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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 27, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number 333-48123

 

The Hackett Group, Inc.

(Exact name of registrant as specified in its charter)

 

 

Florida

 

65-0750100

(State or other jurisdiction of

incorporation or organization)

 

(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)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.001 per share

HCKT

NASDAQ Stock Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

Accelerated Filer

 

 

 

 

 

 

 

Non-Accelerated Filer

 

Smaller Reporting Company

 

 

 

 

 

 

 

 

 

 

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.

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 1, 2024, there were 27,593,479 shares of common stock outstanding.

 

 

 


 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

Page

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets as of September 27, 2024 (unaudited) and December 29, 2023

3

 

 

 

 

Consolidated Statements of Operations for the Three and Nine Months Ended September 27, 2024, and September 29, 2023, (unaudited)

4

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 27, 2024, and September 29, 2023, (unaudited)

5

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 27, 2024, and September 29, 2023, (unaudited)

6

 

 

 

 

Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 27, 2024, and September 29, 2023, (unaudited)

7

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

 

 

 

Item 4.

Controls and Procedures

25

 

 

Item 5.

Other Information

25

 

 

PART II - OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

26

 

 

 

Item 1A.

Risk Factors

26

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

 

 

 

Item 6.

Exhibits

27

 

 

SIGNATURES

28

 

2


 

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The Hackett Group, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$

9,964

 

 

$

20,957

 

Accounts receivable and contract assets, net of allowance of $1,652 and $1,072 at September 27, 2024 and December 29, 2023, respectively

 

 

61,227

 

 

 

52,113

 

Prepaid expenses and other current assets

 

 

3,659

 

 

 

2,368

 

Total current assets

 

 

74,850

 

 

 

75,438

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

20,307

 

 

 

20,044

 

Other assets

 

 

367

 

 

 

285

 

Intangible assets

 

 

2,800

 

 

 

-

 

Goodwill

 

 

89,417

 

 

 

84,242

 

Operating lease right-of-use assets

 

 

3,010

 

 

 

1,419

 

Total assets

 

$

190,751

 

 

$

181,428

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

5,280

 

 

$

7,557

 

Accrued expenses and other liabilities

 

 

26,142

 

 

 

26,801

 

Contract liabilities

 

 

12,572

 

 

 

12,087

 

Income tax payable

 

 

4,323

 

 

 

2,360

 

Operating lease liabilities

 

 

1,173

 

 

 

1,083

 

Total current liabilities

 

 

49,490

 

 

 

49,888

 

Non-current deferred tax liability, net

 

 

8,565

 

 

 

8,118

 

Long term debt, net

 

 

19,739

 

 

 

32,711

 

Operating lease liabilities

 

 

2,041

 

 

 

631

 

Total liabilities

 

 

79,835

 

 

 

91,348

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value, 1,250,000 shares authorized; none
   issued and outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 125,000,000 shares authorized; 61,015,604 and
   
60,581,418 shares issued at September 27, 2024 and December 29, 2023, respectively

 

 

61

 

 

 

61

 

Additional paid-in capital

 

 

322,644

 

 

 

317,034

 

Treasury stock, at cost, 33,423,164 and 33,314,926 shares September 27, 2024 and December 29, 2023, respectively

 

 

(277,392

)

 

 

(274,600

)

Retained earnings

 

 

77,772

 

 

 

60,820

 

Accumulated other comprehensive loss

 

 

(12,169

)

 

 

(13,235

)

Total shareholders' equity

 

 

110,916

 

 

 

90,080

 

Total liabilities and shareholders' equity

 

$

190,751

 

 

$

181,428

 

 

The accompanying notes are an integral part of the consolidated financial statements.

3


 

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Revenue before reimbursements

 

$

77,949

 

 

$

74,634

 

 

$

229,572

 

 

$

220,106

 

Reimbursements

 

 

1,828

 

 

 

1,222

 

 

 

5,048

 

 

 

4,081

 

Total revenue

 

 

79,777

 

 

 

75,856

 

 

 

234,620

 

 

 

224,187

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of service:

 

 

 

 

 

 

 

 

 

 

 

 

Personnel costs before reimbursable expenses (includes $2,135 and $5,168 and $1,518 and $4,687 of non-cash stock based compensation expense in the three and nine months ended September 27, 2024 and September 29, 2023, respectively)

 

 

46,417

 

 

 

44,421

 

 

 

137,583

 

 

 

132,990

 

Reimbursable expenses

 

 

1,828

 

 

 

1,222

 

 

 

5,048

 

 

 

4,081

 

Total cost of service

 

 

48,245

 

 

 

45,643

 

 

 

142,631

 

 

 

137,071

 

Selling, general and administrative costs (includes $1,688 and $4,104 and $1,193 and $3,243 of non-cash stock based compensation expense in the three and nine months ended September 27, 2024 and September 29, 2023, respectively)

 

 

18,732

 

 

 

16,470

 

 

 

55,046

 

 

 

49,331

 

Legal settlement and related costs

 

 

 

 

 

 

 

 

102

 

 

 

 

Total costs and operating expenses

 

 

66,977

 

 

 

62,113

 

 

 

197,779

 

 

 

186,402

 

Income from operations

 

 

12,800

 

 

 

13,743

 

 

 

36,841

 

 

 

37,785

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(368

)

 

 

(814

)

 

 

(1,352

)

 

 

(2,594

)

Income before income taxes

 

 

12,432

 

 

 

12,929

 

 

 

35,489

 

 

 

35,191

 

Income tax expense

 

 

3,845

 

 

 

3,509

 

 

 

9,423

 

 

 

8,890

 

Net income

 

$

8,587

 

 

$

9,420

 

 

 

26,066

 

 

 

26,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Income per common share

 

$

0.31

 

 

$

0.35

 

 

$

0.95

 

 

$

0.97

 

Weighted average common shares outstanding

 

 

27,645

 

 

 

27,220

 

 

 

27,561

 

 

 

27,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Income per common share

 

$

0.31

 

 

$

0.34

 

 

$

0.93

 

 

$

0.95

 

Weighted average common and common equivalent shares outstanding

 

 

28,142

 

 

 

27,818

 

 

 

27,920

 

 

 

27,545

 

 

The accompanying notes are an integral part of the consolidated financial statements.

4


 

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income

 

$

8,587

 

 

$

9,420

 

 

$

26,066

 

 

$

26,301

 

Foreign currency translation adjustment

 

 

1,475

 

 

 

(1,018

)

 

 

1,066

 

 

 

250

 

Total comprehensive income

 

$

10,062

 

 

$

8,402

 

 

$

27,132

 

 

$

26,551

 

 

The accompanying notes are an integral part of the consolidated financial statements.

5


 

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

26,066

 

 

$

26,301

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation expense

 

 

2,824

 

 

 

2,528

 

Amortization of debt issuance costs

 

 

56

 

 

 

54

 

Non-cash stock based compensation expense

 

 

9,272

 

 

 

7,930

 

Provision for doubtful accounts

 

 

275

 

 

 

219

 

Loss on foreign currency translation

 

 

509

 

 

 

263

 

Deferred income tax expense

 

 

459

 

 

 

1,617

 

Changes in assets and liabilities, net of acquisition:

 

 

 

 

 

 

Increase in accounts receivable and contract assets

 

 

(8,895

)

 

 

(14,134

)

Increase in prepaid expenses and other assets

 

 

(1,244

)

 

 

(1,482

)

Decrease in accounts payable

 

 

(2,277

)

 

 

(3,701

)

Decrease in accrued expenses and other liabilities

 

 

(2,387

)

 

 

(5,619

)

Increase (decrease) in contract liabilities

 

 

468

 

 

 

(409

)

Increase (decrease) in income tax payable

 

 

1,963

 

 

 

(1,750

)

Net cash provided by operating activities

 

 

27,089

 

 

 

11,817

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,061

)

 

 

(3,203

)

Acquisition of business, net of cash acquired

 

 

(6,541

)

 

 

 

Net cash used in investing activities

 

 

(9,602

)

 

 

(3,203

)

Cash flows from financing activities:

 

 

 

 

 

 

Debt issuance costs

 

 

(28

)

 

 

(14

)

Debt proceeds

 

 

 

 

 

5,000

 

Repayment of debt

 

 

(13,000

)

 

 

(21,000

)

Proceeds from ESPP

 

 

535

 

 

 

481

 

Taxes paid to satisfy employee withholding tax obligations

 

 

(4,070

)

 

 

(3,712

)

Dividends paid

 

 

(9,070

)

 

 

(8,978

)

Repurchase of common stock

 

 

(2,792

)

 

 

(734

)

Net cash used in financing activities

 

 

(28,425

)

 

 

(28,957

)

Effect of exchange rate on cash

 

 

(55

)

 

 

(33

)

Net decrease in cash

 

 

(10,993

)

 

 

(20,376

)

Cash at beginning of period

 

 

20,957

 

 

 

30,255

 

Cash at end of period

 

$

9,964

 

 

$

9,879

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for income taxes

 

$

6,653

 

 

$

8,719

 

Cash paid for interest

 

$

1,592

 

 

$

2,690

 

Supplemental disclosure of non-cash flow financing activities:

 

 

 

 

 

 

Dividend declared during the quarter and paid the following quarter

 

$

3,041

 

 

$

2,994

 

 

The accompanying notes are an integral part of the consolidated financial statements.

6


 

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid in

 

 

Treasury Stock

 

 

Retained

 

 

Comprehensive

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Loss

 

 

Equity

 

Balance at December 29, 2023

 

 

60,581

 

 

$

61

 

 

$

317,034

 

 

 

(33,315

)

 

$

(274,600

)

 

$

60,820

 

 

$

(13,235

)

 

$

90,080

 

Issuance of common stock

 

 

378

 

 

 

 

 

 

(3,782

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,782

)

Treasury stock purchased

 

 

 

 

 

 

 

 

 

 

 

(43

)

 

 

(1,055

)

 

 

 

 

 

 

 

 

(1,055

)

Amortization of restricted stock
   units and common stock subject to
   vesting requirements

 

 

 

 

 

 

 

 

2,874

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,874

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,036

)

 

 

 

 

 

(3,036

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,731

 

 

 

 

 

 

8,731

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(331

)

 

 

(331

)

Balance at March 29, 2024

 

 

60,959

 

 

$

61

 

 

$

316,126

 

 

 

(33,358

)

 

$

(275,655

)

 

$

66,515

 

 

$

(13,566

)

 

$

93,481

 

Issuance of common stock

 

 

41

 

 

 

 

 

 

391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

391

 

Amortization of restricted stock
   units and common stock subject to
   vesting requirements

 

 

 

 

 

 

 

 

2,718

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,718

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,037

)

 

 

 

 

 

(3,037

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,748

 

 

 

 

 

 

8,748

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(78

)

 

 

(78

)

Balance at June 28, 2024

 

 

61,000

 

 

$

61

 

 

$

319,235

 

 

 

(33,358

)

 

$

(275,655

)

 

$

72,226

 

 

$

(13,644

)

 

$

102,223

 

Issuance of common stock

 

 

15

 

 

 

 

 

 

(145

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(145

)

Treasury stock purchased

 

 

 

 

 

 

 

 

 

 

 

(65

)

 

 

(1,737

)

 

 

 

 

 

 

 

 

(1,737

)

Amortization of restricted stock
   units and common stock subject to
   vesting requirements

 

 

 

 

 

 

 

 

3,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,554

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,041

)

 

 

 

 

 

(3,041

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,587

 

 

 

 

 

 

8,587

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,475

 

 

 

1,475

 

Balance at September 27, 2024

 

 

61,015

 

 

$

61

 

 

$

322,644

 

 

 

(33,423

)

 

$

(277,392

)

 

$

77,772

 

 

$

(12,169

)

 

$

110,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid in

 

 

Treasury Stock

 

 

Retained

 

 

Comprehensive

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Loss

 

 

Equity

 

Balance at December 30, 2022

 

 

60,148

 

 

$

60

 

 

$

308,325

 

 

 

(33,277

)

 

$

(273,866

)

 

$

38,640

 

 

$

(14,881

)

 

$

58,278

 

Issuance of common stock

 

 

343

 

 

 

 

 

 

(3,529

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,529

)

Treasury stock purchased

 

 

 

 

 

 

 

 

 

 

 

(37

)

 

 

(711

)

 

 

 

 

 

 

 

 

(711

)

Amortization of restricted stock
   units and common stock subject to
   vesting requirements

 

 

 

 

 

 

 

 

3,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,662

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,990

)

 

 

 

 

 

(2,990

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,161

 

 

 

 

 

 

8,161

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

570

 

 

 

570

 

Balance at March 31, 2023

 

 

60,491

 

 

$

60

 

 

$

308,458

 

 

 

(33,314

)

 

$

(274,577

)

 

$

43,811

 

 

$

(14,311

)

 

$

63,441

 

Issuance of common stock

 

 

38

 

 

 

1

 

 

 

362

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

363

 

Treasury stock purchased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23

)

 

 

 

 

 

 

 

 

(23

)

Amortization of restricted stock
   units and common stock subject to
   vesting requirements

 

 

 

 

 

 

 

 

2,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,685

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,991

)

 

 

 

 

 

(2,991

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,720

 

 

 

 

 

 

8,720

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

698

 

 

 

698

 

Balance at June 30, 2023

 

 

60,529

 

 

$

61

 

 

$

311,505

 

 

 

(33,314

)

 

$

(274,600

)

 

$

49,540

 

 

$

(13,613

)

 

$

72,893

 

Issuance of common stock

 

 

9

 

 

 

 

 

 

(67

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(67

)

Amortization of restricted stock
   units and common stock subject to
   vesting requirements

 

 

 

 

 

 

 

 

2,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,608

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,994

)

 

 

 

 

 

(2,994

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,420

 

 

 

 

 

 

9,420

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,018

)

 

 

(1,018

)

Balance at September 29, 2023

 

 

60,538

 

 

$

61

 

 

$

314,046

 

 

 

(33,314

)

 

$

(274,600

)

 

$

55,966

 

 

$

(14,631

)

 

$

80,842

 

The accompanying notes are an integral part of the consolidated financial statements.

