The Hackett Group, Inc. (NASDAQ:HCKT), a global strategic
advisory firm, today announced its financial results for the second
quarter, which ended July 3, 2009.
Second quarter 2009 revenue was $34.6 million, a 29% decrease (a
27% decrease, adjusting for constant currency) from the same period
in 2008. Pro forma diluted earnings per share were $0.02 for the
second quarter of 2009, as compared to $0.08 in the same period in
2008. 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 $0.00 for the second
quarter of 2009, as compared to $0.10 in the same period in
2008.
At the end of the second quarter of 2009, the Company’s cash
balances were $24.2 million, including marketable investments and
restricted cash. During the second quarter of 2009, the Company
repurchased approximately 163 thousand shares of its common stock
at $2.12 per share, for a total cost of $346 thousand. As of the
end of the second quarter, approximately $4.5 million remained
available under the Company’s share repurchase program.
“Our second quarter results reflect the impact from the volatile
economic environment which our clients are experiencing across the
U.S. and International markets that we serve,” stated Ted A.
Fernandez, Chairman & CEO of The Hackett Group, Inc. “However,
as our Q3 guidance indicates, we now expect revenues to stabilize
as a result of improved client activity which should allow us to
improve our profitability during the balance of the year.”
Based on the current economic outlook, the Company estimates
total revenue for the third quarter of 2009 to be in the range of
$34.0 million to $36.0 million and estimates pro forma diluted
earnings per share to be in the range of $0.02 to $0.04.
Other Highlights
Fifth Annual European Best Practices Conference – Hackett
announced plans for its Fifth Annual European Best Practices
Conference in London October 15-16. The conference, entitled
“Survival of the Fittest: How World-Class Companies Weather a
Recession and Position for Recovery and Growth,” will feature
presentations by executives from more than a dozen leading European
companies, including: Rio Tinto, Rolls Royce, Shell International,
Novartis, BASF, and Bombardier.
Global Business Services Research – Hackett released research
detailing how companies are accelerating their evolution beyond
shared services to manage their finance, IT, HR, and procurement
operations under a new Global Business Services model. A Global
Business Services approach breaks down functional boundaries within
the back office, and nearly 45% of all companies in the Hackett
study now incorporate three or more functions in their shared
services operations, with some incorporating as many as five.
2009 Working Capital Analysis – REL’s 11th Annual Working
Capital research, a joint effort of REL and CFO Magazine, found
that the recession has made it dramatically harder for U.S.
companies to collect from customers and manage inventory, leaving
many with dangerously low levels of cash on hand. The research,
which examined 2008 working capital performance by the 1000 largest
public companies in the U.S., showed that strong working capital
performance in the first three quarters of 2008 masked a 15.6%
increase in working capital in Q4 2008 (compared to Q4 2007), one
of the sharpest declines in performance since REL began its
research.
G&A Service Delivery Strategy Research – Hackett issued
research examining how the current economic climate is forcing
companies to fundamentally redefine their G&A Service Delivery
Strategy to support new operating models, business strategies, and
more effectively realize economies of scale, scope, and skills.
Hackett’s research details potential cost reductions of up to
$234.0 million for a typical Global 1000 company with average
annual revenue of $26.4 billion, and describes how companies are
adapting their G&A strategies to successfully reconcile two
seemingly conflicting demands: establish a model that is both agile
and flexible, and achieve industry-leading cost, quality and cycle
time performance levels.
IT Outsourcing Research – Hackett issued research showing that
world-class IT organizations outsource a substantially larger
portion of their IT processes than peer group companies, including
close to half of all their technology infrastructure-related
processes. According to Hackett’s research, companies with
world-class IT organizations outsource 47% more of their technology
infrastructure and 48% more of their application management than
typical companies.
At 5:00 P.M. ET on Tuesday, August 11, 2009 the senior
management of The Hackett Group, Inc. will host a conference call
to discuss second quarter earnings results for the period ending
July 3, 2009.
