May 2, 2006
Miami, FL - May 2, 2006 - Answerthink, Inc. (Nasdaq: ANSR), a strategic business advisory and technology consulting firm, today announced its financial results for the first quarter ended March 31, 2006.
First quarter revenue was $49.8 million, a 35% increase from the first quarter of 2005. Diluted loss per share was $0.13, compared to a diluted loss per share of $0.03 in the first quarter of 2005. The 2006 results included restructuring costs of $0.14 per diluted share, primarily related to the REL acquisition and the closure and consolidation of facilities and related exit costs. The 2005 results included restructuring costs of $0.03 per diluted share from the buyout of the New York lease obligation.
Pro forma diluted earnings per share were $0.04, compared to $0.01 in the first quarter of 2005. 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.
The Company's cash balances, including restricted cash and marketable investments, were $24.3 million at the end of the first quarter of 2006. During the quarter, the Company did not repurchase any shares of the Company's common stock. As of the end of the first quarter of 2006, $7.9 million remained available under the Company's share repurchase program authorization.
"We continue to see strong client demand for our empirical data and related best practice insight as we experienced solid growth across all of our service lines," said Ted A. Fernandez, Chairman and CEO of Answerthink. "Our increased focus and investment in our membership advisory programs was evident in our sales growth, but of greater importance is the broader impact it can have on our business model as we look forward."
Based on the current economic outlook, the Company estimates total revenues for the second quarter of 2006 to be in the range of $48.5 million to $51.5 million. The Company also estimates pro forma diluted earnings per share to be in the range of $0.05 to $0.07.
Procurement Staffing Research - New Procurement Book of Numbers research from Hackett found that world-class procurement executives build organizations that have a much more strategic staffing mix than typical companies, with 63% fewer clerical staff and 31% more professionals. While these world-class procurement organizations have fully-loaded wage rates that are 41% higher than typical companies, this staffing model allows these organizations to spend 20% less on operations than peers and have about half of the overall staff. World-class procurement organizations also drive much higher return on investment within procurement operations than typical companies and are more closely aligned with their companies' business goals.
Finance Research on DSO - Hackett issued select findings from its Finance Book of Numbers, showing that world-class finance executives get customers to pay their bills nearly 30 percent faster than typical companies. Hackett's analysis found that a typical $10 billion company can generate more than $35.8 million/year in bottom-line savings if they achieve world-class performance in this area by reducing Days Sales Outstanding (DSO).
Finance Outsourcing Survey Results - Hackett issued survey results that question the widespread attention and publicity paid to finance outsourcing. According to Hackett, companies are doing very little of it today, and onshore or offshore shared service centers remain the preferred options. Hackett's study found that companies today outsource only 4% of all finance processes, while they turn to onshore or offshore shared service centers 65% of the time. Companies surveyed reported that they expected their use of outsourcing to more than double in the next three years, but reliance on shared service centers will increase slightly as well, and shared services is expected to remain the preferred sourcing alternative for finance by a wide margin.
Total Working Capital Research Covering Auto Suppliers - Hackett issued research and analysis from its new Total Working Capital Executive Advisory Program showing that in the face of bankruptcy filings, lagging sales and rising raw-material prices, the 15 largest US automotive suppliers are nevertheless ignoring up to $7.6 billion in cash opportunity. The opportunity comes in the form of excess working capital tied up in invoices paid late by customers, suppliers being paid too early and inventory lying unsold on warehouse shelves.
Hyperion Implementation for a Leading U.S. Newspaper Publisher - This client contracted with Answerthink for a Hyperion Financial Management implementation and with Hackett for best practices workshops to help identify best practices gaps in finance. The project will offer more robust reporting to support more detailed analysis, and a Web-based delivery system that will broaden potential user access. The client's goals include speeding up the closing process and improving auditability.
