July 31, 2007
Miami, FL - July 31, 2007 - Answerthink, Inc. (NASDAQ: ANSR), a strategic business advisory and technology consulting firm, today announced its financial results for the second quarter, which ended June 29, 2007.
Second quarter revenue was $45.5 million, a 14% sequential increase from the first quarter of $39.9 million, driven by The Hackett Group's sequential growth of 18%. Compared to the second quarter of 2006, revenues were down 7% primarily as a result of the Company's exit from its Lawson and SAP staff augmentation contracts in 2006 and lower Business Intelligence revenues.
Diluted earnings per share was $0.03 in the second quarter of 2007 compared to a diluted loss per share of $0.05 in the first quarter and diluted earnings per share of $0.05 for the second quarter of 2006. Pro forma diluted earnings per share was $0.04 in the second quarter of 2007 compared to a pro forma diluted loss per share of $0.01 in the first quarter of 2007 and pro forma diluted earnings per share of $0.06 in the second quarter of 2006. 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.
As of the end of the second quarter of 2007, the Company's cash balances, including restricted cash, amounted to $21.5 million. During the quarter, the Company spent $1.75 million to repurchase 509 thousand shares of the Company's common stock. As of the end of the quarter, $4.4 million remained available under the Company's share repurchase program authorization.
"We are seeing the introduction of our Transformational Benchmark and the sales incentive changes we made at the beginning of the year favorably impact our growth," said Ted A. Fernandez, Chairman and CEO of Answerthink. "Specifically, we experienced sequential growth across all of our Hackett, REL and Best Practice Solutions groups. This momentum, along with cost management programs also instituted at the beginning of the year, should continue to favorably impact our results."
Based on the current economic outlook, the Company estimates total revenues for the third quarter of 2007 to be in the range of $44 million to $46 million. The Company also estimates pro forma diluted earnings per share to be in the range of $0.04 to $0.06.
Globalization Research - New Hackett research revealed that U.S. and European companies can increase their savings by over 40% by offshoring back office operations if they selectively integrate transformation and process improvement efforts into their globalization initiatives.
REL/CFO Total Working Capital Survey - The Tenth Annual Working Capital Survey, conducted jointly by REL and CFO Magazine/CFO Europe, found that after nearly a decade of annual reductions in working capital, the 1,000 largest U.S. companies showed no improvement in 2006, in large part due to increased inventory as a result of both slowing sales growth rate and increased use of overseas manufacturing facilities. At the same time, the survey found that the 1,000 largest companies in Europe resumed their working capital improvement in 2006, after stalled performance last year.
Technology ROI Book of Numbers - Hackett released Book of Numbers™ research answering the question "Does IT Matter?" and demonstrating that the best companies clearly use information technology as a strategic enabler to create competitive advantage. Fortune 500 companies with world-class IT organizations spend 7% more than typical companies on IT, but the investment more than pays for itself, helping drive lower operating costs of $134 million per year (nearly 5 times the increase in IT spending) in finance, procurement, human resources, and other back office areas.
European Hackett Best Practices Conference - The Hackett Group previewed the findings from its 2007 Book of Numbers™ research to a record attendance of over 100 delegates at its Third Annual European Best Practices Conference, "Leveraging Synergies: Myth or Reality" in London May 10th and 11th. The two-day invitation-only event featured presentations by senior executives from 13 of the world's most successful global companies including: Allianz, Britvic, Dow Chemical, Heineken, and Network Rail.
Oracle Implementation for Leading Business Process Outsourcing Services Provider - This company selected Answerthink for a comprehensive Oracle implementation designed to create a single integrated financial reporting system following a major corporate acquisition. The new system will streamline global operations and simplify financial reporting and analysis.
Hyperion Implementation for Health Insurance Provider - This company selected Answerthink to implement Hyperion System 9. The new system is designed to enable the company to make better business decisions by offering improved accuracy and timeliness of financial forecasts and enhanced visibility into profitability by business segment and region.
Private Equity Acquisition Support - REL has begun working on a large acquisition-related project to improve the target company's cash flow with a focus on inventories, payables and receivables. The project also includes a detailed review of the organization's cash flow forecasting and reporting processes.
Transformational Benchmarking for Petroleum Services Company - This company selected Hackett to perform global benchmarks and develop strategic transformation plans for Finance and Human Resources. New executive leadership is planning to use the results of Hackett's work to identify, quantify, and prioritize performance improvement and cost reduction opportunities across operations in over 90 countries.
G&A Transformation Effort for Healthcare Products Company - This company contracted with The Hackett Group for the first phase of a transformation program involving the General & Administrative functions of its European operations. The goal of the effort is to reduce costs, improve service quality and address restructuring of the company's global operations.
At 5:00 P.M. ET on Tuesday, July 31, 2007, the senior management of Answerthink, Inc. will host a conference call to discuss second quarter earnings results for the period ending June 29, 2007.
The number for the conference call is (800) 779-0375, [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, July 31, 2007 and will run through 5:00 P.M. ET on Tuesday, August 14, 2007. To access the rebroadcast, please dial (800) 944-8789. For International callers, please dial (402) 220-3521.
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, July 31, 2007 and will run through 5:00 P.M. ET on Tuesday, August 14, 2007. To access the call, visit www.answerthink.com or 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, a global strategic advisory firm, is a leader in best practice research and advisory programs, benchmarking and transformation consulting services, including shared services, offshoring and outsourcing advice. Utilizing best practices and implementation insight from more than 4,000 benchmarking studies, executives use Hackett's empirically based approach to quickly define and prioritize initiatives, and to leverage proven strategies that enable world-class performance. Through its sister company REL, Hackett offers working capital solutions focused on delivering significant cash flow improvements. Hackett has worked with 2,700 major corporations and government agencies, including 88% of the Dow Jones Global Titans and 73% of the Fortune 100. For more information, visit www.thehackettgroup.com.
REL is a world leading consulting firm dedicated to delivering sustainable cash flow improvement across business operations. REL's tailored solutions balance client trade-offs between working capital, operating costs and service performance. REL's expertise has helped clients free up billions of dollars/euros/pounds in cash, creating the financial freedom to fund acquisitions, pension liabilities, product development, debt reduction and share buy-back programs. In-depth process expertise, analytical rigor, and collaborative client relationships enable REL to deliver an exceptional return on investment in a short timeframe. REL has delivered work in over 60 countries for the Global 2000.
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.