Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 05, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | HACKETT GROUP, INC. | |
Entity Central Index Key | 1,057,379 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-29 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 29,219,989 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 30, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 17,050 | $ 19,710 |
Accounts receivable and unbilled revenue, net of allowance of $2,249 and $2,574 at March 31, 2017 and December 30, 2016, respectively | 49,906 | 47,399 |
Prepaid expenses and other current assets | 2,631 | 1,704 |
Total current assets | 69,587 | 68,813 |
Property and equipment, net | 15,776 | 14,774 |
Other assets | 2,841 | 3,336 |
Goodwill, net | 72,553 | 72,376 |
Total assets | 160,757 | 159,299 |
Current liabilities: | ||
Accounts payable | 11,655 | 9,089 |
Accrued expenses and other liabilities | 34,153 | 46,725 |
Total current liabilities | 45,808 | 55,814 |
Long-term deferred tax liability, net | 9,923 | 10,216 |
Long-term debt | 9,000 | 7,000 |
Total liabilities | 64,731 | 73,030 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Preferred stock, $.001 par value, 1,250,000 shares authorized; none issued and outstanding | ||
Common stock, $.001 par value, 125,000,000 shares authorized; 55,446,676 and 54,785,193 shares issued at March 31, 2017 and December 30, 2016, respectively | 56 | 55 |
Additional paid-in capital | 279,737 | 277,100 |
Treasury stock, at cost, 26,256,909 and 26,197,981 shares March 31, 2017 and December 30, 2016, respectively | (123,944) | (122,756) |
Accumulated deficit | (48,707) | (56,581) |
Accumulated comprehensive loss | (11,116) | (11,549) |
Total shareholders' equity | 96,026 | 86,269 |
Total liabilities and shareholders' equity | $ 160,757 | $ 159,299 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 30, 2016 |
Consolidated Balance Sheets [Abstract] | ||
Accounts receivable and unbilled revenue, allowance | $ 2,249 | $ 2,574 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,250,000 | 1,250,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 55,446,676 | 54,785,193 |
Treasury stock, at cost, shares | 26,256,909 | 26,197,981 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Revenue: | ||
Revenue before reimbursements | $ 65,069 | $ 61,973 |
Reimbursements | 6,360 | 6,805 |
Total revenue | 71,429 | 68,778 |
Cost of service: | ||
Personnel costs before reimbursable expenses (includes $1,442 and $1,315 of stock compensation expense in the quarters ended March 31, 2017 and April 1, 2016, respectively) | 41,594 | 39,666 |
Reimbursable expenses | 6,360 | 6,805 |
Total cost of service | 47,954 | 46,471 |
Selling, general and administrative costs (includes $659 and $597 of stock compensation expense in the quarters ended March 31, 2017 and April 1, 2016, respectively) | 15,511 | 15,067 |
Total costs and operating expenses | 63,465 | 61,538 |
Income from operations | 7,964 | 7,240 |
Other expense: | ||
Interest expense | (90) | (41) |
Income from operations before income taxes | 7,874 | 7,199 |
Income tax expense | 2,817 | |
Net income | $ 7,874 | $ 4,382 |
Basic net income per common share: | ||
Income per common share from operations | $ 0.27 | $ 0.15 |
Weighted average common shares outstanding | 28,867,950 | 29,889,761 |
Diluted net income per common share: | ||
Income per common share from operations | $ 0.24 | $ 0.13 |
Weighted average common and common equivalent shares outstanding | 32,292,414 | 33,353,187 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share based compensation | $ 2,100 | $ 1,912 |
Cost of Sales [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share based compensation | 1,442 | 1,315 |
Selling General and Administrative [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share based compensation | $ 659 | $ 597 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Consolidated Statements of Comprehensive Income [Abstract] | ||
Net income | $ 7,874 | $ 4,382 |
Foreign currency translation adjustment | 433 | (687) |
Total comprehensive income | $ 8,307 | $ 3,695 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 7,874 | $ 4,382 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 639 | 637 |
Amortization expense | 386 | 275 |
Amortization of debt issuance costs | 23 | 25 |
Non-cash stock compensation expense | 2,100 | 1,912 |
Provision (reversal) for doubtful accounts | 111 | (36) |
Gain (loss) on foreign currency translation | 173 | (250) |
Release of valuation allowance | 1,469 | 2,743 |
Changes in assets and liabilities: | ||
Increase in accounts receivable and unbilled revenue | (2,515) | (4,746) |
Increase in prepaid expenses and other assets | (842) | (415) |
Increase in accounts payable | 2,565 | 2,497 |
Decrease in accrued expenses and other liabilities | (5,620) | (4,118) |
