The Hackett Group Announces Third Quarter 2021 Results

• Q3 2021 net revenue of $71.4 million, exceeds high end of guidance
• Q3 2021 GAAP EPS of $0.25
• Q3 2021 pro forma EPS of $0.32, exceeds the high end of guidance
• Board of Directors declares a $0.10 per share quarterly dividend

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 October 1, 2021.

Third quarter 2021 net revenue (gross revenue less reimbursable expenses) from continuing operations was $71.4 million, up 24%, as compared to the same COVID impacted period in the prior year as client engagement and demand continued to improve throughout the quarter.

GAAP diluted earnings per share were $0.25 for the third quarter of 2021, as compared to $0.09 in the same period in the prior year.

Third quarter 2021 pro forma diluted earnings per share were $0.32, as compared to $0.17 in same period of the prior year. Pro forma information is a non-GAAP financial presentation provided to enhance the understanding of the Company’s financial performance and is reconciled to the Company’s GAAP information in the accompanying tables.

At the end of the third quarter of 2021, the Company's cash balances were $52.9 million with no outstanding debt. During the third quarter of 2021, the Company repurchased 121 thousand shares of its common stock at an average price of $18.74 per share for a total of $2.3 million. As of the end of the third quarter of 2021, the Company's remaining share repurchase program authorization was $11.5 million.

Subsequent to the end of the third quarter of 2021, the Company's Board of Directors declared a quarterly dividend of $0.10 per share for its shareholders of record on December 17, 2021, to be paid on December 30, 2021.

“The increasing client demand we have experienced since the end of the second quarter of last year has continued throughout 2021,” stated Ted A. Fernandez, Chairman & CEO of The Hackett Group, Inc. “More importantly, we believe this momentum should continue into fiscal 2022.”

Based on the current economic outlook, the Company's estimates total net revenue for the fourth quarter of 2021 to be in the range of $64.5 million to $66.5 million. The Company estimates pro forma diluted earnings per share for the fourth quarter of 2021 to be in the range of $0.28 and $0.30.

Other Highlights

Best Practices Conference – On October 20, 2021, The Hackett Group held its annual Best Practices Conference, “Re!magine Peak Performance,” a virtual event with more than 850 registered delegates. The event featured more than 60 speakers, including senior executives from ABB, Albemarle Corporation, Aon plc, Bayer, BHP, bp, Boston Scientific, Engie, HP, Johnson & Johnson, The Lubrizol Corporation, and Takeda Pharmaceuticals International GmbH.

Key Issues Study Launch – In September 2021, The Hackett Group launched its 2022 Key Issues campaigns covering six functional areas: Finance, Procurement, Supply Chain, Human Resources, Information Technology, and Global Business Services. Results from the studies will be released in January 2022.

Podcasts – The Hackett Group continued its weekly “Business Excelleration” podcast, which recently featured topics such as: Wipro’s HR transformation; sustainable procurement; supplier diversity; HR strategies for the hybrid workplace; working capital survey results; trends in corporate learning and development; and how IT can shift from a cost center to a value creator.

AWS SAP Competency – In August 2021, Answerthink, a division of The Hackett Group, announced that it had achieved Amazon Web Services (AWS) SAP Competency status. Achieving AWS SAP Competency status differentiates Answerthink as an AWS Partner Network (APN) member, demonstrating its technical experience and proven customer success with specific focus on migrating SAP workloads to AWS.

On Tuesday, November 9, 2021, senior management will discuss third quarter results in a conference call at 5:00 P.M. ET. The number for the conference call is [phone], [Passcode: Third Quarter]. For International callers, please dial [phone]. 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 9, 2021 and will run through 5:00 P.M. ET on Tuesday, November 23, 2021. To access the rebroadcast, please dial [phone]. For International callers, please dial [phone].

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 9, 2021 and will run through 5:00 P.M. ET on Tuesday, November 23, 2021. 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 cloud ERP, EPM and analytics 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 distinguished Oracle, SAP, Coupa and OneStream practices.

The Hackett Group has completed nearly 20,000 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 91% of the Fortune 100, 80% of the DAX 30 and 55% of the FTSE 100. These studies drive The Hackett’s Group’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 digital world-class performance.

More information on The Hackett Group is available at: www.thehackettgroup.com, [e-mail], or by calling [phone].

