HCKT - Earnings call transcript Q3 2021

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Operator

Welcome to the Hackett Group Third Quarter Earnings Conference Call. [Operator Instructions] Please be advised, the conference is being recorded. Hosting tonight’s call are Mr. Ted Fernandez, Chairman and CEO; and Mr. Rob Ramirez, Chief Financial Officer. Mr. begin. may you Ramirez,

Rob Ramirez

and Group’s for third everyone discuss us the Hackett quarter thank afternoon, joining you to Good results.

the Chairman Speaking here on Officer. wires CEO A Fernandez, over was Chief Time. at to and and of and the answer your press Rob the questions are Financial call Ramirez, Hackett Group today X:XX released Eastern myself, announcement Ted p.m.

www.thehackettgroup.com. release, of a the please visit website copy at For our

is discussed also contained place financial on any release this the in not data on of that will the We our page or call additional Relations statistical Investor website.

for would to estimates accurate, Before like our expected involve future purposes we They about a we and Securities Federal begin, expectations, that to statements of I question-and-answer guarantee and not turn may be of and risks, will uncertainties like future the comments predict, in it be results, Actual forward-looking in of vary. At the the not especially considered Ted. to point, may the These results the this conjunction session, particularly the in our These in current to statements factors statements Laws. projections following which risk statements which you relate COVID-XX. and performance. detailed in filings. would with assumptions should are may contained light that are making SEC only I difficult information, and remind forward-looking over be to be

Ted Fernandez

Thank and you, everyone call. Rob welcome earnings third our to quarter

to comment the cash well some will on turn the as I results, do, normally then to flow overview call I'll on over comments back comment we open on operating as outlook. with As the detailed it quarter. Rob

review comments, up we market our open after then it which related will We to Q&A. will strategy

guidance comments demand would continue to in engagement to who like our under it that the Consistent clearly last acknowledge I during is nonstop dedicated throughout continue a embrace revenues truly transformation health pro need truly million providers net rate client -- quarter. a services of work requirement forma of quarter and to digital and of support this our circumstances many a $X.XX, COVID-related us we activity as we to per recognized cases pandemic. have strongly since basis. continue competitive year, and to care that second on of of the remain It those to for rate related appears is reported and of share and digital quarterly tapering, organizations Although the unprecedented. is and Correspondingly, evident and afternoon, year-over-year earnings both above increased all with this the at the change $XX.X end up experience our innovation to difficult

the year. I Strategy the sequentially our which grown now Group, of well demand our are or practice up The resulted The with in practices. transformation. up of performance the -- U.S. year. throughout above the growth, strategy enabled all as both QX which compared a Without large to group last driven accelerated And nearly the SAP XX% strong our it's as quarter third demand analytics sequentially doubt, the in groups. deployment transformation business transformation, support nearly prepandemic pandemic all including the improvement we've cloud-enabled large accelerated when and QX, X% five for and X% quarters digitally sequentially. has special of across results COVID digital our consistent technologies the the improved Excluding demand revenues of continued of as Transformation U.S. revenue sequential the that, software reflecting our have Business EEA was nice was in sales results we and row, across of and that said, it's recovery sequential were by to levels. has our to Of up note software were ERP for sale strong note a has experiencing also been

We and The our fully U.S. digitize the and the growth. are of investments activity including prospects global and offerings made allow are our the in to Quantum our Leap, long-term drivers to state-of-the-art proprietary our Europe. Hackett platforms, have encouraged in we Transformation highly all and DTP, platform us in Platform, increasing important benchmarking IP Digital our digital of with or the our differentiate development expand of

and We workflow also digital and to strategy. process of digital relationships and We across important of these our are are mining new potential key continue add to strategy components providers our believe enterprise. automation explore to areas the growth technology all transformation

to the balance allowed and sheet program. operations cash to dividend increase strong and our our generate -- us ability has buyback buyback from side, flow On our

let balances comments We also and we outlook. With acquisitions in flow market me Rob? details additional to Rob results, strong comments. fund continuing the conditions to identify make invest operating on continue credit to facility comment strategy fully said, our business. have cash will and on ask cash and our on also available Rob's provide to I that while following

Rob Ramirez

Ted. you, Thank

financial results, typically of cover I activities conclude I'll following of related a the and of along with XXXX overview I will during call. cover an the with portion our the an our for topics third do, then XXXX. I'll during As key an overview cover our this I'll on discussion of flow quarter fourth statistics. the overview outlook cash of operating quarter, quarter