Increase (decrease) in income tax payable | (1,487) | (2,370) |
Net cash provided by operating activities | 4,876 | 536 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,634) | (487) |
Net cash used in investing activities | (1,634) | (487) |
Cash flows from financing activities: | ||
Proceeds from borrowings | 8,000 | 5,000 |
Repayment of borrowings | (6,000) | (5,000) |
Dividends paid | (4,023) | (3,199) |
Exercise of stock options | 200 | |
Repurchases of common stock | (4,071) | (7,693) |
Net cash used in financing activities | (5,894) | (10,892) |
Effect of exchange rate on cash | (8) | (11) |
Net decrease in cash and cash equivalents | (2,660) | (10,854) |
Cash at beginning of period | 19,710 | 23,503 |
Cash at end of period | 17,050 | 12,649 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 7 | 2,399 |
Cash paid for interest | $ 69 | $ 13 |
Basis Of Presentation And Gener
Basis Of Presentation And General Information | 3 Months Ended |
Mar. 31, 2017 | |
Basis Of Presentation And General Information [Abstract] | |
Basis Of Presentation And General Information | 1. Basis of Presentation and General Information Basis of Presentation The accompanying consolidated financial statements of The Hackett Group , Inc. (“Hackett” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s accounts and those of its wholly-owned subsidiaries which the Company is required to consolidate. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 30, 2016, included in the Annual Report on Form 10-K filed by the Company with the SEC. The consolidated results of operations for the quarter ended March 31, 2017, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Fair Value The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of March 31, 2017 and December 30, 2016, the carrying amount of each financial instrument approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments. The Company uses significant other observable market data or assumptions (Level 2 inputs as defined in accounting guidance) that it believes market participants would use in pricing debt. The fair value of the debt approximated the carrying amount, using Level 2 inputs, due to the short-term variable interest rates based on market rates. Business Combinations The Company applies the provisions of ASC 805, Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, that may be up to 12 months from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2017 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method and early adoption is permitted, however not before December 15, 2016. The Company has not yet selected a transition method and is in the process of evaluating the effect this standard will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued guidance on leases which supersedes the current lease guidance. The core principle requires lessees to recognize the assets and liabilities that arise from nearly all leases on the balance sheet. Accounting applied by lessors will remain largely consistent with previous guidance. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements and related disclosures. In March 2016, the FASB issued guidance simplifying the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. Under the new standard, all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit on the statements of income. An excess income tax benefit arises when the tax deduction of a share-based award for income tax purposes exceeds the compensation cost recognized for financial reporting purposes and, a tax deficiency arises when the compensation cost exceeds the tax deduction. Under current GAAP, excess tax benefits are recognized as additional paid-in capital while tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or on the statements of income. Management adopted the guidance effective January 1, 2017. As a result of the adoption of this guidance, management made an accounting policy election to recognize the effect of forfeitures in compensation cost when they occur, which had an immaterial impact on results of operations and financial position and no impact on cash flows at adoption. In the first quarter of 2017, the Company recorded no income tax expense as a result of the adoption of the new guidance relating to the accounting on the vesting of share-based awards. Excluding the effect of the new guidance, the effective tax rate would have been 35.0% for certain federal, foreign and state taxes. Reclassifications Certain prior period amounts in the consolidated financial statements, and notes thereto, have been reclassified to conform to current period presentation. |
Net Income Per Common Share
Net Income Per Common Share | 3 Months Ended |
Mar. 31, 2017 | |
Net Income Per Common Share [Abstract] | |
