The Hackett Group, Inc. (NASDAQ:HCKT), a global strategic advisory
firm, today announced its financial results for the first quarter,
which ended March 28, 2008. In January of 2008, Answerthink, Inc.
was renamed The Hackett Group, Inc. and the Answerthink technology
practices were placed into a newly named group, Hackett Technology
Solutions. First quarter 2008 revenue was $43.8 million, a 10%
increase from the first quarter of 2007 driven by a 31% growth in
The Hackett Group (excluding Technology Solutions). Pro forma
diluted earnings per share were $0.07 in the first quarter of 2008,
as compared to a $0.01 loss per share in the first quarter of 2007.
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 $0.09 in the first quarter of 2008, as
compared to a $0.05 loss per share in the first quarter of 2007. At
the end of the first quarter of 2008, the Company�s cash balances
were $25.3 million, including marketable investments and restricted
cash. During the first quarter, the Company repurchased
approximately 1.8 million shares of its common stock at an average
price of $3.81, for a total cost of approximately $6.8 million. On
May 2, 2008, the Board of Directors authorized an additional $5.0
million increase to the share buyback program, which brings the
current remaining authorization to approximately $8.1 million. �We
have now reported a significant improvement in our operating
results in the last four quarters and we expect to carry this
momentum into our next quarter,� stated Ted A. Fernandez, Chairman
& CEO of The Hackett Group, Inc. �A slowing economy has
heightened the management challenge for organizations globally and
I am pleased to see them turn to us for assistance during this
period.� Based on the current economic outlook, the Company
estimates total revenues for the second quarter of 2008 to be in
the range of $46.0 million to $48.0 million and estimates pro forma
diluted earnings per share to be in the range of $0.06 to $0.08.
The Hackett Group and Hackett Technology Solutions are expected to
grow sequentially, on a quarter over quarter basis with The Hackett
Group�s revenues growing approximately 20% on a year over year
basis. Other Highlights IT Business Value Management Research � New
Book of Numberstm research from The Hackett Group found that IT
excellence can drive real improvements to a company�s bottom line.
The Hackett Group found that companies that are top performers in
IT Business Value Management (IT BVM) also outperform their peers
across a wide range of financial and profitability metrics,
including net profitability, return on assets, and return on
equity. Forecasting Research � New Book of Numberstm research from
The Hackett Group found that despite a market environment where
missed earnings projections can lead to sharp stock declines, CFO
firings, or worse, most companies fail to accurately forecast
earnings and sales. According to The Hackett Group, two out of
every three companies are unable to accurately forecast earnings
for the next quarter, missing the mark by anywhere from 6% to over
30%. Learning & Development Study Launch � The Hackett Group
launched a new open performance study designed to help companies
better understand how their Learning & Development initiatives
compare with those of their peers and how they can improve the
efficiency and effectiveness of efforts in this key Talent
Management area. Representative Client Engagements Finance and HR
Transformation Effort for Leading Technology Company � This client
contracted with The Hackett Group for a global transformational
finance benchmark, HR rapid assessment, and other related services.
The company is seeking to restructure its cost basis while at the
same time driving higher effectiveness in back office support
functions. The work will include an analysis to assist the company
in leveraging global sourcing opportunities in finance and other
areas. Procure-to-Pay Working Capital Reengineering for Leading
Global Aerospace Manufacturer � This client selected REL to assist
in the reengineering of procure-to-pay processes for multiple
global entities. The project, which is supported by the company�s
finance and procurement organizations, is designed to streamline
and more effectively manage the working capital impacts of
distributed global sourcing efforts. Enterprise Performance
Management Implementation for Global Specialty Pharmaceutical
Company � This client selected the Hackett Technology Solutions
group for the next stage of a comprehensive enterprise performance
management data warehousing design and implementation project.
Under the contract, Hackett Technology Solutions will implement the
financial data warehouse system, which will drive enhanced business
value, improved information access, and streamlined reporting. The
project will result in a single source of financial information
company-wide and target and implement best practices broadly across
performance reporting, planning, forecasting, and business analyst
partnering. Hyperion Implementation for Leading Media &
Entertainment Company � This client selected the Hackett Technology
Solutions group to implement a new consolidation and�SEC reporting
tool using Hyperion Financial Management and Hyperion Financial
Data Quality Management. The implementation leverages our 12-step
rapid deployment methodology to achieve go-live in approximately 4
months. The new system will eliminate manual production of Form
10-Q and 10-K reports, improve audit trails, and enhance
transparency of reporting across multiple business segments. At
5:00 P.M. ET on Tuesday, May 6, 2008, the senior management of The
Hackett Group, Inc. will host a conference call to discuss first
quarter earnings results for the period ending March 28, 2008. The
number for the conference call is 800-857-9601 (Passcode: First
Quarter, Leader: Ted A. Fernandez). For International callers,
please dial 210-234-8000. 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, May 6, 2008 and will run through 5:00 P.M. ET
on Tuesday, May 20, 2008. To access the rebroadcast, please dial
800-944-6957. For International callers, please dial 402-220-3502.
