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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.01 | 0.04% | 26.03 | 25.67 | 26.26 | 26.20 | 25.69 | 25.90 | 105,671 | 01:00:00 |
The Hackett Group, Inc. (NASDAQ: HCKT), a global intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices digital transformation firm, today announced its financial results for the third quarter, which ended on September 27, 2019.
Q3 2019 net revenue (gross revenue less reimbursable expenses) from continuing operations was $66.8 million, down 2%, as compared to the same period in the prior year. Q3 2019 gross revenue from continuing operations was $72.7 million, down 1% from the same period in the prior year.
Q3 2019 pro forma diluted earnings per share were $0.27 per share, as compared to $0.28 per share for the same period in the prior year. 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.
Q3 2019 GAAP diluted earnings per share were $0.21 per share, as compared to $0.16 per share for the same period in the prior year. During the third quarter of 2018, the Company recorded a $0.8 million, or $0.02 per diluted share, expense due to the remeasurement of an acquisition-related earnout liability, and a $0.5 million, or $0.02 per diluted share, loss from discontinued operations.
In its recent meeting, the Company’s Board of Directors declared a semi-annual dividend of $0.18 per share for its shareholders of record on December 20, 2019, to be paid on January 7, 2020.
At the end of the third quarter of 2019, the Company’s cash balances were $16.4 million. During the quarter, the Company utilized cash to pay down outstanding debt of $2.0 million. During the third quarter of 2019, the Company did not repurchase shares under its stock repurchase program. At the end of the third quarter of 2019, the Company’s remaining stock repurchase program authorization was $3.9 million.
“Solid U.S. performance driven by digital transformation and implementation of cloud software initiatives was tempered by weaker than expected European results,” stated Ted A. Fernandez, Chairman and CEO of The Hackett Group. “We believe that we are taking the necessary actions to mitigate the impact of the volatility in Europe on our 2020 results.”
Based on the current economic outlook, the Company estimates total net revenue for the fourth quarter of 2019 to be in the range of $61.5 million and $63.5 million or gross revenue (inclusive of reimbursable expenses) to be in the range of $66.5 million and $68.5 million. The Company estimates pro forma diluted earnings per share for the fourth quarter of 2019 to be in the range of $0.23 and $0.25.
Other Highlights
World-Class Procurement Research – New world-class procurement research from The Hackett Group found that through full deployment of digital tools, typical procurement organizations can reduce operational costs by up to 45%, achieving efficiency levels below those of today’s world-class procurement organizations while at the same time enabling them to improve effectiveness and customer experience.
World-Class Finance Research – New world-class finance research from The Hackett Group found that by fully embracing digital transformation typical finance organizations can reduce costs by more than 40%, rapidly accelerating their progress towards previously unattainable world-class efficiency levels.
World-Class HR Research – New world-class HR research from The Hackett Group found that typical HR organizations can reduce costs by 17% and operate with 26% fewer staff hours – while also improving effectiveness and customer experience – by adopting smart automation approaches, including robotic process automation and smart data capture.
OpenWorld DTP Adoption – The Hackett Group announced that it has reached mainstream adoption of its Oracle Digital Transformation Platform (DTP), with more than 100 successful DTP solution applications deployed at clients since its formal release in October of 2018.
On Tuesday, November 5, 2019 senior management will discuss third quarter results in a conference call at 5:00 P.M. ET. (800) 593-0486, [Passcode: Third Quarter]. For International callers, please dial (517) 308-9371.
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, November 5, 2019 and will run through 5:00 P.M. ET on Tuesday, November 19, 2019. To access the rebroadcast, please dial (800) 839-0130. For International callers, please dial (402) 998-1223.
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, November 5, 2019 and will run through 5:00 P.M. ET on Tuesday, November 19, 2019. To access the replay, visit www.thehackettgroup.com or http://www.streetevents.com.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices digital transformation firm to global companies, with offerings that include robotic process automation and enterprise cloud application implementation. Services include business transformation, enterprise analytics 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 and SAP practices.