Net Income Per Common Share | 2. Net Income per Common Share Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. With regard to common stock subject to vesting requirements and restricted stock units issued to the Company’s employees and non-employee members of its Board of Directors, the calculation includes only the vested portion of such stock and units. Dilutive net income per common share is computed by dividing net income by the weighted average number of common shares outstanding, increased by the assumed conversion of other potentially dilutive securities during the period. The following table reconciles basic and dilutive weighted average common shares: Quarter Ended March 31, April 1, 2017 2016 Basic weighted average common shares outstanding 28,867,950 29,889,761 Effect of dilutive securities: Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees 990,499 1,196,529 Common stock issuable upon the exercise of stock options and SARs 2,433,965 2,266,897 Dilutive weighted average common shares outstanding 32,292,414 33,353,187 Approximately 0.7 million and 0.9 million shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarters ended March 31, 2017 and April 1, 2016, respectively, as their inclusion would have had an anti-dilutive effect on diluted net income per common share. . |
Accounts Receivable And Unbille
Accounts Receivable And Unbilled Revenue, Net | 3 Months Ended |
Mar. 31, 2017 | |
Accounts Receivable And Unbilled Revenue, Net [Abstract] | |
Accounts Receivable And Unbilled Revenue, Net | 3. Accounts Receivable and Unbilled Revenue, Net Accounts receivable and unbilled revenue, net, consisted of the following (in thousands): March 31, December 30, 2017 2016 Accounts receivable $ 39,895 $ 39,335 Unbilled revenue 12,260 10,638 Allowance for doubtful accounts (2,249) (2,574) Accounts receivable and unbilled revenue, net $ 49,906 $ 47,399 Accounts receivable is net of uncollected advanced billings. Unbilled revenue includes recognized recoverable costs and accrued profits on contracts for which billings had not been presented to clie nts. |
Accrued Expenses And Other Liab
Accrued Expenses And Other Liabilities | 3 Months Ended |
Mar. 31, 2017 | |
Accrued Expenses And Other Liabilities [Abstract] | |
Accrued Expenses And Other Liabilities | 4. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): March 31, December 30, 2017 2016 Accrued compensation and benefits $ 7,939 $ 4,412 Accrued bonuses 1,493 13,038 Accrued dividend payable — 4,023 Deferred revenue 12,772 10,975 Accrued sales, use, franchise and VAT tax 3,914 3,791 Non-cash stock compensation accrual 2,769 4,225 Income tax payable 2,950 4,437 Other accrued expenses 2,316 1,824 Total accrued expenses and other liabilities $ 34,153 $ 46,725 |
Credit Facility
Credit Facility | 3 Months Ended |
Mar. 31, 2017 | |
Credit Facility [Abstract] | |
Credit Facility | 5 . Credit Facility The Company entered into a credit agreement with Bank of America, N.A. ("Bank of America"), pursuant to which Bank of America agreed to lend the Company up to $20.0 million pursuant to a revolving line of credit (the “Revolver”) and up to $47.0 million pursuant to a term loan (the “Term Loan”). The Company has fully utilized and repaid its Term Loan. On May 9, 2016, the Company amended and restated the credit agreement with Bank of America to: · Provide for up to an additional $25.0 million of borrowing under the Revolver for a total borrowing capacity of $45.0 million; and · Extend the maturity date on the Revolver to May 9, 2021 , five years from the date of this amendment of the Credit Agreement. The obligations of Hackett under the Revolver are guaranteed by active existing and future material U.S. subsidiaries of Hackett (the “U.S. Subsidiaries”), and are secured by substantially all of the existing and future property and assets of Hackett and the U.S. Subsidiaries, a 100% pledge of the capital stock of the U.S. Subsidiaries, and a 66% pledge of the capital stock of Hackett’s direct foreign subsidiaries (subject to certain exceptions). During the quarter ended March 31, 2017, the Company had net borrowings of $2.0 million under the Revolver and $9.0 million was outstanding as of March 31, 2017. The interest rates per annum applicable to borrowings under Revolver will be, at the Company’s option, equal to either a base rate or a LIBOR base rate, plus an applicable margin percentage. The applicable margin percentage is based on the consolidated leverage ratio, as defined in the Credit Agreement. As of March 31, 2017, the applicable margin percentage was 1.50% per annum based on the consolidated leverage ratio, in the case of LIBOR rate advances, and 0.75% per annum, in the case of base rate advances. The interest rate as of March 31, 2017, was 2.43% . The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage, adjusted fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions. As of March 31, 2017, the Company was in compliance with all covenants. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Stock Based Compensation [Abstract] | |
