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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hackett Group Inc | NASDAQ:HCKT | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.1099 | -0.51% | 21.3701 | 21.38 | 21.48 | 21.465 | 21.36 | 21.40 | 1,271 | 14:37:40 |
The Hackett Group, Inc. (NASDAQ: HCKT), a leading benchmarking, executive advisory and strategic consultancy firm that enables organizations to achieve Digital World Class® performance, today announced its financial results for the first quarter, which ended on March 29, 2024.
Financial Highlights
“We reported solid operating results which met or exceeded our previously provided guidance. This was accomplished while aggressively pivoting to the emerging Gen AI consulting demand leveraging our recently launched AI XPLR platform and continuing our investment in our Executive Advisory offerings,” stated Ted A. Fernandez, Chairman & CEO of The Hackett Group, Inc. “AI XPLR, our AI ideation and assessment platform, is continuing to receive very favorable feedback and has led to a significant number of client meetings, and a number of new AI projects. We expect this activity to increase throughout the balance of the year as we continue to extend the AI capabilities of our associates and our AI XPLR platform.”
Business Outlook for the Second Quarter of 2024
Based on the Company’s current outlook:
Conference Call and Webcast Details
Use of Non-GAAP Financial Measures
The Company provides adjusted earnings results (which historically has excluded the loss from discontinued operations, non-cash stock-based compensation expense, acquisition-related compensation expense, acquisition-related non-cash stock-based compensation expense, restructuring charges and reversals, amortization of intangible assets, and any one-time charges or benefits and includes a GAAP 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 users' overall 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 and 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 its ongoing primary operations and to provide a consistent basis for comparison between quarters. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting. The presentation of this additional non-GAAP information should be considered in addition to, and not as a substitute for or superior to, any results prepared in accordance with GAAP. See the reconciliation of actual results titled “Reconciliation of GAAP to Non-GAAP Measures” in the accompanying tables.
The Company believes that the presentation of non-GAAP financial information on a forward-looking basis, including the guidance contained in this release, provides important supplemental information to management and investors regarding its anticipated results of operations. The Company is unable to provide a reconciliation of GAAP measures to corresponding forward-looking non-GAAP measures without unreasonable effort due to the high variability and low visibility of most of the items that have been excluded from these non-GAAP measures. For example, non-cash stock-based compensation expense is impacted by the Company’s future hiring needs, the type and volume of equity awards necessary for such future hiring, and the price at which the Company’s stock will trade in those future periods. In addition, the provision or benefit for income taxes is impacted by non-recurring income tax adjustments, valuation allowance on deferred tax assets, and the income tax effect of non-GAAP exclusions. The effects of these reconciling items may be significant, as the items that are being excluded are difficult to predict.
About The Hackett Group®
The Hackett Group, Inc. (NASDAQ: HCKT) is a leading benchmarking, executive advisory and strategic consultancy firm that enables organizations to achieve Digital World Class® performance. Using AI XPLR™ – our AI assessment platform – our experienced professionals guide organizations to harness the power of Gen AI to digitally transform their operations and achieve quantifiable, breakthrough results, allowing us to be key architects of their Gen AI journey.
Our expertise is grounded in unparalleled best practices insights from benchmarking the world’s leading businesses – including 97% of the Dow Jones Industrials, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the FTSE 100 – and are delivered leveraging our Digital Transformation Platform, Hackett Connect™ and Quantum Leap®.
For more information on The Hackett Group, visit: https://www.thehackettgroup.com/; email info@thehackettgroup.com; or call (770) 225-3600.
The Hackett Group, quadrant logo, World Class Defined and Enabled, Quantum Leap, and Digital World Class are the registered marks of The Hackett Group.
Cautionary Statement Regarding “Forward-Looking” Statements
This release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements including without limitation, words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” seeks,” “estimates,” or other similar phrases or variations of such words or similar expressions indicating, present or future anticipated or expected occurrences or outcomes are intended to identify such forward-looking statements. Forward-looking statements are not statements of historical fact and involve known and unknown risks, uncertainties and other factors that may cause the Company’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 may impact such forward-looking statements include without limitation, the ability of The Hackett Group to effectively market its artificial intelligence, digital transformation and other consulting services, competition from other consulting and technology companies that may have or develop in the future, similar offerings, the commercial viability of The Hackett Group and its services as well as other risk detailed in The Hackett Group’s reports filed with the United States Securities and Exchange Commission. The Hackett Group does not undertake any duty to update this release or any forward-looking statements contained herein.