Group, and I Group International EPM regarding results will Analytics purposes SMBT; total of of financial Solutions call, this our the the company. Transformation our Business and comment Strategy EEA; and our For or or separately ERP Group,

the North our advisory services executive business of and includes practices. our offerings, Our programs our America benchmarking and results S&BT IP-as-a-Service group transformation

of Oracle, Our EEA the our solutions Solutions group results OneStream includes and practices. SAP America North

our includes results Europe. based the that Group resources our International in and of Our primarily are S&BT EEA

impact clients project or margin are through profitability. expenses addition, expenses our In note net reimbursable that to revenues associated passed to our primarily please travel-related all to excluding expenses. no have references revenues Reimbursable represent and

Given revenue trends. margin business of due amount focus revenues we pandemic, travel encourage and to to the investors growth the to on net limited assess

certain call our will non-GAAP believe measures, earlier information included to to measures release GAAP today, useful reference investors. non-GAAP today. which We in During filed provide we financial our reconciliations we of financial press

on comments results continuing today are my Additionally, operations. based from

For quarter when guidance of the third revenue is revenues of up to end year, prior XX% net compared which high XXXX, $XX.X to our million, range. our the above the increased

engagement We to when net on reimbursable the have the and XXXX an The quarter. Reimbursable COVID-XX, delivery to XXXX. X.X% reduced client throughout expenses is expense This the quarter when compare due in third prior ratio X% transition year. also increase QX a been it to significantly continue you was of to X.X% the as up see in model. revenues compared to XXXX to service required compared remote which pre-COVID

EEA on EEA basis million, prior of in when for prior the expected. our Our the revenues revenues our The XXXX revenues prior were quarter S&BT XX% transformation U.S. company to to compared demand Group same were of net International for operations, year, digital which company prior quarter Net quarter a X% year. to million, million, the third were were XX% $XX.X company total total XX% of as up reflecting in as practices. increase year-over-year of when growth revenues third $X.X the period third an the decrease to was XX% increase third represented initiatives. Group Total year-over-year X% revenues our XX% group of net increase the Net an continued year. $XX.X Solutions international when of for of a compared by revenues the the the quarter across driven net of of enterprise the compared our for compared Net for our year. in accounted of all

improving demand. is quarter third end increase of and the increased as pro of in gross $X.XX net of net GAAP previous up revenues is XX% is our year, quarter, commensurate count EBITDA XXXX, diluted in as gross of in in quarter year and the quarter the demand. million prior margin per the primarily to cash the to recurring our driven the in up in company up diluted earnings was quarter primarily sales by consultant quarter end total up diluted of the is as accounted partially for quarter by The million XX% the as year. with represents increased was was prior to forma year. company Pro in and compared net pro quarter. the of contributions revenues compared reimbursable third revenues to quarter prior quarter. pro or approximately a net by third XX% income from a of the of accruals $X.XX third revenues guidance a include per at compared XX.X% our the forma to with headcount third year. hiring XX.X% of the the the to of $X.X which quarter quarter of of or at or income resulting XX.X% increases $XX.X IP our or accruals were with share, when to income as year-over-year AMS quarter XX.X%, company from of demand. were as totaled net or to net quarter higher due compared deferred sales, The $XX.X share EEA XXXX. third receivable to revenues company revenues associated in of the increase diluted use excluding company's on in margins increased increase third as adjusted on SG&A third revenues. company company pro compared to by primarily the of practice revenues, increased year headcount of executive pro $XX.X million, $X.XX commissions the expenses, Pro due million which per net Total in in performance. X,XXX the incentive forma million the million third XX% net of in XX.X% quarter XX% company $XX.X revenues the was the Our and earnings when of expenses of in margins to share and multiyear the margin prior to net revenues third million forma $XX.X of head due year-over-year XXXX. International revenues gross subcontractors offset compared net cost the company up and benchmarks the previous share incremental for year-over-year commensurate the of revenues absolute revenues as $XX.X to incentive of previous in forma revenues increase This was pre-COVID of above the XX.X% compares of and XX.X% S&BT XXX total of result compared compared accrued million third primarily approximately at decreases to net headcount in XXXX. The end in Total dollar or were compared primarily XX% offset activities and was of increasing The in quarter were $X.XX Total third third share or third of XXXX $XX.X of third XX.X% on to quarter The totaled third on diluted forma cash increase compared per previous service, million the revenues. margins the in million Total improving XX.X%. net net operating subcontractors and pro balances as high $XX.X or The of revenues previous year. XX.X%. X,XXX prior end in partially increased XXXX Net by total earnings range. for was XX% the noncash offset advisory, compensation compared $X.X gross compensation was partially increased activity, per utilization quarter in third the forma at consultant as quarter million of groups, and end quarter the the in $X.X XX.X% which quarter net forma is year. activities increased accounts of increased the provided margin resulting primarily