Stock Based Compensation | 6 . Stock Based Compensation During the quarter ended March 31, 2017, the Company issued 633,120 restricted stock units at a weighted average grant-date fair value of $ 16.67 per share. As of March 31, 2017, the Company had 1,770,770 restricted stock units outstanding at a weighted average grant-date fair value of $ 13.03 per share. As of March 31, 2017, $15.0 million of total restricted stock unit compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately 2.13 years. During the quarter ended March 31, 2017, 148,587 shares of common stock subject to vesting requirements were issued. These shares were part of the closing consideration and post-closing contingent consideration for the 2014 acquisition of Technolab. As of March 31, 2017, the Company had 348,745 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of $9.21 per share. As of March 31, 2017, $2.2 million of compensation expense related to common stock subject to vesting requirements had not been recognized and is expected to be recognized over a weighted average p eriod of approximately 1.4 years. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2017 | |
Shareholders' Equity [Abstract] | |
Shareholders' Equity | 7 . Shareholders’ Equity Stock Appreciation Rights (“SARs”) In 2012, the Company’s Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”) agreed to give up 50% of their equity incentive compensation awards under the 1998 Stock Option and Incentive Plan for the years 2012 through 2015 in exchange for 2.9 million SARs with an exercise price of $4.00 , only to be earned upon the achievement of 50% growth in pro forma earnings per share and 50% growth in pro forma EBITDA from a base year of 2011. The grants would have expired if neither target were achieved during a six -year term. In the first quarter of 2015, the outstanding SARs awards for the achievement of 50% growth in pro forma earnings per share vested with the Audit Committee’s approval of the Company’s 2014 financial statements. In the first quarter of 2016, the outstanding SARs awards for the Company’s achievement of over 50% growth of pro forma EBITDA vested with the Audit Committee’s approval of the Company’s 2015 financial statements . As of March 31, 2017, no SARs had been exercised. By the end of 2015, all non-cash stock compensation expense relating to the outstanding SARs had been expensed. Treasury Stock Under the Company’s share repurchase plan, the Company may buy back shares of its outstanding stock either on the open market or through privately negotiated transactions subject to market conditions and trading restrictions. During the quarter ended March 31, 2017, the Company repurchased 59 thousand shares of its common stock at an average price of $20.13 per share for a total cost of $1.2 million. As of March 31, 2017, the Company had $ 3.2 million available under its share repurchase plan authorization. During the quarter ended April 1, 2016, the Company repurchased approximately 307 thousand shares of its common stock at an average price of $13.85 per share for a total cost of approximately $4.3 million. The shares repurchased under the share repurchase plan during the quarter ended March 31, 2017, do not include 174 thousand shares which the Company bought back to satisfy employee net vesting obligations for a cost of $2.9 million. During the quarter ended April 1, 2016, the Company bought back 255 thousand shares at a cost of $3.4 million to satisfy employee net vesting obligations. On May 6, 2016, the Company’s Board of Directors approved the repurchase of 697 thousand shares of its common stock from the Company’s CEO, 732 thousand shares of its common stock from the Company’s COO, and 73 thousand shares of its common stock from the Company’s Chief Financial Officer (“CFO”) for a total of approximately 1.5 million shares at a purchase price of $14.77 per share. The transaction was approved by the Audit Committee of the Board of Directors which is comprised solely of independent directors and was effected as part of the Company’s share repurchase program. Following the transaction, Mr. Fernandez, Mr. Dungan and Mr. Ramirez remained the beneficial owners of 11.8% , 4.9% and 0.9% shares, respectively, of the outstanding common stock. Following the transaction, approximately $3.1 million remained available under the Company’s share repurchase program. One of the primary reasons for this transaction was to lower the Company’s weighted average shares outstanding which had increased by 11% from the first quarter of 2016 as a result of the vesting of the SARs and appreciation in share price. The repurchase reduced weighted average shares outstanding by approximately 4% and is $0.03 to $0.04 accretive on an annualized basis. Based the most recent SEC filings, including shares of Company common stock