7


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. Basis of Presentation and General Information

Basis of Presentation

The accompanying consolidated financial statements of The Hackett Group, Inc. (“Hackett” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s accounts and those of its wholly-owned subsidiaries which the Company is required to consolidate. All intercompany transactions and balances have been eliminated in the consolidation.

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 29, 2023, included in the Annual Report on Form 10-K filed by the Company with the SEC on March 1, 2024. The consolidated results of operations for the quarter and nine months ended September 27, 2024, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Business Combination

 

On September 16, 2024, the Company executed an agreement to acquire 100% of the equity of LeewayHertz Technologies Private Limited (“LeewayHertz”), a technology consulting company based in India, focused on artificial intelligence (A.I.) technology solutions for a provisional purchase consideration of $7.8 million subject to a working capital achievement. This acquisition marks a significant milestone in the Company's aggressive strategy to become a leading architect of its clients' Gen A.I. journey. The acquisition closed on September 23, 2024. Leeway’s founder, one of LeewayHertz’s owners, was hired by the Company to serve as its executive vice president of the A.I. practice.

The following table summarizes the provisional fair value of the assets acquired and liabilities assumed:

 

 

 

Amount

 

Assets / Liabilities

 

(in thousands)

 

Cash

 

$

1,020

 

Current assets

 

 

2,081

 

Intangible assets

 

 

2,800

 

Current liabilities

 

 

(2,587

)

Net assets acquired

 

$

3,314

 

 

 

 

 

Consideration

 

$

7,806

 

Goodwill

 

$

4,492

 

 

As a result, the provisional excess of the purchase price over the assets acquired resulted in goodwill of $4.5 million. Additionally, the Company recognized provisional intangible assets of $2.8 million, with a remaining weighted average useful life of 4.7 years. The fair values of identifiable intangible assets acquired were prepared by a third-party valuation specialist and incorporate significant unobservable inputs, judgment, and estimates, including the amount and timing of future cash flows. The intangible assets will be amortized in accordance with the Company’s accounting policies. The following table summarizes the preliminary value of the intangible assets:

 

 

 

 

8


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. Basis of Presentation and General Information (continued)

 

 

 

Amount

 

 

Useful Life

Category

 

(in thousands)

 

 

(in years)

Customer Relationships

 

$

2,500

 

 

5

Technology

 

 

200

 

 

2

Non-Compete

 

 

100

 

 

2

Total

 

$

2,800

 

 

 

 

The Company recognized $53 thousand of transactions costs related to the acquisition and no amortization was recorded in the three months ended September 27, 2024.

 

The amounts recorded for certain assets and liabilities and related disclosures are preliminary in nature and are subject to adjustment as additional information is obtained about their acquisition date fair values. Since the acquisition was only recently completed, the allocation of the purchase price is preliminary and will likely change in future periods as fair value estimates of the assets acquired and liabilities assumed are finalized, including those primarily related to working capital, property and equipment, intangible assets, and taxes. The final determination of the fair values will be completed within the one-year measurement period.

 

Also, in connection with the acquisition, the Company and LeewayHertz’s founder are creating a joint venture whereby The Hackett Group will contribute its AI XPLR platform and LeewayHertz will contribute its ZBrain platform. The integration of AI XPLR and the ZBrain Gen A.I. orchestration solution will enable the joint venture to provide advanced and tailored Gen AI solutions to its clients. The joint venture is expected to be formed by the end of the Company's fiscal year 2024.

Segment Reporting

Segments are defined as components of a company that engage in business activities from which they earn revenue and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company assesses its operating segments under the management approach in accordance with ASC 280, "Segment Reporting" (ASC 280), and has determined that it has three operating segments: Global S&BT, Oracle Solutions and SAP Solutions which are also its reportable segments. See Note 11 “Segment Information and Geographical Data” for detailed segment information.

Goodwill and Other Intangible Assets

For acquisitions accounted for as a business combination, goodwill represents the excess of the cost over the fair value of the net assets acquired. The Company has organized its operating and internal reporting structure to align with its primary market solutions. In accordance with ASC 280, management made the determination to present three operating segments, three reportable segments and three reporting units as follows: (1) Global S&BT, (2) Oracle Solutions, and (3) SAP Solutions. Global S&BT includes the results of the Company’s Gen A.I. and strategic business consulting practices; Oracle Solutions includes the results of the Company’s Oracle EPM/ERP and Digital AMS practices; SAP Solutions includes the Company’s SAP applications and related SAP service offerings. A reporting unit is an operating segment or one level below an operating segment to which goodwill is assigned. The goodwill was allocated to the reporting unit based on the reporting unit's relative fair value. The carrying amount of goodwill by reporting unit is as follows, which includes the provisional goodwill allocated to the LeewayHertz acquisition (in thousands):

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

December 29,

 

 

Additions/

 

 

Currency

 

 

September 27,

 

 

 

2023

 

 

Adjustments

 

 

Translation

 

 

2024

 

Global S&BT

 

$

57,550

 

 

$

4,492

 

 

$

683

 

 

$

62,725

 

Oracle Solutions

 

 

16,699

 

 

 

 

 

 

 

 

 

16,699

 

SAP Solutions

 

 

9,993

 

 

 

 

 

 

 

 

 

9,993

 

Goodwill

 

$

84,242

 

 

$

4,492

 

 

$

683

 

 

$

89,417

 

 

9


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. Basis of Presentation and General Information (continued)

Revenue Recognition

The Company primarily generates its revenue from providing professional services to its clients. The Company also generates revenue from software sales, software maintenance and support and subscriptions to its executive and best practices advisory programs. A single contract could include one or multiple performance obligations. For those contracts that have multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on its relative standalone selling price. The Company determines the standalone selling price based on the respective selling price of the individual elements when sold separately.

Revenue is recognized when control of the goods and services provided are transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods and services using the following steps: 1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when the Company satisfies the performance obligations.

The Company typically satisfies its performance obligations for professional services over time as the related services are provided. The performance obligations related to software maintenance and support and subscriptions to its executive and best practice advisory programs are typically satisfied evenly over the course of the service period. Other performance obligations, such as software sales, are satisfied at a point in time.

The Company generates revenue under four types of billing arrangements: fixed-fee; time-and-materials; executive and best practice advisory services; and software sales and software maintenance and support.

In fixed-fee billing arrangements, which would also include contracts with capped fees, the Company agrees to a pre-established fee or fee cap in exchange for a predetermined set of professional services. The Company sets the fees based on its estimates of the costs and timing for completing the engagements. The Company generally recognizes revenue under fixed-fee or capped fee arrangements using a proportionate performance approach, which is based on work completed to-date as compared to estimates of the total services to be provided under the engagement. Estimates of total engagement revenue and cost of services are monitored regularly during the term of the engagement. If the Company’s estimates indicate a potential loss, such a loss is recognized in the period in which the loss first becomes probable and reasonably estimable. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty or sixty-day terms, however client terms are subject to change.

Time-and-material billing arrangements require the client to pay based on the number of hours worked by the Company’s consultants at agreed hourly rates. The Company recognizes revenue under time-and-material arrangements as the related services or goods are provided, using the right to invoice practical expedient which allows it to recognize revenue in the amount based on the number of hours worked and the agreed upon hourly rates. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty or sixty-day terms, however client terms are subject to change.

Advisory services contracts are typically in the form of a subscription agreement which allows the customer access to the Company’s executive and best practice advisory programs. There is typically a single performance obligation and the transaction price is the contractual amount of the subscription agreement. Revenue from advisory services contracts is recognized ratably over the life of the agreements. Customers are typically invoiced at the inception of the contract, with net thirty or sixty-day terms, however client terms are subject to change.

The resale of on-premise software, cloud software and maintenance contracts are in the form of SAP America ("SAP") software or maintenance agreements provided by SAP. SAP is the principal and the Company is the agent in these transactions as the Company does not obtain title to the software and maintenance which is sold simultaneously. The transaction price is the Company’s agreed-upon percentage of the software sale for either on-premise software or cloud software or maintenance amount in the contract with the vendor. Revenue for the resale of software is recognized upon contract execution and customer’s receipt of the software. The Company also provides software maintenance on other ERP systems, primarily Oracle. Revenue from maintenance contracts is recognized ratably over the life of the agreements. The customer is typically invoiced at contract inception, with net thirty or sixty-day terms, however client terms are subject to change.

Revenue before reimbursements excludes reimbursable expenses charged to clients. Reimbursements, which include travel and out-of-pocket expenses, are included in revenue, and an equivalent amount of reimbursable expenses is included in the cost of service.

Expense reimbursements that are billable to clients are included in total revenue and are substantially all billed as time-and-material billing arrangements. Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred. Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.

10


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. Basis of Presentation and General Information (continued)

The payment terms and conditions in the Company’s customer contracts vary. The agreements entered into in connection with a project, whether time and materials-based or fixed-fee or capped-fee based, typically allow clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by the Company through the effective date of the termination. In addition, from time to time the Company enters into agreements with its clients that limit its right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit the Company from performing a defined range of services which it might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team.

Differences between the timing of billings and the recognition of revenue are recognized as either contract assets or contract liabilities in the accompanying consolidated balance sheets. Revenue recognized for services performed but not yet billed to clients is recorded as contract assets and is included within accounts receivable and contract assets. Services not yet performed, however billed to the client and uncollected at period end, are recorded as contract assets and are included within accounts receivable and contract assets. Client prepayments are classified as contract liabilities and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and contract asset balances. During the quarter and nine months ended September 27, 2024, the Company recognized $1.7 million and $10.7 million, respectively, of revenue as a result of changes in the contract liability balance, as compared to $1.5 million and $12.1 million, respectively, for the quarter and nine months ended September 29, 2023.

Based on the information that management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, the Company disaggregates revenue as follows for the quarters and nine months ended September 27, 2024 and September 29, 2023 (in thousands):

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global S&BT:

 

 

 

 

 

 

 

 

 

 

 

 

    North America Consulting

 

$

36,563

 

 

$

37,032

 

 

$

105,201

 

 

$

109,642

 

    International Consulting

 

 

7,502

 

 

 

6,766

 

 

 

22,018

 

 

 

20,123

 

Total Global S&BT

 

$

44,065

 

 

$

43,798

 

 

$

127,219

 

 

$

129,765

 

Oracle Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

    Consulting and software support and maintenance

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

Total Oracle Solutions

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

SAP Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

    Consulting and software support and maintenance

 

$

10,934

 

 

$

10,605

 

 

$

31,576

 

 

$

32,372

 

    Software license sales

 

 

2,019

 

 

 

622

 

 

 

8,292

 

 

 

3,276

 

Total SAP Solutions

 

$

12,953

 

 

$

11,227

 

 

$

39,868

 

 

$

35,648

 

Total segment revenue

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The total revenue from the Global S&BT segment, the Oracle Solutions segment and the SAP Solutions segment's consulting and software support and maintenance services is all recognized over time. The software license sales revenue included in the SAP Solutions segment is recognized at a point in time.

Capitalized Sales Commissions

Sales commissions earned by the Company’s sales force are considered the incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized as project revenue is recognized. The Company determined the period of amortization by taking into consideration the customer contract period, which is generally less than 12 months. Commission expenses are included in the Selling, general and administrative costs in the accompanying consolidated statements of operations. As of December 29, 2023 and December 30, 2022, the Company had $1.7 million and $1.5 million, respectively, of deferred commissions, of which $0.2 million and $0.9 million was amortized during the quarter and nine months ended September 27, 2024, respectively, and $0.3 million and $0.9 million for the same periods in 2023, respectively. No impairment loss was recognized relating to the capitalization of deferred commissions.

11


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. Basis of Presentation and General Information (continued)

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be less than one year.

Sales tax collected from customers and remitted to the applicable taxing authorities is accounted for on a net basis, with no impact on revenue.

Expense reimbursements that are billable to clients are included in total revenue and are substantially all billed as time-and-material billing arrangements. Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred. Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.

Fair Value

The Company’s financial instruments consist of cash, accounts receivable and contract assets, accounts payable, accrued expenses and other liabilities, contract liabilities and long-term debt. As of September 27, 2024 and December 29, 2023, the carrying amount of each financial instrument approximated the instrument’s respective fair value due to either the short-term nature or the maturity of these instruments.

The Company uses significant other observable market data or assumptions (Level 2 inputs as defined in accounting guidance) that it believes market participants would use in pricing debt. The fair value of the debt approximated the carrying amount, using Level 2 inputs, due to the short-term variable interest rates based on market rates.

 

Recent Accounting Pronouncements

 

In November 2023, accounting guidance was issued that requires additional disclosures of reportable segment information. The guidance requires that public entities disclose, on an annual and interim basis (1) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, (2) an amount for other segment items by reportable segment and a description of its composition, (3) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, (4) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit; at least one of the reported segment profit or loss measures should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements, (5) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and in deciding how to allocate resources, and (6) if a public entity has a single reportable segment to provide all the disclosures required by the amendments in this update and all existing segment disclosures in Topic 280. The amendments in this update do not change how operating segments are identified or aggregated nor how the quantitative thresholds are applied to determine its reportable segments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in this update should be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the impact the adoption of this accounting standard update will have on its footnote disclosures.

 

12


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

 

 

2. Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. With regard to common stock subject to vesting requirements and restricted stock units issued to the Company’s employees and non-employee members of its Board of Directors, the calculation includes only the vested portion of such stock and units.

