- Q2 2015 revenue of $66.4 million, up
9%, exceeds high-end of guidance led by U.S. non- ERP growth of
15%
- Q2 2015 pro forma EPS of $0.19 cents,
up 19%, also exceeds high-end of guidance
- Semi-annual $0.10 per share dividend
paid on July 10th
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 second quarter,
which ended July 3, 2015.
Second quarter 2015 revenue increased 9%, or 11% in constant
currency, to $66.4 million, as compared to $61.1 million for the
same period in 2014. Pro forma diluted earnings per share were
$0.19 for the second quarter of 2015, an increase of 19%, as
compared to $0.16 for the same period in 2014. 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 $0.12 for the second
quarter of 2015, an increase of 33%, as compared to $0.09 in the
second quarter of 2014.
On July 10, 2015, the Company paid its first semi-annual
dividend of $0.10 per share, totaling $3.1 million, to its
shareholders of record on June 29, 2015. Additionally, the Company
utilized cash to repurchase approximately 74 thousand shares of the
Company’s common stock at an average price of $9.51 per share for a
total cost of $703 thousand. As of the end of the second quarter of
2015, the Company’s remaining stock repurchase authorization was
$2.3 million.
“This was another strong quarter, driven by very strong U.S.
demand across virtually all of our practices,” stated Ted A.
Fernandez, Chairman & CEO of The Hackett Group, Inc. “More
importantly, this momentum is continuing into the second half of
the year and when coupled with the exciting and recently announced
IP-based alliances, we continue to redefine the growth
opportunities available to our organization.”
Based on current economic outlook, the Company estimates total
revenue for the third quarter of 2015 to be in the range of $63.5
million to $65.5 million, and estimates pro forma diluted earnings
per share to be in the range of $0.17 to $0.19.
Other Highlights
ADP Alliance – In August, The Hackett Group announced an
agreement with ADP that will add a dedicated Hackett best practices
advisory program to ADP’s Vantage HCM® solution. ADP Vantage HCM is
a cloud-based human capital management (HCM) solution that helps
organizations find, develop and retain great people. It is an
integrated platform that addresses the strategic needs of HR, as
well as the compliance and risk mitigation aspects of talent,
benefits, payroll, and time and labor management. By augmenting
ADP’s Vantage HCM with industry best practices from The Hackett
Group, clients will enhance their ability to achieve business
outcomes by better aligning their HR services with their business
strategy. ADP Vantage HCM clients now have access to:
Vantage-specific best practice configuration guides and process
flows; HR performance metrics and best-practice HCM research; and
HCM subject matter experts.
Oracle HPE Partnership - The Hackett Group announced plans to
team up with Oracle to offer its new cloud-based Hackett
Performance Exchange (“HPE’) leveraging Oracle’s Business
Intelligence Cloud Service (“BICS”) Platform. The pairing creates a
comprehensive performance analytics offering in the cloud,
combining a business intelligence platform and comparative
performance metrics with peer group and world class data.
CIMA Alliance – On April 20, 2015, The Hackett Group and The
Chartered Institute of Management Accountants (CIMA), announced a
strategic collaboration that will bring to market the first
comprehensive talent management and professional development
qualification program specifically tailored for Global Business
Services (GBS) and shared services professionals. By working
together, The Hackett Group and CIMA are seeking to respond to the
clear need for GBS and shared services organizations to invest in
programs to hire, develop, and retain staff in order to grow the
professional skills and knowledge needed to achieve and maintain
world-class performance standards.
Answerthink SAP Award – Answerthink, a division of The Hackett
Group, announced that it had received a 2015 SAP® Pinnacle Award as
a Valued-Added Reseller of the Year, in recognition of its
outstanding contributions as an SAP partner. SAP presents these
awards annually to top partners that have excelled in developing
and growing their partnership with SAP and helping customers run
better.
Technolab – The Company also announced today the finalization of
employment inducement restricted stock awards pursuant to NASDAQ
Rule 4350(i)(1)(A) covering approximately 293,000 shares granted to
five employees that joined the Company in connection with the
acquisition of Technolab International Corporation in February of
2014. The shares contain restrictions on transfer and are subject
to forfeiture depending on the nature of the recipient’s
termination of employment. The shares will vest over a five year
period.
On Tuesday, August 11, 2015, senior management will discuss
second quarter results in a conference call at 5:00 P.M. ET. The
number for the conference call is (800) 779-3138, [Passcode: Second
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, August 11,
2015 and will run through 5:00 P.M. ET on Tuesday, August 25, 2015.
To access the rebroadcast, please dial (800) 677-0672. For
International callers, please dial (203) 369-3130.
