February 19, 2013

The Hackett Group Announces Fourth Quarter 2012 Results

  • Q4 2012 revenue of $57.1 million, up 3% and exceeds high-end of guidance
  • Q4 2012 pro forma EPS of 11 cents, up 22% and at high-end of guidance
  • Fiscal 2012 revenue of $234.1 million, up 4% and pro forma EPS of $0.40, up 21%
  • In Q4 2012 the Company initiated and paid annual dividend of $0.10 per share

MIAMI, FL - February 19, 2013 - The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic advisory and business transformation consulting firm, today announced its financial results for the fourth quarter and fiscal year 2012, which ended December 28, 2012.

Fourth quarter 2012 revenue was $57.1 million, a 3% increase (4% on a constant currency basis) from the same period in 2011. Pro forma diluted earnings per share were $0.11 for the fourth quarter of 2012, as compared to $0.09 for the same period in 2011. Fiscal year 2012 revenue was $234.1 million, an increase of 4% (5% on a constant currency basis) from the previous fiscal year. Pro forma diluted net earnings per share for 2012 was $0.40, as compared to $0.33 in fiscal year 2011. Pro forma information is provided to enhance the understanding of the Company's financial performance and is reconciled to the Company's GAAP information in the accompanying tables.

GAAP diluted earnings per share was $0.21 for the fourth quarter of 2012, as compared to $0.23 in the same period in 2011. GAAP net income for the fourth quarter of 2012 and 2011 included a net tax benefit of $2.7 million, or $0.09 cents per diluted share, and $4.9 million, or $0.12 per dilutive share, respectively, due to the release of deferred tax valuation allowance. GAAP diluted earnings per share in fiscal 2012 was $0.50, as compared to $0.52 in the previous fiscal year. GAAP net income for 2012 and 2011 includes a net tax benefit of $0.5 million, or $0.01 per diluted share, and $4.5 million, or $0.11 per diluted share, respectively, due to the release of deferred tax valuation allowance.

At the end of the fourth quarter of 2012, the Company's cash balances were $17.6 million. During the fourth quarter, the Company announced and paid a $3.1 million dividend, and paid down $3.0 million of its credit facility, leaving a $25.0 million balance at quarter end. Subsequent to quarter end, the Company paid down an additional $4.5 million on the credit facility.

"We reported solid fourth quarter and fiscal year results in what continues to be a volatile environment for our clients," stated Ted A Fernandez, Chairman and CEO of the Hackett Group, Inc. "As we look back at the year, we are especially proud of our ability to return a significant amount of capital to our shareholders through a $55 million share repurchase tender offer and our recently initiated annual dividend which we declared and paid prior to year end. As we look forward, we continue to believe that our unique intellectual capital and expanding brand permission coupled with our terrific talent bodes well for our future prospects."

Based on the current economic outlook, the Company estimates total revenue for the first quarter of 2013 to be in the range of $55.0 million to $57.0 million, and estimates pro forma diluted earnings per share to be in the range of $0.09 to $0.11. This guidance excludes the operating results of our Oracle ERP implementation practice which we agreed to sell on February 15, 2013.


Other Highlights

Annual Dividend Program – In December 2012, the Company announced that its Board of Directors has approved the initiation of an annual cash dividend program in the amount of $0.10 per share, which is intended to be paid annually. The first dividend was paid on December 28, 2012, to shareholders of record as of the close of business on December 20, 2012.

Enterprise Key Issues Research – A new Enterprise Key Issues study from The Hackett Group found that for 2013, the new "borderless" business environment will present the greatest opportunities to companies in IT, finance, HR and other business services areas, as companies strive to reduce costs and meet aggressive revenue projections. The research identified new opportunities for companies to roll out a flexible, virtual, data-enabled model for service delivery. Companies are also continuing to dramatically accelerate their use of Global Business Services (GBS) operations, an evolution beyond shared services which integrates and consolidates multiple business functions.

World-Class HR Profile – New Book of Numbers™ research from The Hackett Group found that world-class HR organizations operate at 27% lower cost per employee than typical companies and also utilize 24% fewer staff, while still achieving higher effectiveness. The Hackett Group's research detailed three important elements of HR strategy that drive operational excellence at world-class HR organizations: an emphasis on enhancing HR's operational excellence and helping the company achieve its strategic goals; a systematic integrated approach to talent management; and an ability to create strong, strategic working relationships with the business.

Year-End Gamesmanship Research – REL, a division of The Hackett Group, issued research detailing how many large U.S. companies continue to try to "game the system" at year-end, artificially improving their balance sheets by manipulating receivables, payables, and inventory. The study found that their efforts do have a positive impact in the fourth quarter. However, these companies pay a harsh price in the first quarter, when working capital bounces back to even worse levels than before.

Cash Flow Forecasting Study Launch – REL Consulting, a division of The Hackett Group, launched a new performance study designed to help companies compare their cash forecasting practices with top performers. Forecasting cash positions and cash needs continues to be an issue for most organizations. Given the current volatility and uncertainty in the markets, it becomes all the more important for companies to forecast their cash requirements as accurately as possible. By participating in REL's newly-launched Operating Cash Flow Forecasting study, companies can find out how their performance in forecasting operating cash flow compares with other organizations.


On Tuesday, February 19, 2013, senior management will discuss fourth quarter results in a conference call at 5:00 P.M. ET.

The number for the conference call is (800) 779-3138, [Passcode: Fourth Quarter, Leader: Ted A. Fernandez]. For International callers, please dial (517) 308-9381.

Please dial in at least 5-10 minutes prior to start time. If you are unable to participate on the conference call, a rebroadcast will be available beginning at 8:00 P.M. ET on Tuesday, February 19, 2013 and will run through 5:00 P.M. ET on Tuesday, March 5, 2013. To access the rebroadcast, please dial (800) 937-2485. For International callers, please dial (203) 369-3858.

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, February 19, 2013 and will run through 5:00 P.M. ET on Tuesday, March 5, 2013. To access the replay, visit http://www.thehackettgroup.com or http://www.streetevents.com.


Documents


About The Hackett Group, Inc.

The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices implementation firm to global companies. Services include business transformation, enterprise performance management, working capital management, and global business services. The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including its award-winning Oracle EPM and SAP practices.

The Hackett Group has completed more than 11,000 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of the DAX 30 and 52% of the FTSE 100. These studies drive its Best Practice Intelligence Center™ which includes the firm's benchmarking metrics, best practices repository, and best practice configuration guides and process flows, which enable The Hackett Group's clients and partners to achieve world-class performance.


Book of Numbers is a trademark of The Hackett Group.

This press release contains "forward-looking statements" and involves 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 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 and our ability to obtain debt financing through additional borrowings under an amendment to our existing credit facility, as well as other risks detailed in our reports filed with the SEC. 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.