- Q4 2021 net revenue of $69.8 million, up 18% year over year,
which exceeds high end of guidance
- Q4 2021 GAAP EPS of $0.50, includes a tax benefit of $0.23 per
share from SARs exercise
- Q4 2021 pro forma EPS of $0.33, up 43% year over year, which
exceeds high end of guidance
- Company announces annual dividend increase of 10% and declares
$0.11 per share first quarter 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 fourth quarter, which ended
on December 31, 2021.
Fourth quarter 2021 net revenue (gross revenue less reimbursable
expenses) from continuing operations was $69.8 million, up 18%, as
compared to the same period in the prior year.
GAAP diluted earnings per share were $0.50 for the fourth
quarter of 2021, as compared to GAAP diluted earnings per share of
$0.03 in the same period in the prior year. GAAP results for the
fourth quarter of 2021 included a $7.7 million, or $0.23 per
diluted share, tax benefit related to the exercise of 2.9 million
outstanding share appreciation rights (SARs). GAAP results for the
fourth quarter of 2020 included a $5.5 million, or $0.12 per
diluted share, restructuring and asset impairment charge primarily
related to the reduction in the Company's leased office space.
Pro forma diluted earnings per share were $0.33 for the fourth
quarter of 2021, as compared to pro forma diluted earnings per
share of $0.23 in the same period in the prior year, as demand for
our services resulted in increased revenues from higher rates and
utilization as well as an increase in the revenue mix from higher
margin IP based offerings. 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.
At its most recent meeting, the Company's Board of Directors
authorized a 10% increase in its annual dividend from $0.40 to
$0.44 per share, to be paid quarterly, and declared a quarterly
dividend of $0.11 per share for its shareholders of record on March
25, 2022, to be paid on April 8, 2022.
At the end of the fourth quarter of 2021, the Company's cash
balances were $45.8 million with no outstanding debt. During the
quarter, the Company repurchased 1.0 million shares of its stock at
an average price of $19.83 for a total of $20.0 million, which
includes $19.7 million related to the exercise of the 2.9 million
outstanding SARs. As of the end of the fourth quarter of 2021, the
Company's remaining share repurchase program authorization was
$11.2 million.
"We finished the year strongly which resulted in record fiscal
year 2021 operating results," stated Ted A. Fernández, Chairman and
CEO of The Hackett Group, Inc. "More importantly, the strong demand
for our digital transformation services continues into the new year
which bodes well for 2022."
Based on the Company's current economic outlook, the Company
estimates total net revenue for the first quarter of 2022 will be
in the range of $70.0 million to $72.0 million. The Company
estimates pro forma diluted earnings per share for the first
quarter of 2022 to be in the range of $0.31 and $0.33.
Other Highlights
Research: 2022 Key Issues Series – In early January 2022, The
Hackett Group produced and distributed six pieces in its 2022 Key
Issues research series. They focused individually on: finance,
procurement, supply chain, human resources, technology, and global
business services. Each details 10 key issues for 2022, as the
ongoing business disruption of the pandemic continues to shape
priorities and drive an accelerated transformation agenda. For each
research piece, The Hackett Group produced a research paper, email
campaign, Website content, LinkedIn advertising, social media
posts, infographic, animation, virtual roundtable, and podcast.
Working Capital Research – Q3 Update – The Hackett Group issued
a third quarter update to its annual Working Capital Research,
tracking how effective the largest U.S. companies have been at
collecting from customers, paying suppliers, and managing
inventory. The research also details changes to revenue, debt, and
cash on hand as companies began to rebound from the pandemic.
Sustainable Procurement Research – The Hackett Group published
research looking at how companies can build a sustainable
procurement program based on best practices.
Anaplan Partnership – The Hackett Group and Anaplan jointly
announced a strategic alliance that will allow The Hackett Group to
deliver finance and supply chain solutions that empower
organizations to deliver real-time intelligence to executives, add
strategic value to the enterprise, and accelerate best practices
implementations utilizing Anaplan’s leading business performance
orchestration platform.