the $XX the at the company's day the as quarter. XXXX. was outstanding days Our million DSO facility quarter during of at to sales end the days credit or previous third XX compared of quarter of remained XX end unused The

cost average of at of a for an quarter, of During the the total $XX.XX repurchased we approximately $X.X company's per XXX,XXX share stock shares million.

of Board Our the recent to of meeting, repurchase share company's of most quarterly its XXXX. December dividend of at and record authorization the on XX, per paid remaining $XX.X the Directors third the declared December on was At end XXXX, stock shareholders quarter million. XX, for $X.XX be

guidance I'd move I like seasonality fourth remind for to our business. Before everyone of the to the quarter, of

the compared holiday quarter taken Specifically, to historically in time quarter. increased when is the and days our will available that vacation X% decrease by third approximately billing the fourth

mentioned range although will comments, to of in uncertainty the economic current for net continues, the the be Ted estimates quarter of his suggest revenue $XX.X the in from pandemic million $XX.X fourth that As million. XXXX company's

to to forma practice $X.XX earnings in with total diluted to per year-over-year X% to expect fourth of range estimate the XXXX We the pro also all X XX%, $X.XX. of in revenues We be share up be areas up. quarter

to pro forma XX%. to approximately margin expect be revenues net XX% We on gross

expense forma $XX.X expect quarter to million. approximately SG&A We the pro and be for fourth interest

fourth be approximately expect net on revenues the forma range pro in to XX% We EBITDA XX%. quarter to of

it cash approximately be settling to expect in satisfy shares this in to like million XXXX. due require priorities We in outlook back for is weighted appreciation February reduce company result outstanding shares X and down stock approximately net of to net XXXX outstanding to the would tax which these balances and to the rates vesting expected repurchase of strategic rights, equity will associated available balances. the cash over and $XX $XX to At of turn of settlement activities market review appreciation obligations expire company's I by million months. to our stock with coming the primarily Ted average X% million point, and approximately The will related the and vesting will sequentially,

Ted Fernandez

Thank you, Rob.

and it share thoughts environment near opportunity As offers on the growth demand let and organization. our forward, we look long-term the me on our

influencing transformation for disruption, that demand also in means for created enterprise unprecedented accelerated innovation analytics digital created organizations remain it infrastructure, heightened new initiatives. these businesses accelerated change activities capabilities dramatically adopt pandemic is an are services. all automation technology demand pace, and transformation the compete mining Digital has digital at to process Although the to in in and awareness deliver fundamentally workflow an and way and digital resulted their competitive. and redefining applications cloud forcing This order

increase to well our case invest service our IP and value resources. we to services. return order to work-from-home should increase time. of in experienced In for increased our offerings attract model to bolster experience target in our the will end is This year brand and With to to that demand to engagement challenging we issue in have year as for of more new clients. resulting continue travel long-term efforts. QX client delivery IPS which across that license offerings, seen ability momentum emerging industry, growth for which levels. well sales marketing to address We our long partners also that a will said, our delivery amount will increasing us IP-led and delivery The business demand us This serve evolve, continue is retention to the revenues our us we increased as our our competition to the helps XXXX. and allow retain organization. talent IP platforms their our of This enhance permission required continued finish a very of unlike our believe to flexible and since more will selling desire profitability service resources throughout The of and development and model last and our positions include all has to

opportunities contract or XX with such in over have negotiations. launching to pilots proposals, formal continue We

capital best platforms. continuously. and strategically, we believe We continue capabilities our future will us transformation further also to offerings continue our focus digitized whenever should practices increasingly to new results. clients opportunities fully same, allow focused remain digital benefit the focus serve remotely, these Strategically, intellectual will to and on benchmarking unmatched and is and around our brand our IP our around -- build This to possible, should which and

global less the solution, to leverage initiatives track continue clients digital is we and allows the redefine our benchmarking over Leap, in platform this enhancements information through market. us with life platform client effort. It of the Specifically, to our will Software-as-a-Service benchmark significantly allows to also leadership effort. more Quantum there our comparable no IP respective transformation in believe their deliver We

related configuration and unique transformation us our drive solution implementation DTP and capabilities change. continue align to also platform enhance software to well to transformation proven us core digital design our iPass and allowed digital to IP help as transformational IP organization is digitize differentiate cloud practices our a to We our solutions as fully asset and offerings. further our

