PART I - FINANCIAL INFORMATION Financial Statements This section presents The Hackett Group, Inc.'s unaudited consolidated financial statements for Q1 2025, detailing financial position, operational performance, and cash flows Consolidated Financial Statements (Tables) Consolidated financial statements show a slight revenue increase to $77.9 million but a significant net income decrease to $3.1 million in Q1 2025, primarily due to rising operating expenses Consolidated Statements of Operations (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (ended Mar 28) | Q1 2024 (ended Mar 29) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $77.9 million | $77.2 million | +0.9% | | Income from Operations | $4.4 million | $11.5 million | -61.8% | | Net Income | $3.1 million | $8.7 million | -63.9% | | Diluted EPS | $0.11 | $0.32 | -65.6% | Consolidated Balance Sheet Highlights (as of Mar 28, 2025) | Account | March 28, 2025 | December 27, 2024 | | :--- | :--- | :--- | | Cash | $9.2 million | $16.4 million | | Accounts Receivable & Contract Assets, net | $62.6 million | $57.1 million | | Goodwill | $90.2 million | $89.8 million | | Total Assets | $191.8 million | $191.9 million | | Long Term Debt, net | $17.8 million | $12.7 million | | Total Liabilities | $77.3 million | $76.3 million | | Total Shareholders' Equity | $114.4 million | $115.6 million | Consolidated Statements of Cash Flows (Q1 2025 vs Q1 2024) | Cash Flow Activity | Q1 2025 (ended Mar 28) | Q1 2024 (ended Mar 29) | | :--- | :--- | :--- | | Net cash provided by operating activities | $4.2 million | $2.8 million | | Net cash used in investing activities | ($1.5 million) | ($0.9 million) | | Net cash used in financing activities | ($9.7 million) | ($9.8 million) | | Net decrease in cash | ($7.2 million) | ($8.0 million) | Notes to Consolidated Financial Statements Notes detail key accounting policies and events, including the LeewayHertz acquisition, a new executive stock compensation program, increased debt, and segment performance breakdown - The company acquired LeewayHertz Technologies in September 2024 for a provisional consideration of $7.8 million, resulting in $5.9 million of goodwill and $2.5 million of intangible assets, enhancing its Generative A.I. capabilities2627 - A new stock price award program was introduced for executives in September 2024, with vesting tied to share price hurdles ($30, $40, $50) and service conditions, leading to $5.1 million in non-cash stock compensation expense for this program in Q1 20256669 - Outstanding debt under the credit facility increased to $18.0 million as of March 28, 2025, from $13.0 million at the end of 2024, with an aggregate borrowing capacity of $100.0 million6165 Segment Revenue (Q1 2025 vs Q1 2024) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | Change | | :--- | :--- | :--- | :--- | | Global S&BT | $43.4 million | $40.9 million | +6.1% | | Oracle Solutions | $21.1 million | $21.7 million | -2.8% | | SAP Solutions | $13.4 million | $14.6 million | -8.2% | | Total | $77.9 million | $77.2 million | +0.9% | Management's Discussion and Analysis (MD&A) Management discusses the strategic shift to Gen AI consulting, noting a slight revenue increase to $77.9 million but a sharp operating income decline to $4.4 million due to increased stock compensation and SG&A costs - The company is aggressively positioning itself as a Gen AI strategic consulting firm, highlighted by the launch of its AI XPLR platform and the acquisition of LeewayHertz with its ZBrain platform888990 - Global S&BT segment revenue grew 6.1% to $43.4 million, driven by Gen AI consulting and implementation offerings, partially offset by declines in Oracle Solutions (-2.8%) and SAP Solutions (-8.2%) revenues979899 - Operating expenses increased significantly due to non-cash stock compensation, with personnel costs rising by $2.6 million (6%) and SG&A costs by $5.1 million (28%), primarily from the new stock price appreciation equity program102105106 - Cash and cash equivalents decreased from $16.4 million to $9.2 million during the quarter, with $4.2 million from operations, while financing activities used $9.7 million for share repurchases ($6.2 million), dividends ($3.0 million), and taxes on stock vesting ($5.5 million)115117119 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks include interest rate risk from its variable-rate credit facility and foreign currency exchange risk from operations in British Pounds, Euros, and Australian Dollars - Exposure to interest rate risk is linked to the variable-rate Credit Facility, where a 100-basis point increase in interest rates would not have had a material impact on Q1 2025 results123 - The company is exposed to foreign currency fluctuations as a portion of its business is conducted in British Pounds, Euros, and Australian Dollars124 Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 28, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter125 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls126 Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement in Q1 2025127 PART II - OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, but management does not expect a material adverse effect on financial position, cash flows, or results of operations - Management believes that the disposition of ongoing legal proceedings will not have a material adverse effect on the company's financials128 Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 27, 2024, were reported - No material changes to the risk factors from the latest Annual Report on Form 10-K were reported129 Issuer Purchases of Equity Securities In Q1 2025, The Hackett Group repurchased 206,000 shares for $6.2 million at an average price of $30.16, with $21.3 million remaining for future repurchases Share Repurchase Activity (Q1 2025) | Metric | Value | | :--- | :--- | | Total Shares Repurchased | 205,569 | | Average Price Paid per Share | $30.16 | | Total Cost | $6.2 million | | Remaining Authorization | $21.3 million | Exhibits This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents for interactive data - The filing includes required CEO and CFO certifications (Exhibits 31.1, 31.2, 32) and interactive data files (Exhibits 101, 104)134
The Hackett Group(HCKT) - 2025 Q1 - Quarterly Report