8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 2, 2018

The Hackett Group, Inc.

(Exact name of registrant as specified in its charter)

FLORIDA	333-48123	65-0750100
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

1001 Brickell Bay Drive, Suite 3000 Miami, Florida	33131
(Address of principal executive offices)	(Zip Code)

(305) 375-8005

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On May 8, 2018, The Hackett Group, Inc. (the “Company”) issued a press release setting forth its consolidated financial results for the first fiscal quarter ended March 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

The information contained in Item 2.02 of this current report on Form 8-K, as well as Exhibit 99.1, is being furnished to the Securities and Exchange Commission and shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.

Item 5.07   Submission of Matters to a Vote of Security Holders.

The 2018 Annual Meeting of Shareholders of the Company was held on May 2, 2018. Matters submitted to shareholders at the meeting and the voting results thereof were as follows:

Proposal 1 – Election of Directors. The shareholders of the Company elected the director nominees named below to serve until the 2021 Annual Meeting of Shareholders and until their successors are duly elected and qualified. The following is a breakdown of the voting results:

			BROKER
DIRECTOR	FOR	WITHHELD	NON-VOTES
David N. Dungan	22,701,711	677,554	3,655,361

			BROKER
DIRECTOR	FOR	WITHHELD	NON-VOTES
Richard N. Hamlin	21,835,618	1,543,647	3,655,361

Proposal 2 – Advisory Vote on Executive Officer Compensation. The shareholders of the Company approved an advisory vote on executive officer compensation. The following is a breakdown of the voting results:

			BROKER
FOR	AGAINST	ABSTAIN	NON-VOTES
22,375,916	497,021	506,328	3,655,361

Proposal 3 – Appointment of RSM US LLP as Independent Auditor. The shareholders of the Company ratified the appointment of RSM US LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 28, 2018. The following is a breakdown of the voting results:

BROKER

FOR	AGAINST	ABSTAIN	NON-VOTES
26,998,607	23,479	12,540	-

Item 9.01     Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
99.1	Press Release of The Hackett Group, Inc., dated May 8, 2018

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE HACKETT GROUP, INC.
Date: May 8, 2018	By:	/s/ Robert A. Ramirez
		Robert A. Ramirez
		Executive Vice President, Finance and Chief Financial Officer

EX-99.1

Exhibit 99.1

Contact:

Robert A. Ramirez, CFO, 305-375-8005 or rramirez@thehackettgroup.com

The Hackett Group Announces First Quarter 2018 Results

• Q1 2018 total net revenue of $67.5 million, up 4% from prior year, and pro forma EPS of $0.26, up 13% from prior year and both in line with guidance  

• Board of Directors declares $0.17 semi-annual dividend and approves a $5.0 million increase in the Company’s share repurchase program

MIAMI, FL – May 8, 2018 - 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 first quarter, which ended on March 30, 2018.

Q1 2018 net revenue was $67.5 million, up 4% from prior year. Q1 2018 gross revenue was $72.7 million, up 2% from prior year. The actual Q1 2018 reimbursable expense ratio on net revenue was 7.8% versus 9.8% from the prior year. Reimbursable expenses are project travel-related expenses passed through to a client with no associated margin.

Q1 2018 pro forma diluted earnings per share were $0.26, up 13%, when compared to $0.23 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.

GAAP diluted earnings per share were $0.23 for the first quarter of 2018, as compared to $0.24 for the same period in the prior year. Income tax expense in Q1 2018 had a $0.02 unfavorable impact in GAAP diluted earnings per share.

In its recent meeting, the Company’s Board of Directors declared a semi-annual dividend of $0.17 per share for its shareholders of record on June 29, 2018, to be paid on July 11, 2018.

At the end of the first quarter of 2018, the Company’s cash balances were $23.7 million. During the first quarter the Company utilized cash to repurchase 228 thousand shares of the Company’s common stock at an average price per share of $17.42 for a total of $4.0 million. At the end of the first quarter of 2018, the Company’s remaining stock purchase program authorization was $2.2 million. Subsequent to the end of the first quarter, the Company’s Board of Directors approved a $5.0 million increase in the Company’s share repurchase program.

“We reported solid quarterly results as we started to see the initial benefits of our cloud and digital transformation focus,” stated Ted A. Fernandez, Chairman & CEO of the Hackett Group. “Additionally, we are seeing favorable reaction to our recently introduced Quantum Leap, Digital Transformation Platform and RPA offerings which digitize and leverage our unique Hackett Intellectual Property and highly differentiate our capabilities.”