As have I Investor the XX-minute become these that demo both mentioned added Relations page platforms. our capabilities of to a on with can so we call, on our website last of familiar investors more

Lastly, we the that even scale acquisitions and strategically client grow capability scope, with IP and that to we look accelerate we offerings continue our believe have our base to growth. the and our we for which and alliances business, add leverage can though

As challenges, my and comments. for our close to light safe asking tireless people, and stay to which especially and our by thank focused associates clients on always we highly them urge of encounter. let our always, efforts their may the them short-term Those remain in me conclude

to let our of me turn and our us over Operator? Let section call. to Q&A on move then operator, it the

Operator

from Martin Partners. comes first Roth from Capital [Operator instructions] Jeff Our question

Jeff Martin

XXXX in from advance continue the dive It you of sight they to I like the be Are some sounds benefit what mature you relationships? in here. of of line hope you're these doing well. have service. Ted, for to I -- IP do wanted could into the

Ted Fernandez

as first our believe results. on we should them impact we yes, our started when brought future we the do. and client meaningful of answer The And said is in that that, to be we

Jeff Martin

year Great. we growth of rate, that net we kind terms growth are Or how X% of then be should And sustainable? at growth in thinking the revenue exit net Okay. XX% thinking as double-digit XXXX revenue growth? in still double-digit Is you organic range? about to

Ted Fernandez

always X% Well, XX% used reference. to we've the

I Probably environment I look a allow end when with to that. that that fully over that information rate that that. and towards business, high believe is the business stay range of the meaningful we should was, we're share operate demand We in Oracle the could most think exclude us we of growth compounded annual our we that impact our X that towards years our at on-prem high back again, last of believe the provide. the we end

So that's what we're targeting.

Jeff Martin

factors I think then And forma on come wanted million. to was outperformance I to pro the quarter $X.XX EPS or touch in primary to What relative outsized third a $XX were so of type in what $X.XX the Is that an of that size here, the in usually the quarter? EPS contributing consensus -- beat ahead? Okay. the or

Ted Fernandez

obviously a we When stronger -- look had slightly continued we we than at the expected. pace at it, it's stronger demand

performance So we group. strong the had pretty across

We amount had with the us help the continuing in part deals, want little see we an QX, you of to those higher in of term. beat past We're that's a activity of than anywhere had to we've if at a year. that, near in also but for one seller better pace saw not more the value-added SAP-related lack it, call

bit. a us little helped that So

Jeff Martin

I for cloud could is if with part prepared was then me you And you but Coast if your already the the this Great. Okay. in expansion there? don't curious business, call. missed provide update of gave East of in I the know your I one particularly remarks, strategy, terms last an first

Ted Fernandez

acquired Well, deferred we targeted, was decision. know, as ones the the one and any you that other one

an in for opportunity East Coast. look to continue the We

business the noting worth -- our performed very EPM it's strongly think I Oracle this quarter. that

East our mentioned acquisition, So quarter, also as in even the I picked pace across second has up without country, the including the Coast.

that the we had that group the sides -- not It So and to a if saw we reasonable value not you end quite that acquisitions, both is up the a look culturally if whether would we I or are urgency East that tell they Oracle we mean related does fit thought Coast was same. like the that. continuing aggressively not specifically can we to pursue Gap. transaction for addressing

high put make area let's if our culturally believe we fits, we're we're sure really expanding see expanding that to it's So growth. we we an scope it's -- something in like it, that of

to attempt acquire will it. We

Operator

no Mr. call will At now questions. to Fernandez. you. I show further back time, Thank this I over

Ted Fernandez

have you, that tonight. Thank had I operator. said it know we a couple of that trouble would analysts making they that

So Thank look in us will the forward we'll call, we and hope to join that earnings quarter you. quarter third report thank again next But and me when catching fiscal our up let participating time. everyone for you year. we fourth

Operator

Thank you. conference. does conclude today's That

at this you You may joining. disconnect time, for thank and

The Hackett Group, Inc. (HCKT) 13 Nov 212021 Q3 Earnings call transcript