beneficially owned and shares that could be acquired upon the exercise of the SARs, Mr. Fernandez continues to be the single largest beneficial shareholder of the Company. In reviewing and approving the transaction, the independent directors of the Board considered, among other factors, the benefits to the Company’s stockholders of this transaction such as the fact that (i) the share repurchase transaction is expected to be accretive to earnings per share, and (ii) the transaction was a unique opportunity to repurchase a large block of shares in an orderly manner. The transaction was funded from borrowings under the Company’s Revolver which was amended on May 9, 2016 in order to provide an additional $25.0 million in borrowing capacity for an aggregate amount of up to $45.0 million from time to time . Dividend Program In 2016, the Company increased the annual dividend from $0.20 per share to $0.26 per share to be paid on a semi-annual basis which resulted in aggregate dividends of $4.0 million paid to shareholders of record on July 11, 2016 and December 22, 2016 , respectively. These dividends were paid from U.S. domestic sources and are accounted for as an increase to retained deficit. The dividend declared in December 2016 was paid in January 2017. During the quarter ended March 31, 2017, the Company increased its annual dividend to $0.30 per share to be paid on a semi-annual basis. |
Transactions With Related Parti
Transactions With Related Parties | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Transactions With Related Parties | 8 . Transactions with Related Parties During the quarter ended March 31, 2017, the Company bought back 59 thousand shares of its common stock from members of its Board of Directors for $1.2 million, or $20.13 per share. |
Litigation
Litigation | 3 Months Ended |
Mar. 31, 2017 | |
Litigation [Abstract] | |
Litigation | 9 . Litigation The Company is involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. |
Geographic And Group Informatio
Geographic And Group Information | 3 Months Ended |
Mar. 31, 2017 | |
Geographic And Group Information [Abstract] | |
Geographic And Group Information | 10 . Geographic and Group Information Revenue , which is primarily based on the count ry of the contracting entity was attributed to the following geographical areas (in thousands): Quarter Ended March 31, April 1, 2017 2016 Revenue: North America $ 58,620 $ 59,517 International (primarily European countries) 12,809 9,261 Total revenue $ 71,429 $ 68,778 Long-lived assets are attributable to the following geographic areas (in thousands): March 31, December 30, 2017 2016 Long-lived assets: North America $ 78,725 $ 78,200 International (primarily European countries) 12,445 12,286 Total long-lived assets $ 91,170 $ 90,486 As of March 31, 2017 and December 30, 2016, f oreign assets included $1 2.1 million and $11.9 million, respectively, of goodwill related to acquisitions . In the following table, the Hackett Group service group encompasses Benchmarking, Business Transformation, Executive Advisory and EPM and EPM Application Maintenance and Support groups. The ERP Solutions service group encompasses SAP ERP Implementation and SAP Maintenance groups (in thousands): Quarter Ended March 31, April 1, 2017 2016 The Hackett Group $ 60,249 $ 57,945 ERP Solutions 11,180 10,833 Total revenue $ 71,429 $ 68,778 |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Event [Abstract] | |
Subsequent Event | 11 . Subsequent Events Subsequent to the quarter ended March 31, 2017, the Company acquired the operations of Jibe Consulting, Inc . (“Jibe”), a U.S.- based Oracle E-Business Suite (“ EBS ”) and Oracle C loud Business A pplication implementation firm. The acquisition of Jibe enhances the Company’s Cloud Application capabilities and strongly complements its market leading Enterprise Performance Management (“EPM”) transformation and technology implementation group. Management’s purchase consideration was $5.4 million in cash and $3.6 million in shares of the Company’s common stock subject to vesting. In addition, the Sellers have the opportunity to earn an additional $11.0 million in contingent consideration in cash and stock based on the achievement of performance targets achieved over the next 18 months . The equity related to the contingent consideration will be subject to service vesting. The initial cash consideration was funded from borrowings under the Company’s Revolver . Subsequent to the quarter ended March 31, 2017, the Company also acquired the U.K.-based operations of A ecus Limited (“A ecus ”), a European O utsourcing A dvisory and R obotics P rocess A utomation (“RPA”) consulting firm. This acquisition strongly complements the global strategy and business transformation offerings of the Hackett Group. Management’s purchase consideration was £3.2 million in cash. In addition, the Sellers have the opportunity to earn an additional £3.0 million in contingent consideration in cash based on the achievement of performance targets achieved over the next 12 months . The closing purchase consideration was funded with the Company’s available funds. As a result of the short period between both of the acquisition dates and the date of the issuance of the Company’s first quarter consolidated financial statements, all of the information required to be disclosed by ASC 805 has not yet been completed. |
