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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 | |
---|---|---|---|---|---|---|---|---|---|---|
-0.40 | -1.56% | 25.22 | 25.04 | 25.48 | 25.82 | 25.12 | 25.62 | 64,500 | 00:55:08 |
The Hackett Group, Inc. (NASDAQ: HCKT), a leading benchmarking, research advisory and strategic consultancy firm that enables organizations to achieve Digital World Class™ performance, today announced its financial results for the fourth quarter, which ended on December 30, 2022.
Financial Highlights
“In spite of the increasing macro-economic headwinds we experienced during the second half of the year, we reported strong annual operating results with operating income up 19% for the year,” stated Ted A. Fernandez, Chairman & CEO of The Hackett Group, Inc. “We achieved our results while continuing to increase our investments in program development and sales resources for our expanding IP as-a-Service, research advisory and market intelligence offerings, which were up over 20% for the year.”
Business Outlook for the First Quarter of 2023
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 exclude 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 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, research advisory and strategic consultancy firm that enables organizations to achieve Digital World Class™ performance.
Drawing upon our unparalleled intellectual property from more than 25,000 benchmark studies and our Hackett-Certified® best practices repository from the world’s leading businesses – including 97% of the Dow Jones Industrials, 93% of the Fortune 100, 73% of the DAX 30 and 52% of the FTSE 100 – captured through our leading benchmarking platform, Quantum Leap® and our Digital Transformation Platform, we accelerate digital transformations, including enterprise cloud implementations.
More information on The Hackett Group is available at: www.thehackettgroup.com, info@thehackettgroup.com, or by calling (770) 225-3600.
The Hackett Group, Hackett-Certified, quadrant logo, World Class Defined and Enabled, Quantum Leap and Digital Excelleration 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 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 Twelve Months EndedDecember 30,
December 31,
December 30,
December 31,
2022
2021
2022
2021
Revenue: Revenue before reimbursements
$
68,817
$
69,776
$
289,688
$
277,583
Reimbursements
1,300
456
4,054
1,226
Total revenue
70,117
70,232
293,742
278,809
Costs and expenses: Cost of service: Personnel costs before reimbursable expenses (includes $1,401, $6,201, $1,470 and $6,766 of non-cash stock based compensation expense in the quarters and twelve months ended December 30, 2022 and December 31, 2021, respectively)
39,208
42,301
174,112
171,920
Reimbursable expenses
1,300
456
4,054
1,226
Total cost of service
40,508
42,757
178,166
173,146
Selling, general and administrative costs (includes $1,038, $4,066, $841 and $3,356 of non-cash stock based compensation expense in the quarters and twelve months ended December 30, 2022 and December 31, 2021, respectively)
15,986
15,474
60,979
59,187
Restructuring charge and asset impairment
-
-
(651
)
-
Total costs and operating expenses
56,494
58,231
238,494
232,333
Operating income
13,623
12,001
55,248
46,476
Other expense, net: Interest expense, net
(74
)
(19
)
(144
)
(95
)
Income from continuing operations before income taxes
13,549
11,982
55,104
46,381
Income tax expense (benefit) (1)
3,833
(4,539
)
14,302
4,829
Income from continuing operations
9,716
16,521
40,802
41,552
Loss from discontinued operations (net of taxes)
-
-
-
(7
)
Net income$
9,716
$
16,521
$
40,802
$
41,545
Weighted average common shares outstanding: Basic
30,812
29,970
31,400
30,021
Diluted
31,474
32,916
31,962
32,883
GAAP basic net income per common share: Income per common share from continuing operations
$
0.32
$
0.55
$
1.30
$
1.38
Loss per common share from discontinued operations
-
-
-
(0.00
)
GAAP basic net income per common share$
0.32
$
0.55
$
1.30
$
1.38
GAAP diluted net income per common share: Income per common share from continuing operations
$
0.31
$
0.50
$
1.28
$
1.26
Loss per common share from discontinued operations
-
-
-
(0.00
)
GAAP diluted net income per common share$
0.31
$
0.50
$
1.28
$
1.26
(1) The fourth quarter and full year of 2021 included a tax benefit of $7.7 million related to the exercise of 2.9 million SARs. The Hackett Group, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 30, December 31,
2022
2021
ASSETS Current assets: Cash$
30,255
$
45,794
Accounts receivable and contract assets, net
48,376
50,616
Prepaid expenses and other current assets
2,535
5,766
Total current assets
81,166
102,176
Property and equipment, net
19,359
18,026
Other assets
268
620
Goodwill
83,502
85,070
Operating lease right-of-use assets
698
1,649
Total assets$
184,993
$
207,541
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable$
8,741
$
7,677
Accrued expenses and other liabilities
36,712
30,297
Contract liabilities (deferred revenue)
13,278
14,616
Operating lease liabilities
870
2,299
Total current liabilities
59,601
54,889
Long-term deferred tax liability, net
6,877
7,325
Long-term debt
59,653
-
Operating lease liabilities
584
1,474
Total liabilities
126,715
63,688
Shareholders' equity
58,278
143,853
Total liabilities and shareholders' equity$
184,993
$
207,541
The Hackett Group, Inc. SEGMENT PROFIT (in thousands) (unaudited)Quarter Ended
Twelve Months Ended
December 30,
December 31,
December 30,
December 31,
2022
2021
2022
2021
Global S&BT (1): Total revenue (4)$
40,901
$
39,268
$
169,660
$
146,224
Segment profit (5)
15,380
14,805
61,319
49,321
Oracle Solutions (2): Total revenue (4)$