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 impact of the coronavirus pandemic, including the duration and severity of the pandemic, the economic impact of the pandemic and the timing of an economic recovery, demand for our services, our ability to manage our business and capital resources through the pandemic, the ability of our products, services, or offerings mentioned in this release to deliver the desired effect, our ability to retain existing business, our ability to attract additional business through strategic initiatives or otherwise, 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, especially given that our clients are also impacted by the pandemic, changes in expectations regarding the business consulting and information technology industries, our ability to attract and retain skilled employees, the impact of any federally-mandated vaccine, testing or other COVID-19 related requirements on employee retention and our results of operations, 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, as well as other risks detailed in our Annual Report on Form 10-K for the most recent fiscal year as 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

October 1,

 

September 25,

 

October 1,

 

September 25,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue:










Revenue before reimbursements ("net revenue")

$

71,400

 

$

57,769

 

$

207,807

 

$

175,587

 

Reimbursements

 

494

 

 

148

 

 

770

 

 

4,614

 

TOTAL REVENUE FROM CONTINUING OPERATIONS

 

71,894

 

 

57,917

 

 

208,577

 

 

180,201

 

 


Costs and expenses:










Cost of service:










Personnel costs before reimbursable expenses

 

43,552

 

 

37,791

 

 

124,312

 

 

117,558

 

Non-cash stock compensation expense

 

1,651

 

 

1,508

 

 

4,918

 

 

4,449

 

Acquisition-related compensation expense

 

-

 

 

10

 

 

11

 

 

39

 

Acquisition-related non-cash stock compensation expense

 

19

 

 

243

 

 

378

 

 

755

 

Reimbursable expenses

 

494

 

 

148

 

 

770

 

 

4,614

 

TOTAL COST OF SERVICE

 

45,716

 

 

39,700

 

 

130,389

 

 

127,415

 

 


Selling, general and administrative costs

 

13,613

 

 

12,732

 

 

40,415

 

 

38,042

 

Non-cash stock compensation expense

 

901

 

 

711

 

 

2,515

 

 

1,830

 

Amortization of intangible assets

 

259

 

 

247

 

 

783

 

 

723

 

Restructuring costs

 

—

 

 

—

 

 

—

 

 

5,034

 

TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

14,773

 

 

13,690

 

 

43,713

 

 

45,629

 

 


TOTAL COSTS AND OPERATING EXPENSES

 

60,489

 

 

53,390

 

 

174,102

 

 

173,044

 

 


INCOME FROM OPERATIONS

 

11,405

 

 

4,527

 

 

34,475

 

 

7,157

 

 


Other expense:










Interest expense

 

(26

)

 

(22

)

 

(76

)

 

(100

)

 


INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

 

11,379

 

 

4,505

 

 

34,399

 

 

7,057

 

Income tax expense

 

3,248

 

 

1,362

 

 

9,368

 

 

2,312

 

INCOME FROM CONTINUING OPERATIONS

 

8,131

 

 

3,143

 

 

25,031

 

 

4,745

 

Loss from discontinued operations (2)

 

-

 

 

(157

)

 

(7

)

 

(165

)

NET INCOME

$

8,131

 

$

2,986

 

$

25,024

 

$

4,580

 

 


Weighted average common shares outstanding:










Basic

 

29,814

 

 

30,053

 

 

30,038

 

 

29,986

 

Diluted

 

32,876

 

 

32,403

 

 

32,871

 

 

32,335

 

 


Basic net income per common share:










Income per common share from continuing operations

$

0.27

 

$

0.11

 

$

0.83

 

$

0.16

 

Loss per common share from discontinued operations (2)

 

(0.00

)

 

(0.01

)

 

(0.00

)

 

(0.01

)

Basic net income per common share

$

0.27

 

$

0.10

 

$

0.83

 

$

0.15

 

 


Diluted net income per common share:










Income per common share from continuing operations

$

0.25

 

$

0.10

 

$

0.76

 

$

0.15

 

Loss per common share from discontinued operations (2)

 

(0.00

)

 

(0.01

)

 

0.00

 

 

(0.01

)

Diluted net income per common share

$

0.25

 

$

0.09

 

$

0.76

 

$

0.14

 

 


PRO FORMA DATA (1):










Income from continuing operations before income taxes

$

11,379

 

$

4,505

 

$

34,399

 

$

7,057

 

Non-cash stock compensation expense

 

2,552

 

 

2,219

 

 

7,433

 

 

6,279

 

Acquisition-related compensation expense

 

-

 

 

10

 

 

11

 

 

39

 

Acquisition-related non-cash stock compensation expense

 

19

 

 

243

 

 

378

 

 

755

 

Restructuring costs

 

-

 

 

-

 

 

-

 

 

5,034

 

Amortization of intangible assets

 

259

 

 

247

 

 

783

 

 

723

 

PRO FORMA INCOME BEFORE INCOME TAXES

 

14,209

 

 

7,224

 

 

