- Q3 2017 gross revenue of $71.5 million,
net revenue of $65.9 million and pro forma EPS of $0.26, all at
high end of guidance
- Board declares semi-annual dividend of
$0.15 for shareholders of record on December 22, 2017
- Company acquires CIMA’s joint venture
interest in Certified GBS training and certification program
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 third quarter,
which ended on September 29, 2017.
Q3 2017 gross revenue was $71.5 million, down 4% from prior
year, and net revenue (gross revenue less reimbursable expenses)
was $65.9 million, down 1% from prior year. Q3 2017 pro forma
diluted earnings per share were $0.26, up 4% when compared to $0.25
for the same period in 2016. 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 $0.17 for both the third
quarter of 2017 and 2016.
At the end of the third quarter of 2017, the Company’s cash
balances were $16.2 million. During the quarter, the Company
utilized cash to repurchase 250 thousand shares of the Company’s
common stock at an average price per share of $14.21 for a total of
$3.5 million. As of the end of the third quarter of 2017, the
Company’s remaining stock repurchase program authorization was $3.1
million.
In its recent meeting, the Company’s Board of Directors declared
a semi-annual dividend of $0.15 per share for shareholders of
record on December 22, 2017, to be paid on January 5, 2018.
The Hackett Group today, in a separate release, also announced
the launch of The Hackett Institute, offering professional
education programs informed by The Hackett Group’s unmatched
intellectual property derived from its benchmarking data,
proprietary research and Best Practices Intelligence Center™.
Concurrent with the launch of the Hackett Institute, The Hackett
Group announced that it has acquired the interest of The Chartered
Institute of Management Accountants (CIMA) in its Certified GBS
Professionals program, which the two organizations launched as a
joint project in 2015. With the launch of The Hackett Institute,
The Hackett Group has also made available Analytics Foundations,
the first course in its Certified Enterprise Analytics
Professionals (CEAP) program.
“We delivered solid results while continuing to aggressively
migrate our business to our expanded Oracle Cloud Applications
capabilities,” stated Ted A. Fernandez, Chairman and CEO of The
Hackett Group. “Additionally, our recent recognition as Oracle EPM
Cloud Partner of the Year and favorable reviews of our Digital
Transformation Platform, which premiered at Oracle OpenWorld, bode
well for our Cloud and digital transformation growth
prospects.”
Based on the current economic outlook, the Company estimates
total net revenue for the fourth quarter of 2017 to be in the range
of $61.5 million to $63.5 million or gross revenue (inclusive of
reimbursable expenses of 8%) to be in the range of $66.5 million to
$68.5 million. The Company estimates pro forma diluted earnings per
share to be in the range of $0.25 to $0.27. At the high end of the
guidance, pro forma EPS would increase 4% when compared to prior
year.
Other Highlights
The Hackett Group and ADP Expand Strategic Alliance - The
Hackett Group and ADP® announced an expansion to their strategic
alliance that will offer midsized companies new to ADP Workforce
Now® access to The Hackett Group’s benchmarking tool, metrics, best
practices, research and performance studies. These offerings are
aimed at helping ADP Workforce Now users improve their HCM
performance and monitor the efficiency and effectiveness of their
HR operations.
Quantum Leap Launched - The Hackett Group announced the launch
of Quantum Leap, a game-changing digital benchmarking and
performance improvement platform that dramatically speeds up the
benchmarking process, enabling companies to intelligently assess
performance gaps, frame world-class solutions and ensure
improvement success within general and administrative (G&A)
areas such as corporate finance, procurement, human resources, and
information technology.
The Hackett Group Achieves Oracle Cloud Premiere Status – The
Hackett Group, a Platinum level member of Oracle Partner Network
(OPN), announced it has achieved the Cloud Premier designation
within the OPN Cloud program. The OPN Cloud program enables members
to showcase their expertise, skills and investment in Oracle Cloud,
as well as differentiate themselves with Oracle’s integrated cloud
applications and platform services.