17,155
$
19,123
$
76,320
$
74,886
Segment profit (5)
3,188
3,554
15,335
15,662
SAP Solutions (3): Total revenue (4)$
12,061
$
11,841
$
47,762
$
57,699
Segment profit (5)
3,589
3,352
12,827
18,843
Total Company: Total revenue (4)$
70,117
$
70,232
$
293,742
$
278,809
Total segment profit$
22,157
$
21,711
$
89,481
$
83,826
Items not allocated to segment level (5): Corporate general and administrative expenses
5,281
6,357
21,180
22,840
Non-cash stock based compensation expense
2,439
2,311
10,267
10,122
Acquisition-related compensation expense
-
-
-
11
Depreciation and amortization
814
1,042
3,437
4,377
Restructuring charge and asset impairment
-
-
(651
)
-
Interest expense, net
74
19
144
95
Income from continuing operations before taxes$
13,549
$
11,982
$
55,104
$
46,381
(1) Global S&BT includes the results of our strategic businesses consulting practices, including S&BT 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. These administrative function costs include corporate general and administrative expenses, non-cash stock based compensation, depreciation and amortization expense, restructuring charge and asset impairment and interest expense. 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 Twelve Months EndedDecember 30,
December 31,
December 30,
December 31,
2022
2021
2022
2021
GAAP NET INCOME$
9,716
$
16,521
$
40,802
$
41,545
Adjustments (1): Loss from discontinued operations
-
-
-
7
Non-cash stock based compensation expense (2)
2,436
2,283
10,252
9,716
Acquisition-related compensation expense (3)
-
-
-
11
Acquisition-related non-cash stock based compensation expense (3)
3
28
15
406
Restructuring charge and asset impairment
-
-
(651
)
-
Amortization of intangible assets (4)
-
233
154
1,016
ADJUSTED NET INCOME BEFORE INCOME TAXES ON ADJUSTMENTS (1)
12,155
19,065
50,572
52,701
Tax effect of adjustments above (5)
687
646
2,562
2,796
ADJUSTED NET INCOME (1)$
11,468
$
18,419
$
48,010
$
49,905
GAAP diluted net income per common share$
0.31
$
0.50
$
1.28
$
1.26
Adjusted diluted net income per common share (1)$
0.36
$
0.56
$
1.50
$
1.52
Weighted average common and common equivalent shares outstanding
31,474
32,916
31,962
32,883
(1) The Company provides adjusted earnings results (which exclude the loss from discontinued operations, non-cash stock based compensation expense, acquisition-related compensation expense, acquisition-related non-cash stock based compensation expense, restructuring charge and asset impairment, amortization of intangible assets and include 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 ongoing operations and to provide a more consistent basis for comparison between quarters. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting in future periods. In addition, since the Company has historically reported non-GAAP results to the investment community, it believes the continued inclusion of non-GAAP results provides consistency in its financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for 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 Company has incurred expense on amortization of intangible assets related to various acquisitions. The Company excludes the effect of the amortization of intangibles from our adjusted results in order to more consistently present its ongoing results of operations. (5) The adjustment for the income tax expense is based on the accounting treatment and income tax rate for the jurisdiction of each item. For the quarter end periods the impact of non-cash stock based compensation expense was $0.7 million and $0.6 million in 2022 and 2021, respectively and the impact of intangible amortization was $46 thousand in 2021. For the twelve month periods the impact of non-cash stock based compensation expense was $2.7 million and $2.5 million in 2022 and 2021, respectively; the impact of intangible amortization was $32 thousand and $201 thousand in 2022 and 2021, respectively and the impact on the restructuring charge was $172 thousand in 2022. The Hackett Group, Inc. SUPPLEMENTAL FINANCIAL DATA (unaudited) Quarter EndedDecember 30,
September 30,
December 31,
2022
2022
2021
Revenue Concentration: (% of total revenue) Top customer
5
%
7
%
6
%
Top 5 customers
16
%
18
%
15
%
Top 10 customers
26
%
26
%
22
%
Key Metrics and Other Financial Data: Total Company: Consultant headcount
1,120
1,121
1,106
Total headcount
1,345
1,342
1,308
Days sales outstanding (DSO)
63
66
66
Cash provided by operating activities (in thousands)
$
24,827
$
9,789
$
19,885
Depreciation (in thousands)
$
814
$
838
$
809
Amortization (in thousands)
$
-
$
-
$
233
Capital expenditures (in thousands)
$
1,494
$
896
$
986
Remaining Plan authorization: Shares purchased (in thousands) (1)
4,889
-
10
Cost of shares repurchased (in thousands) (1)
$
115,937
$
—
$
224
Average price per share of shares purchased
$
23.71
$
—
$
21.64
Remaining Plan authorization (in thousands) (2)
$
14,672
$
10,609
$
11,244
Shares Purchased to Satisfy Employee Net Vesting Obligations: Shares purchased (in thousands)
31
3
998
Cost of shares purchased (in thousands)
$
646
$
69
$
19,767
Average price per share of shares purchased
$
20.93
$
21.05
$
19.81
(1) Includes the shares repurchased through the Tender Offer transaction in December from which the Company acquired 4.9 million shares at $23.71 per share, or $115.9 million, inclusive of transaction related fees. (2) The Company's Board of Directors approved an additional $120.0 million to its share repurchase plan in November 2022.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230221005740/en/
Robert A. Ramirez, CFO, 305-375-8005 or rramirez@thehackettgroup.com
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