Podcasts – The Hackett Group continued its weekly “Business
Excelleration” podcast, which recently featured topics such as:
ADP’s innovation lab; what to do about the looming credit crunch,
Wipro’s AI-led HR transformation; shifting IT’s perspective from
cost center to business value creator; the transformation in
corporate learning; the big reset on talent; reimagining global
business services and outsourcing; and more.
Webinars and Quick Polls– The Hackett Group held webinars on the
following topics: The Digital World Class Advantage – Transforming
Finance and CPM (with OneStream); How HR and Payroll Must Prepare
to Adopt New Ways of Working; The Hackett Institute – The Changing
Face of Talent Management; and Automate More (with Workiva). In
addition, Quick Polls were launched looking at: inflation, FP&A
forecasting, and HR Centers of Excellence.
On Tuesday, February 22, 2022, senior management will discuss
fourth quarter results in a conference call at 5:00 P.M. ET. The
number for the conference call is (800) 593-0486, [Passcode: Fourth
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, February
22, 2022 and will run through 5:00 P.M. ET on Tuesday, March 8,
2022. To access the rebroadcast, please dial (800) 584-7317. For
International callers, please dial (203) 369-3296.
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, February 22, 2022,
and will run through 5:00 P.M. ET on Tuesday, March 8, 2022. 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 firm to global companies, offering digital
transformation including implementation of leading enterprise cloud
applications, workflow automation and analytics that enable digital
world class performance.
Drawing from our unparalleled IP from nearly 20,000 benchmark
studies with the world’s leading businesses – including 97% of the
Dow Jones Industrials, 94% of the Fortune 100, 70% of the DAX 30
and 51% of the FTSE 100 – captured through our leading benchmarking
platform, Quantum Leap®, and our Digital Transformation Platform
(DTP), we accelerate best practices 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, quadrant logo and World Class Defined and
Enabled, are the registered marks of The Hackett Group.
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
Twelve Months Ended
December 31,
January 1,
December 31,
January 1,
2021
2021
2021
2021
Revenue: Revenue before reimbursements ("net revenue")
$
69,776
$
59,223
$
277,583
$
234,810
Reimbursements
456
58
1,226
4,672
TOTAL REVENUE FROM CONTINUING OPERATIONS
70,232
59,281
278,809
239,482
Costs and expenses: Cost of service: Personnel costs before
reimbursable expenses
40,831
36,769
165,143
154,327
Non-cash stock compensation expense
1,442
1,806
6,360
6,255
Acquisition-related compensation expense
-
11
11
50
Acquisition-related non-cash stock compensation expense
28
309
406
1,064
Reimbursable expenses
456
58
1,226
4,672
TOTAL COST OF SERVICE
42,757
38,953
173,146
166,368
Selling, general and administrative costs
14,400
12,544
54,815
50,586
Non-cash stock compensation expense
841
591
3,356
2,421
Amortization of intangible assets
233
254
1,016
977
Restructuring charges and asset impairments
-
5,454
-
10,488
TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
15,474
18,843
59,187
64,472
TOTAL COSTS AND OPERATING EXPENSES
58,231
57,796
232,333
230,840
INCOME FROM OPERATIONS
12,001
1,485
46,476
8,642
Other expense: Interest expense
(19)
(26)
(95)
(126)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
11,982
1,459
46,381
8,516
Income tax (benefit) expense
(4,539)
559
4,829
2,871
INCOME FROM CONTINUING OPERATIONS
16,521
900
41,552
5,645
Loss from discontinued operations (2)
-
(7)
(7)
(172)
NET INCOME
$
16,521
$
893
$
41,545
$
5,473
Weighted average common shares outstanding: Basic
29,970
29,995
30,021
29,988
Diluted
32,916
32,614
32,883
32,405
Basic net income per common share: Income per common share
from continuing operations
$
0.55
$
0.03
$
1.38
$
0.19
Loss per common share from discontinued operations (2)
(0.00)
(0.00)
(0.00)
(0.01)