Basis Of Presentation And Gen19
Basis Of Presentation And General Information (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Basis Of Presentation And General Information [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements of The Hackett Group , Inc. (“Hackett” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s accounts and those of its wholly-owned subsidiaries which the Company is required to consolidate. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 30, 2016, included in the Annual Report on Form 10-K filed by the Company with the SEC. The consolidated results of operations for the quarter ended March 31, 2017, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Fair Value | Fair Value The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of March 31, 2017 and December 30, 2016, the carrying amount of each financial instrument approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments. The Company uses significant other observable market data or assumptions (Level 2 inputs as defined in accounting guidance) that it believes market participants would use in pricing debt. The fair value of the debt approximated the carrying amount, using Level 2 inputs, due to the short-term variable interest rates based on market rates. |
Business Combinations | Business Combinations The Company applies the provisions of ASC 805, Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, that may be up to 12 months from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2017 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method and early adoption is permitted, however not before December 15, 2016. The Company has not yet selected a transition method and is in the process of evaluating the effect this standard will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued guidance on leases which supersedes the current lease guidance. The core principle requires lessees to recognize the assets and liabilities that arise from nearly all leases on the balance sheet. Accounting applied by lessors will remain largely consistent with previous guidance. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements and related disclosures. In March 2016, the FASB issued guidance simplifying the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. Under the new standard, all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit on the statements of income. An excess income tax benefit arises when the tax deduction of a share-based award for income tax purposes exceeds the compensation cost recognized for financial reporting purposes and, a tax deficiency arises when the compensation cost exceeds the tax deduction. Under current GAAP, excess tax benefits are recognized as additional paid-in capital while tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or on the statements of income. Management adopted the guidance effective January 1, 2017. As a result of the adoption of this guidance, management made an accounting policy election to recognize the effect of forfeitures in compensation cost when they occur, which had an immaterial impact on results of operations and financial position and no impact on cash flows at adoption. |
Reclassifications | Reclassifications Certain prior period amounts in the consolidated financial statements, and notes thereto, have been reclassified to conform to current period presentation. |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Net Income Per Common Share [Abstract] | |
Basic And Diluted Weighted Average Shares | Quarter Ended March 31, April 1, 2017 2016 Basic weighted average common shares outstanding 28,867,950 29,889,761 Effect of dilutive securities: Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees 990,499 1,196,529 Common stock issuable upon the exercise of stock options and SARs 2,433,965 2,266,897 Dilutive weighted average common shares outstanding 32,292,414 33,353,187 |
Accounts Receivable And Unbil21
Accounts Receivable And Unbilled Revenue, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounts Receivable And Unbilled Revenue, Net [Abstract] | |
Accounts Receivable And Unbilled Revenue, Net | March 31, December 30, 2017 2016 Accounts receivable $ 39,895 $ 39,335 Unbilled revenue 12,260 10,638 Allowance for doubtful accounts (2,249) (2,574) Accounts receivable and unbilled revenue, net $ 49,906 $ 47,399 |
Accrued Expenses And Other Li22
