $ 6,683 $ 8,729 $ 16,697
Basic net income per common share: Income per common share
from continuing operations $ 0.04 $ 0.23 $ 0.29 $ 0.54 Income
(loss) per common share from discontinued operations - -
- (0.01 ) Net income per common share $ 0.04 $
0.23 $ 0.29 $ 0.53 Diluted net income
per common share: Income per common share from continuing
operations $ 0.04 $ 0.21 $ 0.28 $ 0.51 Income (loss) per common
share from discontinued operations - - (0.01 ) (0.01
) Net income per common share $ 0.04 $ 0.21 $ 0.27
$ 0.50 Weighted average common shares
outstanding: Basic 29,683 29,599 30,283 31,704 Diluted 31,941
31,107 32,116 33,511 Pro forma data (1): Income from
continuing operations before income taxes $ 2,286 $ 3,894 $ 15,262
$ 16,441 Stock compensation expense 1,417 1,452 6,119 5,514
Acquisition-related costs 188 - 188 - Restructuring expense
(benefit) - 108 - (211 ) Amortization of intangible assets 151
136 602 547 Pro forma income before
income taxes 4,042 5,590 22,171 22,291 Pro forma income tax expense
1,617 2,236 8,868 8,916 Pro forma net
income $ 2,425 $ 3,354 $ 13,303 $ 13,375
Pro forma basic net income per common share $ 0.08 $
0.11 $ 0.44 $ 0.42 Weighted average common shares outstanding
29,683 29,599 30,283 31,704 Pro forma diluted net income per
common share $ 0.08 $ 0.11 $ 0.41 $ 0.40 Weighted average common
and common equivalent shares outstanding 31,941 31,107 32,116
33,511
(1) The Company provides pro forma
earnings results (which exclude the amortization of intangible
assets and stock compensation 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) December 27, December 28,
2013 2012 ASSETS Current assets: Cash
and cash equivalents $ 18,199 $ 16,906 Accounts receivable and
unbilled revenue, net 34,011 36,869 Deferred tax asset, net 5,130
4,741 Prepaid expenses and other current assets 2,283 2,335 Total
current assets 59,623 60,851 Restricted cash 354 683
Property and equipment, net 13,019 12,859 Other assets 1,039 1,598
Goodwill, net 76,283 76,220 Non-current deferred tax asset, net -
1,710 Total assets $ 150,318 $ 153,921
LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $
8,080 $ 7,711 Accrued expenses and other liabilities 25,646 26,484
Current portion of long-term debt - 2,895 Total current liabilities
33,726 37,090 Long-term deferred tax liability, net 4,387 -
Long-term debt 19,029 22,105 Total liabilities 57,142 59,195
Shareholders' equity 93,176 94,726 Total liabilities and
shareholders' equity $ 150,318 $ 153,921
The Hackett Group, Inc. SUPPLEMENTAL FINANCIAL
DATA (unaudited) Quarter Ended December
27, September 27, December 28, 2013
2013 2012 Revenue Breakdown by Group: (in
thousands) The Hackett Group (2) $ 44,152 $ 48,689 $ 45,130 ERP
Solutions (3) 8,452 9,227 9,912 $ 52,604
$ 57,916 $ 55,042
Revenue
Concentration: (% of total revenue) Top customer 3 % 3 % 3 %
Top 5 customers 11 % 12 % 13 % Top 10 customers 19 % 22 % 21 %
Key Metrics and Other Financial Data: Total
Company: Consultant headcount 702 718 724 Total headcount 891
912 921 Days sales outstanding (DSO) 59 59 59 Cash provided by
operating activities (in thousands) $ 15,224 $ 3,858 $ 9,219
Depreciation (in thousands) $ 466 $ 456 $ 483 Amortization (in
thousands) $ 151 $ 150 $ 136
The Hackett Group (in
thousands)
: The Hackett Group annualized revenue per
professional (2) $ 332 $ 358 $ 342
ERP Solutions: ERP
Solutions consultant utilization rate (3) 71 % 72 % 68 % ERP
Solutions gross billing rate per hour (3) $ 127 $ 132 $ 135
Share Repurchase Plan (4): Shares purchased in the quarter
(in thousands) 894 - - Cost of shares repurchased in the quarter
(in thousands) $ 5,368 $ - $ - Average price per share of shares
purchased in the quarter $ 6.00 $ - $ - Remaining authorization (in
thousands) $ 4,594 $ 4,963 $ 556 (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.
The Hackett Group, Inc.Robert A. Ramirez, CFO,
305-375-8005rramirez@thehackettgroup.com
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