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The Hackett Group Announces Fourth Quarter 2012 Results

Stocks in this article: HCKT

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.

       
The Hackett Group, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended Twelve Months Ended

December 28, 2012

December 30, 2011

December 28, 2012

December 30, 2011

Revenue:
Revenue before reimbursements $ 51,147 $ 49,522 $ 209,278 $ 200,435
Reimbursements 5,990   5,989   24,782   24,682  
Total revenue 57,137 55,511 234,060 225,117
 
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses
(includes $789 and $518 and $2,998 and $2,847 of stock compensation expense in the quarters and twelve months ended December 28, 2012 and December 30, 2011, respectively) 32,782 30,607 133,974 126,421
Reimbursable expenses 5,990   5,989   24,782   24,682  
Total cost of service 38,772 36,596 158,756 151,103
 
Selling, general and administrative costs
(includes $664 and $586 and $2,524 and $1,758 of stock compensation expense in the quarters and twelve months ended December 28, 2012 and December 30, 2011, respectively) 14,158 14,174 58,686 56,773
Restructuring expense (benefit) 108   -   (211 ) -  
Total costs and operating expenses 53,038   50,770   217,231   207,876  
Income from operations 4,099 4,741 16,829 17,241
Other income (expense):
Interest income 1 9 20 33
Interest expense (160 ) -   (630 ) -  
Income before income taxes 3,940 4,750 16,219 17,274
Income tax expense 1,246 332 3,511 780
Release of valuation allowance (3,989 ) (5,275 ) (3,989 ) (5,275 )
Net income $ 6,683   $ 9,693   $ 16,697   $ 21,769  
 
Basic net income per common share:
Net income per common share $ 0.23 $ 0.25 $ 0.53 $ 0.55
Weighted average common shares outstanding 29,599 39,476 31,704 39,895
 
Diluted net income per common share:
Net income per common share $ 0.21 $ 0.23 $ 0.50 $ 0.52
Weighted average common and common equivalent shares outstanding 31,107 41,596 33,511 41,875
 
Pro forma data (1):
Income before income taxes $ 3,940 $ 4,750 $ 16,219 $ 17,274
Stock compensation expense 1,453 1,104 5,522 4,605
Restructuring expense (benefit) 108 - (211 ) -
Amortization of intangible assets 136   204   547   811  
Pro forma income before income taxes 5,637 6,058 22,077 22,690
Pro forma income tax expense 2,255   2,423   8,831   9,076  
Pro forma net income $ 3,382   $ 3,635   $ 13,246   $ 13,614  
 
Pro forma basic net income per common share $ 0.11 $ 0.09 $ 0.42 $ 0.34
Weighted average common shares outstanding 29,599 39,476 31,704 39,895
 
Pro forma diluted net income per common share $ 0.11 $ 0.09 $ 0.40 $ 0.33
Weighted average common and common equivalent shares outstanding 31,107 41,596 33,511 41,875
 
(1) The Company provides pro forma earnings results (which exclude the amortization of intangible assets, stock compensation expense and restructuring expense and benefit, 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.
 
   
The Hackett Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
  December 28, 2012 December 30, 2011
 
ASSETS
Current assets:
Cash and cash equivalents $ 16,906 $ 32,936
Accounts receivable and unbilled revenue, net 36,869 35,209
Deferred tax asset, net 4,741 6,975
Prepaid expenses and other current assets 2,335 2,344
Total current assets 60,851 77,464
 
Restricted cash 683 885
Property and equipment, net 12,859 11,696
Other assets 1,598 1,823
Goodwill, net 76,220 75,558
Non-current deferred tax asset, net 1,710 -
Total assets $ 153,921 $ 167,426
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,711 $ 7,433
Accrued expenses and other liabilities 26,484 28,018
Current portion of long-term debt 2,895 -
Total current liabilities 37,090 35,451
Long-term deferred tax liability, net - 1,727
Long-term debt 22,105 -
Total liabilities 59,195 37,178
 
Shareholders' equity 94,726 130,248
Total liabilities and shareholders' equity $ 153,921 $ 167,426
 
     
The Hackett Group, Inc.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
 
Quarter Ended
December 28, 2012 September 28, 2012 December 30, 2011
Revenue Breakdown by Group:
(in thousands)
The Hackett Group (2) $ 45,130 $ 45,429 $ 45,246
ERP Solutions (3)   12,007     13,192     10,265  
Total revenue $ 57,137   $ 58,621   $ 55,511  
 
Revenue Concentration:
(% of total revenue)
Top customer 3 % 3 % 5 %
Top 5 customers 13 % 11 % 16 %
Top 10 customers 21 % 20 % 26 %
 
 
Key Metrics and Other Financial Data:
 
Total Company:
Consultant headcount 747 756 713
Total headcount 947 962 914
Days sales outstanding (DSO) 59 57 58
Cash provided by operating activities ( in thousands) $ 9,219 $ 4,857 $ 16,945
Depreciation ( in thousands) $ 483 $ 492 $ 600
Amortization ( in thousands) $ 136 $ 136 $ 204
 
The Hackett Group (in thousands) :
The Hackett Group annualized revenue per professional (2) $ 342 $ 338 $ 353
 
ERP Solutions:
ERP Solutions consultant utilization rate (3) 69 % 76 % 65 %
ERP Solutions gross billing rate per hour (3) $ 147 $ 146 $ 139
 
Share Repurchase Plan (4) :
Shares purchased in the quarter ( in thousands) - - 561
Cost of shares repurchased in the quarter ( in thousands) $ - $ - $ 1,947
Average price per share of shares purchased in the quarter $ - $ - $ 3.47
Remaining authorization ( in thousands) $ 556 $ 556 $ 556
   
(2) The Hackett Group encompasses the Benchmarking, Business Transformation and Executive Advisory groups, and EPM Technologies.
(3) ERP Solutions encompasses 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.
 




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