The Hackett Group, Inc. (HCKT)

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Hackett Group, Inc. (HCKT)

Q4 2008 Earnings Call

February 24, 2009 5:00 pm ET


Robert A. Ramirez - Chief Financial Officer & Executive Vice President, Finance

Ted A. Fernandez - Chairman of the Board & Chief Executive Officer


George Sutton – Craig-Hallum Capital

William Sutherland - Boenning & Scattergood, Inc.



Welcome to The Hackett Group fourth quarter and year end conference call. Your lines have been placed on a listen only mode until the question-and-answer session. Please be advised that the conference is being recorded. Hosting tonight’s call are Mr. Ted Fernandez, Chairman and CEO and Mr. Rob Ramirez, Chief Financial Officer.

Robert A. Ramirez

Thank you for joining us to discuss The Hackett Group’s fourth quarter and full year 2008 results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of The Hackett Group and myself, Robert Ramirez, CFO. A press announcement was released over the wires at 4:75 pm Eastern time. For a copy of the release please visit our website at

We will also place any additional financial or statistical data discussed on this call that is not contained in the release on the Investor Relations page of our website. Before we begin I would like to remind you that in the following comments and in the question-and-answer session we will be making statements about expected future results which may be forward-looking statements for the purposes of the Federal securities laws.

These statements relate to our current expectations, estimates and projections and are not a guarantee of future performance. They involve risks, uncertainties and assumptions that are difficult to predict and which may not be accurate. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information particularly the risk factors contained in our SEC filings.

At this point I would like to turn it over to Ted.

Ted A. Fernandez

As I customarily do I will open by commenting on the quarter and year end overview or highlights. I will then turn it back over to Rob and ask him to comment on the quarterly operating results, cash flow and also comment on outlook. Rob will turn it back over to me and I will make some market and strategic related comments and then we will open it for Q&A.

Let m start with the quarterly overview and highlights and let me also welcome everyone to our fourth quarter and year end earnings call. For the quarter we are pleased to report pro forma EPS of $0.10 which represents a year-over-year increase of 25%. These results were led by The Hackett Group’s 13% growth 23% on a constant currency basis or assuming the same foreign currency rates for this same period last year.

Our strong operating results coupled with our continuing improvement in DSO resulted in over $11 million in cash flow from operations in the quarter. For our 2008 fiscal year pro forma earnings per share increased 94% which drove cash flow form operations of $27.5 million our best in the company’s history.

This allowed us to continue to increase our cash balances during the year while returning $19 million to our shareholders through our stock buy back program. As I have mentioned throughout the year several changes have driven our improved performance, the introduction of our transformational benchmark has expanded our initial entry point with our clients.

The improved performance by our REL team has been very meaningful and the stability of our HTS group also contributed to our improvement. One key area where we have shown improvement has been our ability to sell other services into our executive advisory client base. We are pleased to say that over 40% of our Hackett Group 2008 sales came from our executive advisory client base.

This continues to validate a key element of our strategy. We fully understand that our long term growth prospects lie in our ability to extend our unique market permission to help clients measure their performance improvement opportunity utilizing our proprietary benchmark database into our other offerings. We have started to extend our permission through the strategic relationship that result from our executive advisory programs.

However our most significant growth opportunity is in our ability to extend our brand and market permission into our transformation implementation offerings where our ability to expand revenue per client is exponential. On the technology solutions front we made great progress throughout the year led by the results of our Hyperion or Oracle EPM Group.

As we head into '09 it is clear that we will face a more challenging economic environment. However given our performance in 2008 we know that our offerings are well aligned with the tremendous pressure that all organizations face to reduce costs and optimize cash balances. The question is whether organizations do this for themselves or who they decide to turn to for assistance.

In today’s environment clients must be clearly convinced that you can help them achieve their targeted results and that the time to benefit realization is consistent with their business demands. In other, words quickly. The key for us is to continue to ensure that our clients understand that our unique intellectual capital and implementation expertise enables them to make the necessary changes in a targeted and timely manner.

It is clear that our go to market execution has improved and our branding permission continues to expand. At the same time we recognize there is much room for improvement and the opportunity provided by our brand and the unique best practice intellectual property that we have is very meaningful. Let me now ask Rob to provide details on our operating results, cash flow and also comment on outlook.

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