Exhibit 99.1
Contact:
Robert A. Ramirez, CFO, 305-375-8005 orrramirez@thehackettgroup.com
The Hackett Group Announces Second Quarter 2012 Results
| | • | | Q2 2012 revenue of $61.3 million, at the high-end of guidance |
| | • | | Pro forma EPS of 11 cents, at mid-point of guidance, and up 22% from prior year |
| | • | | Foreign exchange fluctuations negatively impact earnings by 1.5 cents when compared to Q2 2011 |
MIAMI, FL – August 7 , 2012—The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic advisory and operations improvement consulting firm, today announced its financial results for the second quarter of 2012, which ended June 29, 2012.
Second quarter 2012 revenue was $61.3 million, a 4% increase (6% on a constant currency basis) from the same period in 2011. Pro forma diluted earnings per share were $0.11 for the second quarter of 2012, as compared to $0.09 for the same period in 2011. 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 2012, as compared to $0.10 from the same period in 2011. For comparison purposes, the second quarter of 2012 GAAP earnings per share were unfavorably impacted by a penny, when compared to the same quarter in 2011, as a result of the 2011 year end release of the deferred tax valuation allowance.
“The momentum that we built entering the second quarter was tempered only by the higher than expected impact of foreign exchange fluctuations on our earnings,” stated Ted A. Fernandez, Chairman and CEO of The Hackett Group. “Even though our third quarter results will be unfavorably impacted by our European Operations, we continue to believe our focus on Operating Excellence and Enterprise Performance Management is well aligned with the complexity of the global economy.”
At the end of the second quarter of 2012, the Company’s cash balances were $14.5 million. During the second quarter of 2012, the Company repaid $8.0 million of its new credit facility, leaving a $32.0 million balance at quarter end.
Based on the current economic outlook, the Company estimates total revenue for the third quarter of 2012 to be in the range of $56.0 million to $58.0 million, and estimates pro forma diluted earnings per share to be in the range of $0.09 to $0.11.
Other Highlights
Procurement Key Issues Study Results—The Hackett Group’s 2012 Procurement Key Issues Study found that procurement organizations can expect to see small budget and staff increases in 2012. The Hackett Group’s research also found that procurement organizations are heavily focused on addressing demand and pricing volatility that is the “New Normal.”
Working Capital Performance Study Results—REL Consulting, a division of The Hackett Group, issued results from a working capital performance study showing that despite a global business environment where companies can be harshly punished by Wall Street for even small missteps in predicting revenue or earnings, most large companies say they cannot correctly forecast operational basics like inventory, receivables, payables, and the underlying cash requirements to support them. According to the REL study, typical companies potentially miss quarterly working capital forecasts (including inventory, receivables, and payables) by up to 23%, which amounts to up to $600 million for a typical Global 1000 company (with $29 billion annual revenue).
Reshoring Research—The Hackett Group issued research showing some companies are reshoring a portion of their manufacturing capacity, and this trend is expected to reach a crucial tipping point over the next two to three years, as the total landed cost gap between U.S. and China continues to shrink, driven in part by rising wage inflation in China and continued productivity improvements in the U.S.
Answerthink SAP Go-Live at Exact Sciences—Answerthink, a division of The Hackett Group focused on providing and supporting SAP® solutions, announced that while leveraging SAP’s fast-start implementation approach, it has delivered a successful go-live implementation of EzLifeSciences™, a qualified SAP Business All-in-One partner solution for the life sciences industry, at Exact Sciences Corporation.
On Tuesday, August 7, 2012 the 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 7, 2012 and will run through 5:00 P.M. ET on Tuesday, August 21, 2012. To access the rebroadcast, please dial (800) 324-4693. For International callers, please dial (203) 369-3245.
In addition, The Hackett Group will also be webcasting this conference call live through the StreetEvents.com service. To participate, simply visithttp://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 7, 2012 and will run through 5:00 P.M. ET on Tuesday, August 21, 2012. To access the replay, visithttp://www.thehackettgroup.com orhttp://www.streetevents.com.
About The Hackett Group
The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic business advisory and operations improvement consulting firm, is a leader in best practice advisory, benchmarking, and transformation consulting services including strategy and operations, working capital management, shared services and globalization advice. Utilizing best practices and implementation insights from more than 7,000 benchmarking engagements, executives use The Hackett Group’s empirically-based approach to quickly define and implement initiatives to enable world-class performance. Through its REL group, The Hackett Group offers working capital solutions focused on delivering significant cash flow improvements. Through its Archstone Consulting group, The Hackett Group offers Strategy & Operations consulting services in the Consumer and Industrial Products, Pharmaceutical, Manufacturing and Financial Services industry sectors. 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 completed benchmark studies with over 3,000 major corporations and government agencies, including 97% of the Dow Jones Industrials, 86% of the Fortune 100, 90% of the DAX 30 and 48% of the FTSE 100.
More information on The Hackett Group is available: by phone at (770) 225-7300; by e-mail atinfo@thehackettgroup.com.
