The Hackett Group, Inc. (NASDAQ:HCKT) Q4 2022 Earnings Conference Call February 21, 2023 5:00 PM ET

Company Participants

Rob Ramirez – Chief Financial Officer

Ted Fernandez – Chairman and Chief Executive Officer

Conference Call Participants

George Sutton – Craig-Hallum

Jeff Martin – ROTH MKM

Vince Colicchio – Barrington Research

Operator

Welcome to the Hackett Group Fourth Quarter Earnings Conference Call. Your lines have been placed on a listen-only mode until the question-and-answer session. Please be advised the conference is being recorded. Hosting tonight’s call are Mr. Ted Fernandez, Chairman and CEO; and Mr. Rob Ramirez, Chief Financial Officer.

Mr. Ramirez, you may begin.

Rob Ramirez

Good afternoon, everyone, and thank you for joining us to discuss The Hackett Group’s fourth quarter results. Speaking on the call today, and here to answer your questions are Ted Fernandez, Chairman and CEO of The Hackett Group; and myself Rob Ramirez, Chief Financial Officer. A press announcement was released over the wires at 4:05 PM Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. 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, especially in light of COVID-19. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors that are contained in our SEC filings.

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

Ted Fernandez

Thank you, Rob, and welcome everyone to our fourth quarter earnings call. As we normally do, I will open the call with some overview comments on the quarter. I will then turn it back over to Rob to comment on detailed operating results, cash flow, as well as comment on outlook. We will then review our market and strategy related comments, after which we will open it up to Q&A.

Before I move to the quarterly results, let me start by congratulating our associates for our strong 2022 performance. All of the second half of the year was clearly more challenging as the Fed rate increases started to weigh in on our clients spending decisions. Our revenues before reimbursements were up 4% and our adjusted EPS was $1.50, which is – which strongly exceeded our prior year results when you exclude the tax benefit on the SARs exercise in 2021. Relative to the fourth quarter this afternoon we’ve reported revenues of $70.1 million and adjusted earnings per share of $0.36, both exceeding our quarterly guidance. Our quarterly results were driven by revenues before reimbursements from our Global S&BT segment of 3.5% on a reported basis and 5% on a local currency basis. More specifically, our recurring revenue high margin Research Advisory and IPaaS offerings grew over 20% in the quarter. Annual contract value growth for these offerings in 2022 was also over 20%. The success and market opportunity for our intellectual property offerings highlights the reasons why we have accelerated our sales and product development investments in this area.