Accrued Expenses And Other Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accrued Expenses And Other Liabilities [Abstract] | |
Components Of Accrued Expenses And Other Liabilities | March 31, December 30, 2017 2016 Accrued compensation and benefits $ 7,939 $ 4,412 Accrued bonuses 1,493 13,038 Accrued dividend payable — 4,023 Deferred revenue 12,772 10,975 Accrued sales, use, franchise and VAT tax 3,914 3,791 Non-cash stock compensation accrual 2,769 4,225 Income tax payable 2,950 4,437 Other accrued expenses 2,316 1,824 Total accrued expenses and other liabilities $ 34,153 $ 46,725 |
Geographic And Group Informat23
Geographic And Group Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Geographic And Group Information [Abstract] | |
Geographic Revenue | Quarter Ended March 31, April 1, 2017 2016 Revenue: North America $ 58,620 $ 59,517 International (primarily European countries) 12,809 9,261 Total revenue $ 71,429 $ 68,778 |
Long-Lived Assets Attributable To Geographic Area | March 31, December 30, 2017 2016 Long-lived assets: North America $ 78,725 $ 78,200 International (primarily European countries) 12,445 12,286 Total long-lived assets $ 91,170 $ 90,486 |
Revenue By Service Group | Quarter Ended March 31, April 1, 2017 2016 The Hackett Group $ 60,249 $ 57,945 ERP Solutions 11,180 10,833 Total revenue $ 71,429 $ 68,778 |
Basis Of Presentation And Gen24
Basis Of Presentation And General Information (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Basis Of Presentation And General Information [Abstract] | |
Effective tax rate | 35.00% |
Net Income Per Common Share (Na
Net Income Per Common Share (Narrative) (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Net Income Per Common Share [Abstract] | ||
Antidilutive common share equivalents | 0.7 | 0.9 |
Net Income Per Common Share (Ba
Net Income Per Common Share (Basic And Diluted Weighted Average Shares) (Details) - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Net Income Per Common Share [Abstract] | ||
Basic weighted average common shares outstanding | 28,867,950 | 29,889,761 |
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees | 990,499 | 1,196,529 |
Common stock issuable upon the exercise of stock options and SARs | 2,433,965 | 2,266,897 |
Diluted weighted average common shares outstanding | 32,292,414 | 33,353,187 |
Accounts Receivable And Unbil27
Accounts Receivable And Unbilled Revenue, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 30, 2016 |
Accounts Receivable And Unbilled Revenue, Net [Abstract] | ||
Accounts receivable | $ 39,895 | $ 39,335 |
Unbilled revenue | 12,260 | 10,638 |
Allowance for doubtful accounts | (2,249) | (2,574) |
Accounts receivable and unbilled revenue, net | $ 49,906 | $ 47,399 |
Accrued Expenses And Other Li28
Accrued Expenses And Other Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 30, 2016 |
Accrued Expenses And Other Liabilities [Abstract] | ||
Accrued compensation and benefits | $ 7,939 | $ 4,412 |
Accrued bonuses | 1,493 | 13,038 |
Accrued dividend payable | 4,023 | |
Deferred revenue | 12,772 | 10,975 |
Accrued sales, use, franchise and VAT tax | 3,914 | 3,791 |
Non-cash stock compensation accrual | 2,769 | 4,225 |
Income taxes payable | 2,950 | 4,437 |
Other accrued expenses | 2,316 | 1,824 |
Total accrued expenses and other liabilities | $ 34,153 | $ 46,725 |
Credit Facility (Details)
Credit Facility (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | May 09, 2016 | |
Revolving line of credit facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Borrowing capacity under credit facility | $ 20 | $ 45 |
Additional borrowing capacity | $ 25 | |
Maturity date | May 9, 2021 | |
Pledge of capital stock to U.S. subsidiaries | 100.00% | |
Pledge of capital stock to direct foreign subsidiaries | 66.00% | |
Additional amount drawn on loan | $ 2 | |
Credit facility amount outstanding | $ 9 | |
Interest rate | 2.43% | |
Term Loan [Member] | ||
Line of Credit Facility [Line Items] | ||
Borrowing capacity under credit facility | $ 47 | |
Term of debt | 5 years | |
London Interbank Offered Rate (LIBOR) [Member] | Revolving line of credit facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Margin percentage base rate | 1.50% | |
Base Rate [Member] | Revolving line of credit facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Margin percentage base rate | 0.75% |
Stock Based Compensation (Detai
Stock Based Compensation (Details) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Restricted Stock Units (RSUs) [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares granted | 633,120 |
Weighted average grant-date fair value | $ / shares | $ 16.67 |
Shares outstanding | 1,770,770 |
Nonvested weighted average grant-date fair value | $ / shares | $ 13.03 |
Compensation expense | $ | $ 15 |
Weighted average period | 2 years 1 month 17 days |