# # #
EzLifeSciences is a trademark of The Hackett Group.
SAP and all SAP logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries.
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 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.
Page 4 of 6 - The Hackett Group, Inc. Announces Second Quarter Results
The Hackett Group, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | Six Months Ended | |
| | | June 29, 2012 | | | July 1, 2011 | | | June 29, 2012 | | | July 1, 2011 | |
Revenue: | | | | | | | | | | | | | | | | |
Revenue before reimbursements | | $ | 54,242 | | | $ | 52,382 | | | $ | 105,832 | | | $ | 99,339 | |
Reimbursements | | | 7,042 | | | | 6,427 | | | | 12,470 | | | | 12,332 | |
| | | | | | | | | | | | | | | | |
Total revenue | | | 61,284 | | | | 58,809 | | | | 118,302 | | | | 111,671 | |
| | | | |
Costs and expenses: | | | | | | | | | | | | | | | | |
Cost of service: | | | | | | | | | | | | | | | | |
Personnel costs before reimbursable expenses
(includes $762 and $812 and $1,522 and $1,564 of stock compensation expense in the quarters and six months ended June 29, 2012 and July 1, 2011, respectively) | | | 34,629 | | | | 32,815 | | | | 67,778 | | | | 63,075 | |
Reimbursable expenses | | | 7,042 | | | | 6,427 | | | | 12,470 | | | | 12,332 | |
| | | | | | | | | | | | | | | | |
Total cost of service | | | 41,671 | | | | 39,242 | | | | 80,248 | | | | 75,407 | |
Selling, general and administrative costs
(includes $679 and $489 and $1,186 and $663 of stock compensation expense in the quarters and six months ended June 29, 2012 and July 1, 2011, respectively) | | | 15,123 | | | | 15,064 | | | | 29,905 | | | | 28,275 | |
| | | | | | | | | | | | | | | | |
Total costs and operating expenses | | | 56,794 | | | | 54,306 | | | | 110,153 | | | | 103,682 | |
| | | | | | | | | | | | | | | | |
Income from operations | | | 4,490 | | | | 4,503 | | | | 8,149 | | | | 7,989 | |
Other income (expense), net: | | | | | | | | | | | | | | | | |
Interest income | | | 8 | | | | 12 | | | | 17 | | | | 13 | |
Interest expense | | | (247 | ) | | | — | | | | (274 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 4,251 | | | | 4,515 | | | | 7,892 | | | | 8,002 | |
Income taxes | | | 406 | | | | 112 | | | | 514 | | | | 272 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 3,845 | | | $ | 4,403 | | | $ | 7,378 | | | $ | 7,730 | |
| | | | | | | | | | | | | | | | |
| | | | |
Basic net income per common share: | | | | | | | | | | | | | | | | |
Net income per common share | | $ | 0.13 | | | $ | 0.11 | | | $ | 0.22 | | | $ | 0.19 | |
Weighted average common shares outstanding | | | 29,290 | | | | 40,016 | | | | 33,907 | | | | 40,211 | |
| | | | |
Diluted net income per common share: | | | | | | | | | | | | | | | | |
Net income per common share | | $ | 0.12 | | | $ | 0.10 | | | $ | 0.21 | | | $ | 0.18 | |
Weighted average common and common equivalent shares outstanding | | | 31,509 | | | | 42,258 | | | | 35,724 | | | | 42,017 | |
| | | | |
Pro forma data (1): | | | | | | | | | | | | | | | | |
Income before income taxes | | $ | 4,251 | | | $ | 4,515 | | | $ | 7,892 | | | $ | 8,002 | |
Stock compensation expense | | | 1,441 | | | | 1,301 | | | | 2,708 | | | | 2,227 | |
Amortization of intangible assets | | | 137 | | | | 204 | | | | 274 | | | | 404 | |
| | | | | | | | | | | | | | | | |
Pro forma income before income taxes | | | 5,829 | | | | 6,020 | | | | 10,874 | | | | 10,633 | |
Pro forma income tax expense | | | 2,332 | | | | 2,408 | | | | 4,350 | | | | 4,253 | |
| | | | | | | | | | | | | | | | |
Pro forma net income | | $ | 3,497 | | | $ | 3,612 | | | $ | 6,524 | | | $ | 6,380 | |
| | | | | | | | | | | | | | | | |
| | | | |
Pro forma basic net income per common share | | $ | 0.12 | | | $ | 0.09 | | | $ | 0.19 | | | $ | 0.16 | |
Weighted average common shares outstanding | | | 29,290 | | | | 40,016 | | | | 33,907 | | | | 40,211 | |
| | | | |
Pro forma diluted net income per common share | | $ | 0.11 | | | $ | 0.09 | | | $ | 0.18 | | | $ | 0.15 | |
Weighted average common and common equivalent shares outstanding | | | 31,509 | | | | 42,258 | | | | 35,724 | | | | 42,017 | |
