Exhibit 99.1
Contact:
Jack Brennan, CFO - (305) 375-8005 or jbrennan@answerthink.com
Answerthink Announces Fourth Quarter Results
• | Revenue and Proforma EPS in line with guidance. |
• | Hackett and Business Transformation year over year growth of 66% and 51%, respectively. |
MIAMI, FL, February 8, 2005 –Answerthink, Inc. (Nasdaq: ANSR), a strategic business advisory and technology consulting firm, today announced its financial results for the fourth quarter ended December 31, 2004.
Fourth quarter revenue was $33.7 million, up 8% from $31.2 million in the fourth quarter of 2003. Diluted loss per share was $0.02, compared to diluted earnings of $0.02 for the fourth quarter of 2003. Pro forma diluted earnings per share were $0.01, compared to $0.03 for the fourth quarter of 2003. 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 fiscal year 2004, revenues were $143.5 million, up 8% from $132.4 million in fiscal year 2003. Diluted loss per share was $0.00, compared to an $0.11 loss for fiscal year 2003. The 2004 and 2003 results included restructuring costs of $0.08 and $0.11 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 $0.10, up from $0.03 in fiscal year 2003.
The Company’s cash balances, including restricted cash and marketable investments, were $52.8 million at the end of the fourth quarter of 2004. During the quarter, the Company spent $2.3 million to repurchase 568,000 shares of the Company’s common stock. As of the end of the fourth quarter of 2004, $6.8 million remained available under the Company’s share repurchase program authorization.
“We are pleased with the progress we made during the year to expand the value we deliver to clients through our unparalleled best practices insight,” said Ted A. Fernandez, Chairman and CEO of Answerthink. “This was especially evident in the strong growth we achieved in our Hackett Group and Business Transformation service lines as well as our growing number of joint pursuits with Accenture. We believe that this focus will continue to improve our ability to compete and to grow in 2005.”
Based on the current economic outlook, the Company estimates total revenues for the first quarter of 2005 to be in the range of $36.0 million to $38.0 million. The Company also estimates diluted earnings (loss) per share to be in the range of ($0.01) to $0.02 and pro forma diluted earnings per share to be in the range of $0.01 to $0.03.
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Other Highlights
New Hackett Web Portal – Hackett launched a new Web portalwww.thehackettgroup.com, which speeds up the benchmarking process and provides Hackett clients with improved access to best practice research and offers enhanced benchmark project management and online inquiry capabilities.
EzPharma Launch – Answerthink announced EzPharma, a custom mySAP™ All-in-One solution designed to offer pharmaceutical companies and others in the life sciences industries a powerful and efficient solution that can help improve time to market, enhance quality control, and streamline compliance efforts.
Balanced Scorecard Research –Hackett published research findings showing that less than 20 percent of all typical companies have mature balanced scorecard implementations in place that are generating business value. According to Hackett, typical companies report nearly nine times the number of measures when compared to the most effective balanced scorecards. In addition, these findings show that companies do not place enough emphasis on forward-looking measures such as external financial and operating performance.
Representative Client Engagements
Shared Services Strategy Advisory for a Global Telecommunications Technology Manufacturer – Leveraging a Hackett benchmark, Answerthink is assisting in the design and buildout of a shared services center located in Asia encompassing key finance operations. The shared service center will consolidate certain financial functions presently provided independently in 15 countries. The design of future state finance processes leverages Hackett Best Practices in creating a single global chart of accounts utilizing PeopleSoft and standardizing processes thereby helping to improve productivity throughout the enterprise.
Global Oracle Implementation & Finance Transformation for a Global Travel and Hospitality Company – Answerthink and its strategic alliance partner, Accenture, are providing support for this client’s comprehensive Oracle reimplementation effort. The project is a follow-on to Hackett finance benchmark and strategic advisory efforts designed to help the company develop a shared services strategy for finance.
Global SAP Implementation for a Global Financial Services Company –Answerthink and its strategic alliance partner, Accenture, are supporting an implementation of SAP to replace legacy systems. The effort was launched with a Hackett finance benchmark in 2004. Answerthink will utilize its Best Practices Implementation tools and methodology to integrate Hackett best practices throughout the implementation. The company’s overall goal is to create a single system for use by all of its global business units, and generate cost savings by centralizing purchasing and other related activities.
Regulatory Business Intelligence System for a National Telecommunications Company – As a continuation of a long-term project, Answerthink is assisting this company with the design, development, and implementation of a nationwide roll out of a custom business intelligence system that streamlines the process of rate-related regulatory filings. In a separate initiative, the company has asked Answerthink to support its Sarbanes-Oxley compliance efforts by guiding the configuration of a new compliance application.
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Shared Services Strategy for a Global Online Service Provider –Answerthink is supporting efforts to optimize and expand a newly-created dual shore finance shared services center. Activities include a phased conversion to SAP, reorganization of the center’s management team and implementation of Hackett-certified practices as the company expands the center from a U.S. pilot to a global operation incorporating facilities in the U.S. and India. Goals of the effort include helping the company find transformative ways to provide and improve service in a cost effective, scalable fashion.