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, August 11, 2015
and will run through 5:00 P.M. ET on Tuesday, August 25, 2015. To
access the replay, visit http://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 11,000 benchmarking
studies with major corporations and government agencies, including
93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of
the DAX 30 and 51% 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 Six Months
Ended July 3, June 27, July 3,
June 27, 2015 2014 2015
2014 Revenue: Revenue before reimbursements ("net revenue")
$ 59,423 $ 55,000 $ 114,328 $ 104,418 Reimbursements 6,972 6,052
13,041 11,539 Total revenue 66,395 61,052 127,369 115,957
Costs and expenses: Cost of service: Personnel costs before
reimbursable expenses 36,404 33,568 70,041 66,206 Non-cash stock
compensation expense 1,056 723 2,091 1,338 Acquisition-related
non-cash stock compensation expense 152 276 426 347 Acquisition
cash consideration reflected as compensation expense - 860 - 1,720
Reimbursable expenses 6,972 6,052 13,041 11,539 Total cost of
service 44,584 41,479 85,599 81,150 Selling, general and
administrative costs 14,675 14,341 28,937 27,252 Non-cash stock
compensation expense 540 691 1,055 1,344 Amortization of intangible
assets 547 575 1,094 1,126 Acquisition related costs - - - 120
Total selling, general, and administrative expenses 15,762 15,607
31,086 29,842 Bargain purchase gain from acquisition - - -
(3,015) Restructuring costs - - - 3,604 Total costs and operating
expenses 60,346 57,086 116,685 111,581 Income from
operations 6,049 3,966 10,684 4,376 Other income (expense):
Interest income - 1 2 2 Interest expense (109) (166) (249) (290)
Income from operations before income taxes 5,940 3,801
10,437 4,088 Income tax expense 2,249 973 3,741 855 Net income $
3,691 $ 2,828 $ 6,696 $ 3,233 Basic net income per common
share: Income per common share from operations $ 0.13 $ 0.10 $ 0.23
$ 0.11 Weighted average common shares outstanding 28,718 28,939
28,635 29,029 Diluted net income per common share: Income
per common share from operations $ 0.12 $ 0.09 $ 0.22 $ 0.11
Weighted average common and common equivalent shares outstanding
30,888 29,984 30,403 29,926 Pro forma data (1): Income from
operations before income taxes $ 5,940 $ 3,801 $ 10,437 $ 4,088
Bargain purchase gain from acquisition - - - (3,015) Non-cash stock
compensation expense 1,596 1,414 3,146 2,682 Acquisition-related
non-cash stock compensation expense 152 276 426 347
Acquisition-related cash compensation expense - 860 - 1,720
Acquisition-related costs - - - 120 Restructuring costs - - - 3,604
Amortization of intangible assets 547 575 1,094 1,126 Pro forma
income before income taxes 8,235 6,926 15,103 10,672 Pro forma
income tax expense 2,471 2,216 4,531 3,639 Pro forma net income $
5,765 $ 4,710 $ 10,572 $ 7,033 Pro forma basic net income
per common share $ 0.20 $ 0.16 $ 0.37 $ 0.24 Weighted average
common shares outstanding 28,718 28,939 28,635 29,029 Pro
forma diluted net income per common share $ 0.19 $ 0.16 $ 0.35 $
0.24 Weighted average common and common equivalent shares
outstanding 30,888 29,984 30,403 29,926
(1) The Company provides pro forma
earnings results (which exclude the amortization of intangible
assets, stock compensation expense, restructuring 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' 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) July 3,
January 2, 2015 2015 (unaudited)
ASSETS Current assets: Cash and cash equivalents $ 16,217 $
14,608 Accounts receivable and unbilled revenue, net 44,605 37,421
Deferred tax asset, net 2,315 2,828 Prepaid expenses and other
current assets 2,489 2,199 Total current assets 65,626 57,056
Property and equipment, net 14,017 13,753 Other assets 5,372
6,548 Goodwill, net 75,374 75,429 Total assets $ 160,389 $ 152,786
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable $ 5,167 $ 7,909 Accrued expenses and
other liabilities 35,238 30,901 Current portion of long-term debt
3,321 - Total current liabilities 43,726 38,810 Long-term deferred
tax liability, net 8,821 5,925 Long-term debt 14,942 18,263 Total
liabilities 67,489 62,998 Shareholders' equity 92,900 89,788
Total liabilities and shareholders' equity $ 160,389 $ 152,786
The Hackett Group, Inc. SUPPLEMENTAL FINANCIAL DATA
(unaudited) Quarter Ended July
3, April 3, June 27 2015 2015
2014 Revenue Breakdown by Group: (in thousands) The
Hackett Group (2) $ 55,991 $ 51,592 $ 49,151 ERP Solutions (3)
10,404 9,382 11,901 Total revenue $ 66,395 $ 60,974 $ 61,052
Revenue Concentration: (% of total revenue) Top customer 3%
4% 5% Top 5 customers 14% 15% 19% Top 10 customers 25% 25% 29%
Key Metrics and Other Financial Data: Total
Company: Consultant headcount 810 778 774 Total headcount 1,012
973 975 Days sales outstanding (DSO) 61 63 65 Cash provided by
(used in) operating activities (in thousands) $ 7,015 $
(340)
$ 611 Depreciation (in thousands) $ 663 $ 612 $ 565 Amortization
(in thousands) $ 547 $ 547 $ 590
The Hackett Group
(in thousands)
: The Hackett Group annualized revenue per
professional (2) $ 397 $ 374 $ 359
ERP Solutions: ERP
Solutions consultant utilization rate (3) 77% 72% 75% ERP Solutions
gross billing rate per hour (3) $ 136 $ 142 $ 125
Shares Repurchased
Shares purchased (in thousands) (5):
83 342 502
Cost of shares repurchased (in thousands)
(5):
$ 816 $ 2,718 $ 3,027
Average price per share of shares
purchased (5):
$ 9.83 $ 7.95 $ 6.03 Remaining Plan authorization (in thousands) $
2,309 $ 3,012 $ 2,296 (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 42% of
which are offshore resources. (4) Certain reclassifications have
been made to conform with current reporting requirements.
(5) Shares repurchased include shares
bought back to satisfy employee net vesting obligations of 9
thousand shares for $113 thousand; 267 thousand shares for $2.1
million; and 11 thousand shares for $66 thousand, for the quarters
ended July 3, 2015, April 3, 2015 and June 27, 2014,
respectively.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150811006401/en/
The Hackett Group, Inc.Robert A. Ramirez, CFO,
305-375-8005rramirez@thehackettgroup.com
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