In addition, The Hackett Group, Inc. will 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, May 6, 2008 and
will run through 5:00 P.M. ET on Tuesday, May 20, 2008. To access
the call, visit http://www.thehackettgroup.com or
http://www.streetevents.com. About The Hackett Group, Inc. The
Hackett Group Inc. (NASDAQ: HCKT), a global strategic advisory
firm, is a leader in best practice advisory, benchmarking, and
transformation consulting services, including shared services,
offshoring and outsourcing advice. Utilizing best practices and
implementation insights from more than 4,000 benchmarking
engagements, executives use The Hackett Group's empirically-based
approach to quickly define and prioritize initiatives to enable
world-class performance. Through its REL brand, The Hackett Group
offers working capital solutions focused on delivering significant
cash flow improvements. 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 worked with 2,700 major corporations and government
agencies, including 97% of the Dow Jones Industrials, 73% of the
Fortune 100, 73% of the DAX 30 and 50% of the FTSE 100. Founded in
1991, The Hackett Group was acquired by Answerthink, Inc., which
was renamed The Hackett Group in 2008. The Hackett Group has global
offices in the United States, Europe and India. More information on
The Hackett Group is available: by phone at 770-225-7300; by e-mail
at info@thehackettgroup.com; or on the Web at
www.thehackettgroup.com. Book of Numbers is a trademark of The
Hackett Group. 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 practices mentioned in this release
to deliver the desired effect, our ability to effectively integrate
acquisitions into our operations, 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 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, 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 �
March 28, � March 30, 2008 � 2007 Revenues: Revenues before
reimbursements $ 39,268 � $ 36,161 Reimbursements � 4,570 � 3,716 �
Total revenues 43,838 39,877 � Costs and expenses: Cost of service:
Personnel costs before reimbursable expenses (includes $397 and
$411 of stock compensation expense in the quarters ended March 28,
2008 and March 30, 2007, respectively) (2) 22,963 22,558
Reimbursable expenses � 4,570 � 3,716 � Total cost of service
27,533 26,274 � Selling, general and administrative costs (includes
$548 and $597 of stock compensation expense in the quarters ended
March 28, 2008 and March 30, 2007, respectively) (2) 12,582 16,462
Collections from misappropriation � - � (350 ) Total costs and
operating expenses � 40,115 � 42,386 � Income (loss) from
operations 3,723 (2,509 ) Other income (expense): Interest income
167 240 Interest expense � - � (2 ) Income (loss) before income
taxes 3,890 (2,271 ) Income tax expense � 107 � 67 � Net income
(loss) $ 3,783 � $ (2,338 ) � Basic net income (loss) per common
share: Net income (loss) per common share $ 0.09 � $ (0.05 )
Weighted average common shares outstanding 42,755 44,778 � Diluted
net income (loss) per common share (1): Net income (loss) per
common share $ 0.09 � $ (0.05 ) Weighted average common and common
equivalent shares outstanding 43,353 44,778 � Pro forma data (3):
Income (loss) before income taxes $ 3,890 � $ (2,271 ) Stock
compensation expense 945 1,008 Amortization of intangible assets
197 364 Professional fees related to the misappropriation - 183
Collections from misappropriation � - � (350 ) Pro forma income
(loss) before income taxes 5,032 (1,066 ) Pro forma income tax
expense (benefit) � 2,013 � (427 ) Pro forma net income (loss) $
3,019 � $ (639 ) � Pro forma basic net income (loss) per common
share $ 0.07 � $ (0.01 ) Weighted average common shares outstanding
42,755 44,778 � Pro forma diluted net income (loss) per common
share $ 0.07 � $ (0.01 ) Weighted average common and common
equivalent shares outstanding 43,353 44,778 � (1) Potentially
diluted shares were excluded from the diluted loss per share
calculations for the quarter ended March 30, 2007 as their effects
would have been anti-dilutive to the loss incurred by the Company.