Common Stock Subject to Vesting Requirements [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares granted | 148,587 |
Shares outstanding | 348,745 |
Nonvested weighted average grant-date fair value | $ / shares | $ 9.21 |
Compensation expense | $ | $ 2.2 |
Weighted average period | 1 year 4 months 24 days |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 22, 2016 | Jul. 11, 2016 | May 06, 2016 | Mar. 31, 2017 | Apr. 01, 2016 | Dec. 28, 2012 | May 09, 2016 |
Equity, Class of Treasury Stock [Line Items] | |||||||
Equity incentive compensation awards given up | 50.00% | ||||||
Repurchase of common stock | 1,500,000 | ||||||
Purchase price per share | $ 14.77 | ||||||
Weighted average shares outstanding | 4.00% | 11.00% | |||||
Weighted average shares outstanding accretive on an annualized basis | $ 0.04 | $ 0.03 | |||||
Amount available under repurchase plan | $ 3.1 | $ 3.2 | |||||
Shares repurchased for employee net vesting obligations, shares | 174,000 | 255,000 | |||||
Shares repurchased for employee net vesting obligations, value | $ 2.9 | $ 3.4 | |||||
Dividend declared | $ 0.30 | ||||||
Dividend paid, per share | $ 0.26 | $ 0.20 | |||||
Dividend paid, cash value | $ 4 | $ 4 | |||||
Chief Executive Officer [Member] | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock | 697,000 | ||||||
Beneficial owners | 11.80% | ||||||
Chief Operating Officer [Member] | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock | 732,000 | ||||||
Beneficial owners | 4.90% | ||||||
Chief Financial Officer [Member] | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock | 73,000 | ||||||
Beneficial owners | 0.90% | ||||||
Stock Appreciation Rights (SARs) [Member] | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
SARs exchanged | 2,900,000 | ||||||
Exercise price | $ 4 | ||||||
Target achievement, pro forma Earnings per share | 50.00% | ||||||
Target achievement, pro forma EBITDA | 50.00% | ||||||
Target achievement, Term | 6 years | ||||||
SARs exercised | 0 | ||||||
Stock Repurchase A [Member] | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock | 59,000 | 307,000 | |||||
Purchase price per share | $ 20.13 | $ 13.85 | |||||
Total cost | $ 1.2 | $ 4.3 | |||||
Revolving line of credit facility [Member] | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Additional borrowing capacity | $ 25 | ||||||
Borrowing capacity under credit facility | 20 | $ 45 | |||||
Credit facility amount outstanding | $ 9 |
Transactions With Related Par32
Transactions With Related Parties (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | May 06, 2016 | Mar. 31, 2017 |
Related Party Transaction [Line Items] | ||
Repurchase of common stock | 1,500 | |
Purchase price per share | $ 14.77 | |
Director [Member] | ||
Related Party Transaction [Line Items] | ||
Repurchase of common stock | 59 | |
Total cost | $ 1.2 | |
Purchase price per share | $ 20.13 |
Geographic And Group Informat33
Geographic And Group Information (Narrative) (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 30, 2016 |
Geographic And Group Information [Abstract] | ||
Goodwill included in foreign assets | $ 12.1 | $ 11.9 |
Geographic And Group Informat34
Geographic And Group Information (Geographic Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 71,429 | $ 68,778 |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 58,620 | 59,517 |
International (Primarily European Countries) [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 12,809 | $ 9,261 |
Geographic And Group Informat35
Geographic And Group Information (Long-Lived Assets Attributable To Geographic Area) (Details) - USD ($) | Mar. 31, 2017 | Dec. 30, 2016 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 91,170,000 | $ 90,486,000 |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | 78,725,000 | 78,200,000 |
International (Primarily European Countries) [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 12,445,000 | $ 12,286,000 |
Geographic And Group Informat36
Geographic And Group Information (Revenue By Service Group) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Segment Reporting Information [Line Items] | ||
Total revenue | $ 71,429 | $ 68,778 |
The Hackett Group [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 60,249 | 57,945 |
ERP Solutions [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenue | $ 11,180 | $ 10,833 |
Subsequent Event (Details)
Subsequent Event (Details) - 1 months ended May 10, 2017 - Subsequent Event [Member] £ in Millions, shares in Millions, $ in Millions | GBP (£)shares | USD ($)shares | USD ($) |
Jibe Consulting, Inc [Member] | |||
Subsequent Event [Line Items] | |||
Purchase consideration | $ | $ 5.4 | ||
Shares issued for consideration | shares | 3.6 | 3.6 | |
Contingent consideration | $ | $ 11 | ||
AECUS Limited [Member] | |||
Subsequent Event [Line Items] | |||
Purchase consideration | £ | £ 3.2 | ||
Contingent consideration | £ | £ 3 |