Basic net income per common share
$
0.55
$
0.03
$
1.38
$
0.18
Diluted net income per common share: Income per common share
from continuing operations
$
0.50
$
0.03
$
1.26
$
0.17
Loss per common share from discontinued operations (2)
(0.00)
(0.00)
(0.00)
(0.00)
Diluted net income per common share
$
0.50
$
0.03
$
1.26
$
0.17
PRO FORMA DATA (1): Income from continuing operations before
income taxes
$
11,982
$
1,459
$
46,381
$
8,516
Non-cash stock compensation expense
2,283
2,397
9,716
8,676
Acquisition-related compensation expense
-
11
11
50
Acquisition-related non-cash stock compensation expense
28
309
406
1,064
Restructuring charges and asset impairments
-
5,454
-
10,488
Amortization of intangible assets
233
254
1,016
977
PRO FORMA INCOME BEFORE INCOME TAXES
14,526
9,884
57,530
29,771
Pro forma income tax expense
3,632
2,471
14,383
7,443
PRO FORMA NET INCOME
$
10,895
$
7,413
$
43,148
$
22,328
Pro forma basic net income per common share
$
0.36
$
0.25
$
1.44
$
0.74
Weighted average common shares outstanding
29,970
29,995
30,021
29,988
Pro forma diluted net income per common share
$
0.33
$
0.23
$
1.31
$
0.69
Weighted average common and common equivalent shares outstanding
32,916
32,614
32,883
32,405
(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,
restructuring charges, asset impairments, 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)
December 31,
January 1,
2021
2021
ASSETS Current assets: Cash and cash equivalents
$
45,794
$
49,455
Accounts receivable and contract assets, net
50,616
32,778
Prepaid expenses and other current assets
5,766
2,599
Total current assets
102,176
84,832
Property and equipment, net
18,026
18,158
Other assets
620
1,680
Goodwill
85,070
85,297
Operating lease right-of-use assets
1,649
2,578
Total assets
$
207,541
$
192,545
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable
$
7,677
$
6,098
Accrued expenses and other liabilities
30,297
25,084
Contract liabilities (deferred revenue)
14,616
8,765
Operating lease liabilities
2,299
2,620
Total current liabilities
54,889
42,567
Long-term deferred tax liability, net
7,325
5,588
Operating lease liabilities
1,474
3,503
Total liabilities
63,688
51,658
Shareholders' equity
143,853
140,887
Total liabilities and shareholders' equity
$
207,541
$
192,545
The Hackett Group, Inc. SUPPLEMENTAL FINANCIAL DATA
(unaudited)
Quarter Ended
December 31,
October 1,
January 1,
2021
2021
2021
Revenue Breakdown by Group: (in thousands) S&BT (3)
$
28,436
$
27,623
$
23,362
EEA (4)
34,771
38,201
30,102
International (5)
6,569
5,576
5,759
Net revenue from continuing operations (6)
$
69,776
$
71,400
$
59,223
Revenue Concentration: (% of total revenue) Top
customer
6%
5%
3%
Top 5 customers
15%
14%
13%
Top 10 customers
22%
24%
23%
Key Metrics and Other Financial Data: Total
Company: Consultant headcount
1,072
1,049
928
Total headcount
1,274
1,257
1,133
Days sales outstanding (DSO)
66
63
54
Cash provided by operating activities (in thousands)
$
19,885
$
6,818
$
12,906
Depreciation (in thousands)
$
809
$
829
$
902
Amortization (in thousands)
$
233
$
259
$
254
Capital expeditures (in thousands)
$
986
$
838
$
395
Remaining Plan authorization: Shares purchased (in
thousands)
10
113
36
Cost of shares repurchased (in thousands)
$
224
$
2,103
$
429
Average price per share of shares purchased
$
21.64
$
18.68
$
11.84
Remaining Plan authorization (in thousands)
$
11,244
$
11,468
$
4,284
Shares Purchased to Satisfy Employee Net Vesting
Obligations (7): Shares purchased (in thousands)
998
8
4
Cost of shares purchased (in thousands)
$
19,767
$
155
$
54
Average price per share of shares purchased
$
19.81
$
19.49
$
13.00
(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. (7) The share
repurchases to satisfy employee net vesting obligations in the
quarter ended December 31, 2021, included the net exercise of 2.9
million SARs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220222006002/en/
Robert A. Ramirez, CFO, 305-375-8005 or
rramirez@thehackettgroup.com
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