hckt-ex991

MIAMI, FL – February 19, 2019 - 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 28, 2018.

Q4 2018 net revenue (gross revenue less reimbursable expenses) from continuing operations was $61.6 million, down 1%, as compared to the same period in the prior year. Q4 2018 gross revenue from continuing operations was $66.5 million, down 1%, from the same period in the prior year. Fiscal year 2018 net revenue (gross revenue less reimbursable expenses) from continuing operations was $264.5 million, up 4% from prior year.

GAAP diluted losses per share were $0.00 for the fourth quarter of 2018, compared to earnings of $0.29 in the fourth quarter of 2017. GAAP diluted earnings per share were $0.74 for fiscal year 2018, compared to earnings of $0.85 for the fiscal year 2017. During the fourth quarter of 2018, the Company recorded a $6.3 million write-off of its investments in HPE software and Working Capital and recorded discontinued operations of its REL working capital group, all of which negatively impacted earnings per share by $0.23. During the fourth quarter of 2017, the adoption of the new tax pronouncements and tax legislation favorably impacted GAAP diluted earnings per share by $0.12.

Q4 2018 pro forma diluted earnings per share were $0.26, up 4% when compared to $0.25 for the same period in the prior year. Fiscal 2018 pro forma diluted earnings per share were $1.06, up 12% when compared to $0.95

for 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.

At the end of the fourth quarter of 2018, the Company’s cash balances were $13.8 million. During the quarter, the Company repurchased 15 thousand shares under its stock repurchase program. As of the end of the fourth quarter of 2018, the Company’s remaining stock repurchase program authorization was $6.9 million.

“In Q4 we took several actions that reinforced our focus on our growing digital transformation groups and strengthened our organization as we head into 2019,” stated Ted A. Fernandez, Chairman and CEO of The Hackett Group. “Although the decline in our on-premise implementation revenues unfavorably impacted our Q4

results and the start of 2019, as we decrease our exposure to our legacy on premise revenue, we expect to continue to get closer to realizing the revenue growth of our digital transformation focus.”

Based on the current economic outlook, the Company estimates total net revenue for the first quarter of 2019 to be in the range of $61.5 million and $63.0 million or gross revenue (inclusive of reimbursable expenses) to be in the range of $66.5 million and $68.0 million. The Company estimates pro forma diluted earnings per share for the first quarter of 2019 to be in the range of $0.21 and $0.23.

European Best Practices Conference – Nearly 200 business executives from over 134 companies attended The Hackett Group’s 2018 European Best Practices Conference “Unlocking Digital Value” in London from October 9^th to October 11^th. Speakers included leaders in finance, procurement, HR, IT, global business services and working capital from over a dozen of Europe’s largest and most successful companies, including: Agrekko, AstraZeneca, Cisco, HP Inc., IBM, Nokia, Robert Bosch GmbH, Rolls-Royce, Pearson Plc, Redwood Software, SAP, Shell Smith & Nephew, Tungsten Network, Wipro and Vodafone.

UiPath Alliance - The Hackett Group, Inc. announced that it has been named a Recommended Partner by UiPath, the leading enterprise Robotic Process Automation (RPA) software company. The partnership will enable The Hackett Group to further expand its ability to offer UiPath solutions to clients.

Oracle Excellence Award - Oracle awarded The Hackett Group with its 2018 Oracle Excellence Award for Specialized Partner of the Year –SaaS Innovation Solution of the Year. The award recognizes The Hackett Group for its commitment to delivering innovative, specialized solutions and services using Oracle Cloud software and hardware.

CASME Alliance - The Hackett Group, Inc. and CASME launched an alliance that will provide procurement clients of both companies with access to additional insights, research assets and networking opportunities. Through the reciprocal alliance, members of The Hackett Group’s Procurement Advisory Programs will benefit from access to CASME’s extensive spend category-specific market intelligence and indirect spending expertise, as well as selected Webcasts, RoundTables, virtual events and other peer networking opportunities. CASME clients will gain access to select research insights from The Hackett Group’s procurement membership advisory teams. The Hackett Group will also host Webcasts and provide seats at selected virtual events for CASME members.

On Tuesday, February 19, 2019 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 19, 2019 and will run through 5:00 P.M. ET on Tuesday, March 5, 2019. To access the rebroadcast, please dial (866) 458-4758. For International callers, please dial (203) 369-1315.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 19, 2019 and will run through 5:00 P.M. ET on Tuesday, March 5, 2019. To access the replay, visit www.thehackettgroup.com or http://www.streetevents.com.

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.

	Quarter Ended						Twelve Months Ended
	December 28,			December 29,			December 28,			December 29,
	2018			2017			2018			2017
Revenue:
Revenue before reimbursements ("net revenue")	$	61,595		$	62,307		$	264,523		$	255,131
Reimbursements		4,940			4,622			21,364			21,468
Total revenue		66,535			66,929			285,887			276,599

Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		35,979			35,744			159,614			153,357
Non-cash stock compensation expense		900			1,015			3,815			4,409
Acquisition-related compensation expense (benefit)		14			540			(535	)		1,582
Acquisition-related non-cash stock compensation expense		575			795			2,027			2,515
Reimbursable expenses		4,940			4,622			21,364			21,468
Total cost of service		42,408			42,716			186,285			183,331

Selling, general and administrative costs		14,352			14,880			58,516			57,473
Non-cash stock compensation expense		743			903			3,238			3,330
Amortization of intangible assets		580			615			2,369			2,090
Acquisition-related costs		—			—			—			378
Acquisition-related contingent consideration liability		(614	)		—			(4,364	)		—
Impairment of assets (3)		6,269			—			6,269			—
Restructuring costs		—			—			—			1,293
Total selling, general, and administrative expenses		21,330			16,398			66,028			64,564