The Hackett Group has completed more than 16,500 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 89% of the Fortune 100, 83% of the DAX 30 and 57% of the FTSE 100. These studies drive Hackett’s Digital Transformation Platform 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.
More information on The Hackett Group is available at: www.thehackettgroup.com, info@thehackettgroup.com, or by calling (770) 225-3600.
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 offerings 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, including those referenced above, 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, the impact of Brexit on our business, changes in general economic conditions and interest rates, our ability to mitigate the impact of the recent decline in our European operations, 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 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.
The Hackett Group, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Quarter Ended Nine Months Ended September 27, September 28, September 27, September 28,2019
2018
2019
2018
Revenue: Revenue before reimbursements ("net revenue")$
66,755
$
68,183
$
197,101
$
202,928
Reimbursements
5,935
5,535
16,265
16,424
Total revenue from continuing operations
72,690
73,718
213,366
219,352
Costs and expenses: Cost of service: Personnel costs before reimbursable expenses
41,026
40,883
120,780
123,635
Non-cash stock compensation expense
833
915
2,775
2,915
Acquisition-related compensation expense (benefit)
157
240
(131
)
(549
)
Acquisition-related non-cash stock compensation expense
322
731
690
1,452
Reimbursable expenses
5,935
5,535
16,265
16,424
Total cost of service
48,273
48,304
140,379
143,877
Selling, general and administrative costs
14,117
14,922
43,318
44,164
Non-cash stock compensation expense
776
850
2,268
2,495
Amortization of intangible assets
236
585
789
1,789
Change in acquisition-related contingent consideration liability
(108
)
803
(1,133
)
(3,750
)
Total selling, general, and administrative expenses
15,021
17,160
45,242
44,698
Total costs and operating expenses
63,294
65,464
185,621
188,575
Income from operations
9,396
8,254
27,745
30,777
Other expense: Interest expense
(62
)
(158
)
(268
)
(515
)
Income from continuing operations before income taxes
9,334
8,096
27,477
30,262
Income tax expense
2,427
2,425
6,481
5,618
Income from continuing operations
6,907
5,671
20,996
24,644
Income (loss) from discontinued operations (2)
2
(514
)
(4
)
(599
)
Net income$
6,909
$
5,157
$
20,992
$
24,045
Weighted average common shares outstanding: Basic
29,876
29,478
29,794
29,332
Diluted
32,571
32,593
32,413
32,214
Basic net income per common share: Income per common share from continuing operations
$
0.23
$
0.19
$
0.70
$
0.84
Income (loss) per common share from discontinued operations (2)
0.00
(0.02
)
(0.00
)
(0.02
)
Basic net income per common share$
0.23
$
0.17
$
0.70
$
0.82
Diluted net income per common share: Income per common share from continuing operations
$
0.21
$
0.18
$
0.65
$
0.77
Income (loss) per common share from discontinued operations (2)
0.00
(0.02
)
(0.00
)
(0.02
)
Diluted net income per common share$
0.21
$
0.16
$
0.65
$
0.75
Pro forma data (1): Income from continuing operations before income taxes
$
9,334
$
8,096
$
27,477
$
30,262
Non-cash stock compensation expense
1,609
1,765
5,043
5,410
Acquisition-related compensation expense (benefit)
157
240
(131
)
(549
)
Acquisition-related non-cash stock compensation expense
322
731
690
1,452
Change in acquisition-related contingent consideration liability
(108
)
803
(1,133
)
(3,750
)
Acquisition-related costs
32
—
32
— Amortization of intangible assets
236
585
789
1,789
Pro forma income before income taxes
11,582
12,220
32,767
34,614
Pro forma income tax expense
2,896
3,055
8,192
8,654
Pro forma net income
$
8,687
$
9,165
$
24,575
$
25,961
Pro forma basic net income per common share
$
0.29
$
0.31
$
0.82
$
0.89
Weighted average common shares outstanding
29,876
29,478
29,794
29,332
Pro forma diluted net income per common share
$
0.27
$
0.28
$
0.76
$
0.81
Weighted average common and common equivalent shares outstanding
32,571
32,593
32,413
32,214
