Hackett : Consolidated Statements of Operations – Q1 2021

Page 1 of 3 - The Hackett Group, Inc. Announces First Quarter Results
The Hackett Group, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
		Quarter Ended
		April 2,			March 27,
		2021			2020
Revenue:
Revenue before reimbursements ("net revenue")	$	63,410	$	65,186
Reimbursements		76			4,347
TOTAL REVENUE FROM CONTINUING OPERATIONS		63,486			69,533
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		39,312			41,113
Non-cash stock compensation expense		1,599			1,341
Acquisition-related compensation expense		11			-
Acquisition-relatednon-cash stock compensation expense		248			253
Reimbursable expenses		76			4,347
TOTAL COST OF SERVICE		41,246			47,054
Selling, general and administrative costs		12,386			13,897
Non-cash stock compensation expense		740			636
Amortization of intangible assets		261			238
TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		13,387			14,771
TOTAL COSTS AND OPERATING EXPENSES
	54,633			61,825
INCOME FROM OPERATIONS		8,853			7,708
Other expense:
Interest expense		(25)			(37)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		8,828			7,671
Income tax expense		2,460			2,136
INCOME FROM CONTINUING OPERATIONS		6,368			5,535
Loss from discontinued operations (2)		(7)			(8)
NET INCOME	$	6,361		$	5,527
Weighted average common shares outstanding:
Basic		30,207			29,889
Diluted		32,769			32,264
Basic net income per common share:
Income per common share from continuing operations	$	0.21	$	0.19
Loss per common share from discontinued operations (2)		(0.00)			(0.00)
Basic net income per common share	$	0.21		$	0.19
Diluted net income per common share:
Income per common share from continuing operations	$	0.19	$	0.17
Loss per common share from discontinued operations (2)		(0.00)			(0.00)
Diluted net income per common share	$	0.19		$	0.17
PRO FORMA DATA (1):
Income from continuing operations before income taxes	$	8,828	$	7,671
Non-cash stock compensation expense		2,339			1,977
Acquisition-related compensation expense		11			-
Acquisition-relatednon-cash stock compensation expense		248			253
Amortization of intangible assets		261			238
PRO FORMA INCOME BEFORE INCOME TAXES		11,687			10,139
Pro forma income tax expense		2,922			2,535
PRO FORMA NET INCOME	$	8,765		$	7,604
Pro forma basic net income per common share	$	0.29	$	0.25
Weighted average common shares outstanding		30,207			29,889
Pro forma diluted net income per common share	$	0.27	$	0.24
Weighted average common and common equivalent shares outstanding		32,769			32,264

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.

Page 2 of 3 - The Hackett Group, Inc. Announces First Quarter Results
The Hackett Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
			April 2,			January 1,
			2021			2021
	ASSETS
	Current assets:
	Cash and cash equivalents	$	51,105	$	49,455
	Accounts receivable and contract assets, net		38,521			32,778
	Prepaid expenses and other current assets		2,733			2,599
	Total current assets		92,359			84,832
	Property and equipment, net		17,803			18,158
	Other assets		1,417			1,680
	Goodwill		85,438			85,297
	Operating lease right-of-use assets		2,335			2,578
	Total assets	$	199,352		$	192,545
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Current liabilities:
	Accounts payable	$	4,938	$	6,098
	Accrued expenses and other liabilities		24,929			25,084
	Contract liabilities (deferred revenue)		13,802			8,765
	Operating lease liabilities		2,501			2,620
	Total current liabilities		46,170			42,567
	Long-term deferred tax liability, net		7,013			5,588
	Operating lease liabilities		2,988			3,503
	Total liabilities		56,171			51,658
	Shareholders' equity		143,181			140,887
	Total liabilities and shareholders' equity	$	199,352		$	192,545

Page 3 of 3 - The Hackett Group, Inc. Announces First Quarter Results

The Hackett Group, Inc.

SUPPLEMENTAL FINANCIAL DATA (unaudited)

					Quarter Ended
	April 2,				January 1,			March 27,
Revenue Breakdown by Group:	2021				2021			2020
(in thousands)
S&BT (3)	$	25,738	$	23,362	$	25,593
EEA (4)		32,138			30,102			32,093
International (5)		5,534			5,759			7,500
Net revenue from continuing operations (6)	$	63,410		$	59,223		$	65,186
Revenue Concentration:
(% of total revenue)
Top customer		3%			3%			4%
Top 5 customers		13%			13%			15%
Top 10 customers		22%			23%			25%
Key Metrics and Other Financial Data:
Total Company:
Consultant headcount		943			928			1,026
Total headcount		1,149			1,133			1,243
Days sales outstanding (DSO)		55			54			70
Cash provided by operating activities (in thousands)	$	5,895	$	12,906	$	6,521
Depreciation (in thousands)	$	874	$	902	$	800
Amortization (in thousands)	$	261	$	254	$	238
Remaining Plan authorization:
Shares purchased (in thousands)		136			36			73
Cost of shares repurchased (in thousands)	$	2,106	$	429	$	1,006
Average price per share of shares purchased	$	15.45	$	11.84	$	13.79
Remaining Plan authorization (in thousands)	$	2,178	$	4,284	$	5,645
Shares Purchased to Satisfy Employee Net Vesting Obligations:
Shares purchased (in thousands)		108			4			125
Cost of shares purchased (in thousands)	$	1,606	$	54	$	1,962
Average price per share of shares purchased	$	14.85	$	13.00	$	15.70

1. 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.
2. ERP, EPM and Analytics Solutions (EEA) includes the results of our North America Oracle EEA, SAP Solutions Practices and One Stream.
3. International Groups include the results of our S&BT and EEA Practices, primarily in Europe.
4. Net revenue excludes reimbursable expenses which are primarily travel-related expenses passed through to a client with no associated margin.
5. Certain reclassifications have been made to conform with current reporting requirements.