Based on the current economic outlook, the Company estimates total net revenue for the second quarter of 2018 to be in the range of $69.0 million and $71.0 million or gross revenue (inclusive of reimbursable expenses) to be in the range of $74.0 million and $76.0 million. The Company estimates pro forma diluted earnings per share for the second quarter of 2018 to be in the range of $0.26 and $0.28. At the high end of guidance, pro forma diluted earnings per share for the second quarter of 2018 would increase 12%, when compared to the same period in the prior year.

Other Highlights

Best Practices Conference – More than 300 attendees joined The Hackett Group for its 2018 North American Best Practices Conference, “Unlocking Digital Value,” in Atlanta, from April 30 to May 2. Highlights of the conference included presentations by senior leadership from more than a dozen of the largest and most successful U.S. companies, each spotlighting their digital transformation efforts in finance, procurement, HR, IT, and other business services areas. Presenters included executives from: Becton, Dickinson and Company; Cargill; General Motors; Halyard Health; IBM; Mary Kay; MGM Resorts International; NCR; Pfizer; Rogers Communications Canada; Thermo Fisher Scientific; Verizon Communications; and WestRock. More than 20 executives from The Hackett Group also presented on the company’s latest research, analysis, and insights.

IT Key Issues Research – New research from The Hackett Group found that support for enterprise analytics and development of IT talent are two top priority areas for CIOs in 2018, as companies seek to unlock the value of digital business. However, companies’ efforts to deploy and derive value from digital tools are likely to be handicapped by low capability maturity in these two key areas and a lack of initiative to improve over the coming year. The research also found that IT budgets are expected to rise by 1.8% in 2018. The research is available for complimentary download here: http://go.poweredbyhackett.com/keyit1801sm.

HR Key Issues Research – New research from The Hackett Group found that despite another year of flat to decreasing budgets and headcounts, HR organizations are focused on helping their companies unlock the value of digital transformation this year. But while most HR executives recognize the future potential of digital technology to transform the enterprise as well as HR roles and operating models, less than half feel their organizations have the resources and capabilities in place to execute and support their company’s digital transformation strategy. The research also found that urgent shortfalls exist in HR’s ability to support critical goals, including developing executives who can lead in volatile environments and enabling business strategy execution. In addition, there are significant internal gaps, with limited ability to address some of the most critical development areas. On the upside, HR organizations are now targeting many of these same areas for improvement initiatives in 2018. The research is available for complimentary download here: http://go.poweredbyhackett.com/keyhr1801sm.

Finance Key Issues Research – New research from The Hackett Group found that faster adoption of digital tools is critical if finance is to deliver on its key mandates in 2018 -- to help companies drive growth while holding down cost. Finance also faces significant budget constraints of its own in 2018, which can also be addressed in part through digital transformation, the research found. Unlocking the value of digital transformation is emerging as a strategic imperative for the enterprise in 2018, and The Hackett Group’s research identified four “must dos” for finance: balance investments to improve performance; improve analytics to better support the enterprise; leverage digital strategy to improve efficiency, effectiveness, and agility; and reshape the service delivery model to improve customer service and reduce cost. The research is available for complimentary download here: http://go.poweredbyhackett.com/keyfin1801sm.

On Tuesday, May 8, 2018 senior management will discuss first quarter results in a conference call at 5:00 P.M. ET. The number for the conference call is (800) 369-2134, [Passcode: First Quarter]. For International callers, please dial (212) 547-0413.

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, May 8, 2018 and will run through 5:00 P.M. ET on Tuesday, May 22, 2018.  To access the rebroadcast, please dial (866) 453-1997.  For International callers, please dial (203) 369-1223.

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, May 8, 2018 and will run through 5:00 P.M. ET on Tuesday, May 22, 2018. 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, offering digital transformation including robotic process automation and enterprise cloud application implementation. Services include business transformation, enterprise analytics, working capital management 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 15,200 benchmarking and performance studies with major corporations and government agencies, including 97% of the Dow Jones Industrials, 89% of the Fortune 100, 87% of the DAX 30 and 59% of the FTSE 100. These studies drive its Best Practice Intelligence Center^™ 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 these 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, changes in general economic conditions and interest rates, 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.