(2) Certain items in the quarter ended March 30, 2007 have been
reclassified to conform with the March 28, 2008 presentation. As a
result, SGA for the second quarter, third quarter and fourth
quarter of 2007 have been recast to $15,224, $14,978 and $14,081,
respectively. In addition, personnel costs before reimbursable
expenses for the second quarter, third quarter and fourth quarter
of 2007 have been recast to $23,886, $23,363 and $22,047,
respectively. (3) The Company provides pro forma earnings results
(which exclude amortization of intangible assets, stock
compensation expense, collections and professional fees related to
the misappropriation 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' 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. The Hackett Group, Inc. CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) � March 28,
� December 28, � 2008 2007 � ASSETS � Current assets: Cash and cash
equivalents $ 20,188 $ 20,061 Marketable investments 4,546 7,032
Accounts receivable and unbilled revenue, net 31,265 29,735 Prepaid
expenses and other current assets � 3,988 � 1,586 Total current
assets 59,987 58,414 � Restricted cash 600 600 Property and
equipment, net 5,677 5,709 Other assets 2,248 2,434 Goodwill, net �
68,474 � 68,302 Total assets $ 136,986 $ 135,459 � LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,704
$ 3,970 Accrued expenses and other liabilities � 30,988 � 29,047
Total current liabilities 36,692 33,017 Accrued expenses and other
liabilities, non-current � 3,339 � 3,623 Total liabilities 40,031
36,640 � Shareholders' equity � 96,955 � 98,819 Total liabilities
and shareholders' equity $ 136,986 $ 135,459 The Hackett Group,
Inc. Supplemental Financial Data (unaudited) � � � Quarter Ended
March 28, 2008 December 28, 2007 March 30, 2007 Revenue Breakdown
by Group: (in thousands) � The Hackett Group: Benchmarking and
Business Transformation (5) $ 25,969 $ 26,022 $ 19,303 Executive
Advisory Programs (6) � 4,012 � � 3,893 � � 3,613 � Total The
Hackett Group 29,981 29,915 22,916 � Hackett Technology Solutions
(7) � 13,857 � � 14,975 � � 16,961 � Total Revenues $ 43,838 � $
44,890 � $ 39,877 � � � Revenue Concentration: (% of total
revenues) � Top customer 7 % 5 % 3 % Top 5 customers 20 % 17 % 13 %
Top 10 customers 29 % 28 % 23 % � � Key Metrics and Other Financial
Data: The Hackett Group annualized revenue per professional (in
thousands) $ 415 $ 411 $ 345 Executive Advisory Programs -
Annualized Contract Value (in thousands) (4) (8) $ 15,148 $ 16,031
$ 14,310 Hackett Technology Solutions consultant utilization rate
66 % 62 % 63 % Hackett Technology Solutions gross billing rate per
hour $ 160 $ 161 $ 171 Consultant headcount 536 552 563 Total
headcount 723 739 770 Days sales outstanding (DSO) 66 60 71 Cash
provided by operating activities (in thousands) $ 4,733 $ 8,320 $
4,209 Depreciation (in thousands) $ 510 $ 508 $ 536 Amortization
(in thousands) $ 197 $ 296 $ 364 � Share Repurchase Program: Shares
purchased in the quarter (in thousands) 1,783 1,029 - Cost of
shares repurchased in the quarter (in thousands) $ 6,793 $ 4,208 $
- Average price per share of shares purchased in the quarter $ 3.81
$ 4.09 $ - Remaining authorization (in thousands) $ 4,266 $ 6,060 $
6,133 � (4) We define "Annualized Contract Value" as of the
beginning of the following quarter as the aggregate annualized
revenue attributed to all agreements in effect on such date,
without regard to the remaining duration of any such agreement. (5)
Comparison of a client's demand drivers, costs and practices to a
peer group in order to empirically identify and define an
organization's ability to improve performance at a process level
and to identify and compare business practices utilized by
world-class performers. Additionally, strategic consulting support
that utilizes Hackett best practice implementation content and
tools to enable clients to accelerate transformation to world-class
performance. (6) Annual or multi-year contract that provides
clients with on-demand access to world-class performance metrics,
best practice repository, best practice research forums and
conferences, and advice. (7) Best Practice Implementation of ERP
Software, which is primarily Oracle and SAP, and business
performance management solutions, which is primarily Hyperion. (8)
Certain items in the quarter ended March 30, 2007 have been
reclassified to conform with the March 28, 2008 presentation.
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