Answerthink, Inc. (Nasdaq: ANSR): -- Quarterly growth driven by
Business Intelligence and Hackett revenue growth of 33% and 16%,
respectively. -- Proforma EPS in line with previously provided
guidance with operating profit margin improving to 8%. Answerthink,
Inc. (Nasdaq: ANSR) announced today its financial results for the
third quarter of 2005, which ended September 30, 2005. Third
quarter revenue was $40.0 million, an 8% increase from the third
quarter of 2004. Diluted earnings per share were $0.05, compared to
$0.02 in the third quarter of 2004. Pro forma diluted earnings per
share were $0.05, compared to $0.03 in the third quarter of 2004.
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. For the
first nine months of 2005, revenues were $118.6 million, an 8%
increase from the first nine months of 2004. Diluted earnings per
share were $0.04, compared to $0.01 for the same period in the
previous year. The 2005 and 2004 results include restructuring
costs of $0.02 and $0.08 per diluted share, respectively, related
to an increase in previously established restructuring reserves for
the consolidation of facilities. Pro forma diluted earnings per
share were $0.08, compared to $0.09 in the same period of the
previous year. The Company's cash balances, including restricted
cash and marketable investments, were $41.1 million at the end of
the third quarter of 2005. During the quarter, the Company did not
repurchase any shares of the Company's common stock. As of the end
of the third quarter of 2005, $7.9 million remained available under
the Company's share repurchase program authorization. "Our focus to
define and extend the business model around our unique business
process and best practice intellectual capital continues to
favorably impact all of our offerings," said Answerthink Chairman
and CEO Ted A. Fernandez. "If a client is interested in
establishing baseline performance, they can turn to our benchmarks.
If they desire assistance in developing a strategic performance
improvement roadmap, our advisory programs can help. Finally, if
they seek direct assistance with business transformation or
technology implementation activities, we can support that as well.
In every case, we can offer companies unique data-driven guidance
that has proven its ability to help reduce cost, enhance strategic
alignment, and improve both efficiency and effectiveness." Based on
the current economic outlook, the Company estimates total revenues
for the fourth quarter of 2005 to be in the range of $38.0 million
to $41.0 million. The Company also estimates diluted earnings per
share to be in the range of $0.03 to $0.06 and pro forma diluted
earnings per share to be in the range of $0.04 to $0.06. Other
Highlights EquaTerra Partnership - In October Hackett and
EquaTerra, a multi-national outsourcing and insourcing advisory
firm, announced an exclusive alliance designed to demonstrate how
companies can improve the efficiency and effectiveness of their
administrative functions through a blend of service delivery
alternatives such as shared services, offshoring, and outsourcing.
The companies unveiled jointly-managed Business Process Sourcing
Executive Advisory Programs for Human Resources and Finance
executives offering a tailored mix of benchmarking services,
on-demand advisor access, empirical research, and peer learning
opportunities. NASACT Contract - The National Association of State
Auditors, Comptrollers and Treasurers (NASACT) announced it will
offer specialized finance and human resources/payroll benchmarking
services to state governments under a contract signed with The
Hackett Group. The program offers state governments a way to
analyze and target improvements in the efficiency and effectiveness
of their finance and HR/payroll operations, compare their
performance with that of their public- and private-sector peers,
and compare the performance of individual agencies with others in
their state. Complexity Book of Numbers Analysis - The Hackett
Group released its Complexity Book of Numbers(C) covering four
major functional areas: IT, Finance, HR, and Procurement. A sample
of key findings follows. Hackett found that reducing IT complexity
can drive significant savings in finance and HR costs. The
combination of moving to a single ERP system for finance and at the
same time implementing consistent data and technology standards can
also enable companies to cut the cost of finance operations by 23
percent. The study also highlighted that the companies can generate
more than $50 million in savings per billion of procurement
spending and also significantly cut the cost of the procurement
function by reducing the number of suppliers they work with and
focusing more spending with key suppliers. Representative Client
Engagements Process Improvement Strategy for a Global ERP Solution
for a Metals and Mining Company - This global industry leader
selected us to assist in identifying process improvement
opportunities across its SG&A functions. Significant industry
change and consolidation have increased the need for more efficient
and effective back office operations. To enable the transformation
of these processes, the company is evaluating the deployment of a
Global ERP-based solution. As part of this initiative, we will
perform an enterprise benchmark study to assist the client in
developing an improvement plan and business case to justify the
investment in the ERP solution. The ultimate goal of this program
is to implement best practices in an effort to do more with fewer
resources. Multi-Year SG&A Benchmark for International
Automaker - This company has signed a commitment to perform two
SG&A benchmarks over the next three years. The relationship
builds upon a highly successful Hackett benchmark performed by an
affiliate earlier this year, and will be used to focus and guide
internal initiatives geared towards optimizing overhead functions.