Diluted net income per common share is computed by dividing net income by the weighted average number of common shares outstanding, increased by the assumed conversion of other potentially dilutive securities during the period.

The following table reconciles basic and dilutive weighted average common shares:

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

27,645,288

 

 

 

27,220,176

 

 

 

27,561,279

 

 

 

27,146,095

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Unvested restricted stock units and common stock subject
   to vesting requirements issued to employees and
   non-employees

 

 

496,226

 

 

 

597,773

 

 

 

358,764

 

 

 

398,643

 

Dilutive weighted average common shares outstanding

 

 

28,141,514

 

 

 

27,817,949

 

 

 

27,920,043

 

 

 

27,544,738

 

 

Approximately one thousand shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarter and nine months ended September 27, 2024, respectively, as compared to 102 shares and two thousand shares for the same periods in 2023, respectively, as inclusion would have had an anti-dilutive effect on diluted net income per common share. In addition, 84 thousand restricted stock units in the quarter and nine months ended September 27, 2024, were excluded from the computations of diluted net income per common share as they are contingently issuable shares with market-related conditions that have not been satisfied. Please see Note 7 for further information.

3. Accounts Receivable and Contract Assets, Net

Accounts receivable and contract assets, net, consisted of the following (in thousands):

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

Accounts receivable

 

$

39,250

 

 

$

35,640

 

Contract assets (unbilled revenue)

 

 

23,629

 

 

 

17,545

 

Allowance for doubtful accounts

 

 

(1,652

)

 

 

(1,072

)

Accounts receivable and contract assets, net

 

$

61,227

 

 

$

52,113

 

 

Accounts receivable is net of uncollected advanced billings. Contract assets represent revenue for services performed that have not been invoiced.

4. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

 

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

Accrued compensation and benefits

 

$

10,389

 

 

$

9,162

 

Accrued bonuses

 

 

6,813

 

 

 

8,246

 

Accrued dividend payable

 

 

3,042

 

 

 

2,997

 

Accrued sales, use, franchise and VAT tax

 

 

2,098

 

 

 

2,862

 

Non-cash stock based compensation accrual

 

 

533

 

 

 

408

 

Other accrued expenses

 

 

3,267

 

 

 

3,126

 

Total accrued expenses and other liabilities

 

$

26,142

 

 

$

26,801

 

 

13


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

5. Lease Commitments

 

The Company has operating leases for office space and, to a much lesser extent, operating leases for equipment. The Company’s office leases are between terms of 1 year and 5 years. Rents usually increase annually in accordance with defined rent steps or are based on current year consumer price index adjustments. Some of the lease agreements contain one or more of the following provisions: tenant allowances, rent holidays, lease premiums, and rent escalation clauses. There are typically no purchase options, residual value guarantees or restrictive covenants. When renewal options exist, the Company generally does not deem them to be reasonably certain to be exercised, and therefore the amounts are not recognized as part of the lease liability nor the right of use asset.

 

The components of lease expense were as follows for the nine months ended September 27, 2024 (in thousands):

 

Operating lease cost

 

$

882

 

 

 

 

 

Total net lease costs

 

$

882

 

 

The weighted average remaining lease term is 3.7 years. The weighted average discount rate utilized is 5.8%. For the quarter and nine months ended September 27, 2024, the Company paid $0.3 million and $1.1 million, respectively, from operating cash flows for its operating leases.

Future minimum lease commitments under non-cancellable operating leases as of September 27, 2024, were as follows (in thousands):

2024 (excluding the nine months ended September 27, 2024)

 

$

355

 

2025

 

 

1,055

 

2026

 

 

863

 

2027

 

 

791

 

2028 and thereafter

 

 

660

 

Total lease payments

 

 

3,724

 

Less imputed interest

 

 

(510

)

Total

 

$

3,214

 

As of September 27, 2024, the Company does not have any additional material operating leases that have not yet commenced.

6. Credit Facility

On November 7, 2022, the Company entered into a third amended and restated credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and the lenders party thereto, pursuant to which the lenders agreed to amend and restate its existing credit agreement, in order to extend the maturity date of the revolving line of credit and provide the Company with an additional $55.0 million in borrowing capacity, for an aggregate amount of up to $100.0 million from time to time pursuant to a revolving line of credit (the “Credit Facility”). The Credit Facility matures on November 7, 2027.

The obligations of Hackett under the Credit Facility are guaranteed by active existing and future material U.S. subsidiaries of Hackett (the “U.S. Subsidiaries”) and are secured by substantially all of the existing and future property and assets of Hackett and the U.S. Subsidiaries.

The interest rates per annum applicable to loans under the Credit Facility will be, at the Company’s option, equal to either a base rate or a Secured Overnight Financing Rate ("SOFR") rate. The applicable margin percentage is based on the consolidated leverage ratio, as defined in the Credit Agreement. As of September 27, 2024, the applicable margin percentage was 1.50% per annum for the SOFR rate, and 0.75% per annum, for the base rate. As of September 27, 2024, the interest rate on the Company's outstanding debt was 6.6%, utilizing the SOFR margin percentage. The interest rate of the commitment fee as of September 27, 2024 was 0.125%. Interest payments are made monthly.

The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions. As of September 27, 2024, the Company was in compliance with all covenants.

14


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

6. Credit Facility (continued)

As of September 27, 2024, the Company had $20.0 million of outstanding debt, excluding $0.3 million of deferred debt costs, which will be amortized over the remaining life of the Credit Facility. As of December 29, 2023, the Company had $33.0 million of outstanding debt, excluding $0.3 million of deferred debt costs.

7. Stock Based Compensation

 

Restricted Stock Units

On September 16 and 17, 2024, the Company granted its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and certain other Company leaders performance-based restricted stock units, in the amounts of 786,885, 413,115, 72,000, and 607,350, respectively. In connection with the awards, the annual equity incentive award opportunities for the recipients during the performance period of the awards will be reduced by 50% compared to the annual equity incentive award opportunities in the Company’s executive compensation program for 2024. The awards are split into three equal tranches with each tranche having its own market condition and service condition. The market condition is met when the Company’s stock price reaches a certain share price hurdle for twenty consecutive trading days during the performance period from the grant date through December 31, 2028. The share price hurdles are $30, $40, and $50 for the first, second, and third tranches, respectively. Additionally, the service condition is met if the employee is employed on the first, second, and third anniversary of the grant date for the first tranche, second tranche, and third tranche, respectively.

Furthermore, if the second or third tranches are not met during the performance period, and the volume weighted average of the Company’s stock price falls between two share price hurdles for over 20 consecutive trading days immediately prior to the end of the performance period, the employee will vest in an interpolated amount of the next tranche.

The Company used a lattice valuation model to determine the fair value of the three tranches as of the grant date. The lattice valuation model, using different share price paths, calculates a derived service period which is the median share price path on which the market condition is satisfied for each tranche. The requisite service period was determined to be service conditions as the service conditions are greater than the derived service period. For each of the three tranches, stock compensation expense is recognized on a straight-line basis over the requisite service period. The Company has elected to account for forfeitures as incurred. If an employee forfeits nonvested shares subsequent to meeting a service condition, the previously recognized expense is not reversed. If an employee forfeits nonvested shares prior to meeting the service condition, the previously recognized expense is reversed.

As of September 27, 2024, these market conditions had not been met and as such these shares had not vested and were not included in the Company's basic or dilutive shares outstanding. The stock price appreciation equity program non-cash stock compensation expense was $0.6 million for both the quarter and nine months ended September 27, 2024. As of September 27, 2024, there was $29.1 million of total unrecognized non-cash stock based compensation expense which is expected to be recognized over a weighted-average period of 3.0 years.

The following tables summarize information about the Company’s stock price appreciation equity program awards described above:

Award Summary

 

Tranche

 

Grant Date Fair Value

 

 

Share Price Vesting Conditions*

 

Underlying Share #

 

 

Contractual Service Period

 

Derived Service Period

 

 

September 16, 2024

 

 

September 17, 2024

 

 

Both Grant Dates

 

September 16, 2024

 

 

September 17, 2024

 

 

Both Grant Dates

 

September 16, 2024

 

September 17, 2024

1

 

$

21.26

 

 

$

22.85

 

 

>$30pershare

 

 

424,000

 

 

 

202,450

 

 

1 year

 

0.60 years

 

0.46 years

2

 

$

14.96

 

 

$

16.31

 

 

$30to$40pershare

 

 

424,000

 

 

 

202,450

 

 

2 years

 

2.00 years

 

1.86 years

3

 

$

9.93

 

 

$

11.03

 

 

$40to$50pershare

 

 

424,000

 

 

 

202,450

 

 

3 years

 

2.71 years

 

2.60 years

 

15


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

7. Stock Based Compensation (continued)

The following table summarizes the fair value assumption utilized in the lattice valuation model to calculate fair value:

 

 

 

 

 

 

 

 

 

 

 

Grant Date

 

Volatility

 

 

Risk Free Interest Rate

 

 

Dividend Yield

 

September 16, 2024

 

 

29.5

%

 

 

3.38

%

 

 

1.70

%

September 17, 2024

 

 

29.5

%

 

 

3.41

%

 

 

1.65

%

 

In connection with the acquisition of LeewayHertz (Note 1), the Company entered into an employment agreement with the selling shareholder and certain key employees by which the Company granted 439,453 restricted stock units, with either both performance and service requirements or just service requirements at a grant-date fair value of $25.86 per share with four year vesting terms. For the quarter and nine months ended September 27, 2024, the Company recorded $0.2 million of non-cash stock compensation expense.

During the quarter and nine months ended September 27, 2024, the Company issued 2,443,082 and 2,867,035 restricted stock units, respectively, at a weighted average grant date fair value of $18.11 and $18.89 per share, respectively. The grants issued during the quarter ended September 27, 2024, include the shares related to the stock price appreciation equity program and the shares issued in connection with the acquisition of LeewayHertz. As of September 27, 2024, the Company had 3,462,128 restricted stock units outstanding at a weighted average grant date fair value of $19.15 per share. As of September 27, 2024, $56.6 million of total restricted stock unit non-cash stock based compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately 2.8 years, including the stock appreciation equity program awards discussed above.

Forfeitures for all of the Company’s outstanding equity awards are recognized as incurred.

8. Shareholders’ Equity

Treasury Stock

On July 30, 2002, the Company announced that its Board of Directors approved the repurchase of the Company’s common stock through its share repurchase program. Since the inception of the repurchase plan, the Board of Directors has approved the repurchase of $287.2 million of the Company’s common stock. As of September 27, 2024, the Company had affected cumulative purchases under the plan of $276.0 million, leaving $11.1 million available for future purchases. Subsequent to September 27, 2024, the Company's Board of Directors approved an additional $20.0 million increase to the Company's share repurchase program.

 

During the quarter ended September 27, 2024, the Company repurchased 65 thousand shares at an average price of $26.77 per share for a total cost of $1.7 million on the open market. The Company did not repurchase any outstanding stock on the open market during the quarter ended September 29, 2023. During the nine months ended September 27, 2024, the Company repurchased 108 thousand shares on the open market and from members of the Company's Board of Directors at an average price per share of $25.80 for a total cost of $2.8 million. During the nine months ended September 29, 2023, the Company repurchased 37 thousand shares from members of its Board of Directors at an average price per share of $18.96 for a total cost of $0.7 million.

 

There is no expiration of the Company's repurchase authorization. Under the repurchase plan, the Company may buy back shares of its outstanding stock either on the open market or through privately negotiated transactions, subject to market conditions and trading restrictions. The Company holds repurchased shares of its common stock as treasury stock and accounts for treasury stock under the cost method.

 

Shares purchased under the repurchase plan do not include shares withheld to satisfy withholding tax obligations. These withheld shares are never issued and in lieu of issuing the shares, taxes were paid on the employee’s behalf. During the quarter and nine months ended September 27, 2024, the Company withheld and did not issue 6 thousand shares and 174 thousand shares, respectively, for a cost of $0.1 million and $4.1 million, respectively. During the quarter and nine months ended

16


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

8. Shareholders’ Equity (continued)

 

September 29, 2023, the Company withheld and did not issue 3 thousand shares and 171 thousand shares, respectively, for a cost of $66 thousand and $3.7 million, respectively. The shares withheld for taxes are included under issuance of common stock in the accompanying consolidated statements of shareholders’ equity.

Dividend Program

During the first nine months of 2024, the Company declared three quarterly dividends to its shareholders for an aggregate of $9.1 million, which were paid in April 2024, July 2024 and October 2024. These dividends were paid from U.S. domestic sources and are accounted for as a decrease to retained earnings. Subsequent to September 27, 2024, the Company declared its fourth quarter dividend in 2024 to be paid in January 2025.

9. Transactions with Related Parties

During the first nine months ended September 27, 2024, the Company repurchased 43 thousand shares of its common stock from members of its Board of Directors for $1.1 million, or $24.34 per share.

10. Litigation

The Company is involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.

11. Segment Information and Geographical Data

The Company has organized its operating and internal reporting structure to align with its primary market solutions. In accordance with ASC 280, the Company determined it has three operating segments and three reportable segments: (1) Global S&BT, (2) Oracle Solutions, and (3) SAP Solutions. Global S&BT includes the results of the Company’s strategic business consulting practices; Oracle Solutions includes the results of the Company’s Oracle EPM/ERP and Digital AMS practices; SAP Solutions includes the Company’s SAP applications and related SAP service offerings. The SAP Solutions reportable segment is the only segment that contains software sales revenue.

The measurement criteria for segment profit or loss are substantially the same for each reportable segment, excluding any unusual or infrequent items, if any. Segment profit consists of the revenue generated by a segment, less operating expenses that are incurred directly by the segment. Unallocated costs include corporate costs related to the administrative functions that are performed in a centralized manner and that are not attributable to a particular segment, depreciation and amortization expense, interest expense, non-cash compensation expense and any non-recurring transactions. Segment information related to assets has been omitted as the chief operating decision maker does not receive discrete financial information regarding assets at the segment level.

