- Q4 2016 revenue of $70.1 million, up
5.6%, and pro forma EPS of $0.26, up 24%, both exceeding high end
of guidance
- Fiscal 2016 revenue of $288.6 million,
up 10.6%, pro forma EPS of $0.94, up 25%; and pro forma EBITDA of
$46.9 million, up 27% from prior year
- Company announces annual dividend
increase of 15% from $0.26 to $0.30 per share, paid
semi-annually
The Hackett Group, Inc. (NASDAQ: HCKT), a global intellectual
property-based strategic consultancy and leading
enterprise benchmarking and best practices implementation
firm, today announced its financial results for the fourth quarter
and fiscal year, which ended on December 30, 2016.
Fourth quarter 2016 revenue was $70.1 million, up 5.6%, or 6.5%
in constant currency, as compared to prior year. Fiscal 2016
revenue was $288.6 million, up 10.6%, or 11.1% in constant
currency, as compared to prior year.
GAAP diluted earnings per share in the fourth quarter of 2016
were $0.19, up 58%, when compared to $0.12 for the same period in
2015. Fiscal year 2016 GAAP diluted earnings per share were $0.66,
up 53%, when compared to $0.43 for the same period in 2015.
Pro forma diluted earnings per share in the fourth quarter of
2016 were $0.26, up 24%, when compared to $0.21 for the same period
in 2015. Fiscal year pro forma diluted earnings per share were
$0.94, up 25%, when compared to $0.75 for the same period in 2015.
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.
In its meeting, the Company’s Board of Directors authorized an
increase in its annual dividend from $0.26 to $0.30 per share,
which is to be paid semi-annually. At the end of the fourth quarter
of 2016, the Company’s cash balances were $19.7 million. The
outstanding balance of the Company’s Credit Facility totaled $7.0
million at the end of the quarter.
“We had another strong quarter and an outstanding year,” stated
Ted A. Fernandez, Chairman & CEO of The Hackett Group, Inc.
“Additionally, today we announced the introduction of our second
training and certification program which demonstrates our ability
to expand our 'IP as a Service' offerings which is providing new
ways to leverage our valuable IP, serve our clients strategically
and grow our business.”
Based on the current economic outlook, the Company estimates
total revenue for the first quarter of 2017 to be in the range of
$72.0 million to $74.0 million, and estimates pro forma diluted
earnings per share to be in the range of $0.22 to $0.24. At the
high-end of guidance, pro forma EPS would increase 20%, when
compared to prior year.
Other Highlights
World-Class IT Research – New research from The Hackett Group
found that world-class IT organizations are dramatically more
effective than their peers at enabling the digital transformation
that is at the heart of most business strategies today. The Hackett
Group found that this ability plays a key role in how world-class
IT organizations enable greater efficiency, agility and improved
competitive advantage across the enterprise. At the same time,
world-class IT organizations also spend significantly less on IT
operations than typical companies.
World-Class HR Research – New research from The Hackett Group
found that world-class HR organizations embrace digital
transformation and advanced analytics as key levers to drive
improved results, including spending 23% less per employee than
typical companies, operating with 32% fewer staff and demonstrating
improved effectiveness. For a typical company with $10 billion in
revenue, attaining world-class performance represents as much as
$14 million in savings annually.
World-Class Procurement Research – New research from The Hackett
Group found that world-class procurement organizations now have 18%
lower operating costs than typical companies, and operate with 28%
fewer staff, while generating more than twice the return on
investment. Digital business transformation is one key enabler to
how world-class procurement organizations achieve greater
efficiency, effectiveness and higher ROI, the research found.
World-class procurement organizations understand the opportunity
that digital technologies present to transform service delivery,
reduce errors, and free procurement staff for higher-value
work.
Certified GBS Professionals Program Diploma Launched - The
Hackett Group and The Chartered Institute of Management Accountants
(CIMA) announced the launch of their Diploma in Global Business
Services (DGBS). This is the third offering in the companies’
Certified GBS Professionals (CGBSP) program, a comprehensive career
development system for global business services (GBS), shared
services and business process outsourcing (BPO) professionals. The
Diploma in GBS, designed for current GBS team leaders, center
managers and others running operational or functional teams, covers
an array of topics relevant to operational excellence in finance,
HR, procurement and IT. It is the middle level of certification
offered by the CGBSP program.