Digital Transformation Platform Launched - At Oracle
OpenWorld 2017, The Hackett Group launched its
Digital Transformation Platform™, a proprietary Oracle Cloud
diagnostic and implementation system. Using the platform, companies
can improve ROI and optimize their Oracle cloud configurations
using The Hackett Group’s performance targets, best practices and
inventory of optimized cloud configuration solutions. This platform
allows companies to quickly and easily identify areas of
opportunity and performance gaps by leveraging The Hackett Group’s
nearly 2,000 certified best practices. Specifically, this platform
takes the client through a user-friendly portal to: clarify which
practices and performance targets are most relevant to their
situation; connect the client to the associated practices and
performance levels necessary to achieve those benefits; and create
a direct linkage from targets and best practices to how the related
Oracle Cloud modules (ERP, HCM, EPM) should be used and configured
to realize target improvements.
On Tuesday, November 7, 2017, senior management will discuss
third quarter results in a conference call at 5:00 P.M. ET. The
number for the conference call is (844) 358-9115, [Passcode: Third
Quarter, The Hackett Group Earnings]. For International callers,
please dial (209) 905-5950.
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 7, 2017 and will run through 5:00 P.M. ET on Tuesday,
November 21, 2017. To access the rebroadcast, please dial (855)
859-2056. For International callers, please dial (404)
537-3406, [Passcode: 99518204].
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 7, 2017 and will run through 5:00 P.M. ET on Tuesday,
November 21, 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, offering digital transformation including robotic
process automation and enterprise cloud application implementation.
Services include business transformation, enterprise
analytics, 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 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, including these referenced above, 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.
CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share data) (unaudited)
Quarter Ended Nine Months Ended
September 29, September 30, September
29, September 30, 2017 2016
2017 2016 Revenue: Revenue before reimbursements
("net revenue") $ 65,947 $ 66,810 $ 198,742
$ 196,961 Reimbursements 5,515 7,308
17,719 21,548 Total revenue 71,462
74,118 216,461 218,509 Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses 39,807 40,621 120,906
120,866 Acquisition-related compensation expense 619 — 1,042 —
Non-cash stock compensation expense 1,082 1,135 3,440 3,318
Acquisition-related non-cash stock compensation expense 794 315
1,720 898 Reimbursable expenses 5,515 7,308
17,719 21,548 Total cost of
service 47,817 49,379 144,827 146,630 Selling, general and
administrative costs 14,209 14,664 43,759 43,918 Non-cash stock
compensation expense 894 793 2,427 2,251 Acquisition-related costs
111 — 378 — Amortization of intangible assets 557 275 1,475 825
Restructuring costs - — 1,293
— Total selling, general, and administrative
expenses 15,771 15,732 49,332 46,994
Total costs and operating expenses 63,588
65,111 194,159 193,624
Income from operations 7,874 9,007 22,302 24,885 Other
expense: Interest expense (184 ) (137 ) (401 )
(288 ) Income from operations before income taxes
7,690 8,870 21,901 24,597 Income tax expense 2,401
3,382 3,988 9,281 Net
income $ 5,289 $ 5,488 $ 17,913 $ 15,316
Basic net income per common share: Income per common
share from operations $ 0.18 $ 0.19 $ 0.62 $ 0.52 Weighted average
common shares outstanding 28,765 28,579 28,891 29,251
Diluted net income per common share: Income per common share from
operations $ 0.17 $ 0.17 $ 0.56 $ 0.47 Weighted average common and
common equivalent shares outstanding 31,958 32,375 32,254 32,870
Pro forma data (1): Income from operations before income
taxes $ 7,690 $ 8,870 $ 21,901 $ 24,597 Acquisition-related
compensation expense 619 — 1,042 — Non-cash stock compensation
expense 1,976 1,928 5,867 5,569 Acquisition-related non-cash stock
compensation expense 794 315 1,720 898 Acquisition-related costs
111 — 378 — Restructuring costs - — 1,293 — Amortization of
intangible assets 557 275 1,475
825 Pro forma income before income taxes
11,747 11,388 33,676 31,889 Pro forma income tax expense
3,524 3,416 10,103 9,567
Pro forma net income $ 8,223 $ 7,972 $ 23,573
$ 22,322 Pro forma basic net income per common
share $ 0.29 $ 0.28 $ 0.82 $ 0.76 Weighted average common shares
outstanding 28,765 28,579 28,891 29,251 Pro forma diluted
net income per common share $ 0.26 $ 0.25 $ 0.73 $ 0.68 Weighted
average common and common equivalent shares outstanding 31,958
32,375 32,254 32,870 (1) The Company provides pro
forma earnings results (which exclude the amortization of
intangible assets, stock compensation
expense, acquisition-related cash and
stock compensation expenses and transaction expenses, restructuring
expenses 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'
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
and 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.
CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands) (unaudited) September
29, December 30, 2017 2016
ASSETS Current assets: Cash $ 16,226 $ 19,710 Accounts
receivable and unbilled revenue, net 55,552 47,399 Prepaid expenses
and other current assets 2,897 1,704 Total current
assets 74,675 68,813 Property and equipment, net 17,854
14,774 Other assets 4,679 3,336 Goodwill, net 84,966
72,376 Total assets $ 182,174 $ 159,299
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities: Accounts payable 8,597 $ 9,089 Accrued
expenses and other liabilities 35,971 46,725 Total
current liabilities 44,568 55,814 Non-current accrued expenses and
other liabilities 6,936 - Long-term deferred tax liability, net
10,591 10,216 Long-term debt 22,000 7,000 Total
liabilities 84,095 73,030 Shareholders' equity 98,079
86,269 Total liabilities and shareholders' equity $ 182,174
$ 159,299
SUPPLEMENTAL FINANCIAL
DATA (unaudited) Quarter Ended
September 29, September 30, June 30,
2017 2016 2017 Revenue
Breakdown by Group: (in thousands) The Hackett Group (2) $
60,789 $ 62,610 $ 62,472 SAP Solutions (3) 10,673
11,508 11,098 Total revenue $ 71,462
$ 74,118 $ 73,570
Revenue
Concentration: (% of total revenue) Top customer 4 % 4 % 4 %
Top 5 customers 12 % 15 % 15 % Top 10 customers 20 % 26 % 25 %
Key Metrics and Other Financial Data: Total
Company: Consultant headcount 1,022 942 1,002 Total headcount
1,259 1,158 1,236 Days sales outstanding (DSO) 71 59 61 Cash
provided by operating activities (in thousands) $ 9,966 $ 13,033 $
4,111 Depreciation (in thousands) $ 590 $ 618 $ 612 Amortization
(in thousands) $ 557 $ 275 $ 532
The Hackett Group
(in thousands)
: The Hackett Group annualized net revenue per
professional (2) $ 297 $ 321 $ 316
SAP Solutions: SAP
Solutions consultant utilization rate (3) 72 % 76 % 78 % SAP
Solutions gross billing rate per hour (3) $ 131 $ 134 133
Shares Repurchased Under the Share Repurchase Plan: Shares
purchased (in thousands) 182 30 507 Cost of shares repurchased (in
thousands) $ 2,492 $ 449 $ 7,617 Average price per share of shares
purchased $ 13.73 $ 14.84 $ 15.01 Remaining Plan authorization (in
thousands) $ 3,138 $ 4,433 $ 630
Shares Purchased to
Satisfy Employee Net Vesting Obligations: Shares purchased (in
thousands) 68 4 21 Cost of shares purchased (in thousands) $ 1,050
$ 50 $ 370 Average price per share of shares purchased $ 15.50 $
14.03 $ 17.90
(2) The Hackett Group encompasses the
Benchmarking, Business Transformation and Executive Advisory
groups, and EPM Groups and
excludes AMS. Annualized revenue per
professional disclosed prior to Q2 2017 utilized gross revenue; the
statistics have
been amended to utilize net revenue. Prior
periods have been restated.
(3) SAP 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/20171107006760/en/
The Hackett GroupRobert A. Ramirez, CFO,
305-375-8005rramirez@thehackettgroup.com
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