17


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

11. Segment Information and Geographical Data (continued)

 

The tables below set forth information about the Company’s operating segments for the quarter and nine months ended September 27, 2024 and September 29, 2023, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements (in thousands):

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global S&BT:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

44,065

 

 

$

43,798

 

 

$

127,219

 

 

$

129,765

 

Segment profit

 

 

14,093

 

 

 

13,951

 

 

 

36,895

 

 

 

40,860

 

Oracle Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

Segment profit

 

 

5,520

 

 

 

5,031

 

 

 

16,150

 

 

 

13,966

 

SAP Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

12,953

 

 

$

11,227

 

 

$

39,868

 

 

$

35,648

 

Segment profit

 

 

3,699

 

 

 

2,861

 

 

 

11,833

 

 

 

8,486

 

Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segment profit

 

$

23,312

 

 

$

21,843

 

 

$

64,878

 

 

$

63,312

 

Items not allocated to segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate general and administrative expenses**

 

 

5,655

 

 

 

4,497

 

 

 

15,745

 

 

 

15,069

 

Non-cash stock based compensation expense***

 

 

2,989

 

 

 

2,707

 

 

 

8,438

 

 

 

7,920

 

Stock price appreciation equity program compensation expense

 

 

602

 

 

 

-

 

 

 

602

 

 

 

-

 

Acquisition-related compensation expense

 

 

41

 

 

 

-

 

 

 

41

 

 

 

-

 

Acquisition-related non-cash stock based compensation expense

 

 

232

 

 

 

4

 

 

 

232

 

 

 

10

 

Acquisition-related costs

 

 

53

 

 

 

-

 

 

 

53

 

 

 

-

 

Legal settlement and related costs

 

 

-

 

 

 

-

 

 

 

102

 

 

 

-

 

Depreciation expense

 

 

940

 

 

 

892

 

 

 

2,824

 

 

 

2,528

 

Interest expense, net

 

 

368

 

 

 

814

 

 

 

1,352

 

 

 

2,594

 

Income before taxes

 

$

12,432

 

 

$

12,929

 

 

$

35,489

 

 

$

35,191

 

*Total revenue includes reimbursable expenses, which are project travel-related expenses passed through to a client with no associated operating margin.

**Corporate general and administrative expenses primarily include costs related to business support functions including accounting and finance, human resources, legal, information technology and office administration, as well as any foreign currency gains and losses. Corporate general and administrative expenses exclude one-time, non-recurring expenses and benefits.

***See Note 7.

 

 

 

 

 

18


The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

11. Segment Information and Geographical Data (continued)

 

The tables below set forth information on the Company's geographical data. Total revenue, which is primarily based on the country of the contracting entity, was attributed to the following geographical areas (in thousands):

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

66,214

 

 

$

63,955

 

 

$

195,098

 

 

$

190,578

 

Europe

 

 

8,484

 

 

 

7,399

 

 

 

25,107

 

 

 

21,132

 

Other (Australia, Canada, India and Uruguay)

 

 

5,079

 

 

 

4,502

 

 

 

14,415

 

 

 

12,477

 

Total revenue

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-lived assets are attributable to the following geographic areas (in thousands):

 

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

Long-lived assets:

 

 

 

 

 

 

United States

 

$

100,210

 

 

$

91,065

 

Europe

 

 

15,152

 

 

 

14,481

 

Other (Australia, Canada, India and Uruguay)

 

 

539

 

 

 

444

 

Total long-lived assets

 

$

115,901

 

 

$

105,990

 

 

The domestic long-lived assets above include the provisional LeewayHertz allocation of goodwill of $4.5 million and intangible assets of $2.8 million. See Note 1. As of September 27, 2024 and December 29, 2023, foreign assets included $14.9 million and $14.3 million, respectively, of goodwill related to acquisitions.

 

 

 

 

19


 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding our expected financial position and operating results, our business strategy, our financing plans and forecasted demographic and economic trends relating to our industry are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. We cannot promise you that our expectations reflected in such forward-looking statements will turn out to be correct. Factors that could impact such forward-looking statements include, among others, changes in worldwide and U.S. economic conditions that impact business confidence and the demand for our products and services, our ability to transition our capabilities to support generative artificial intelligence ("A.I.")-related consulting services and solutions, our ability to effectively integrate acquisitions, including the LeewayHertz acquisition, into our operations,[our ability to manage joint ventures and successfully cooperate with our joint venture partners, 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, the timing of projects and the potential for contract cancellation 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, the impact of the geopolitical conflict involving Russia and Ukraine and in the Middle East on our business and changes in general economic conditions, interest rates and our ability to obtain additional debt financing if needed. An additional description of our risk factors is described in Part I – Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 29, 2023.

 

OVERVIEW

The following Management's Discussion and Analysis ("MD&A") is intended to help the reader understand the results of operations and financial condition of Hackett. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

 

Hackett is a global IP-based executive advisory, strategic consulting and digital transformation firm. The Hackett Group provides dedicated expertise in Generative Artificial Intelligence ("Gen A.I.") strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including its highly recognized Oracle, SAP, OneStream and Coupa implementation offerings.

The firm recently launched its A.I. XPLR offering which helps define an organizations’ Gen A.I. enablement opportunities. Using A.I. XPLR, our A.I. assessment platform, our experienced professionals guide organizations to harness the power of Gen AI to digitally transform their operations and seek to achieve quantifiable, breakthrough results, allowing us to be key architects of our clients' Gen A.I. journey.

The Hackett Group has completed over 26,600 benchmarking and performance studies with major organizations. These studies are executed utilizing our Quantum Leap ("QL") platform which drives our Digital Transformation Platform ("DTP"). This includes the firm's benchmarking metrics, best practices repository, and best practice configuration and process flow accelerators, which enables our clients and partners to achieve digital world-class performance.

Our expertise is grounded in best practices insights from benchmarking the world’s leading businesses – including companies comprising 97% of the Dow Jones Industrial Average, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the Financial Times Stock Exchange 100 Index, which are delivered through our Hackett Connect, QL and DTP platforms.

Impact of Macroeconomic Conditions on Our Business

 

The level of revenue we achieve is based on our ability to deliver market leading services and solutions and to deploy skilled teams of professionals quickly. Our results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. Any deterioration in the current macroeconomic environment or economic downturn as a result of weak or uncertain economic conditions due to inflation, high interest rates, national or geopolitical events or other factors impacting

20


 

economic activity or business confidence could adversely affect our clients' financial condition or outlook which may reduce the clients' demand for our services.

 

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, our results of operations (in thousands and unaudited):

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

September 29,

 

 

September 27,

September 29,

 

 

 

2024

2023

 

 

2024

2023

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Revenue before reimbursements

 

$

77,949

 

 

$

74,634

 

 

$

229,572

 

 

$

220,106

 

Reimbursements

 

 

1,828

 

 

 

1,222

 

 

 

5,048

 

 

 

4,081

 

Total revenue

 

 

79,777

 

 

 

75,856

 

 

 

234,620

 

 

 

224,187

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of service:

 

 

 

 

 

 

 

 

 

 

 

 

Personnel costs before reimbursable expenses (includes $2,135 and $5,168 and $1,518 and $4,687 of non-cash stock based compensation expense in the three and nine months ended September 27, 2024 and September 29, 2023, respectively)

 

 

46,417

 

 

 

44,421

 

 

 

137,583

 

 

 

132,990

 

Reimbursable expenses

 

 

1,828

 

 

 

1,222

 

 

 

5,048

 

 

 

4,081

 

Total cost of service

 

 

48,245

 

 

 

45,643

 

 

 

142,631

 

 

 

137,071

 

Selling, general and administrative costs (includes $1,688 and $4,104 and $1,193 and $3,243 of non-cash stock based compensation expense in the three and nine months ended September 27, 2024 and September 29, 2023, respectively)

 

 

18,732

 

 

 

16,470

 

 

 

55,046

 

 

 

49,331

 

Legal settlement and related costs

 

 

 

 

 

 

 

 

102

 

 

 

 

Total costs and operating expenses

 

 

66,977

 

 

 

62,113

 

 

 

197,779

 

 

 

186,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

12,800

 

 

 

13,743

 

 

 

36,841

 

 

 

37,785

 

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(368

)

 

 

(814

)

 

 

(1,352

)

 

 

(2,594

)

Income before income taxes

 

 

12,432

 

 

 

12,929

 

 

 

35,489

 

 

 

35,191

 

Income tax expense

 

 

3,845

 

 

 

3,509

 

 

 

9,423

 

 

 

8,890

 

Net income

 

$

8,587

 

 

$

9,420

 

 

$

26,066

 

 

$

26,301

 

Diluted net income per common share

 

$

0.31

 

 

$

0.34

 

 

$

0.93

 

 

$

0.95

 

 

Revenue. We are a global Company with operations in our primary markets located in the United States and Western Europe. Our revenue is denominated in multiple currencies, primarily the U.S. Dollar, British Pound and Euro, and as a result is affected by currency exchange rate fluctuations. The impact of currency fluctuations did not have a significant impact on comparisons between the third quarter and first nine months of 2024 and the same comparable periods of 2023. In this MD&A, we discuss revenue based on geographical location of engagement team personnel.

 

Our Company total revenue was $79.8 million and $234.6 million during the third quarter and first nine months of 2024, respectively, as compared to $75.9 million and $224.2 million in the same periods in 2023, respectively. In the third quarter and first nine months of 2024, one customer accounted for 13% and 12%, respectively, of our total revenue. In the third quarter and first nine months of 2023, one customer accounted for 6% and 5%, respectively, of our total revenue.

 

Segment revenue. The Company has three reportable segments: Global Strategy & Business Transformation (Global S&BT), Oracle Solutions and SAP Solutions. Global S&BT includes S&BT Gen A.I. and Business Transformation Consulting, Benchmarking, Business Advisory Services, Intellectual Property as-a-Service (IPASS) and OneStream offerings. Oracle Solutions and SAP Solutions support the two fundamentally distinct ERP systems: Oracle and SAP.

 

The following table sets forth total revenue by operating segment, which includes reimbursable expenses related to project travel-related expenses passed through to a client with no associated operating margin (in thousands):

 

21


 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global S&BT

 

$

44,065

 

 

$

43,798

 

 

$

127,219

 

 

$

129,765

 

Oracle Solutions

 

 

22,759

 

 

 

20,831

 

 

 

67,533

 

 

 

58,774

 

SAP Solutions

 

 

12,953

 

 

 

11,227

 

 

 

39,868

 

 

 

35,648

 

Total revenue

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

Global S&BT total revenue was $44.1 million and $127.2 million during the third quarter and first nine months of 2024, respectively, as compared to $43.8 million and $129.8 million in the same periods of 2023, respectively. The revenue growth in our Gen A.I. consulting and implementation offerings were offset by weakness in our e-procurement implementation offerings.

Oracle Solutions total revenue was $22.8 million and $67.5 million during the third quarter and first nine months of 2024, respectively, as compared to $20.8 million and $58.8 million in the same periods of 2023, respectively. The segment has continued the momentum it has experienced since the second quarter of 2023.

SAP Solutions total revenue was $13.0 million and $40.0 million during the third quarter and first nine months of 2024, respectively, as compared to $11.2 million and $35.6 million in the same periods of 2023, respectively. The increase in revenue during the third quarter and first nine months of 2024, as compared to the same periods in 2023, was due to the strong software-related sales during the third quarter and first nine months of 2024.

Reimbursements as a percentage of Company total revenue were 2% during both the third quarter and first nine months of 2024 and 2023. Reimbursements are project travel-related expenses passed through to a client with no associated operating margin.

Cost of Service. Cost of service consists of personnel costs before reimbursable expenses, which includes salaries, benefits and incentive compensation for consultants and subcontractor fees, acquisition-related non-cash stock based compensation expense and non-cash stock based compensation expense, and reimbursable expenses which are travel and other expenses passed through to a client and are associated with projects.

Personnel costs before reimbursable expenses were $46.4 million and $137.6 million for the third quarter and first nine months of 2024, respectively, as compared to $44.4 million and $133.0 million in the same periods of 2023, respectively. The higher costs in the first nine months of 2024 were primarily a result of increased salaries, higher utilization of subcontractors and increases in non-cash stock compensation expense. Personnel costs as a percentage of total Company total revenue were 58% and 59% during the third quarter and first nine months of 2024, respectively, and 59% for each of the same periods in 2023, respectively.

Non-cash stock based compensation expense, included in personnel costs before reimbursable expenses was $2.1 million and $5.2 million during the third quarter and first nine months of 2024, respectively, as compared to $1.5 million and $4.7 million in the same periods of 2023, respectively. This increase was primarily related to increased non-cash stock compensation from the stock price appreciation equity program issuances (Note 7) and to the acquisition related non-cash stock compensation expense (Note 1 and Note 7).

Selling, General and Administrative Costs (“SG&A”). SG&A primarily consists of salaries, benefits and incentive compensation for the selling, marketing, administrative and executive employees, non-cash stock based compensation expense and various other overhead expenses.

SG&A costs increased 14%, to $18.7 million, and 12%, to $55.0 million, for the third quarter and first nine months of 2024, respectively, as compared to $16.5 million and $49.3 million for the same periods in 2023, respectively. This increase in the costs during the third quarter and first nine months of 2024 was primarily due to the incremental investments we have made in sales and related expenses, increased commissions, increased incentive compensation commensurate with Company performance, increased non-cash stock based compensation, as well as foreign currency fluctuations. SG&A costs as a percentage of total Company revenue were 23% during both the third quarter and first nine months of 2024, respectively, as compared to 22% during the same periods in 2023.

