- Q3 2015 revenue of $67.2 million, up
11% or 13% in constant currency from prior year, exceeds high-end
of guidance, led by U.S. growth of 20%.
- Q3 2015 pro forma EPS of $0.20 cents,
up 25% from prior year, also exceeds high-end of guidance
- Company declares semi-annual dividend
of $0.10 per share for holders of record on December 28, 2015
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 October 2, 2015.
Third quarter 2015 revenue increased 11%, or 13% in constant
currency, to $67.2 million, as compared to $60.4 million for the
same period in 2014. Pro forma diluted earnings per share were
$0.20 for the third quarter of 2015, an increase of 25%, 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 $0.10 cents for both the
third quarter of 2015 and 2014. GAAP results for the third quarter
were unfavorably impacted by $1.3 million accrual for performance
based stock appreciation rights issued in fiscal 2012, which are
now expected to be earned, as well as a higher effective tax rate
when compared to the prior year.
In its recent meeting, the Company's Board of Directors declared
the payment of its second semi-annual dividend of $0.10 per share
for holders of record on December 28, 2015. This dividend will be
paid on January 8, 2016.
“This was another strong quarter driven by solid U.S. demand
across nearly all of our practices,” stated Ted A. Fernandez,
Chairman & CEO of The Hackett Group, Inc. “More importantly,
the demand continues into the fourth quarter and, when coupled with
the new strategic alliances that we recently launched, bodes well
for our prospects.”
Based on current economic outlook, the Company estimates total
revenue for the fourth quarter of 2015 to be in the range of $63.0
million to $65.0 million, and estimates pro forma diluted earnings
per share to be in the range of $0.19 to $0.21.
Other Highlights
European Best Practices Conference – The Hackett Group held its
annual European Best Practices Conference in London on October 7th
and 8th. The event, “Creating World-Class Advantage Through
Digital, Analytical and Operational Agility,” was attended by more
than 150 executives. It featured presentations by senior leaders
from more than 16 companies, including: Altana AG, Becton,
Dickinson and Co., BP Group, The Coca-Cola Company, Cofely UK,
General Electric Co, GlaxoSmithKline plc, Henkel, Lexmark
International, Linde AG, Michelin, Novo Nordisk, Sanofi, SAP AG,
Tetra Pak Group, and WNS Global Services.
World-Class Procurement Research – New research from The Hackett
Group found that world-class procurement organizations now deliver
services at 17% less cost than typical companies while offering
improved effectiveness, largely by becoming more customer-centric.
A key differentiator is the superior ability of world-class
procurement organizations to gain a deep understanding of the needs
of their business, react more quickly to changing requirements, and
drive higher overall value and greater stakeholder satisfaction,
the research found.
World-Class Finance – New research from The Hackett Group found
that world-class finance organizations are far more responsive to
business needs than their peers, driving greater value and agility
while also spending more than 40% less and running with about half
the staff. Overall, finance organizations continue to focus on
redeploying resources away from transactional work towards
higher-value activities to support innovation, growth, and greater
agility, the research found. According to The Hackett Group’s
research, world-class finance organizations are relying on three
strategies to achieve operational excellence, drive higher value
and improve agility: strengthening the foundations to enable agile
service delivery; unleashing enterprise performance management
(EPM) decision-making excellence; and building an adaptive finance
organization.
World-Class HR – New research from The Hackett Group found that
world-class HR organizations now spend 37% less than their peers
and operate with 31% fewer staff, while delivering improved
effectiveness and greater agility. The research also identified an
array of HR capabilities that drive performance leadership,
including: strategic workforce planning; technology/automation
strategy; unified streamlined processes and systems; and
performance measurement and analysis.
On Tuesday, November 10, 2015, senior management will discuss
third quarter results in a conference call at 5:00 P.M. ET. The
number for the conference call is (800) 779-3138, [Passcode: Third
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, November
10, 2015 and will run through 5:00 P.M. ET on Tuesday, November 24,
2015. To access the rebroadcast, please dial (888) 566-0509. For
International callers, please dial (203) 369-3613.