The number for the conference call is (800) 857-9601, [Passcode:
Second Quarter, Leader: Ted A. Fernandez]. For International
callers, please dial (210) 234-8000.
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 11,
2009 and will run through 5:00 P.M. ET on Tuesday, August 25, 2009.
To access the rebroadcast, please dial (888) 568-0132. For
International callers, please dial (203) 369-3898.
In addition, The Hackett Group will also be webcasting this
conference call live through the StreetEvents.com service. To
participate, simply visit http://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 11, 2009
and will run through 5:00 P.M. ET on Tuesday, August 25, 2009. To
access the call, visit http://www.thehackettgroup.com or
http://www.streetevents.com.
About The Hackett Group, Inc.
The Hackett Group, Inc. (NASDAQ:HCKT), a global strategic
advisory firm, is a leader in best practice advisory, benchmarking,
and transformation consulting services, including shared services,
offshoring and outsourcing advice. Utilizing best practices and
implementation insights from more than 4,000 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 brand, The Hackett Group
offers working capital solutions focused on delivering significant
cash flow improvements. 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 worked with 2,700 major corporations and government
agencies, including 97% of the Dow Jones Industrials, 73% of the
Fortune 100, 73% of the DAX 30 and 50% of the FTSE 100.
Founded in 1991, The Hackett Group was acquired by Answerthink,
Inc. in 1997. Answerthink was renamed The Hackett Group, Inc. in
2008. The Hackett Group has global offices in the United States,
Europe and Asia/Pacific.
More information on The Hackett Group is available: by phone at
(770) 225-7300; by e-mail at info@thehackettgroup.com; or on the
Web at www.thehackettgroup.com.
Book of Numbers is a trademark of The Hackett Group.
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 practices 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 information technology industry, our ability to attract and
retain skilled employees, possible changes in collections of
accounts receivable, risks of competition, price and margin trends,
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
Six Months Ended July 3, 2009 June 27, 2008
July 3, 2009 June 27, 2008 Revenue: Revenue before
reimbursements $ 31,382 $ 44,653 $ 67,372 $ 83,921 Reimbursements
3,234 4,447 6,760 9,017 Total revenue 34,616 49,100
74,132 92,938 Costs and expenses: Cost of service: Personnel
costs before reimbursable expenses (includes $529 and $261 and
$1,089 and $658 of stock compensation expense in the quarters and
six months ended July 3, 2009 and June 27, 2008, respectively)
20,381 25,296 42,655 48,259 Reimbursable expenses 3,234
4,447 6,760 9,017
Total cost of service 23,615 29,743 49,415 57,276 Selling,
general and administrative costs (includes $218 and $839 and $324
and $1,387 of stock compensation expense in the quarters and six
months ended July 3, 2009 and June 27, 2008, respectively) 10,791
15,437 23,630 28,019 Total costs and operating
expenses 34,406 45,180 73,045 85,295 Income from
operations 210 3,920 1,087 7,643 Other income (expense): Interest
income 11 112 36 279 Loss on marketable investments (35 ) - (35 ) -
Income before income taxes 186 4,032 1,088 7,922 Income tax expense
26 23 89 130 Net income $ 160 $ 4,009 $ 999
$ 7,792 Basic net income per common share: Net income
per common share $ 0.00 $ 0.10 $ 0.03 $ 0.19 Weighted average
common shares outstanding 37,894 40,656 38,169 41,471
Diluted net income per common share: Net income per common share $
0.00 $ 0.10 $ 0.03 $ 0.18
Weighted average common and common
equivalent shares outstanding
38,070 41,751 38,387 42,317
Pro forma data (1): Income before income taxes $ 186 $ 4,032
$ 1,088 $ 7,922 Stock compensation expense 747 1,100 1,413 2,045
Amortization of intangible assets 172 191 332 388 Pro
forma income before income taxes 1,105 5,323 2,833 10,355 Pro forma
income tax expense 442 2,129 1,133 4,142 Pro forma
net income $ 663 $ 3,194 $ 1,700 $ 6,213 Pro
forma basic net income per common share $ 0.02 $ 0.08 $ 0.04 $ 0.15
Weighted average common shares outstanding 37,894 40,656 38,169
41,471 Pro forma diluted net income per common share $ 0.02
$ 0.08 $ 0.04 $ 0.15
Weighted average common and common
equivalent shares outstanding
38,070 41,751 38,387 42,317 (1)
The Company provides pro forma
earnings results (which exclude 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.