Non-cash stock based compensation expense, included in SG&A, was $1.7 million and $4.1 million during the third quarter and first nine months of 2024, respectively, as compared to $1.2 million and $3.2 million for the same periods in 2023, respectively. The increase in the third quarter and first nine months of 2024 primarily relates to the non-cash stock compensation expense from the stock price appreciation equity program issuances (Note 7) .

Segment Profit. Segment profit consists of the revenue generated by the segment, less the direct costs of revenue and selling, general and administrative expenses that are incurred directly by the segment. Items not allocated to the segment level include corporate costs related to the administrative functions that are performed in a centralized manner and that are not attributable to a particular segment. These administrative function costs include corporate general and administrative expenses, non-cash compensation, depreciation expense, interest expense and legal settlement and related costs.

22


 

Global S&BT segment profit was $14.1 million and $37.0 million during the third quarter and first nine months of 2024, respectively, as compared to $14.0 million and $40.9 million for the same periods in 2023, respectively. This decrease in the first nine months of 2024 was primarily due to the revenue growth in our Gen A.I. consulting and implementation offerings more than offset by weakness in our e-procurement implementation offerings.

Oracle Solutions segment profit was $5.5 million and $16.2 million during the third quarter and first nine months of 2024, respectively, as compared to $5.0 million and $14.0 million for the same periods in 2023, respectively. The increase during the third quarter and first nine months of 2024 was primarily due to higher revenue, partially offset by increased headcount and increased usage of subcontractors.

SAP Solutions segment profit was $3.7 million and $11.8 million during the third quarter and first nine months of 2024, respectively, as compared to $2.9 million and $8.5 million for the same periods in 2023, respectively. The increase in segment profit in the third quarter and first nine months of 2024, as compared to the same period in 2023, was primarily due to the value-added reseller activity in the quarter, partially offset by higher commissions and sales related costs.

 

Legal Settlement and Related Costs. In May 2023, Gartner, Inc. ("Gartner") filed a lawsuit seeking a preliminary injunction and damages against the Company and two ex-Gartner employees that were hired by us. On February 17, 2024, we, Gartner and the two ex-Gartner employees entered into a settlement agreement whereby we made a settlement payment of $985,000 to Gartner in exchange for a dismissal of the lawsuit and a release of all claims which is reflected in our Consolidated Statement of Operations for the year ended December 29, 2023. In addition, we incurred incremental legal costs related to the settlement which were recorded as expense in the period incurred.

Interest Expense, Net. Interest expense, net was $0.4 million and $1.4 million during the third quarter and first nine months of 2024, respectively, as compared to $0.8 million and $2.6 million in the same periods in 2023, respectively. As of September 27, 2024, we had outstanding debt of $20.0 million, excluding debt issue costs. As of September 29, 2023, we had outstanding debt of $44.0 million, excluding debt issue costs.

Income Taxes. During the third quarter and first nine months of 2024, we recorded $3.8 million and $9.4 million of income tax expense, respectively, related to certain federal, foreign and state taxes which reflected an effective tax rate of 30.9% and 26.6%, respectively. During the third quarter and first nine months of 2023, we recorded $3.5 million and $8.9 million of income tax expense, respectively, related to certain federal, foreign and state taxes which reflected an effective tax rate of 27.1% and 25.3%, respectively.

Liquidity and Capital Resources

As of September 27, 2024 and December 29, 2023, we had $9.7 million and $21.0 million, respectively, classified as cash on the consolidated balance sheets. We currently believe that available funds (including the cash on hand and funds available for borrowing under our revolving line of credit the "Credit Facility") and cash flows generated by operations will be sufficient to fund our working capital requirements, including debt payments, lease obligations and capital expenditures for at least the next twelve months and beyond. We may decide to raise additional funds in order to fund expansion, to develop new or further enhance products and services, to respond to competitive pressures, or to acquire complementary businesses or technologies. There is no assurance that additional financing would be available when needed or desired. Our cash requirements have not changed materially from those disclosed in Item 7 included in Part II of our Annual Report on Form 10-K for the year ended December 29, 2023.

The following table summarizes our cash flow activity (in thousands):

 

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

Cash flows provided by operating activities

 

$

27,089

 

 

$

11,817

 

Cash flows used in investing activities

 

$

(9,602

)

 

$

(3,203

)

Cash flows used in financing activities

 

$

(28,425

)

 

$

(28,957

)

Cash Flows from Operating Activities

Net cash provided by operating activities was $27.1 million during the first nine months of 2024, as compared to $11.8 million during the same period in 2023. In 2024 and 2023, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, partially offset by increases in accounts receivable and contract assets, decreases in accrued liabilities and other accruals primarily due to payments of the prior year earned incentive compensation liabilities and payments to vendors.

23


 

Cash Flows from Investing Activities

Net cash used in investing activities was $9.6 million during the first nine months of 2024, as compared to $3.2 million during the same period in 2023. During the third quarter of 2024, the Company acquired LeewayHertz for $6.5 million, net of cash acquired (see Note 1). During both the first nine months periods of 2024 and 2023, cash flows used in investing activities also included investments made to the continued development of our Hackett Connect Executive Advisory member platform, our QL benchmark, Digital Transformation technologies and our Gen A.I. platform, A.I. XPLR.

Cash Flows from Financing Activities

Net cash used in financing activities was $28.4 million and $29.0 million during the first nine months of 2024 and 2023, respectively. The usage of cash in 2024, primarily related to the repayment of borrowings of $13.0 million related to our Credit Facility, dividend payments of $9.1 million and the repurchase of $6.9 million of the Company's common stock. The usage of cash in 2023 primarily related to the net repayment of borrowings of $21.0 million related to our Credit Facility, dividend payments of $9.0 million and the repurchase of $4.4 million of the Company's common stock.

As of September 27, 2024, we had $20.0 million of outstanding borrowings under our Credit Facility, excluding deferred debt costs, leaving us with a capacity of approximately $80.0 million.

24


 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As of September 27, 2024, our exposure to market risk related primarily to changes in interest rates and foreign currency exchange rate risks.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to the Credit Facility, which is subject to variable interest rates. Under our credit agreement, the interest rates per annum applicable to loans under the Credit Facility was, at our option, equal to a base rate for one-, two-, three- or nine-month interest periods chosen by us in each case, plus an applicable margin percentage. A 100-basis point increase in our interest rate under our Credit Facility would not have had a material impact on our results of operations for the quarter and nine months ended September 27, 2024.

Exchange Rate Sensitivity

We face exposure to adverse movements in foreign currency exchange rates as a portion of our revenue, expenses, assets and liabilities are denominated in currencies other than the U.S. Dollar, primarily the British Pound, the Euro and the Australian Dollar. These exposures may change over time as business practices evolve.

 

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 5. Other Information.

Rule 10b5-1 Trading Arrangements

During the three months ended September 27, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

 

25


 

PART II — OTHER INFORMATION

The Company is involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.

Item 1A. Risk Factors.

 

For a discussion of our potential risks and uncertainties, see the risk factor below and the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 29, 2023.

 

There have been no material changes to any of the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 29, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

During the quarter ended September 27, 2024, the Company repurchased 65 thousand shares at an average price of $26.77 per share for a total cost of $1.7 million. As of September 27, 2024, the Company had $11.1 million of authorization remaining under the repurchase plan. Subsequent to September 27, 2024, the Company's Board of Directors approved a $20.0 million increase to the share repurchase program.

 

 

 

 

 

 

 

 

 

Total Number

 

 

Maximum Dollar

 

 

 

 

 

 

 

 

 

of Shares as Part

 

 

Value That May

 

 

 

 

 

 

 

 

 

of Publicly

 

 

Yet be Purchased

 

 

 

Total Number

 

 

Average Price

 

 

Announced

 

 

Under the

 

Period

 

of Shares

 

 

Paid per Share

 

 

Program

 

 

Program

 

Balance as of June 28, 2024

 

 

 

 

 

 

 

 

 

 

$

12,883,015

 

June 29, 2024 to July 26, 2024

 

 

 

 

$

 

 

 

 

 

$

12,883,015

 

July 27, 2024 to August 23, 2024

 

 

 

 

$

 

 

 

 

 

$

12,883,015

 

August 24, 2024 to September 27, 2024

 

 

64,887

 

 

$

26.77

 

 

 

64,887

 

 

$

11,146,164

 

 

 

 

64,887

 

 

$

26.77

 

 

 

64,887

 

 

 

 

 

 

Shares repurchased during the quarter and nine months ended September 27, 2024 under the repurchase plan do not include 6 thousand shares and 174 thousand shares for a cost of $0.1 million and $4.1 million, respectively, that the Company bought back to satisfy employee net vesting obligations.

26


 

Item 6. Exhibits

 

Exhibit No.

Exhibit Description

    3.1

Second Amended and Restated Articles of Incorporation of the Registrant, as amended (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 29, 2000).

    3.2

Articles of Amendment of the Articles of Incorporation of the Registrant (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 28, 2007).

    3.3

Amended and Restated Bylaws of the Registrant, as amended (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 29, 2000).

    3.4

Amendment to Amended and Restated Bylaws of the Registrant (incorporated herein by reference to the Registrant's Form 8-K filed on March 31, 2008).

    3.5

Amendment to Amended and Restated Bylaws of the Registrant (incorporated herein by reference to the Registrant's Form 8-K filed on January 21, 2015).

 

 

 

  10.1

 

Form of Performance-Based Stock Price Restricted Stock Award (incorporated herein by reference to Exhibit 10.1 of the Registrant's Form 8-K filed on September 16, 2024).

 

 

 

  31.1*

Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

  31.2*

Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

  32*

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.

101.SCH**

Inline XBRL Taxonomy Extension Schema with embedded Linkbases Document.

104**

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

 

 

* Filed herewith

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

 

27


 

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 thereunto duly authorized.

 

 

 

The Hackett Group, Inc.

 

 

 

Date: November 6, 2024

 

/s/ Robert A. Ramirez

 

 

Robert A. Ramirez

 

 

Executive Vice President, Finance and Chief Financial Officer

 

28


Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ted A. Fernandez, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q of The Hackett Group, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 6, 2024

By:

/s/ Ted A. Fernandez

Ted A. Fernandez

Chairman of the Board and Chief Executive Officer

The Hackett Group, Inc.

 


Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert A. Ramirez, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q of The Hackett Group, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 6, 2024

By:

/s/ Robert A. Ramirez

Robert A. Ramirez

Executive Vice President, Finance and Chief Financial Officer

The Hackett Group, Inc.

 


Exhibit 32

THE HACKETT GROUP, INC

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Hackett Group, Inc. (the “Company”) on Form 10-Q for the period ended September 27, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Ted A. Fernandez, Chairman of the Board and Chief Executive Officer, and Robert A. Ramirez, Executive Vice President, Finance and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1)
The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

By:

/s/ Ted A. Fernandez

Ted A. Fernandez

Chairman of the Board and Chief Executive Officer

 

November 6, 2024

By:

/s/ Robert A. Ramirez

Robert A. Ramirez

Executive Vice President, Finance and Chief Financial Officer

 

November 6, 2024

A signed original of this statement required by Section 906 has been provided to The Hackett Group, Inc. and will be retained by The Hackett Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 