Accenture will participate in the effort by executing senior
executive interviews, supporting the company's Project Management
Office, and facilitating in-depth best practices workshops.
Hyperion Implementation for U.S. University & Hospital - We
will support this university, a medical school, and hospital with a
Hyperion budgeting and planning implementation. The project will
replace the current spreadsheet-based approach with a centralized
system that improves controls and address compliance issues. The
system will also support physicians' practices affiliated with the
university. World-Class Program for a Diversified Chemical Company
- This client contracted for a world-class program focusing on
global general and administrative activities. As part of an
ambitious SG&A cost-cutting initiative, the company will
execute a G&A benchmark and join our Finance, Procurement, and
IT Executive Advisory Programs under a two-year membership.
Multi-Year IT Benchmark and World-Class Program for a Travel &
Hospitality Conglomerate - This client will perform two global IT
benchmarks over the next three years. They also became a member of
all four of our Executive Advisory Programs. The company intends to
use benchmark findings and program insights as it considers
business process sourcing options in the context of its current
large IT outsourcing relationship. SG&A and Supply Chain
Benchmark & Finance Transformation for Global Chemical
Manufacturer - This client selected us and PRTM for a global
SG&A and supply chain benchmark. In an effort to reduce cost
and optimize its finance function, the company is working with us
to redesign finance processes for order-to-cash, plan-to-produce,
requisition-to-pay, record-to-report, and management reporting. We
will also assist with future state design and scope of activities
expansion plans for the company's existing North American finance
shared services center. Multi-Year World-Class HR Program for
International Transportation Equipment Manufacturer - This company
has signed a three-year contract for two HR benchmarks, membership
in our HR Executive Advisory program, and best practices workshops.
The company has decided to use this initiative as an integrated
part of its ongoing measurement and target-setting approach to
reduce cost and drive towards increased use of shared services for
HR. At 5:00 P.M. ET today, the senior management of Answerthink,
Inc. will host a conference call to discuss third quarter earnings
results for the period ending September 30, 2005. The number for
the conference call is (888) 913-9965, (Passcode: Third Quarter,
Leader: Ted A. Fernandez). For International callers, please dial
(517) 308-9001. 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 1, 2005 and will run through 5:00 P.M. ET on Tuesday,
November 15, 2005. To access the rebroadcast, please dial (800)
388-9075. For International callers, please dial (203) 369-3665. In
addition, Answerthink will also be webcasting this conference call
live through the StreetEvents.com service. To participate, simply
visit http://www.answerthink.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 1, 2005 and will run through 5:00 P.M.