On Tuesday, February 21, 2017, 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 Tuesday, February
21, 2017 and will run through 5:00 P.M. ET on Tuesday, March 7,
2017. To access the rebroadcast, please dial (888) 566-0406. For
International callers, please dial (402) 998-0591.
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 21, 2017
and will run through 5:00 P.M. ET on Tuesday, March 7, 2017. To
access the replay, visit www.thehackettgroup.com or
http://www.streetevents.com.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual
property-based strategic consultancy and leading
enterprise benchmarking and best practices implementation
firm to global companies. Services include business
transformation, enterprise performance
management, working capital management, and global
business services. The Hackett Group also provides dedicated
expertise in business strategy, operations, finance, human capital
management, strategic sourcing, procurement, and information
technology, including its award-winning Oracle EPM and SAP
practices.
The Hackett Group has completed more than 13,000 benchmarking
studies with major corporations and government agencies, including
93% of the Dow Jones Industrials, 87% of the Fortune 100, 87% of
the DAX 30 and 58% of the FTSE 100. These studies drive its Best
Practice Intelligence Center which includes the firm's benchmarking
metrics, best practices repository, and best practice configuration
guides and process flows, which enable The Hackett Group’s clients
and partners to achieve world-class performance.
More information on The Hackett Group is available at:
www.thehackettgroup.com, info@thehackettgroup.com, or by calling
(770) 225-3600.
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 30,
January 1, December 30, January 1, 2016
2016 2016 2016 Revenue: Revenue before
reimbursements ("net revenue") $ 62,946 $ 60,261 $ 259,907 $
234,581 Reimbursements 7,106 6,093 28,654 26,359 Total revenue
70,052 66,354 288,561 260,940 Costs and expenses: Cost of
service: Personnel costs before reimbursable expenses 36,649 35,393
157,515 141,665 Non-cash stock compensation expense 1,226 969 4,544
4,432 Acquisition-related non-cash stock compensation expense 316
250 1,214 927 Reimbursable expenses 7,106 6,093 28,654 26,359 Total
cost of service 45,297 42,705 191,927 173,383 Selling,
general and administrative costs 14,056 14,907 57,974 58,423
Non-cash stock compensation expense 756 550 3,007 2,344
SARs-related non-cash compensation expense - 1,329 - 2,658
Amortization of intangible assets 275 565 1,100 2,207 Total
selling, general, and administrative expenses 15,087 17,351 62,081
65,632 Total costs and operating
expenses 60,384 60,056 254,008 239,015 Income from
operations 9,668 6,298 34,553 21,925 Other income (expense):
Interest income - - - 3 Interest expense (99) (61) (387) (412)
Income from operations before income taxes 9,569 6,237
34,166 21,516 Income tax expense 3,344 2,182 12,625 7,707 Net
income $ 6,225 $ 4,055 $ 21,541 $ 13,809 Basic net income
per common share: Income per common share from operations $ 0.22 $
0.14 $ 0.74 $ 0.47 Weighted average common shares outstanding
28,575 29,725 29,082 29,620 Diluted net income per common
share: Income per common share from operations $ 0.19 $ 0.12 $ 0.66
$ 0.43 Weighted average common and common equivalent shares
outstanding 32,651 32,844 32,815 31,968 Reconciliation to
pro forma net income (1): Income from operations before income
taxes $ 9,569 $ 6,237 $ 34,166 $ 21,516 Non-cash stock compensation
expense 1,982 1,519 7,551 6,776 SARs-related non-cash compensation
expense - 1,329 - 2,658 Acquisition-related non-cash stock
compensation expense 316 250 1,214 927 Amortization of intangible
assets 275 565 1,100 2,207 Pro forma income before income taxes
12,142 9,900 44,031 34,084 Pro forma income tax expense 3,643 2,970
13,209 10,225 Pro forma net income $ 8,499 $ 6,930 $ 30,822 $
23,859 Pro forma basic net income per common share $ 0.30 $