The Hackett Group, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Quarter Ended March 29, March 31,2024
2023
Revenue: Revenue before reimbursements$
75,727
$
69,831
Reimbursements
1,460
1,398
Total revenue
77,187
71,229
Costs and expenses: Cost of service: Personnel costs before reimbursable expenses (includes $1,393 and $1,526 of non-cash stock based compensation expense in the quarters ended March 29, 2024 and March 31, 2023, respectively)
45,771
43,143
Reimbursable expenses
1,460
1,398
Total cost of service
47,231
44,541
Selling, general and administrative costs (includes $1,206 and $921 of non-cash stock based compensation expense in the quarters ended March 29, 2024 and March 31, 2023, respectively)
18,329
15,436
Legal settlement and related costs
102
-
Total costs and operating expenses
65,662
59,977
Operating income
11,525
11,252
Other expense, net: Interest expense, net
(472
)
(859
)
Income before income taxes
11,053
10,393
Income tax expense
2,322
2,232
Net income
$
8,731
$
8,161
Basic net income per common share: Income per common share
$
0.32
$
0.30
Weighted average common shares outstanding
27,422
27,026
Diluted net income per common share: Income per common share
$
0.32
$
0.30
Weighted average common and common equivalent shares outstanding
27,676
27,269
The Hackett Group, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) March 29, December 29,
2024
2023
ASSETS
Current assets: Cash$
12,958
$
20,957
Accounts receivable and contract assets, net
57,979
52,113
Prepaid expenses and other current assets
2,730
2,368
Total current assets
73,667
75,438
Property and equipment, net
20,048
20,044
Other assets
283
285
Goodwill
84,099
84,242
Operating lease right-of-use assets
1,220
1,419
Total assets$
179,317
$
181,428
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable$
6,215
$
7,557
Accrued expenses and other liabilities
19,870
26,801
Contract liabilities
14,957
12,087
Income tax payable
2,443
2,360
Operating lease liabilities
811
1,083
Total current liabilities
44,296
49,888
Long-term deferred tax liability, net
10,133
8,118
Long-term debt
30,729
32,711
Operating lease liabilities
678
631
Total liabilities
85,836
91,348
Shareholders' equity
93,481
90,080
Total liabilities and shareholders' equity$
179,317
$
181,428
The Hackett Group, Inc. SEGMENT PROFIT (in thousands) (unaudited) Quarter Ended March 29, March 31,2024
2023
Global S&BT (1): Total revenue (4)$
40,892
$
42,335
Segment profit (5)
10,053
13,807
Oracle Solutions (2): Total revenue (4)$
21,729
$
17,168
Segment profit (5)
5,261
3,049
SAP Solutions (3): Total revenue (4)$
14,566
$
11,726
Segment profit (5)
4,882
2,634
Total Company: Total revenue (4)$
77,187
$
71,229
Total segment profit$
20,196
$
19,490
Items not allocated to segment level (5): Corporate general and administrative expenses
5,028
4,961
Non-cash stock based compensation expense
2,599
2,447
Legal settlement and related costs
102
-
Depreciation expense
942
830
Interest expense, net
472
859
Income before taxes$
11,053
$
10,393
(1) Global S&BT includes the results of our strategic businesses consulting practices, including Strategy and Business Transformation Consulting, Benchmarking, Business Advisory Services, IP as-a-Service and OneStream. (2) Oracle Solutions includes the results of our EPM/ERP and AMS practices. (3) SAP Solutions includes the results of our SAP applications and related SAP service offerings. (4) Total revenue includes reimbursable expenses, which are project travel-related expenses passed through to a client with no associated operating margin. (5) Segment profits consist of the revenue generated by the segment, less the direct costs of revenue and selling, general and administrative expenses that are incurred directly by the segment. Items not allocated to the segment level include corporate costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. Items not allocated to the segment level include corporate general and administrative expenses, non-cash stock based compensation expense, depreciation expense, legal settlement and related costs, interest expense and foreign currency gains and losses. Corporate general and administrative expenses primarily include costs related to business support functions including accounting and finance, human resources, legal, information technology and office administration. Corporate general and administrative expenses exclude one-time, non-recurring expenses and benefits. The Hackett Group, Inc. RECONCILIATION OF GAAP TO NON-GAAP MEASURES (in thousands, except per share data) (unaudited) Quarter Ended March 29, March 31,2024