v3.24.3
Document and Entity Information - shares
9 Months Ended
Sep. 27, 2024
Nov. 01, 2024
Cover [Abstract]    
Trading Symbol HCKT  
Entity Registrant Name Hackett Group, Inc.  
Entity Central Index Key 0001057379  
Document Type 10-Q  
Document Period End Date Sep. 27, 2024  
Amendment Flag false  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q3  
Current Fiscal Year End Date --12-27  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   27,593,479
Title of 12(b) Security Common Stock, par value $.001 per share  
Security Exchange Name NASDAQ  
Entity Shell Company false  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity File Number 333-48123  
Entity Tax Identification Number 65-0750100  
Entity Address, Address Line One 1001 Brickell Bay Drive  
Entity Address, Address Line Two Suite 3000  
Entity Address, City or Town Miami  
Entity Address, State or Province FL  
Entity Address, Postal Zip Code 33131  
City Area Code 305  
Local Phone Number 375-8005  
Entity Incorporation, State or Country Code FL  
Document Quarterly Report true  
Document Transition Report false  
v3.24.3
Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 27, 2024
Dec. 29, 2023
Current assets:    
Cash $ 9,964 $ 20,957
Accounts receivable and contract assets, net of allowance of $1,652 and $1,072 at September 27, 2024 and December 29, 2023, respectively 61,227 52,113
Prepaid expenses and other current assets 3,659 2,368
Total current assets 74,850 75,438
Property and equipment, net 20,307 20,044
Other assets 367 285
Intangible assets 2,800  
Goodwill 89,417 84,242
Operating lease right-of-use assets 3,010 1,419
Total assets 190,751 181,428
Current liabilities:    
Accounts payable 5,280 7,557
Accrued expenses and other liabilities 26,142 26,801
Contract liabilities 12,572 12,087
Income tax payable 4,323 2,360
Operating lease liabilities 1,173 1,083
Total current liabilities 49,490 49,888
Non-current deferred tax liability, net 8,565 8,118
Long term debt, net 19,739 32,711
Operating lease liabilities 2,041 631
Total liabilities 79,835 91,348
Commitments and contingencies
Shareholders’ equity:    
Preferred stock, $0.001 par value, 1,250,000 shares authorized; none issued and outstanding
Common stock, $0.001 par value, 125,000,000 shares authorized; 61,015,604 and 60,581,418 shares issued at September 27, 2024 and December 29, 2023, respectively 61 61
Additional paid-in capital 322,644 317,034
Treasury stock, at cost, 33,423,164 and 33,314,926 shares September 27, 2024 and December 29, 2023, respectively (277,392) (274,600)
Retained earnings 77,772 60,820
Accumulated other comprehensive loss (12,169) (13,235)
Total shareholders' equity 110,916 90,080
Total liabilities and shareholders' equity $ 190,751 $ 181,428
v3.24.3
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Sep. 27, 2024
Dec. 29, 2023
Statement of Financial Position [Abstract]    
Accounts receivable and unbilled revenue, allowance $ 1,652 $ 1,072
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 1,250,000 1,250,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 125,000,000 125,000,000
Common stock, shares issued 61,015,604 60,581,418
Treasury stock, at cost, shares 33,423,164 33,314,926
v3.24.3
Consolidated Statements of Operations - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 27, 2024
Sep. 29, 2023
Sep. 27, 2024
Sep. 29, 2023
Revenue:        
Total revenue $ 79,777 $ 75,856 $ 234,620 $ 224,187
Cost of service:        
Total cost of service 48,245 45,643 142,631 137,071
Selling, general and administrative costs (includes $1,688 and $4,104 and $1,193 and $3,243 of non-cash stock based compensation expense in the three and nine months ended September 27, 2024 and September 29, 2023, respectively) 18,732 16,470 55,046 49,331
Legal settlement and related costs     102  
Total costs and operating expenses 66,977 62,113 197,779 186,402
Income from operations 12,800 13,743 36,841 37,785
Other expense, net:        
Interest expense, net (368) (814) (1,352) (2,594)
Income before income taxes 12,432 12,929 35,489 35,191
Income tax expense 3,845 3,509 9,423 8,890
Net income $ 8,587 $ 9,420 $ 26,066 $ 26,301
Basic net income per common share:        
Income per common share $ 0.31 $ 0.35 $ 0.95 $ 0.97
Weighted average common shares outstanding 27,645,288 27,220,176 27,561,279 27,146,095
Diluted net income per common share:        
Income per common share $ 0.31 $ 0.34 $ 0.93 $ 0.95
Weighted average common and common equivalent shares outstanding 28,141,514 27,817,949 27,920,043 27,544,738
Revenue Before Reimbursements [Member]        
Revenue:        
Total revenue $ 77,949 $ 74,634 $ 229,572 $ 220,106
Reimbursements [Member]        
Revenue:        
Total revenue 1,828 1,222 5,048 4,081
Cost of service:        
Total cost of service 1,828 1,222 5,048 4,081
Personnel Cost Before Reimbursements [Member]        
Cost of service:        
Total cost of service $ 46,417 $ 44,421 $ 137,583 $ 132,990
v3.24.3
Consolidated Statements of Operations (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 27, 2024
Sep. 29, 2023
Sep. 27, 2024
Sep. 29, 2023
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total share based compensation     $ 9,272 $ 7,930
Cost of Sales [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total share based compensation $ 2,135 $ 1,518 5,168 4,687
Selling General and Administrative [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total share based compensation $ 1,688 $ 1,193 $ 4,104 $ 3,243
v3.24.3
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 27, 2024
Sep. 29, 2023
Sep. 27, 2024
Sep. 29, 2023
Statement of Comprehensive Income [Abstract]        
Net income $ 8,587 $ 9,420 $ 26,066 $ 26,301
Foreign currency translation adjustment 1,475 (1,018) 1,066 250
Total comprehensive income $ 10,062 $ 8,402 $ 27,132 $ 26,551
v3.24.3
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Sep. 27, 2024
Sep. 29, 2023
Cash flows from operating activities:    
Net income $ 26,066 $ 26,301
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation expense 2,824 2,528
Amortization of debt issuance costs 56 54
Non-cash stock based compensation expense 9,272 7,930
Provision for doubtful accounts 275 219
Loss on foreign currency translation 509 263
Deferred income tax expense 459 1,617
Changes in assets and liabilities, net of acquisition:    
Increase in accounts receivable and contract assets (8,895) (14,134)
Increase in prepaid expenses and other assets (1,244) (1,482)
Decrease in accounts payable (2,277) (3,701)
Decrease in accrued expenses and other liabilities (2,387) (5,619)
Increase (decrease) in contract liabilities 468 (409)
Increase (decrease) in income tax payable 1,963 (1,750)
Net cash provided by operating activities 27,089 11,817
Cash flows from investing activities:    
Purchases of property and equipment (3,061) (3,203)
Acquisition of business, net of cash acquired (6,541)  
Net cash used in investing activities (9,602) (3,203)
Cash flows from financing activities:    
Debt issuance costs (28) (14)
Debt proceeds   5,000
Repayments of debt (13,000) (21,000)
Proceeds from ESPP 535 481
Taxes paid to satisfy employee withholding tax obligations (4,070) (3,712)
Dividends paid (9,070) (8,978)
Repurchase of common stock (2,792) (734)
Net cash used in financing activities (28,425) (28,957)
Effect of exchange rate on cash (55) (33)
Net decrease in cash (10,993) (20,376)
Cash at beginning of period 20,957 30,255
Cash at end of period 9,964 9,879
Supplemental disclosure of cash flow information:    
Cash paid for income taxes 6,653 8,719
Cash paid for interest 1,592 2,690
Supplemental disclosure of non-cash flow financing activities:    
Dividend declared during the quarter and paid the following quarter $ 3,041 $ 2,994
v3.24.3
Consolidated Statements of Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Loss [Member]
Balance at Dec. 30, 2022 $ 58,278 $ 60 $ 308,325 $ (273,866) $ 38,640 $ (14,881)
Balance, Shares at Dec. 30, 2022   60,148   (33,277)    
Issuance of common stock (3,529)   (3,529)      
Issuance of common stock, Shares   343        
Treasury stock purchased, net of costs (711)     $ (711)    
Treasury stock purchased, net of costs, Shares       (37)    
Amortization of restricted stock units and common stock subject to vesting requirements 3,662   3,662      
Dividends declared (2,990)       (2,990)  
Net income 8,161       8,161  
Foreign currency translation 570         570
Balance at Mar. 31, 2023 63,441 $ 60 308,458 $ (274,577) 43,811 (14,311)
Ending Balance, Shares at Mar. 31, 2023   60,491   (33,314)    
Balance at Dec. 30, 2022 58,278 $ 60 308,325 $ (273,866) 38,640 (14,881)
Balance, Shares at Dec. 30, 2022   60,148   (33,277)    
Net income 26,301          
Foreign currency translation 250          
Balance at Sep. 29, 2023 80,842 $ 61 314,046 $ (274,600) 55,966 (14,631)
Ending Balance, Shares at Sep. 29, 2023   60,538   (33,314)    
Balance at Mar. 31, 2023 63,441 $ 60 308,458 $ (274,577) 43,811 (14,311)
Balance, Shares at Mar. 31, 2023   60,491   (33,314)    
Issuance of common stock 363 $ 1 362      
Issuance of common stock, Shares   38        
Treasury stock purchased, net of costs (23)     $ (23)    
Amortization of restricted stock units and common stock subject to vesting requirements 2,685   2,685      
Dividends declared (2,991)       (2,991)  
Net income 8,720       8,720  
Foreign currency translation 698         698
Balance at Jun. 30, 2023 72,893 $ 61 311,505 $ (274,600) 49,540 (13,613)
Ending Balance, Shares at Jun. 30, 2023   60,529   (33,314)    
Issuance of common stock (67)   (67)      
Issuance of common stock, Shares   9        
Amortization of restricted stock units and common stock subject to vesting requirements 2,608   2,608      
Dividends declared (2,994)       (2,994)  
Net income 9,420       9,420  
Foreign currency translation (1,018)         (1,018)
Balance at Sep. 29, 2023 80,842 $ 61 314,046 $ (274,600) 55,966 (14,631)
Ending Balance, Shares at Sep. 29, 2023   60,538   (33,314)    
Balance at Dec. 29, 2023 90,080 $ 61 317,034 $ (274,600) 60,820 (13,235)
Balance, Shares at Dec. 29, 2023   60,581   (33,315)    
Issuance of common stock (3,782)   (3,782)      
Issuance of common stock, Shares   378        
Treasury stock purchased, net of costs (1,055)     $ (1,055)    
Treasury stock purchased, net of costs, Shares       (43)    
Amortization of restricted stock units and common stock subject to vesting requirements 2,874   2,874      
Dividends declared (3,036)       (3,036)  
Net income 8,731       8,731  
Foreign currency translation (331)         (331)
Balance at Mar. 29, 2024 93,481 $ 61 316,126 $ (275,655) 66,515 (13,566)
Ending Balance, Shares at Mar. 29, 2024   60,959   (33,358)    
Balance at Dec. 29, 2023 90,080 $ 61 317,034 $ (274,600) 60,820 (13,235)
Balance, Shares at Dec. 29, 2023   60,581   (33,315)    
Dividends declared (9,100)          
Net income 26,066          
Foreign currency translation 1,066          
Balance at Sep. 27, 2024 110,916 $ 61 322,644 $ (277,392) 77,772 (12,169)
Ending Balance, Shares at Sep. 27, 2024   61,015   (33,423)    
Balance at Mar. 29, 2024 93,481 $ 61 316,126 $ (275,655) 66,515 (13,566)
Balance, Shares at Mar. 29, 2024   60,959   (33,358)    
Issuance of common stock 391   391      
Issuance of common stock, Shares   41        
Amortization of restricted stock units and common stock subject to vesting requirements 2,718   2,718      
Dividends declared (3,037)       (3,037)  
Net income 8,748       8,748  
Foreign currency translation (78)         (78)
Balance at Jun. 28, 2024 102,223 $ 61 319,235 $ (275,655) 72,226 (13,644)
Ending Balance, Shares at Jun. 28, 2024   61,000   (33,358)    
Issuance of common stock (145)   (145)      
Issuance of common stock, Shares   15        
Treasury stock purchased, net of costs (1,737)     $ (1,737)    
Treasury stock purchased, net of costs, Shares       (65)    
Amortization of restricted stock units and common stock subject to vesting requirements 3,554   3,554      
Dividends declared (3,041)       (3,041)  
Net income 8,587       8,587  
Foreign currency translation 1,475         1,475
Balance at Sep. 27, 2024 $ 110,916 $ 61 $ 322,644 $ (277,392) $ 77,772 $ (12,169)
Ending Balance, Shares at Sep. 27, 2024   61,015   (33,423)    
v3.24.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 27, 2024
Jun. 28, 2024
Mar. 29, 2024
Sep. 29, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 27, 2024
Sep. 29, 2023
Pay vs Performance Disclosure                
Net Income (Loss) $ 8,587 $ 8,748 $ 8,731 $ 9,420 $ 8,720 $ 8,161 $ 26,066 $ 26,301
v3.24.3
Insider Trading Arrangements
3 Months Ended
Sep. 27, 2024
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.3
Basis of Presentation and General Information
9 Months Ended
Sep. 27, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation and General Information

1. Basis of Presentation and General Information

Basis of Presentation

The accompanying consolidated financial statements of The Hackett Group, Inc. (“Hackett” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s accounts and those of its wholly-owned subsidiaries which the Company is required to consolidate. All intercompany transactions and balances have been eliminated in the consolidation.

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 29, 2023, included in the Annual Report on Form 10-K filed by the Company with the SEC on March 1, 2024. The consolidated results of operations for the quarter and nine months ended September 27, 2024, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Business Combination

 

On September 16, 2024, the Company executed an agreement to acquire 100% of the equity of LeewayHertz Technologies Private Limited (“LeewayHertz”), a technology consulting company based in India, focused on artificial intelligence (A.I.) technology solutions for a provisional purchase consideration of $7.8 million subject to a working capital achievement. This acquisition marks a significant milestone in the Company's aggressive strategy to become a leading architect of its clients' Gen A.I. journey. The acquisition closed on September 23, 2024. Leeway’s founder, one of LeewayHertz’s owners, was hired by the Company to serve as its executive vice president of the A.I. practice.

The following table summarizes the provisional fair value of the assets acquired and liabilities assumed:

 

 

 

Amount

 

Assets / Liabilities

 

(in thousands)

 

Cash

 

$

1,020

 

Current assets

 

 

2,081

 

Intangible assets

 

 

2,800

 

Current liabilities

 

 

(2,587

)

Net assets acquired

 

$

3,314

 

 

 

 

 

Consideration

 

$

7,806

 

Goodwill

 

$

4,492

 

 

As a result, the provisional excess of the purchase price over the assets acquired resulted in goodwill of $4.5 million. Additionally, the Company recognized provisional intangible assets of $2.8 million, with a remaining weighted average useful life of 4.7 years. The fair values of identifiable intangible assets acquired were prepared by a third-party valuation specialist and incorporate significant unobservable inputs, judgment, and estimates, including the amount and timing of future cash flows. The intangible assets will be amortized in accordance with the Company’s accounting policies. The following table summarizes the preliminary value of the intangible assets:

 

 

 

 

1. Basis of Presentation and General Information (continued)

 

 

 

Amount

 

 

Useful Life

Category

 

(in thousands)

 

 

(in years)

Customer Relationships

 

$

2,500

 

 

5

Technology

 

 

200

 

 

2

Non-Compete

 

 

100

 

 

2

Total

 

$

2,800

 

 

 

 

The Company recognized $53 thousand of transactions costs related to the acquisition and no amortization was recorded in the three months ended September 27, 2024.

 

The amounts recorded for certain assets and liabilities and related disclosures are preliminary in nature and are subject to adjustment as additional information is obtained about their acquisition date fair values. Since the acquisition was only recently completed, the allocation of the purchase price is preliminary and will likely change in future periods as fair value estimates of the assets acquired and liabilities assumed are finalized, including those primarily related to working capital, property and equipment, intangible assets, and taxes. The final determination of the fair values will be completed within the one-year measurement period.