Answerthink will host a conference call today at 5 pm to discuss fourth quarter earnings results and outlook. The number for the conference call is (877) 546-1566, (Passcode: Fourth Quarter, Leader: Ted A. Fernandez). For International callers, please dial (210) 234-0000.
A rebroadcast of the call will be available beginning at 8:00 P.M. ET on Tuesday, February 8, 2005 and will run through 5:00 P.M. ET on Tuesday, February 22, 2005. To access the rebroadcast, please dial (866) 356-4341. For International callers, please dial (203) 369-0101.
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, February 8, 2005 and will run through 5:00 P.M. ET on Tuesday, February 22, 2005. To access the call, visithttp://www.answerthink.com orhttp://www.streetevents.com.
About Answerthink
Answerthink, Inc. (www.answerthink.com) is a strategic business and technology consulting firm that enables companies to achieve world-class business performance. By leveraging the comprehensive database of The Hackett Group, the world’s leading repository of enterprise best practice metrics and business process knowledge, 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), an Answerthink company, is a business advisory firm providing empirically based advice and best-practices research to executives seeking to drive world-class performance in areas such as finance, IT, human resources, and procurement. Hackett’s functional and process-specific benchmarks and its confidential, on-demand, membership-based advisory services are backed by an ongoing database of best practices in processes, technology, and organization in use at more than 2,400 clients around the globe. This unparalleled information repository allows 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 93 percent of the Dow Jones Industrials, 80 percent of the Fortune 100 and 90 percent of the Dow Jones Global Titans Index.
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# # #
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, 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 for the fiscal year ended January 2, 2004. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
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Answerthink, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended | Year Ended | ||||||||||||||
December 31, 2004 | January 2, 2004 | December 31, 2004 | January 2, 2004 | ||||||||||||
Revenues: | |||||||||||||||
Revenues before reimbursements | $ | 30,446 | $ | 27,828 | $ | 129,339 | $ | 117,945 | |||||||
Reimbursements | 3,232 | 3,359 | 14,208 | 14,442 | |||||||||||
Total revenues | 33,678 | 31,187 | 143,547 | 132,387 | |||||||||||
Costs and expenses: | |||||||||||||||
Project personnel and expenses: | |||||||||||||||
Project personnel and expenses before reimbursable expenses | 18,398 | 16,001 | 75,774 | 73,061 | |||||||||||
Reimbursable expenses | 3,232 | 3,359 | 14,208 | 14,442 | |||||||||||
Total project personnel and expenses | 21,630 | 19,360 | 89,982 | 87,503 | |||||||||||
Selling, general and administrative expenses | 12,369 | 10,181 | 48,491 | 43,951 | |||||||||||
Restructuring costs | — | — | 3,749 | 4,875 | |||||||||||
Stock compensation expense | 430 | 671 | 2,321 | 1,236 | |||||||||||
Total costs and operating expenses | 34,429 | 30,212 | 144,543 | 137,565 | |||||||||||
Income (loss) from operations | (751 | ) | 975 | (996 | ) | (5,178 | ) | ||||||||
Other income (expense): | |||||||||||||||
Interest income | 296 | 189 | 866 | 706 | |||||||||||
Interest expense | (24 | ) | — | (64 | ) | — | |||||||||
Income (loss) before income taxes and income from discontinued operations | (479 | ) | 1,164 | (194 | ) | (4,472 | ) | ||||||||
Income taxes | 251 | 125 | 324 | 350 | |||||||||||
Income (loss) from continuing operations | (730 | ) | 1,039 | (518 | ) | (4,822 | ) | ||||||||
Income from discontinued operations | — | — | 370 | — | |||||||||||
Net income (loss) | $ | (730 | ) | $ | 1,039 | $ | (148 | ) | $ | (4,822 | ) | ||||
Basic net income (loss) per common share: | |||||||||||||||
Income (loss) from continuing operations | $ | (0.02 | ) | $ | 0.02 | $ | (0.01 | ) | $ | (0.11 | ) | ||||
Income from discontinued operations | $ | — | $ | — | $ | 0.01 | $ | — | |||||||
Net income (loss) per common share | $ | (0.02 | ) | $ | 0.02 | $ | (0.00 | ) | $ | (0.11 | ) | ||||
Weighted average common shares outstanding | 43,471 | 44,480 | 44,188 | 45,140 | |||||||||||
Diluted net income (loss) per common share (1): | |||||||||||||||
Income (loss) from continuing operations | $ | (0.02 | ) | $ | 0.02 | $ | (0.01 | ) | $ | (0.11 | ) | ||||