2023
GAAP NET INCOME$
8,731
$
8,161
Adjustments (1): Non-cash stock based compensation expense (2)
2,599
2,444
Acquisition-related non-cash stock based compensation expense (3)
-
3
Legal settlement and related costs
102
-
ADJUSTED NET INCOME BEFORE INCOME TAXES ON ADJUSTMENTS (1)
11,432
10,608
Tax effect of adjustments above (4)
708
646
ADJUSTED NET INCOME (1)$
10,724
$
9,962
GAAP diluted net income per common share$
0.32
$
0.30
Adjusted diluted net income per common share (1)$
0.39
$
0.37
Weighted average common and common equivalent shares outstanding
27,676
27,269
(1) The Company provides adjusted earnings results (which excludes non-cash stock-based compensation expense, acquisition-related non-cash stock-based compensation expense, legal settlement and related costs and includes a GAAP 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 users' overall 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 and 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 its ongoing primary operations and to provide a consistent basis for comparison between quarters. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting. The presentation of this additional non-GAAP information should be considered in addition to, and not as a substitute for or superior to, any results prepared in accordance with GAAP. (2) Non-cash stock based compensation expense is accounted for under Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation. The Company excludes non-cash stock based compensation expense and the related tax effects for the purposes of adjusted net income and adjusted diluted earnings per share. The Company believes that non-GAAP measures of profitability, which exclude non-cash stock based compensation expense, are widely used by investors. (3) The Company incurs cash and non-cash stock based compensation expense for acquisition related consideration that is recognized over time under GAAP. The Company believes excluding these amounts more consistently presents its ongoing results of operations because they are related to acquisitions and not due to normal operating activities. The acquisition-related non-cash stock based compensation expense is also accounted for under Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation. (4) The adjustment for the income tax expense is based on the accounting treatment and income tax rate for the jurisdiction of each item. The impact of non-cash stock based compensation expense was $0.7 million and $0.6 million in 2024 and 2023, respectively. The impact of the legal settlement and related costs were $27 thousand in 2024. The Hackett Group, Inc. SUPPLEMENTAL FINANCIAL DATA (unaudited) Quarter Ended March 29, December 29, March 31,2024
2023
2023
Segment Total Revenue and Revenue Before Reimbursements (in thousands): Global S&BT: Total revenue$
40,892
$
42,162
$
42,335
Reimbursements
639
566
668
Revenue before reimbursements
$
40,253
$
41,596
$
41,667
Oracle Solutions: Total revenue
$
21,729
$
18,998
$
17,168
Reimbursements
661
556
467
Revenue before reimbursements
$
21,068
$
18,442
$
16,701
SAP Solutions: Total revenue
$
14,566
$
11,243
$
11,726
Reimbursements
160
114
263
Revenue before reimbursements
$
14,406
$
11,129
$
11,463
Total segment revenue: Total revenue
$
77,187
$
72,403
$
71,229
Reimbursements
1,460
1,236
1,398
Revenue before reimbursements
$
75,727
$
71,167
$
69,831
Revenue Concentration: (% of total revenue) Top customer
9
%
7
%
5
%
Top 5 customers
24
%
18
%
16
%
Top 10 customers
34
%
27
%
24
%
Key Metrics and Other Financial Data: Total Company: Consultant headcount
1,154
1,168
1,128
Total headcount
1,414
1,416
1,368
Days sales outstanding (DSO)
68
65
66
Cash provided by (used in) operating activities (in thousands)
$
2,792
$
25,587
$
(3,063
)
Depreciation (in thousands)$
942
$
894
$
830
Capital expenditures (in thousands)
$
948
$
898
$
1,063
Remaining Plan authorization: Shares purchased (in thousands)
43
-
37
Cost of shares repurchased (in thousands)
$
1,055
$
—
$
711
Average price per share of shares purchased
$
24.34
$
—
$
18.98
Remaining Plan authorization (in thousands)
$
12,883
$
13,938
$
13,961
Shares Purchased to Satisfy Employee Net Vesting Obligations: Shares purchased (in thousands)
162
3
162
Cost of shares purchased (in thousands)
$
3,782
$
71
$
3,526
Average price per share of shares purchased
$
23.36
$
23.08
$
21.75
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507140914/en/
Robert A. Ramirez, CFO, 305-375-8005 or rramirez@thehackettgroup.com
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