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 10, 2015
and will run through 5:00 P.M. ET on Tuesday, November 24, 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
Nine Months Ended October 2, September 26,
October 2, September 26, 2015 2014
2015 2014 Revenue: Revenue before reimbursements
("net revenue") $ 59,992 $ 54,550
$ 174,320 $ 158,968 Reimbursements 7,225 5,887 20,266
17,426 Total revenue 67,217 60,437 194,586 176,394
Costs and expenses: Cost of service: Personnel costs before
reimbursable expenses 36,231 33,440 106,272 99,646 Non-cash stock
compensation expense 1,372 566 3,463 1,904 Acquisition-related
non-cash stock compensation expense 251 276 677 623 Acquisition
consideration reflected as compensation expense - 860 - 2,580
Reimbursable expenses 7,225 5,887 20,266
17,426 Total cost of service 45,079 41,029 130,678 122,179
Selling, general and administrative costs 14,579 14,055
43,516 41,307 Non-cash stock compensation expense 2,068 814 3,123
2,158 Amortization of intangible assets 548 553 1,642 1,679
Acquisition related costs - - - 120
Total selling, general, and administrative expenses 17,195 15,422
48,281 45,264 Bargain purchase gain from acquisition - - -
(3,015 ) Restructuring costs - - - 3,604
Total costs and operating expenses 62,274 56,451
178,959 168,032 Income from operations
4,943 3,986 15,627 8,362 Other income (expense): Interest
income 1 2 3 4 Interest expense (102 ) (173 ) (351 ) (463 )
Income from operations before income taxes 4,842 3,815 15,279 7,903
Income tax expense 1,784 879 5,525 1,734
Net income $ 3,058 $ 2,936
$ 9,754 $ 6,169 Basic net income per common
share: Income per common share from operations $ 0.11 $ 0.10
$ 0.34 $ 0.21 Weighted average common shares outstanding 28,755
28,558 28,675 28,872 Diluted net income per common share:
Income per common share from operations $ 0.10 $ 0.10
$ 0.32 $ 0.21 Weighted average common and common equivalent shares
outstanding 31,488 29,800 30,765 29,884 Pro forma data (1):
Income from operations before income taxes $ 4,842 $ 3,815
$ 15,279 $ 7,903 Bargain purchase gain from acquisition - - -
(3,015 ) Non-cash stock compensation expense 3,440 1,380 6,586
4,062 Acquisition-related non-cash stock compensation expense 251
276 677 623 Acquisition-related cash compensation expense - 860 -
2,580 Acquisition-related costs - - - 120 Restructuring costs - - -
3,604 Amortization of intangible assets 548 553 1,642
1,679 Pro forma income before income taxes 9,081
6,884 24,184 17,556 Pro forma income tax expense 2,724 2,067
7,255 5,705 Pro forma net income $ 6,357
$ 4,817
$ 16,929 $ 11,851 Pro forma basic net income
per common share $ 0.22 $ 0.17
$ 0.59 $ 0.41 Weighted average common shares outstanding 28,755
28,558 28,675 28,872 Pro forma diluted net income per common
share $ 0.20 $ 0.16
$ 0.55 $ 0.40 Weighted average common and common equivalent shares
outstanding 31,488 29,800 30,765 29,884
(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)
October 2, January 2, 2015 2015
(unaudited)
ASSETS Current assets: Cash and cash equivalents $ 16,338 $
14,608 Accounts receivable and unbilled revenue, net 43,993 37,421
Deferred tax asset, net 486 2,828 Prepaid expenses and other
current assets 2,131 2,199 Total current assets 62,948 57,056
Property and equipment, net 14,189 13,753 Other assets 4,796
6,548 Goodwill, net 74,961 75,429 Total assets $ 156,894 $ 152,786
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable $ 5,950 $ 7,909 Accrued expenses and
other liabilities 34,230 30,901 Current portion of long-term debt -
- Total current liabilities 40,180 38,810 Long-term deferred tax
liability, net 8,276 5,925 Long-term debt 9,263 18,263 Total
liabilities 57,719 62,998 Shareholders' equity 99,175 89,788
Total liabilities and shareholders' equity $ 156,894 $ 152,786
The Hackett Group, Inc.
SUPPLEMENTAL FINANCIAL DATA (unaudited)
Quarter Ended October 2, July 3, September
26, 2015 2015 2014 Revenue Breakdown by
Group: (in thousands) The Hackett Group (2) $ 58,174 $ 55,991 $
51,370 ERP Solutions (3) 9,043 10,404 9,067
Total revenue $ 67,217 $ 66,395 $ 60,437
Revenue Concentration: (% of total revenue) Top
customer 4 % 3 % 4 % Top 5 customers 16 % 14 % 15 % Top 10
customers 27 % 25 % 25 %
Key Metrics and Other Financial
Data: Total Company: Consultant headcount 827 810
775 Total headcount 1,027 1,012 973 Days sales outstanding (DSO) 60
61 67 Cash provided by operating activities (in thousands) $ 12,546
$ 7,015 $ 5,888 Depreciation (in thousands) $ 651 $ 663 $ 512
Amortization (in thousands) $ 548 $ 547 $ 553
The Hackett
Group (in thousands)
: The Hackett Group annualized
revenue per professional (2) $ 396 $ 397 $ 368
ERP
Solutions: ERP Solutions consultant utilization rate (3) 75 %
77 % 72 % ERP Solutions gross billing rate per hour (3) $ 132 $ 136
$ 128
Shares Repurchased: Shares purchased (in
thousands) (5) - 83 485 Cost of shares repurchased (in thousands)
(5) $ - $ 816 $ 2,974 Average price per share of shares purchased
(5) $ - $ 9.83 $ 6.13 Remaining Plan authorization (in thousands) $
2,309 $ 2,309 $ 4,322
(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.
(5) Shares repurchased include shares bought back to satisfy
employee net vesting obligations of 5 thousand shares for $65
thousand; 9 thousand shares for $113 thousand; and 2 thousand
shares for $12 thousand, for the quarters ended October 2, 2015,
July 3, 2015 and September 26, 2014, respectively.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151110006949/en/
The Hackett GroupRobert A. Ramirez, CFO,
305-375-8005rramirez@thehackettgroup.com
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