The Hackett Group, Inc. CONDENSED CONSOLIDATED
BALANCE SHEETS (in thousands) (unaudited)
July 3, 2009 January 2, 2009 ASSETS Current
assets: Cash and cash equivalents $ 22,516 $ 32,060 Marketable
investments 1,070 1,727 Accounts receivable and unbilled revenue,
net 21,829 25,481 Prepaid expenses and other current assets 3,556
3,021 Total current assets 48,971 62,289 Restricted cash 600
600 Property and equipment, net 6,276 5,767 Other assets 1,120
1,392 Goodwill, net 65,231 63,616 Total assets $ 122,198 $ 133,664
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable $ 2,569 $ 3,711 Accrued expenses and
other liabilities 21,977 34,277 Total current liabilities 24,546
37,988 Accrued expenses and other liabilities, non-current 1,200
1,759 Total liabilities 25,746 39,747 Shareholders' equity
96,452 93,917 Total liabilities and shareholders' equity $ 122,198
$ 133,664
The Hackett Group,
Inc. Supplemental Financial Data (unaudited)
Quarter Ended July 3, 2009 April 3,
2009 June 27, 2008 Revenue Breakdown by Group:
(in thousands) The Hackett Group: Benchmarking and Business
Transformation (2) $ 21,388 $ 23,784 $ 29,167 Executive Advisory
Programs (3) 3,208 3,549 4,130
Total The Hackett Group 24,596 27,333 33,297 Hackett
Technology Solutions (4) 10,020 12,183
15,803 Total Revenue $ 34,616 $ 39,516
$ 49,100
Revenue Concentration: (% of total
revenue) Top customer 7 % 8 % 4 % Top 5 customers 20 % 21 %
18 % Top 10 customers 31 % 32 % 29 %
Key Metrics
and Other Financial Data: The Hackett Group: The
Hackett Group annualized revenue per professional (in thousands) $
327 $ 357 $ 462
Technology Solutions: Technology
Solutions consultant utilization rate 60 % 61 % 73 % Technology
Solutions gross billing rate per hour $ 144 $ 156 $ 169
Total Company: Consultant headcount 507 532 548 Total
headcount 679 723 729 Days sales outstanding (DSO) 57 50 65 Cash
used in operating activities (in thousands) $ (1,337 ) $ (5,234 ) $
(1,556 ) Depreciation (in thousands) $ 525 $ 536 $ 508 Amortization
(in thousands) $ 172 $ 160 $ 191
Share Repurchase
Program: Shares purchased in the quarter (in thousands) 163
1,018 675 Cost of shares repurchased in the quarter (in thousands)
$ 346 $ 2,117 $ 2,959 Average price per share of shares purchased
in the quarter $ 2.12 $ 2.08 $ 4.39 Remaining authorization (in
thousands) $ 4,495 $ 4,841 $ 6,307 (2) Comparison of a
client's demand drivers, costs and practices to a peer group in
order to empirically identify and define an organization's ability
to improve performance at a process level and to identify and
compare business practices utilized by world-class performers.
Additionally, strategic consulting support that utilizes Hackett
best practice implementation content and tools to enable clients to
accelerate transformation to world-class performance. (3)
Annual or multi-year contracts
that provide clients with on-demand access to world-class
performance metrics, best practice repository, best practice
research forums and conferences, and advice.
(4)
Best Practice Implementation of
ERP Software, which is primarily Oracle and SAP, and business
performance management solutions, which is primarily EPM
Oracle.
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