 

Also, in connection with the acquisition, the Company and LeewayHertz’s founder are creating a joint venture whereby The Hackett Group will contribute its AI XPLR platform and LeewayHertz will contribute its ZBrain platform. The integration of AI XPLR and the ZBrain Gen A.I. orchestration solution will enable the joint venture to provide advanced and tailored Gen AI solutions to its clients. The joint venture is expected to be formed by the end of the Company's fiscal year 2024.

Segment Reporting

Segments are defined as components of a company that engage in business activities from which they earn revenue and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company assesses its operating segments under the management approach in accordance with ASC 280, "Segment Reporting" (ASC 280), and has determined that it has three operating segments: Global S&BT, Oracle Solutions and SAP Solutions which are also its reportable segments. See Note 11 “Segment Information and Geographical Data” for detailed segment information.

Goodwill and Other Intangible Assets

For acquisitions accounted for as a business combination, goodwill represents the excess of the cost over the fair value of the net assets acquired. The Company has organized its operating and internal reporting structure to align with its primary market solutions. In accordance with ASC 280, management made the determination to present three operating segments, three reportable segments and three reporting units as follows: (1) Global S&BT, (2) Oracle Solutions, and (3) SAP Solutions. Global S&BT includes the results of the Company’s Gen A.I. and strategic business consulting practices; Oracle Solutions includes the results of the Company’s Oracle EPM/ERP and Digital AMS practices; SAP Solutions includes the Company’s SAP applications and related SAP service offerings. A reporting unit is an operating segment or one level below an operating segment to which goodwill is assigned. The goodwill was allocated to the reporting unit based on the reporting unit's relative fair value. The carrying amount of goodwill by reporting unit is as follows, which includes the provisional goodwill allocated to the LeewayHertz acquisition (in thousands):

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

December 29,

 

 

Additions/

 

 

Currency

 

 

September 27,

 

 

 

2023

 

 

Adjustments

 

 

Translation

 

 

2024

 

Global S&BT

 

$

57,550

 

 

$

4,492

 

 

$

683

 

 

$

62,725

 

Oracle Solutions

 

 

16,699

 

 

 

 

 

 

 

 

 

16,699

 

SAP Solutions

 

 

9,993

 

 

 

 

 

 

 

 

 

9,993

 

Goodwill

 

$

84,242

 

 

$

4,492

 

 

$

683

 

 

$

89,417

 

 

1. Basis of Presentation and General Information (continued)

Revenue Recognition

The Company primarily generates its revenue from providing professional services to its clients. The Company also generates revenue from software sales, software maintenance and support and subscriptions to its executive and best practices advisory programs. A single contract could include one or multiple performance obligations. For those contracts that have multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on its relative standalone selling price. The Company determines the standalone selling price based on the respective selling price of the individual elements when sold separately.

Revenue is recognized when control of the goods and services provided are transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods and services using the following steps: 1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when the Company satisfies the performance obligations.

The Company typically satisfies its performance obligations for professional services over time as the related services are provided. The performance obligations related to software maintenance and support and subscriptions to its executive and best practice advisory programs are typically satisfied evenly over the course of the service period. Other performance obligations, such as software sales, are satisfied at a point in time.

The Company generates revenue under four types of billing arrangements: fixed-fee; time-and-materials; executive and best practice advisory services; and software sales and software maintenance and support.

In fixed-fee billing arrangements, which would also include contracts with capped fees, the Company agrees to a pre-established fee or fee cap in exchange for a predetermined set of professional services. The Company sets the fees based on its estimates of the costs and timing for completing the engagements. The Company generally recognizes revenue under fixed-fee or capped fee arrangements using a proportionate performance approach, which is based on work completed to-date as compared to estimates of the total services to be provided under the engagement. Estimates of total engagement revenue and cost of services are monitored regularly during the term of the engagement. If the Company’s estimates indicate a potential loss, such a loss is recognized in the period in which the loss first becomes probable and reasonably estimable. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty or sixty-day terms, however client terms are subject to change.

Time-and-material billing arrangements require the client to pay based on the number of hours worked by the Company’s consultants at agreed hourly rates. The Company recognizes revenue under time-and-material arrangements as the related services or goods are provided, using the right to invoice practical expedient which allows it to recognize revenue in the amount based on the number of hours worked and the agreed upon hourly rates. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty or sixty-day terms, however client terms are subject to change.

Advisory services contracts are typically in the form of a subscription agreement which allows the customer access to the Company’s executive and best practice advisory programs. There is typically a single performance obligation and the transaction price is the contractual amount of the subscription agreement. Revenue from advisory services contracts is recognized ratably over the life of the agreements. Customers are typically invoiced at the inception of the contract, with net thirty or sixty-day terms, however client terms are subject to change.

The resale of on-premise software, cloud software and maintenance contracts are in the form of SAP America ("SAP") software or maintenance agreements provided by SAP. SAP is the principal and the Company is the agent in these transactions as the Company does not obtain title to the software and maintenance which is sold simultaneously. The transaction price is the Company’s agreed-upon percentage of the software sale for either on-premise software or cloud software or maintenance amount in the contract with the vendor. Revenue for the resale of software is recognized upon contract execution and customer’s receipt of the software. The Company also provides software maintenance on other ERP systems, primarily Oracle. Revenue from maintenance contracts is recognized ratably over the life of the agreements. The customer is typically invoiced at contract inception, with net thirty or sixty-day terms, however client terms are subject to change.

Revenue before reimbursements excludes reimbursable expenses charged to clients. Reimbursements, which include travel and out-of-pocket expenses, are included in revenue, and an equivalent amount of reimbursable expenses is included in the cost of service.

Expense reimbursements that are billable to clients are included in total revenue and are substantially all billed as time-and-material billing arrangements. Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred. Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.

1. Basis of Presentation and General Information (continued)

The payment terms and conditions in the Company’s customer contracts vary. The agreements entered into in connection with a project, whether time and materials-based or fixed-fee or capped-fee based, typically allow clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by the Company through the effective date of the termination. In addition, from time to time the Company enters into agreements with its clients that limit its right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit the Company from performing a defined range of services which it might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team.

Differences between the timing of billings and the recognition of revenue are recognized as either contract assets or contract liabilities in the accompanying consolidated balance sheets. Revenue recognized for services performed but not yet billed to clients is recorded as contract assets and is included within accounts receivable and contract assets. Services not yet performed, however billed to the client and uncollected at period end, are recorded as contract assets and are included within accounts receivable and contract assets. Client prepayments are classified as contract liabilities and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and contract asset balances. During the quarter and nine months ended September 27, 2024, the Company recognized $1.7 million and $10.7 million, respectively, of revenue as a result of changes in the contract liability balance, as compared to $1.5 million and $12.1 million, respectively, for the quarter and nine months ended September 29, 2023.

Based on the information that management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, the Company disaggregates revenue as follows for the quarters and nine months ended September 27, 2024 and September 29, 2023 (in thousands):

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global S&BT:

 

 

 

 

 

 

 

 

 

 

 

 

    North America Consulting

 

$

36,563

 

 

$

37,032

 

 

$

105,201

 

 

$

109,642

 

    International Consulting

 

 

7,502

 

 

 

6,766

 

 

 

22,018

 

 

 

20,123

 

Total Global S&BT

 

$

44,065

 

 

$

43,798

 

 

$

127,219

 

 

$

129,765

 

Oracle Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

    Consulting and software support and maintenance

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

Total Oracle Solutions

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

SAP Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

    Consulting and software support and maintenance

 

$

10,934

 

 

$

10,605

 

 

$

31,576

 

 

$

32,372

 

    Software license sales

 

 

2,019

 

 

 

622

 

 

 

8,292

 

 

 

3,276

 

Total SAP Solutions

 

$

12,953

 

 

$

11,227

 

 

$

39,868

 

 

$

35,648

 

Total segment revenue

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The total revenue from the Global S&BT segment, the Oracle Solutions segment and the SAP Solutions segment's consulting and software support and maintenance services is all recognized over time. The software license sales revenue included in the SAP Solutions segment is recognized at a point in time.

Capitalized Sales Commissions

Sales commissions earned by the Company’s sales force are considered the incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized as project revenue is recognized. The Company determined the period of amortization by taking into consideration the customer contract period, which is generally less than 12 months. Commission expenses are included in the Selling, general and administrative costs in the accompanying consolidated statements of operations. As of December 29, 2023 and December 30, 2022, the Company had $1.7 million and $1.5 million, respectively, of deferred commissions, of which $0.2 million and $0.9 million was amortized during the quarter and nine months ended September 27, 2024, respectively, and $0.3 million and $0.9 million for the same periods in 2023, respectively. No impairment loss was recognized relating to the capitalization of deferred commissions.

1. Basis of Presentation and General Information (continued)

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be less than one year.

Sales tax collected from customers and remitted to the applicable taxing authorities is accounted for on a net basis, with no impact on revenue.

Expense reimbursements that are billable to clients are included in total revenue and are substantially all billed as time-and-material billing arrangements. Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred. Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.

Fair Value

The Company’s financial instruments consist of cash, accounts receivable and contract assets, accounts payable, accrued expenses and other liabilities, contract liabilities and long-term debt. As of September 27, 2024 and December 29, 2023, the carrying amount of each financial instrument approximated the instrument’s respective fair value due to either the short-term nature or the maturity of these instruments.

The Company uses significant other observable market data or assumptions (Level 2 inputs as defined in accounting guidance) that it believes market participants would use in pricing debt. The fair value of the debt approximated the carrying amount, using Level 2 inputs, due to the short-term variable interest rates based on market rates.

 

Recent Accounting Pronouncements

 

In November 2023, accounting guidance was issued that requires additional disclosures of reportable segment information. The guidance requires that public entities disclose, on an annual and interim basis (1) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, (2) an amount for other segment items by reportable segment and a description of its composition, (3) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, (4) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit; at least one of the reported segment profit or loss measures should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements, (5) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and in deciding how to allocate resources, and (6) if a public entity has a single reportable segment to provide all the disclosures required by the amendments in this update and all existing segment disclosures in Topic 280. The amendments in this update do not change how operating segments are identified or aggregated nor how the quantitative thresholds are applied to determine its reportable segments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in this update should be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the impact the adoption of this accounting standard update will have on its footnote disclosures.

v3.24.3
Net Income Per Common Share
9 Months Ended
Sep. 27, 2024
Earnings Per Share [Abstract]  
Net Income Per Common Share

2. Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. With regard to common stock subject to vesting requirements and restricted stock units issued to the Company’s employees and non-employee members of its Board of Directors, the calculation includes only the vested portion of such stock and units.

Diluted net income per common share is computed by dividing net income by the weighted average number of common shares outstanding, increased by the assumed conversion of other potentially dilutive securities during the period.

The following table reconciles basic and dilutive weighted average common shares:

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

27,645,288

 

 

 

27,220,176

 

 

 

27,561,279

 

 

 

27,146,095

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Unvested restricted stock units and common stock subject
   to vesting requirements issued to employees and
   non-employees

 

 

496,226

 

 

 

597,773

 

 

 

358,764

 

 

 

398,643

 

Dilutive weighted average common shares outstanding

 

 

28,141,514

 

 

 

27,817,949

 

 

 

27,920,043

 

 

 

27,544,738

 

 

Approximately one thousand shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarter and nine months ended September 27, 2024, respectively, as compared to 102 shares and two thousand shares for the same periods in 2023, respectively, as inclusion would have had an anti-dilutive effect on diluted net income per common share. In addition, 84 thousand restricted stock units in the quarter and nine months ended September 27, 2024, were excluded from the computations of diluted net income per common share as they are contingently issuable shares with market-related conditions that have not been satisfied. Please see Note 7 for further information.

v3.24.3
Accounts Receivable and Contract Assets, Net
9 Months Ended
Sep. 27, 2024
Receivables, Net, Current [Abstract]  
Accounts Receivable and Contract Assets, Net

3. Accounts Receivable and Contract Assets, Net

Accounts receivable and contract assets, net, consisted of the following (in thousands):

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

Accounts receivable

 

$

39,250

 

 

$

35,640

 

Contract assets (unbilled revenue)

 

 

23,629

 

 

 

17,545

 

Allowance for doubtful accounts

 

 

(1,652

)

 

 

(1,072

)

Accounts receivable and contract assets, net

 

$

61,227

 

 

$

52,113

 

 

Accounts receivable is net of uncollected advanced billings. Contract assets represent revenue for services performed that have not been invoiced.

v3.24.3
Accrued Expenses and Other Liabilities
9 Months Ended
Sep. 27, 2024
Accrued Liabilities And Other Liabilities Current [Abstract]  
Accrued Expenses and Other Liabilities

4. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

 

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

Accrued compensation and benefits

 

$

10,389

 

 

$

9,162

 

Accrued bonuses

 

 

6,813

 

 

 

8,246

 

Accrued dividend payable

 

 

3,042

 

 

 

2,997

 

Accrued sales, use, franchise and VAT tax

 

 

2,098

 

 

 

2,862

 

Non-cash stock based compensation accrual

 

 

533

 

 

 

408

 

Other accrued expenses

 

 

3,267

 

 

 

3,126

 

Total accrued expenses and other liabilities

 

$

26,142

 

 

$

26,801

 

v3.24.3
Lease Commitments
9 Months Ended
Sep. 27, 2024
Leases [Abstract]  
Lease Commitments

5. Lease Commitments

 

The Company has operating leases for office space and, to a much lesser extent, operating leases for equipment. The Company’s office leases are between terms of 1 year and 5 years. Rents usually increase annually in accordance with defined rent steps or are based on current year consumer price index adjustments. Some of the lease agreements contain one or more of the following provisions: tenant allowances, rent holidays, lease premiums, and rent escalation clauses. There are typically no purchase options, residual value guarantees or restrictive covenants. When renewal options exist, the Company generally does not deem them to be reasonably certain to be exercised, and therefore the amounts are not recognized as part of the lease liability nor the right of use asset.