0.23 $ 1.06 $ 0.81 Weighted average common shares outstanding
28,575 29,725 29,082 29,620 Pro forma diluted net income per
common share $ 0.26 $ 0.21 $ 0.94 $ 0.75 Weighted average common
and common equivalent shares outstanding 32,651 32,844 32,815
31,968 EBITDA: Income from operations before income taxes $
9,569 $ 6,237 $ 34,166 $ 21,516 Interest expense 99 61 387 412
Depreciation expense 610 656 2,485 2,582 Amortization of intangible
assets 275 565 1,100 2,207 EBITDA $ 10,553 $ 7,519 $ 38,138 $
26,717 Reconciliation to pro forma EBITDA (1): EBITDA $
10,553 $ 7,519 $ 38,138 $ 26,717 Non-cash stock compensation
expense 1,982 1,519 7,551 6,776 SARs-related non-cash compensation
expense - 1,329 - 2,658 Acquisition-related non-cash stock
compensation expense 316 250 1,214 927 Pro forma EBITDA $ 12,851 $
10,617 $ 46,903 $ 37,078
(1) The Company provides pro forma
earnings results (which exclude the amortization of intangible
assets, stock and SARs-related non-cash compensation expense,
acquisition-related costs and include a normalized tax rate, which
is our long term projected cash 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' understaning 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 30, January 1,
2016 2016 ASSETS Current assets: Cash
and cash equivalents $ 19,710 $ 23,503 Accounts receivable and
unbilled revenue, net 47,399 42,046 Prepaid expenses and other
current assets 1,704 1,938 Total current assets 68,813 67,487
Property and equipment, net 14,774 14,102 Other assets 2,930
4,206 Goodwill, net 72,376 74,584 Total assets $ 158,893 $ 160,379
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable $ 9,089 $ 8,300 Accrued expenses and
other liabilities 46,725 41,812 Total current liabilities 55,814
50,112 Long-term deferred tax liability, net 10,216 8,123 Long-term
debt 6,594 - Total liabilities 72,624 58,235 Shareholders'
equity 86,269 102,144 Total liabilities and shareholders' equity $
158,893 $ 160,379
The Hackett Group,
Inc. SUPPLEMENTAL FINANCIAL DATA (unaudited)
Quarter Ended December 30, September
30, January 1, 2016 2016 2016
Revenue Breakdown by Group: (in thousands) The Hackett Group
(2) $ 59,908 $ 62,610 $ 55,584 ERP Solutions (3) 10,144 11,508
10,770 Total revenue $ 70,052 $ 74,118 $ 66,354
Revenue
Concentration: (% of total revenue) Top customer 6% 4% 5% Top 5
customers 18% 15% 20% Top 10 customers 28% 26% 29%
Key
Metrics and Other Financial Data: Total Company:
Consultant headcount 940 942 842 Total headcount 1,155 1,158 1,043
Days sales outstanding (DSO) 62 59 58 Cash provided by operating
activities (in thousands) $ 12,077 $ 13,033 $ 16,956 Depreciation
(in thousands) $ 610 $ 618 $ 656 Amortization (in thousands) $ 275
$ 275 $ 565
The Hackett Group (in thousands)
:
The Hackett Group annualized revenue per professional (2) $ 343 $
360 $ 360
ERP Solutions: ERP Solutions consultant
utilization rate (3) 70% 76% 69% ERP Solutions gross billing rate
per hour (3) $ 129 $ 134 $ 129
Shares Repurchased Under
the Share Repurchase Plan: Shares purchased (in thousands) - 30
- Cost of shares repurchased (in thousands) $ - $ 449 $ - Average
price per share of shares purchased $ - $ 14.84 $ - Remaining Plan
authorization (in thousands) $ 4,433 $ 4,433 $ 2,309
Shares Purchased to Satisfy Employee Net Vesting
Obligations: Shares purchased (in thousands) 6 4 17 Cost of
shares purchased (in thousands) $ 104 $ 50 $ 240 Average price per
share of shares purchased $ 16.89 $ 14.03 $ 16.53 (2) The
Hackett Group encompasses the Benchmarking, Business Transformation
and Executive Advisory groups, and EPM Groups. (3) ERP Solutions
encompasses Best Practice Implementation of ERP Software, the SAP
group, approximately 40% of which are offshore resources. (4)
Certain reclassifications have been made to conform with current
reporting requirements.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170221006660/en/
The Hackett Group, Inc.Robert A. Ramirez, CFO,
305-375-8005rramirez@thehackettgroup.com
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