| (1) | The Company provides pro forma earnings results (which exclude the amortization of intangible assets and stock compensation expense, and include a normalized 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. |
Page 5 of 6 - The Hackett Group, Inc. Announces Second Quarter Results
The Hackett Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
| | | | | | | | |
| | | June 29, 2012 | | | December 30, 2011 | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 13,806 | | | $ | 32,936 | |
Accounts receivable and unbilled revenue, net | | | 37,078 | | | | 35,209 | |
Prepaid expenses and other current assets | | | 9,096 | | | | 9,319 | |
| | | | | | | | |
Total current assets | | | 59,980 | | | | 77,464 | |
| | |
Restricted cash | | | 683 | | | | 885 | |
Property and equipment, net | | | 12,671 | | | | 11,696 | |
Other assets | | | 1,910 | | | | 1,823 | |
Goodwill, net | | | 75,633 | | | | 75,558 | |
| | | | | | | | |
Total assets | | $ | 150,877 | | | $ | 167,426 | |
| | | | | | | | |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 6,713 | | | $ | 7,433 | |
Accrued expenses and other liabilities | | | 25,848 | | | | 28,018 | |
Current portion of long-term debt | | | 6,316 | | | | — | |
| | | | | | | | |
Total current liabilities | | | 38,877 | | | | 35,451 | |
Accrued expenses and other liabilities, non-current | | | 1,555 | | | | 1,727 | |
Long-term debt | | | 25,684 | | | | — | |
| | | | | | | | |
Total liabilities | | | 66,116 | | | | 37,178 | |
| | |
Shareholders’ equity | | | 84,761 | | | | 130,248 | |
| | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 150,877 | | | $ | 167,426 | |
| | | | | | | | |
Page 6 of 6 - The Hackett Group, Inc. Announces Second Quarter Results
The Hackett Group, Inc.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
| | | | | | | | | | | | |
| | | Quarter Ended | |
| | | June 29, 2012 | | | March 30, 2012 | | | July 1, 2011 | |
Revenue Breakdown by Group: | | | | | | | | | | | | |
(in thousands) | | | | | | | | | | | | |
The Hackett Group (2) | | $ | 50,104 | | | $ | 47,124 | | | $ | 46,790 | |
ERP Solutions (3) | | | 11,180 | | | | 9,894 | | | | 12,019 | |
| | | | | | | | | | | | |
Total revenue | | $ | 61,284 | | | $ | 57,018 | | | $ | 58,809 | |
| | | | | | | | | | | | |
| | | |
Revenue Concentration: | | | | | | | | | | | | |
(% of total revenue) | | | | | | | | | | | | |
Top customer | | | 5 | % | | | 5 | % | | | 3 | % |
Top 5 customers | | | 14 | % | | | 15 | % | | | 14 | % |
Top 10 customers | | | 23 | % | | | 26 | % | | | 25 | % |
| | | |
Key Metrics and Other Financial Data: | | | | | | | | | | | | |
| | | |
Total Company: | | | | | | | | | | | | |
Consultant headcount | | | 749 | | | | 730 | | | | 735 | |
Total headcount | | | 956 | | | | 933 | | | | 943 | |
Days sales outstanding (DSO) | | | 55 | | | | 56 | | | | 57 | |
Cash provided by (used in) operating activities (in thousands) | | $ | 10,109 | | | $ | (3,833 | ) | | $ | 6,879 | |
Depreciation (in thousands) | | $ | 491 | | | $ | 614 | | | $ | 465 | |
Amortization (in thousands) | | $ | 137 | | | $ | 137 | | | $ | 204 | |
| | | |
The Hackett Group (in thousands): | | | | | | | | | | | | |
The Hackett Group annualized revenue per professional (2) | | $ | 379 | | | $ | 374 | | | $ | 377 | |
| | | |
ERP Solutions: | | | | | | | | | | | | |
ERP Solutions consultant utilization rate (3) | | | 73 | % | | | 71 | % | | | 77 | % |
ERP Solutions gross billing rate per hour (3) | | $ | 140 | | | $ | 134 | | | $ | 143 | |
| | | |
Share Repurchase Plan (4): | | | | | | | | | | | | |
Shares purchased in the quarter (in thousands) | | | — | | | | — | | | | 830 | |
Cost of shares repurchased in the quarter (in thousands) | | $ | — | | | $ | — | | | $ | 3,631 | |
Average price per share of shares purchased in the quarter | | $ | — | | | $ | — | | | $ | 4.38 | |
Remaining authorization (in thousands) | | $ | 556 | | | $ | 556 | | | $ | 3,470 | |
| (2) | The Hackett Group encompasses Benchmarking, Business Transformation and Executive Advisory groups, and includes EPM Technologies. |
| (3) | Best Practice Implementation of ERP Software, which includes Oracle and SAP. |
| (4) | The Share Repurchase Plan information does not include 11.0 million shares purchased pursuant to the Dutch Tender Offer at $5.00 per share for a total of $55.0 million, excluding fees, during Q1 2012. |