43,004

 

 

19,887

 

Pro forma income tax expense

 

3,552

 

 

1,806

 

 

10,751

 

 

4,972

 

PRO FORMA NET INCOME

$

10,657

 

$

5,418

 

$

32,253

 

$

14,915

 

 


Pro forma basic net income per common share

$

0.36

 

$

0.18

 

$

1.07

 

$

0.50

 

Weighted average common shares outstanding

 

29,814

 

 

30,053

 

 

30,038

 

 

29,986

 

 


Pro forma diluted net income per common share

$

0.32

 

$

0.17

 

$

0.98

 

$

0.46

 

Weighted average common and common equivalent shares outstanding

 

32,876

 

 

32,403

 

 

32,871

 

 

32,335

 

(1) The Company provides pro forma earnings results (which exclude the amortization of intangible assets, non-cash stock compensation expense, acquisition-related one-time expense, 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 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) 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)

October 1,

 

January 1,

2021

 

2021

ASSETS

Current assets:






Cash and cash equivalents

$

52,939

$

49,455

Accounts receivable and contract assets, net

 

49,609

 

32,778

Prepaid expenses and other current assets

 

3,168

 

2,599

Total current assets

 

105,716

 

84,832

Property and equipment, net

 

17,853

 

18,158

Other assets

 

840

 

1,680

Goodwill

 

85,089

 

85,297

Operating lease right-of-use assets

 

1,862

 

2,578

Total assets

$

211,360

$

192,545

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:






Accounts payable

$

5,027

$

6,098

Accrued expenses and other liabilities

 

35,615

 

25,084

Contract liabilities (deferred revenue)

 

11,959

 

8,765

Operating lease liabilities

 

2,338

 

2,620

Total current liabilities

 

54,939

 

42,567

Long-term deferred tax liability, net

 

5,950

 

5,588

Operating lease liabilities

 

1,962

 

3,503

Total liabilities

 

62,851

 

51,658

 


Shareholders' equity

 

148,509

 

140,887

 


Total liabilities and shareholders' equity

$

211,360

$

192,545

The Hackett Group, Inc.

SUPPLEMENTAL FINANCIAL DATA

(unaudited)

Quarter Ended

October 1,

 

July 2,

 

September 25,

 

2021

 

 

 

2021

 

 

 

2020

 

Revenue Breakdown by Group:

(in thousands)








S&BT (3)

$

27,623

 

$

26,447

 

$

22,217

 

EEA (4)

 

38,201

 

 

40,521

 

 

29,710

 

International (5)

 

5,576

 

 

6,029

 

 

5,842

 

Net revenue from continuing operations (6)

$

71,400

 

$

72,997

 

$

57,769

 

Revenue Concentration:

(% of total revenue)








Top customer

 

5

%

 

7

%

 

6

%

Top 5 customers

 

14

%

 

19

%

 

16

%

Top 10 customers

 

24

%

 

30

%

 

26

%

Key Metrics and Other Financial Data:

Total Company:

Consultant headcount

 

1,049

 

 

1,001

 

 

923

 

Total headcount

 

1,257

 

 

1,210

 

 

1,124

 

Days sales outstanding (DSO)

 

63

 

 

59

 

 

57

 

Cash provided by operating activities (in thousands)

$

6,818

 

$

13,756

 

$

10,088

 

Depreciation (in thousands)

$

829

 

$

849

 

$

916

 

Amortization (in thousands)

$

259

 

$

263

 

$

247

 

Remaining Plan authorization:

Shares purchased (in thousands)

 

113

 

 

489

 

 

75

 

Cost of shares repurchased (in thousands)

$

2,103

 

$

8,603

 

 

932

 

Average price per share of shares purchased

$

18.68

 

$

17.58

 

 

12.41

 

Remaining Plan authorization (in thousands)

$

11,472

 

$

13,575

 

$

4,713

 

Shares Purchased to Satisfy Employee Net Vesting Obligations:

Shares purchased (in thousands)

 

8

 

 

2

 

 

8

 

Cost of shares purchased (in thousands)

$

155

 

$

38

 

$

111

 

Average price per share of shares purchased

$

19.49

 

$

17.63

 

$

14.26

 

(3) 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.


(4) ERP, EPM and Analytics Solutions (EEA) includes the results of our North America Oracle EEA, SAP Solutions Practices and One Stream.


(5) International Groups include the results of our S&BT and EEA Practices, primarily in Europe.


(6) Net revenue excludes reimbursable expenses which are primarily travel-related expenses passed through to a client with no associated margin.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211109006527/en/

Robert A. Ramirez, CFO, 305-375-8005 or [e-mail]