Total costs and operating expenses		63,738			59,114			252,313			247,895

Income from operations		2,797			7,815			33,574			28,704

Other expense:
Interest expense		(123	)		(183	)		(638	)		(584	)

Income from continuing operations before income taxes		2,674			7,632			32,936			28,120
Income tax expense (benefit)		(41	)		(1,203	)		5,577			2,564
Income from continuing operations		2,715			8,835			27,359			25,556
Gain (loss) from discontinued operations		(2,851	)		606			(3,450	)		1,798
Net income (loss)	$	(136	)	$	9,441		$	23,909		$	27,354


Weighted average common shares outstanding:
Basic		29,517			28,735			29,379			28,852
Diluted		32,677			32,022			32,330			32,196


Basic net income per common share:
Income per common share from operations	$	0.09		$	0.31		$	0.93		$	0.89
Income (loss) per common share from discontinued operations (2)		(0.09	)		0.02			(0.12	)		0.06
Net income per common share	$	(0.00	)	$	0.33		$	0.81		$	0.95


Diluted net income per common share:
Income per common share from operations	$	0.08		$	0.27		$	0.85		$	0.79
Income (loss) per common share from discontinued operations		(0.08	)		0.02			(0.11	)		0.06
Net income per common share	$	(0.00	)	$	0.29		$	0.74		$	0.85


Pro forma data (1):
Income from operations before income taxes	$	2,674		$	7,632	$	32,936		$	28,120
Non-cash stock compensation expense		1,643			1,918		7,053			7,739
Acquisition-related compensation expense (benefit)		14			540		(535	)		1,582
Acquisition-related non-cash stock compensation expense		575			795		2,027			2,515
Acquisition-related costs		—			—		—			378
Acquisition-related contingent consideration liability		(614	)		—		(4,364	)		—
Impairment of assets (3)		6,269			—		6,269			—
Restructuring costs		—			—		—			1,293
Amortization of intangible assets		580			615		2,369			2,090
Pro forma income before income taxes		11,141			11,500		45,755			43,717
Pro forma income tax expense		2,785			3,450		11,439			13,115
Pro forma net income	$	8,356		$	8,050	$	34,316		$	30,602

Pro forma basic net income per common share	$	0.28		$	0.28	$	1.17		$	1.06
Weighted average common shares outstanding		29,517			28,735		29,379			28,852

Pro forma diluted net income per common share	$	0.26		$	0.25	$	1.06		$	0.95
Weighted average common and common equivalent shares outstanding		32,677			32,022		32,330			32,196



(1) The Company provides pro forma earnings results (which exclude the amortization of intangible assets, stock compensation expense, acquisition-related one-time
expense, cash and stock compensation expense (benefit), restructuring and impairment charges 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 REL Working Capital group.

(3) The charge for the impairment of assets relates to the discontinuance of the Hackett Performance Exchange and the Working Capital training course.

	December 28,		December 29,
	2018		2017
ASSETS
Current assets:
Cash and cash equivalents	$	13,808	$	17,512
Accounts receivable and unbilled revenue, net		54,807		52,267
Prepaid expenses and other current assets		4,339		2,511
Assets related to discontinued operations (4)		137		2,995
Total current assets		73,091		75,285

Property and equipment, net		19,750		18,851
Other assets		3,704		6,021
Goodwill, net		84,207		85,074
Total assets	$	180,752	$	185,231

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	7,429	$	8,434
Accrued expenses and other liabilities		34,498		42,685
Liabilities related to discontinued operations (4)		2,300		329
Total current liabilities		44,227		51,448
Non-current accrued expenses and other liabilities		-		1,268
Long-term deferred tax liability, net		6,435		6,240
Long-term debt		6,500		19,000
Total liabilities		57,162		77,956

Shareholders' equity		123,590		107,275
Total liabilities and shareholders' equity	$	180,752	$	185,231


(4) The assets and liabilities related to discontinued operations relate to the discontinuance of the Company's European Working Capital Group.

	Quarter Ended
	December 28,			December 29,			September 28,
	2018			2017			2018
Revenue Breakdown by Group:
(in thousands)
The Hackett Group (5)	$	52,906		$	52,435		$	60,225
SAP Solutions (6)		8,689			9,872			7,958
Net revenue (7)	$	61,595		$	62,307		$	68,183

Revenue Concentration:
(% of total revenue)
Top customer		4	%		4	%		7	%
Top 5 customers		16	%		13	%		19	%
Top 10 customers		24	%		20	%		26	%

Key Metrics and Other Financial Data:

Total Company:
Consultant headcount		1,003			1,011			1,046
Total headcount		1,246			1,243			1,290
Days sales outstanding (DSO)		75			72			70
Cash provided by operating activities (in thousands)	$	8,056		$	7,559		$	9,521
Pro forma return on equity (8)		30	%		32	%		32	%
Depreciation (in thousands)	$	609		$	601		$	652
Amortization (in thousands)	$	580		$	615		$	585


Remaining Plan authorization:
Shares purchased (in thousands)		15			-			-
Cost of shares repurchased (in thousands)	$	240		$	—		$	—
Average price per share of shares purchased	$	16.01		$	—		$	—
Remaining Plan authorization (in thousands)	$	6,934		$	3,138		$	7,174

Shares Purchased to Satisfy Employee Net Vesting Obligations:
Shares purchased (in thousands)		14			6			8
Cost of shares purchased (in thousands)	$	274		$	89		$	118
Average price per share of shares purchased	$	19.74		$	15.37		$	15.77