August 6, 2013

The Hackett Group Announces Second Quarter 2013 Results

  • Q2 2013 revenue of $59.0 million and pro forma EPS of $0.13 cents, exceed guidance
  • Hackett Group announces it intends to repurchase $35.75 million of stock through tender offer

MIAMI, FL - August 6, 2013 - The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic advisory and business transformation consulting firm, today announced its financial results for the second quarter of 2013, which ended June 28, 2013.

Second quarter 2013 revenue was $59.0 million, up 8% sequentially and 2% from the same period in 2012. Pro forma diluted earnings per share were $0.13, up 18% when compared to $0.11 for the same period in 2012. 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 $0.09 for the three months ended June 28, 2013, as compared to $0.12 in the same period in 2012. Excluding the impact of the accounting for deferred taxes in 2012, GAAP diluted earnings per share would have been $0.08 for the three months ended June 29, 2012.

The Company also announced that it intends to launch a modified "Dutch auction" tender offer to purchase up to $5.5 million in shares of its common stock, at a price ranging from $5.75 to $6.50. The tender offer would allow the Company to repurchase approximately 17% of its outstanding common shares at the high-end of the pricing range. The Company intends to pay for the share repurchase from the expansion of its credit facility.

"The strong US demand for our services allowed us to exceed both revenue and pro forma EPS guidance," stated Ted A. Fernandez, Chairman & CEO of The Hackett Group, Inc. "I am also pleased to see that our operating execution and our sound balance sheet provide us with the opportunity to launch a $35.75 million tender offer that enables us to return capital to shareholders while maintaining the flexibility to continue to pursue our growth initiatives."

At the end of the second quarter of 2013, the Company's cash balances were $11.3 million. During the quarter the Company paid down $5.5 million of its credit facility, leaving a $15.0 million balance at quarter end. Additionally, during the second quarter of 2013, cash was utilized to repurchase 124 thousand shares of its common stock at an average cost of $4.80 per share, for a total of $594 thousand. The Company's remaining repurchase authorization at the end of the second quarter of 2013 was $5.0 million.

Based on the current economic outlook, the Company estimates total revenue for the third quarter of 2013 to be in the range of $57.0 million to $59.0 million, and estimates pro forma diluted earnings per share to be in the range of $0.11 to $0.13.

Other Highlights

REL 1000 Working Capital Research - New research from REL Consultancy, a division of The Hackett Group, and CFO Magazine found that the ability of companies to generate cash from operations deteriorated in 2012, as the opportunity for working capital improvement at 1,000 of the largest U.S. public companies rose dramatically, topping $1 trillion for the first time.

The research, which examines the ability of companies to collect from customers, manage inventory, and pay suppliers, found that as revenue grew by 5% in 2012, profitability -- as measured by EBIT margin decreased. At the same time, working capital levels increased by 6%, to levels 25% higher than three years ago. Actual Days Working Capital remained flat, however cash conversion efficiency deteriorated for the second year in a row, indicating that companies are taking longer to convert sales into cash. In addition, free cash flow, which is a key indicator of the health of corporate cash flows and represents the cash companies are able to generate after laying out money to maintain or expand their asset base, fell by 14% year over year, indicating poor cash flow management.

Finance Key Issues Research - New Finance Key Issues research from The Hackett Group found that despite continued cuts in staffing and budgets this year, finance organizations are compelled to respond to the challenges and opportunities presented by the new "borderless business environment". The new study details how finance leaders are forging ahead with high-value analytics and business partnering programs while continuing to work on reducing operational costs.

HR Key Issues Research - New HR Key Issues research from The Hackett Group found that in the face of significant staff and budget reductions, HR executives face continuing pressure and new challenges in 2013, driven in part by the new "borderless business environment." According to The Hackett Group's research, leaders are focusing on several HR strategy issues for 2013: process improvement, including cost reduction and standardization of processes, data, technology and organizational culture; improving the effectiveness of talent management; obtaining more value from data to enable better decisions; and expanding the use of technology.

Best Practices Conference - Over 225 senior-level executives from the world's most respected brands attended The Hackett Group's 2013 North American Best Practices Conference, "Borderless Business: Integrating the Enterprise for Sustainable Success," in Miami on May 20-22. The conference focused on how companies are addressing the opportunities and challenges of today's global economy. This year's best practices conference brought together speakers from 17 of the world's most successful companies, including CEOs, CFOs, CIOs, and leaders in procurement, human resources, and global business services from: Becton, Dickinson and Company; Citigroup; Coca Cola Refreshments USA; Cytec Industries; FedEx; Fidelity Investments; General Electric; General Mills; Hertz; Kimberly-Clark; Kronos; Lennox International; Meritor; MetLife; Office Depot; SAP AG; and TE Connectivity.

On Tuesday, August 6, 2013, senior management will discuss second quarter results in a conference call at 5:00 P.M. ET.

The number for the conference call is (800) 779-3138, [Passcode: Second 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, August 6, 2013 and will run through 5:00 P.M. ET on Tuesday, August 20, 2013. To access the rebroadcast, please dial (800) 925-0562. For International callers, please dial (203) 369-3629.

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 6, 2013 and will run through 5:00 P.M. ET on Tuesday, August 20, 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.

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.