Customer-to-Cash Transformation Project for Major European Electrical Utility - This client contracted for an extension of a multi-year engagement with Hackett - REL designed to improve receivables management. The project includes an analysis of billing and collections strategies, and the implementation of customer segmentation programs and other best practices to enhance cash flow and close performance gaps. To date, this program has helped the client generate hundreds of millions of dollars of cash flow improvement.
Oracle Implementation for Quick Serve Restaurant Chain - This client selected Answerthink for a comprehensive Oracle implementation with integrated Hackett best practices. The goal is to create a sustainable controls environment and improve the company's transactional processes across finance, construction management, lease and property management, and sales royalty and revenue accounting. Over the past year, Answerthink has assisted the client with best practices implementation requirements development and with vendor-agnostic ERP planning and best practice implementation configuration design.
World-Class Merger & Integration Program for U.S. Electrical Utility - This client contracted for two G&A benchmarks and membership in four Executive Advisory Programs, in anticipation of a merger with another utility. We will benchmark both organizations, and use the data to model the future combined entity under several sets of assumptions. The goal is to help the client determine how best to optimize the newly-merged back office operations, improve efficiency and effectiveness, and set cost reduction and performance targets.
World-Class Program for a Global Financial Conglomerate - This client contracted for a G&A benchmark and one-year membership in four Executive Advisory Programs as part of an effort to reassess the scalability of its global corporate infrastructure. In part to address shrinking profit margins in their industry, this company is hoping to reduce costs, improve its utilization of technology, and determine how best to integrate and consolidate decentralized strategic support functions across its various functional silos and business units.
"Customer-to-Cash" Initiative for International Aviation Ground Services Provider - This client selected Hackett-REL to implement a "Customer-to-Cash" working capital improvement initiative designed to address billing problems, including late billing, high error rates, and inefficiencies in their dispute management system. The goal is to reduce Days Sales Outstanding (DSO) and free up cash from the receivables process.
At 5:00 P.M. ET on Tuesday, May 2, 2006, senior management of Answerthink will host a conference call to discuss first quarter earnings results for the quarter ending March 31, 2006. The number for the conference call is (800) 857-4830, (Passcode: First Quarter; Leader: Ted A. Fernandez). For International callers, please dial (210) 839-8500.
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, May 2, 2006 and will run through 5:00 P.M. ET on Tuesday, May 16, 2006. To access the rebroadcast, please dial (800) 728-5859. For International callers, please dial (402) 220-0344.
In addition, Answerthink will also be webcasting this conference call live through the StreetEvents.com service. To participate, simply visit http://www.answerthink.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, May 2, 2006 and will run through 5:00 P.M. ET on Tuesday, May 16, 2006. To access the call, visit http://www.answerthink.com or http://www.streetevents.com
Answerthink, Inc. (www.Answerthink.com) is a leading business and technology consulting firm that enables companies to achieve world-class business performance. By leveraging the comprehensive database of The Hackett Group, Answerthink's business and technology solutions help clients significantly improve performance and maximize returns on technology investments. Answerthink's capabilities include benchmarking, business transformation, business applications, business intelligence, and offshore application development and support. Founded in 1997, Answerthink has offices throughout the United States and in Europe and India.
The Hackett Group (www.TheHackettGroup.com), a strategic advisory firm and an Answerthink company, is a world leader in best practice research, benchmarking and business transformation services that empirically define and enable world-class enterprise performance.
Through the acquisition of REL Consultancy Group, a global leader in generating cash improvement from working capital, we offer Hackett-REL Total Working Capital services to liberate cash flow from operations through improved working capital, reduced costs and increased service quality. Hackett-REL has helped clients in more than 60 countries free up over $25 billion through working capital improvements in the last 10 years alone.
The Hackett Group empirically defines world-class performance in sales, general and administrative (SG&A) and supply chain activities with analysis gained through 3,500 benchmark studies over 14 years at 2,000 of the world's leading companies. Our clients comprise 96 percent of the Dow Jones Industrials, 77 percent of the Fortune 100 and 92 percent of the Dow Jones Global Titans Index.
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.