ET on Tuesday, November 15, 2005. To access the call, visit
http://www.answerthink.com or http://www.streetevents.com. About
Answerthink, Inc. Answerthink, Inc. (www.answerthink.com) is a
leading business and technology consulting firm that enables
companies to achieve world-class business performance. By
leveraging the comprehensive database of The Hackett Group,
Answerthink's business and technology solutions help clients
significantly improve performance and maximize returns on
technology investments. Answerthink's capabilities include
benchmarking, business transformation, business applications,
business intelligence, and offshore application development and
support. Founded in 1997, Answerthink has offices throughout the
United States and in Europe and India. About The Hackett Group The
Hackett Group (www.thehackettgroup.com), a business process
advisory firm and an Answerthink company, is a world leader in best
practice research, benchmarking and advisory services that empower
executives to achieve world-class enterprise performance. Only The
Hackett Group empirically defines world-class performance in sales,
general and administrative (SG&A) and supply chain activities
with analysis gained through 3,300 benchmark studies over 13 years
at nearly 2,000 of the world's leading companies. The foundation of
Hackett's benchmarks, transformation services, and membership-based
advisory programs is our proprietary database of
Hackett-Certified(SM) Practices, approaches which are proven to
correlate with superior performance metrics. This unparalleled
knowledge repository enables Hackett business advisors to provide
data, advice, and strategic insight with a level of integrity and
authority available nowhere else. As of this writing, Hackett
clients comprise 96 percent of the Dow Jones Industrials, 77
percent of the Fortune 100 and 92 percent of the Dow Jones Global
Titans Index. Hackett-Certified, Book of Numbers, and Hackett
World-Class Passport are service marks 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 Company'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, our ability to effectively
integrate acquisitions into our operations, our ability to attract
additional business, our ability to effectively market and sell our
recently launched product offerings and other new services, the
timing of projects and the potential for contract cancellations by
our customers, changes in expectations regarding the information
technology industry, our ability to attract and retain skilled
employees, possible changes in collections of accounts receivable,
risks of competition, price and margin trends, changes in general
economic conditions and interest rates as well as other risks
detailed in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004 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. -0- *T Answerthink, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per
share data) (unaudited) Quarter Ended Nine months Ended
------------------------ ------------------------ September 30,
October 1, September 30, October 1, 2005 2004 2005 2004
------------- ---------- ------------- ---------- Revenues:
Revenues before reimbursements $ 36,171 $ 33,329 $ 106,789 $ 98,893
Reimbursements 3,834 3,802 11,788 10,976 ----------- --------
----------- -------- Total revenues 40,005 37,131 118,577 109,869
Costs and expenses: Project personnel and expenses: Project
personnel and expenses before reimbursable expenses 19,700 19,845
60,239 57,376 Reimbursable expenses 3,834 3,802 11,788 10,976
----------- -------- ----------- -------- Total project personnel
and expenses 23,534 23,647 72,027 68,352 Selling, general and
administrative expenses 13,619 12,081 42,038 36,122 Restructuring
costs - - 1,134 3,749 Stock compensation expense 905 597 2,190
1,891 ----------- -------- ----------- -------- Total costs and
operating expenses 38,058 36,325 117,389 110,114 -----------
-------- ----------- -------- Income (loss) from operations 1,947
806 1,188 (245) Other income (expense): Interest income 346 184 930
570 Interest expense (12) (40) (52) (40) ----------- --------
----------- -------- Income before income taxes and income from
discontinued operations 2,281 950 2,066 285 Income taxes 174 126
155 73 ----------- -------- ----------- -------- Income from
continuing operations 2,107 824 1,911 212 Income from discontinued
operations - - - 370 ----------- -------- ----------- -------- Net
income $ 2,107 $ 824 $ 1,911 $ 582 ----------- -------- -----------
-------- Basic net income per common share: Income from continuing
operations $ 0.05 $ 0.02 $ 0.04 $ - Income from discontinued
operations $ - $ - $ - $ 0.01 Net income per common share $ 0.05 $
0.02 $ 0.04 $ 0.01 Weighted average common shares outstanding
43,912 43,900 43,379 44,427 Diluted net income per common share:
Income from continuing operations $ 0.05 $ 0.02 $ 0.04 $ - Income
from discontinued operations $ - $ - $ - $ 0.01 Net income per
common share $ 0.05 $ 0.02 $ 0.04 $ 0.01 Weighted average common
and common equivalent shares outstanding 46,750 47,960 47,143
48,824 Pro forma data: (1) Income before income taxes and income
from discontinued operations $ 2,281 $ 950 $ 2,066 $ 285
Restructuring costs - - 1,134 3,749 Stock compensation expense 905
597 2,190 1,891 Amortization of intangible assets 375 581 1,239
1,371 ----------- -------- ----------- -------- Pro forma income
before income taxes 3,561 2,128 6,629 7,296 Pro forma income taxes
1,424 851 2,651 2,918 ----------- -------- ----------- -------- Pro
forma net income $ 2,137 $ 1,277 $ 3,978 $ 4,378 -----------
-------- ----------- -------- Pro forma basic net income per common
share $ 0.05 $ 0.03 $ 0.09 $ 0.10 Weighted average common shares
outstanding 43,912 43,900 43,379 44,427 Pro forma diluted net
income per common share $ 0.05 $ 0.03 $ 0.08 $ 0.09 Weighted
average common and common equivalent shares outstanding 46,750
47,960 47,143 48,824 (1) The Company provides pro forma earnings
results (which exclude amortization of intangible assets, non-cash
compensation and restructuring charges, and include a normalized
tax rate) as a complement to results provided in accordance with
Generally Accepted Accounting Principles. These non-GAAP results
are provided to enhance the users's overall 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 inclusion of non-GAAP numbers 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 accounting
principles generally accepted in the United States of America.