Page 4 of 6 - 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
	March 30,			March 31,
	2018			2017
Revenue:
Revenue before reimbursements ("net revenue")	$	67,475		$	65,069
Reimbursements		5,258			6,360
Total revenue		72,733			71,429
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		41,621			40,152
Acquisition-related compensation expense		(585	)		—
Non-cash stock compensation expense		1,043			1,132
Acquisition-related non-cash stock compensation expense		800			310
Reimbursable expenses		5,258			6,360
Total cost of service		48,137			47,954
Selling, general and administrative costs		14,822			14,360
Non-cash stock compensation expense		841			659
Acquisition-related costs		—			106
Amortization of intangible assets		613			386
Total selling, general, and administrative expenses		16,276			15,511
Total costs and operating expenses		64,413			63,465
Income from operations		8,320			7,964
Other expense:
Interest expense		(179	)		(90	)
Income from operations before income taxes		8,141			7,874
Income tax expense		774			—
Net income	$	7,367		$	7,874
Basic net income per common share:
Income per common share from operations	$	0.25		$	0.27
Weighted average common shares outstanding		29,089			28,868
Diluted net income per common share:
Income per common share from operations	$	0.23		$	0.24
Weighted average common and common equivalent shares outstanding		31,815			32,292
Pro forma data (1):
Income from operations before income taxes	$	8,141		$	7,874
Acquisition-related compensation expense		(585	)		—
Non-cash stock compensation expense		1,884			1,791
Acquisition-related non-cash stock compensation expense		800			310
Acquisition-related costs		—			106
Amortization of intangible assets		613			386
Pro forma income before income taxes		10,853			10,467
Pro forma income tax expense		2,713			3,140
Pro forma net income	$	8,140		$	7,327
Pro forma basic net income per common share	$	0.28		$	0.25
Weighted average common shares outstanding		29,089			28,868
Pro forma diluted net income per common share	$	0.26		$	0.23
Weighted average common and common equivalent shares outstanding		31,815			32,292

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

Page 5 of 6 - The Hackett Group, Inc. Announces First Quarter Results

The Hackett Group, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

	March 30,		December 29,
	2018		2017
ASSETS
Current assets:
Cash and cash equivalents	$	23,666	$	17,512
Accounts receivable and unbilled revenue, net		51,943		55,262
Prepaid expenses and other current assets		3,456		2,511
Total current assets		79,065		75,285
Property and equipment, net		20,652		18,851
Other assets		5,641		6,021
Goodwill, net		85,691		85,074
Total assets	$	191,049	$	185,231
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	8,621	$	8,434
Accrued expenses and other liabilities		39,802		43,014
Total current liabilities		48,423		51,448
Non-current accrued expenses and other liabilities		613		1,268
Long-term deferred tax liability, net		7,629		6,240
Long-term debt		19,000		19,000
Total liabilities		75,665		77,956
Shareholders' equity		115,384		107,275
Total liabilities and shareholders' equity	$	191,049	$	185,231

Page 6 of 6 - The Hackett Group, Inc. Announces First Quarter Results

The Hackett Group, Inc.

SUPPLEMENTAL FINANCIAL DATA

(unaudited)

	Quarter Ended
	March 30,			March 31,			December 29,
	2018			2017			2017
Revenue Breakdown by Group:
(in thousands)
The Hackett Group (2)	$	58,898		$	54,991		$	54,639
SAP Solutions (3)		8,577			10,078			9,871
Net revenue (4)	$	67,475		$	65,069		$	64,510
Revenue Concentration:
(% of total revenue)
Top customer		3	%		4	%		4	%
Top 5 customers		12	%		18	%		13	%
Top 10 customers		19	%		30	%		20	%
Key Metrics and Other Financial Data:
Total Company:
Consultant headcount		1,016			922			1,011
Total headcount		1,257			1,142			1,243
Days sales outstanding (DSO)		65			64			72
Cash provided by operating activities (in thousands)	$	17,203		$	4,876		$	7,559
Pro forma return on equity (5)		31	%		32	%		33	%
Depreciation (in thousands)	$	580		$	639		$	601
Amortization (in thousands)	$	613		$	386		$	615
Remaining Plan authorization:
Shares purchased (in thousands)		53			59			—
Cost of shares repurchased (in thousands)	$	963		$	1,186		$	—
Average price per share of shares purchased	$	18.33		$	20.13		$	—
Remaining Plan authorization (in thousands)	$	2,174		$	3,247		$	3,138
Shares Purchased to Satisfy Employee Net Vesting Obligations:
Shares purchased (in thousands)		175			174			6
Cost of shares purchased (in thousands)	$	3,004		$	2,906		$	89
Average price per share of shares purchased	$	17.15		$	16.72		$	15.37

(2) The Hackett Group encompasses the Benchmarking, Business Transformation and Executive Advisory groups, and EPM Groups

and excludes AMS.

(3) SAP Solutions encompasses Best Practice Implementation of ERP Software, the SAP group, approximately 40% of which are offshore resources.

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

(5) Twelve months of pro forma net income divided by average shareholder's equity.

(6) Certain reclassifications have been made to conform with current reporting requirements.