(1) The Company provides pro forma earnings results (which exclude the amortization of intangible assets, stock compensation expense, acquisition-related one-time expense (benefit), and include a normalized tax rate, which is our long-term projected cash 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 overall users' 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 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) Discontinued operations relate to the discontinuance of the Company's European Working Capital Group. The Hackett Group, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) September 27, December 28,
2019
2018
ASSETS Current assets: Cash and cash equivalents$
16,423
$
13,808
Accounts receivable and contract assets, net
57,890
54,807
Prepaid expenses and other current assets
3,664
4,339
Assets related to discontinued operations (3)
-
137
Total current assets
77,977
73,091
Property and equipment, net
21,080
19,750
Other assets
2,801
3,704
Goodwill, net
83,782
84,207
Operating lease right-of-use assets
8,293
-
Total assets$
193,933
$
180,752
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable$
5,217
$
7,429
Accrued expenses and other liabilities
31,450
34,498
Operating lease liabilities
2,678
-
Liabilities related to discontinued operations (3)
22
2,300
Total current liabilities
39,367
44,227
Long-term deferred tax liability, net
7,704
6,435
Long-term debt
2,500
6,500
Operating lease liabilities
5,615
-
Total liabilities
55,186
57,162
Shareholders' equity
138,747
123,590
Total liabilities and shareholders' equity$
193,933
$
180,752
(3) The assets and liabilities related to discontinued operations relate to the discontinuance of the Company's European Working Capital Group. The Hackett Group, Inc. SUPPLEMENTAL FINANCIAL DATA (unaudited) Quarter EndedSeptember 27,
September 28,
June 28,
2019
2018
2019
Revenue Breakdown by Group: (in thousands) S&BT (4)$
27,435
$
26,014
$
26,549
EEA (5)
30,920
29,971
30,717
International (6)
8,400
12,198
10,710
Net revenue from continuing operations (7)
$
66,755
$
68,183
$
67,976
Revenue Concentration: (% of total revenue) Top customer
6
%
7
%
4
%
Top 5 customers
19
%
19
%
16
%
Top 10 customers
27
%
26
%
25
%
Key Metrics and Other Financial Data: Total Company: Consultant headcount (8)
1,029
1,027
999
Total headcount (8)
1,268
1,271
1,240
Days sales outstanding (DSO) (8)
72
70
68
Cash provided by operating activities (in thousands)
$
8,506
$
9,521
$
11,273
Pro forma return on equity (9)
25
%
30
%
26
%
Depreciation (in thousands)$
884
$
652
$
830
Amortization (in thousands)
$
236
$
585
$
255
Remaining Plan authorization: Shares purchased (in thousands)
-
-
92
Cost of shares repurchased (in thousands)
$
—
$
—
$
1,440
Average price per share of shares purchased$
—
$
—
$
15.59
Remaining Plan authorization (in thousands)
$
3,878
$
7,174
$
3,878
Shares Purchased to Satisfy Employee Net Vesting Obligations: Shares purchased (in thousands)
5
8
1
Cost of shares purchased (in thousands)
$
88
$
118
$
14
Average price per share of shares purchased
$
16.29
$
15.77
$
16.39
(4) Strategy and Business Transformation Group (S&BT) includes the results of our IP as-a-service offerings, which includes our North America Executive Advisory Programs, our Benchmarking Services and our Business Transformation Practices. (5) ERP, EPM and Analytics Solutions (EEA) includes the results of our North America Oracle EEA and SAP Solutions Practices. (6) International Groups include the results of our S&BT and EEA Practices, primarily in Europe. (7) Net revenue excludes reimbursable expenses which are primarily travel-related expenses passed through to a client with no associated margin. (8) Prior periods have been restated to exclude the discontinuance of the Company's European Working Capital Group. (9) Twelve months of pro forma net income divided by average shareholder's equity. (10) Certain reclassifications have been made to conform with current reporting requirements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20191105006180/en/
Robert A. Ramirez, CFO, 305-375-8005 or rramirez@thehackettgroup.com
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