The Hackett Group Announces Third Quarter 2023 Results
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 announc...
MIAMI: 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 third quarter, which ended on September 29, 2023.
Financial Highlights
- Total revenue in the third quarter of 2023 was $75.9 million and revenue before reimbursements was $74.6 million, which was above the high end of our guidance. This compares to total revenue of $72.0 million and revenue before reimbursements of $71.0 million in the third quarter of the prior year.
- GAAP diluted earnings per share was $0.34 in the third quarter of 2023, as compared to $0.32 in the third quarter of 2022.
- Third quarter 2023 adjusted diluted earnings per share, a non-GAAP measure, was $0.41, which was at the high end of our guidance, as compared to $0.37 in the third quarter of 2022. Adjusted financial 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.
- As of September 29, 2023, the Company’s cash balances were $9.9 million, with a $44.0 million outstanding balance on the Company’s credit facility. During the third quarter of 2023, the Company paid down $9.0 million of its debt balance. As of the end of the third quarter of 2023, the Company's remaining share repurchase program authorization was $13.9 million.
- Subsequent to the end of the third quarter, the Company’s Board of Directors declared its fourth quarter 2023 dividend of $0.11 per share for its shareholders of record on December 22, 2023, to be paid on January 5, 2024.
“We continued to report solid operating results meeting or exceeding previously provided guidance while continuing to increase our investment in program development and sales resources in our recurring high margin IP offerings,” stated Ted A. Fernandez, Chairman & CEO of The Hackett Group, Inc. “We recently launched our new Hackett Connect platform and AI Explorer offering which avails our clients to our new delivery systems and capabilities in emerging areas important to our growth.”
Business Outlook for the Fourth Quarter of 2023
Based on the Company’s current outlook:
- The Company estimates total revenue before reimbursements for the fourth quarter of 2023 will be in the range of $69.0 million to $70.4 million.
- The Company estimates adjusted diluted earnings per share for the fourth quarter of 2023 to be in the range of $0.36 and $0.38, assuming a GAAP effective tax rate of 28.6%.
Conference Call and Webcast Details
- On Tuesday, November 7, 2023, senior management will discuss third quarter results in a conference call at 5:00 P.M. ET. The number for the conference call is (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 7, 2023 and will run through 5:00 P.M. ET on Tuesday, November 21, 2023. To access the rebroadcast, please dial (800) 944-1822. For International callers, please dial (203) 369-3872.
- In addition, The Hackett Group® will also be webcasting this conference call live. To participate, simply visit https://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 7, 2023 and will run through 5:00 P.M. ET on Tuesday, November 21, 2023. To access the replay, visit www.thehackettgroup.com.
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, executive 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 40 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.
For more information on The Hackett Group, visit: https://www.thehackettgroup.com/; email info@thehackettgroup.com; or call (770) 225-3600.
# # #
The Hackett Group, Hackett-Certified, quadrant logo, World Class Defined and Enabled, Quantum Leap, Digital World Class and Hackett Value Matrix 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 |
| Nine Months Ended | ||||||||||||||
September 29, |
| September 30, |
| September 29, |
| September 30, | ||||||||||
| 2023 |
|
|
| 2022 |
|
|
| 2023 |
|
|
| 2022 |
| ||
| Revenue: | ||||||||||||||||
| Revenue before reimbursements | $ | 74,634 |
| $ | 70,995 |
| $ | 220,106 |
| $ | 220,871 |
| ||||
| Reimbursements |
| 1,222 |
|
| 1,038 |
|
| 4,081 |
|
| 2,754 |
| ||||
| Total revenue |
| 75,856 |
|
| 72,033 |
|
| 224,187 |
|
| 223,625 |
| ||||
| Costs and expenses: | ||||||||||||||||
| Cost of service: | ||||||||||||||||
| Personnel costs before reimbursable expenses (includes $1,518 and $4,687 and $1,652 and $4,801 of non-cash stock based compensation expense in the three and nine months ended September 29, 2023 and September 30, 2022, respectively) |
| 44,421 |
|
| 42,870 |
|
| 132,990 |
|
| 134,904 |
| ||||
| Reimbursable expenses |
| 1,222 |
|
| 1,038 |
|
| 4,081 |
|
| 2,754 |
| ||||
| Total cost of service |
| 45,643 |
|
| 43,908 |
|
| 137,071 |
|
| 137,658 |
| ||||
| Selling, general and administrative costs (includes $1,193 and $3,243 and $859 and $3,027 of non-cash stock based compensation expense in the three and nine months ended September 29, 2023 and September 30, 2022, respectively) |
| 16,470 |
|
| 14,616 |
|
| 49,331 |
|
| 44,993 |
| ||||
| Restructuring and asset impairment settlement |
| - |
|
| (526 | ) |
| - |
|
| (651 | ) | ||||
| Total costs and operating expenses |
| 62,113 |
|
| 57,998 |
|
| 186,402 |
|
| 182,000 |
| ||||
| Operating income |
| 13,743 |
|
| 14,035 |
|
| 37,785 |
|
| 41,625 |
| ||||
| Other expense, net: | ||||||||||||||||
| Interest expense, net |
| (814 | ) |
| (14 | ) |
| (2,594 | ) |
| (70 | ) | ||||
| Income from operations before income taxes |
| 12,929 |
|
| 14,021 |
|
| 35,191 |
|
| 41,555 |
| ||||
| Income tax expense |
| 3,509 |
|
| 3,655 |
|
| 8,890 |
|
| 10,469 |
| ||||
| Net income | $ | 9,420 |
| $ | 10,366 |
| $ | 26,301 |
| $ | 31,086 |
| ||||
| Basic net income per common share: | ||||||||||||||||
| Income per common share from operations | $ | 0.35 |
| $ | 0.33 |
| $ | 0.97 |
| $ | 0.98 |
| ||||
| Weighted average common shares outstanding |
| 27,220 |
|
| 31,686 |
|
| 27,146 |
|
| 31,596 |
| ||||
| Diluted net income per common share: | ||||||||||||||||
| Income per common share from operations | $ | 0.34 |
| $ | 0.32 |
| $ | 0.95 |
| $ | 0.97 |
| ||||
| Weighted average common and common equivalent shares outstanding |
| 27,818 |
|
| 32,309 |
|
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