Income from discontinued operations | $ | — | $ | — | $ | 0.01 | $ | — | |||||||
Net income (loss) per common share | $ | (0.02 | ) | $ | 0.02 | $ | (0.00 | ) | $ | (0.11 | ) | ||||
Weighted average common and common equivalent shares outstanding | 43,471 | 48,793 | 44,188 | 45,140 | |||||||||||
Pro forma data: (2) | |||||||||||||||
Income (loss) before income taxes and income from discontinued operations | $ | (479 | ) | $ | 1,164 | $ | (194 | ) | $ | (4,472 | ) | ||||
Restructuring costs | — | — | 3,749 | 4,875 | |||||||||||
Stock compensation expense | 430 | 671 | 2,321 | 1,236 | |||||||||||
Amortization of intangible assets | 604 | 408 | 1,975 | 893 | |||||||||||
Pro forma income before income taxes | 555 | 2,243 | 7,851 | 2,532 | |||||||||||
Pro forma income taxes | 223 | 897 | 3,141 | 1,013 | |||||||||||
Pro forma net income | $ | 332 | $ | 1,346 | $ | 4,710 | $ | 1,519 | |||||||
Pro forma basic net income per common share | $ | 0.01 | $ | 0.03 | $ | 0.11 | $ | 0.03 | |||||||
Weighted average common shares outstanding | 43,471 | 44,480 | 44,188 | 45,140 | |||||||||||
Pro forma diluted net income per common share | $ | 0.01 | $ | 0.03 | $ | 0.10 | $ | 0.03 | |||||||
Weighted average common and common equivalent shares outstanding | 47,353 | 48,793 | 48,457 | 47,236 |
(1) | Potentially dilutive shares were excluded from the diluted loss per share calculation for the quarter ended December 31, 2004 and the years ended December 31, 2004 and January 2, 2004 as their effects would have been anti-dilutive to the loss incurred by the Company. |
(2) | The Company provides pro forma earnings results (which exclude amortization of intangible assets, non-cash compensation, income from discontinued operations 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. |
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Answerthink, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, 2004 | January 2, 2004 | |||||
(unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 39,895 | $ | 54,441 | ||
Accounts receivable and unbilled revenue, net | 27,878 | 24,877 | ||||
Prepaid expenses and other current assets | 3,459 | 4,260 | ||||
Total current assets | 71,232 | 83,578 | ||||
Marketable investments | 9,902 | 10,000 | ||||
Restricted cash | 3,000 | 3,000 | ||||
Property and equipment, net | 7,568 | 8,714 | ||||
Other assets | 3,245 | 3,211 | ||||
Goodwill, net | 33,786 | 26,720 | ||||
Total assets | $ | 128,733 | $ | 135,223 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 3,462 | $ | 3,793 | ||
Accrued expenses and other liabilities | 25,417 | 26,195 | ||||
Total current liabilities | 28,879 | 29,988 | ||||
Shareholders’ equity | 99,854 | 105,235 | ||||
Total liabilities and shareholders’ equity | $ | 128,733 | $ | 135,223 | ||
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Answerthink, Inc.
Supplemental Financial Data
(unaudited)
2004 | 2003 | |||||||||||
Q4 | Q3 | Q4 | ||||||||||
Revenue Breakdown by Group: | ||||||||||||
(in thousands) | ||||||||||||
Business Applications | $ | 12,327 | $ | 15,362 | $ | 13,589 | ||||||
Business Intelligence | $ | 7,259 | $ | 7,634 | $ | 8,612 | ||||||
Business Transformation | $ | 8,240 | $ | 8,361 | $ | 5,470 | ||||||
The Hackett Group | $ | 5,852 | $ | 5,774 | $ | 3,516 | ||||||
Total revenues | $ | 33,678 | $ | 37,131 | $ | 31,187 | ||||||
Revenue Concentration: | ||||||||||||
(% of total revenues) | ||||||||||||
Top customer | 5 | % | 6 | % | 7 | % | ||||||
Top 5 customers | 23 | % | 18 | % | 25 | % | ||||||
Top 10 customers | 36 | % | 29 | % | 37 | % | ||||||
Key Metrics and Other Financial Data: | ||||||||||||
Consultant utilization rate | 61 | % | 67 | % | 69 | % | ||||||
Gross billing rate per hour | $ | 181 | $ | 174 | $ | 175 | ||||||
Net billing rate per hour | $ | 163 | $ | 156 | $ | 156 | ||||||
Consultant headcount | 550 | 600 | 483 | |||||||||
Total headcount | 717 | 768 | 618 | |||||||||
Days sales outstanding (DSO) | 76 | 79 | 73 | |||||||||
Cash provided by (used in) operating activities (in thousands) | $ | 4,283 | $ | (1,225 | ) | $ | 2,712 | |||||
Depreciation and amortization(in thousands) | $ | 1,467 | $ | 1,324 | $ | 1,295 | ||||||
Share Repurchase Program: | ||||||||||||
Shares purchased since inception(in thousands) | 5,527 | 4,959 | 3,550 | |||||||||
Cost of shares repurchased since inception(in thousands) | $ | 18,178 | $ | 15,857 | $ | 7,686 | ||||||
Average per share cost of shares purchased since inception | $ | 3.29 | $ | 3.20 | $ | 2.16 | ||||||
Remaining authorization(in thousands) | $ | 6,822 | $ | 4,143 | $ | 2,314 |