Answerthink, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands) September 30, December 31, 2005 2004
----------------------------------------------------------------------
ASSETS (unaudited) Current assets: Cash and cash equivalents $
30,595 $ 38,890 Marketable investments 4,966 - Accounts receivable
and unbilled revenue, net 39,155 28,883 Prepaid expenses and other
current assets 2,108 3,459 ----------- ---------- Total current
assets 76,824 71,232 Marketable investments 4,911 9,902 Restricted
cash 600 3,000 Property and equipment, net 6,376 7,568 Other assets
2,285 3,245 Goodwill, net 35,683 33,786 ----------- ----------
Total assets $ 126,679 $ 128,733 ----------- ---------- LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $
4,280 $ 3,462 Accrued expenses and other liabilities 19,775 17,910
----------- ---------- Total current liabilities 24,055 21,372
Accrued expenses and other liabilities, non-current 2,851 7,507
----------- ---------- 26,906 28,879 Shareholders' equity 99,773
99,854 ----------- ---------- Total liabilities and shareholders'
equity $ 126,679 $ 128,733 ----------- ---------- Answerthink, Inc.
Supplemental Financial Data (unaudited) 2005 2004 -----------------
-------- Q3 Q2 Q3 -------- -------- -------- Revenue Breakdown by
Group: (in thousands) The Hackett Group Benchmarking and Membership
Advisory Programs $ 7,168 $ 7,314 $ 5,774 Transformation Advisory
9,161 10,449 8,361 -------- -------- -------- Total The Hackett
Group 16,329 17,763 14,135 Best Practice Solutions Business
Applications 13,555 14,398 15,362 Business Intelligence 10,121
9,539 7,634 -------- -------- -------- Total Best Practice
Solutions 23,676 23,937 22,996 -------- -------- -------- Total
revenues $40,005 $41,700 $37,131 ======== ======== ======== Revenue
Concentration: (% of total revenues) Top customer 6% 5% 6% Top 5
customers 20% 19% 18% Top 10 customers 33% 30% 29% Key Metrics and
Other Financial Data: Consultant utilization rate 67% 70% 67% Gross
billing rate per hour $ 194 $ 192 $ 174 Net billing rate per hour $
175 $ 173 $ 156 Consultant headcount 601 596 600 Total headcount
780 782 768 Days sales outstanding (DSO) 86 75 79 Cash used in
operating activities (in thousands) $(1,363) $(1,525) $(1,225)
Depreciation and amortization (in thousands) $ 1,138 $ 1,190 $
1,324 Share Repurchase Program: Shares purchased since inception
(in thousands) 6,534 6,534 4,959 Cost of shares repurchased since
inception (in thousands) $22,119 $22,119 $15,857 Average per share
cost of shares purchased since inception $ 3.39 $ 3.39 $ 3.20
Remaining authorization (in thousands) $ 7,881 $ 7,881 $ 4,143 *T
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