 

The components of lease expense were as follows for the nine months ended September 27, 2024 (in thousands):

 

Operating lease cost

 

$

882

 

 

 

 

 

Total net lease costs

 

$

882

 

 

The weighted average remaining lease term is 3.7 years. The weighted average discount rate utilized is 5.8%. For the quarter and nine months ended September 27, 2024, the Company paid $0.3 million and $1.1 million, respectively, from operating cash flows for its operating leases.

Future minimum lease commitments under non-cancellable operating leases as of September 27, 2024, were as follows (in thousands):

2024 (excluding the nine months ended September 27, 2024)

 

$

355

 

2025

 

 

1,055

 

2026

 

 

863

 

2027

 

 

791

 

2028 and thereafter

 

 

660

 

Total lease payments

 

 

3,724

 

Less imputed interest

 

 

(510

)

Total

 

$

3,214

 

As of September 27, 2024, the Company does not have any additional material operating leases that have not yet commenced.

v3.24.3
Credit Facility
9 Months Ended
Sep. 27, 2024
Debt Disclosure [Abstract]  
Credit Facility

6. Credit Facility

On November 7, 2022, the Company entered into a third amended and restated credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and the lenders party thereto, pursuant to which the lenders agreed to amend and restate its existing credit agreement, in order to extend the maturity date of the revolving line of credit and provide the Company with an additional $55.0 million in borrowing capacity, for an aggregate amount of up to $100.0 million from time to time pursuant to a revolving line of credit (the “Credit Facility”). The Credit Facility matures on November 7, 2027.

The obligations of Hackett under the Credit Facility are guaranteed by active existing and future material U.S. subsidiaries of Hackett (the “U.S. Subsidiaries”) and are secured by substantially all of the existing and future property and assets of Hackett and the U.S. Subsidiaries.

The interest rates per annum applicable to loans under the Credit Facility will be, at the Company’s option, equal to either a base rate or a Secured Overnight Financing Rate ("SOFR") rate. The applicable margin percentage is based on the consolidated leverage ratio, as defined in the Credit Agreement. As of September 27, 2024, the applicable margin percentage was 1.50% per annum for the SOFR rate, and 0.75% per annum, for the base rate. As of September 27, 2024, the interest rate on the Company's outstanding debt was 6.6%, utilizing the SOFR margin percentage. The interest rate of the commitment fee as of September 27, 2024 was 0.125%. Interest payments are made monthly.

The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions. As of September 27, 2024, the Company was in compliance with all covenants.

6. Credit Facility (continued)

As of September 27, 2024, the Company had $20.0 million of outstanding debt, excluding $0.3 million of deferred debt costs, which will be amortized over the remaining life of the Credit Facility. As of December 29, 2023, the Company had $33.0 million of outstanding debt, excluding $0.3 million of deferred debt costs.

v3.24.3
Stock Based Compensation
9 Months Ended
Sep. 27, 2024
Share-Based Payment Arrangement [Abstract]  
Stock Based Compensation

7. Stock Based Compensation

 

Restricted Stock Units

On September 16 and 17, 2024, the Company granted its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and certain other Company leaders performance-based restricted stock units, in the amounts of 786,885, 413,115, 72,000, and 607,350, respectively. In connection with the awards, the annual equity incentive award opportunities for the recipients during the performance period of the awards will be reduced by 50% compared to the annual equity incentive award opportunities in the Company’s executive compensation program for 2024. The awards are split into three equal tranches with each tranche having its own market condition and service condition. The market condition is met when the Company’s stock price reaches a certain share price hurdle for twenty consecutive trading days during the performance period from the grant date through December 31, 2028. The share price hurdles are $30, $40, and $50 for the first, second, and third tranches, respectively. Additionally, the service condition is met if the employee is employed on the first, second, and third anniversary of the grant date for the first tranche, second tranche, and third tranche, respectively.

Furthermore, if the second or third tranches are not met during the performance period, and the volume weighted average of the Company’s stock price falls between two share price hurdles for over 20 consecutive trading days immediately prior to the end of the performance period, the employee will vest in an interpolated amount of the next tranche.

The Company used a lattice valuation model to determine the fair value of the three tranches as of the grant date. The lattice valuation model, using different share price paths, calculates a derived service period which is the median share price path on which the market condition is satisfied for each tranche. The requisite service period was determined to be service conditions as the service conditions are greater than the derived service period. For each of the three tranches, stock compensation expense is recognized on a straight-line basis over the requisite service period. The Company has elected to account for forfeitures as incurred. If an employee forfeits nonvested shares subsequent to meeting a service condition, the previously recognized expense is not reversed. If an employee forfeits nonvested shares prior to meeting the service condition, the previously recognized expense is reversed.

As of September 27, 2024, these market conditions had not been met and as such these shares had not vested and were not included in the Company's basic or dilutive shares outstanding. The stock price appreciation equity program non-cash stock compensation expense was $0.6 million for both the quarter and nine months ended September 27, 2024. As of September 27, 2024, there was $29.1 million of total unrecognized non-cash stock based compensation expense which is expected to be recognized over a weighted-average period of 3.0 years.

The following tables summarize information about the Company’s stock price appreciation equity program awards described above:

Award Summary

 

Tranche

 

Grant Date Fair Value

 

 

Share Price Vesting Conditions*

 

Underlying Share #

 

 

Contractual Service Period

 

Derived Service Period

 

 

September 16, 2024

 

 

September 17, 2024

 

 

Both Grant Dates

 

September 16, 2024

 

 

September 17, 2024

 

 

Both Grant Dates

 

September 16, 2024

 

September 17, 2024

1

 

$

21.26

 

 

$

22.85

 

 

>$30pershare

 

 

424,000

 

 

 

202,450

 

 

1 year

 

0.60 years

 

0.46 years

2

 

$

14.96

 

 

$

16.31

 

 

$30to$40pershare

 

 

424,000

 

 

 

202,450

 

 

2 years

 

2.00 years

 

1.86 years

3

 

$

9.93

 

 

$

11.03

 

 

$40to$50pershare

 

 

424,000

 

 

 

202,450

 

 

3 years

 

2.71 years

 

2.60 years

 

7. Stock Based Compensation (continued)

The following table summarizes the fair value assumption utilized in the lattice valuation model to calculate fair value:

 

 

 

 

 

 

 

 

 

 

 

Grant Date

 

Volatility

 

 

Risk Free Interest Rate

 

 

Dividend Yield

 

September 16, 2024

 

 

29.5

%

 

 

3.38

%

 

 

1.70

%

September 17, 2024

 

 

29.5

%

 

 

3.41

%

 

 

1.65

%

 

In connection with the acquisition of LeewayHertz (Note 1), the Company entered into an employment agreement with the selling shareholder and certain key employees by which the Company granted 439,453 restricted stock units, with either both performance and service requirements or just service requirements at a grant-date fair value of $25.86 per share with four year vesting terms. For the quarter and nine months ended September 27, 2024, the Company recorded $0.2 million of non-cash stock compensation expense.

During the quarter and nine months ended September 27, 2024, the Company issued 2,443,082 and 2,867,035 restricted stock units, respectively, at a weighted average grant date fair value of $18.11 and $18.89 per share, respectively. The grants issued during the quarter ended September 27, 2024, include the shares related to the stock price appreciation equity program and the shares issued in connection with the acquisition of LeewayHertz. As of September 27, 2024, the Company had 3,462,128 restricted stock units outstanding at a weighted average grant date fair value of $19.15 per share. As of September 27, 2024, $56.6 million of total restricted stock unit non-cash stock based compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately 2.8 years, including the stock appreciation equity program awards discussed above.

Forfeitures for all of the Company’s outstanding equity awards are recognized as incurred.

v3.24.3
Shareholders' Equity
9 Months Ended
Sep. 27, 2024
Stockholders' Equity Note [Abstract]  
Shareholders' Equity

8. Shareholders’ Equity

Treasury Stock

On July 30, 2002, the Company announced that its Board of Directors approved the repurchase of the Company’s common stock through its share repurchase program. Since the inception of the repurchase plan, the Board of Directors has approved the repurchase of $287.2 million of the Company’s common stock. As of September 27, 2024, the Company had affected cumulative purchases under the plan of $276.0 million, leaving $11.1 million available for future purchases. Subsequent to September 27, 2024, the Company's Board of Directors approved an additional $20.0 million increase to the Company's share repurchase program.

 

During the quarter ended September 27, 2024, the Company repurchased 65 thousand shares at an average price of $26.77 per share for a total cost of $1.7 million on the open market. The Company did not repurchase any outstanding stock on the open market during the quarter ended September 29, 2023. During the nine months ended September 27, 2024, the Company repurchased 108 thousand shares on the open market and from members of the Company's Board of Directors at an average price per share of $25.80 for a total cost of $2.8 million. During the nine months ended September 29, 2023, the Company repurchased 37 thousand shares from members of its Board of Directors at an average price per share of $18.96 for a total cost of $0.7 million.

 

There is no expiration of the Company's repurchase authorization. Under the repurchase plan, the Company may buy back shares of its outstanding stock either on the open market or through privately negotiated transactions, subject to market conditions and trading restrictions. The Company holds repurchased shares of its common stock as treasury stock and accounts for treasury stock under the cost method.

 

Shares purchased under the repurchase plan do not include shares withheld to satisfy withholding tax obligations. These withheld shares are never issued and in lieu of issuing the shares, taxes were paid on the employee’s behalf. During the quarter and nine months ended September 27, 2024, the Company withheld and did not issue 6 thousand shares and 174 thousand shares, respectively, for a cost of $0.1 million and $4.1 million, respectively. During the quarter and nine months ended

8. Shareholders’ Equity (continued)

 

September 29, 2023, the Company withheld and did not issue 3 thousand shares and 171 thousand shares, respectively, for a cost of $66 thousand and $3.7 million, respectively. The shares withheld for taxes are included under issuance of common stock in the accompanying consolidated statements of shareholders’ equity.

Dividend Program

During the first nine months of 2024, the Company declared three quarterly dividends to its shareholders for an aggregate of $9.1 million, which were paid in April 2024, July 2024 and October 2024. These dividends were paid from U.S. domestic sources and are accounted for as a decrease to retained earnings. Subsequent to September 27, 2024, the Company declared its fourth quarter dividend in 2024 to be paid in January 2025.

v3.24.3
Transactions with Related Parties
3 Months Ended
Sep. 27, 2024
Related Party Transactions [Abstract]  
Transactions with Related Parties

9. Transactions with Related Parties

During the first nine months ended September 27, 2024, the Company repurchased 43 thousand shares of its common stock from members of its Board of Directors for $1.1 million, or $24.34 per share.

v3.24.3
Litigation
9 Months Ended
Sep. 27, 2024
Commitments and Contingencies Disclosure [Abstract]  
Litigation

10. Litigation

The Company is involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.

v3.24.3
Segment Information and Geographical Data
9 Months Ended
Sep. 27, 2024
Segment Reporting [Abstract]  
Segment Information and Geographical Data

11. Segment Information and Geographical Data

The Company has organized its operating and internal reporting structure to align with its primary market solutions. In accordance with ASC 280, the Company determined it has three operating segments and three reportable segments: (1) Global S&BT, (2) Oracle Solutions, and (3) SAP Solutions. Global S&BT includes the results of the Company’s strategic business consulting practices; Oracle Solutions includes the results of the Company’s Oracle EPM/ERP and Digital AMS practices; SAP Solutions includes the Company’s SAP applications and related SAP service offerings. The SAP Solutions reportable segment is the only segment that contains software sales revenue.

The measurement criteria for segment profit or loss are substantially the same for each reportable segment, excluding any unusual or infrequent items, if any. Segment profit consists of the revenue generated by a segment, less operating expenses that are incurred directly by the segment. Unallocated costs include corporate costs related to the administrative functions that are performed in a centralized manner and that are not attributable to a particular segment, depreciation and amortization expense, interest expense, non-cash compensation expense and any non-recurring transactions. Segment information related to assets has been omitted as the chief operating decision maker does not receive discrete financial information regarding assets at the segment level.

11. Segment Information and Geographical Data (continued)

 

The tables below set forth information about the Company’s operating segments for the quarter and nine months ended September 27, 2024 and September 29, 2023, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements (in thousands):

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global S&BT:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

44,065

 

 

$

43,798

 

 

$

127,219

 

 

$

129,765

 

Segment profit

 

 

14,093

 

 

 

13,951

 

 

 

36,895

 

 

 

40,860

 

Oracle Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

Segment profit

 

 

5,520

 

 

 

5,031

 

 

 

16,150

 

 

 

13,966

 

SAP Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

12,953

 

 

$

11,227

 

 

$

39,868

 

 

$

35,648

 

Segment profit

 

 

3,699

 

 

 

2,861

 

 

 

11,833

 

 

 

8,486

 

Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segment profit

 

$

23,312

 

 

$

21,843

 

 

$

64,878

 

 

$

63,312

 

Items not allocated to segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate general and administrative expenses**

 

 

5,655

 

 

 

4,497

 

 

 

15,745

 

 

 

15,069

 

Non-cash stock based compensation expense***

 

 

2,989

 

 

 

2,707

 

 

 

8,438

 

 

 

7,920

 

Stock price appreciation equity program compensation expense

 

 

602

 

 

 

-

 

 

 

602

 

 

 

-

 

Acquisition-related compensation expense

 

 

41

 

 

 

-

 

 

 

41

 

 

 

-

 

Acquisition-related non-cash stock based compensation expense

 

 

232

 

 

 

4

 

 

 

232

 

 

 

10

 

Acquisition-related costs

 

 

53

 

 

 

-

 

 

 

53

 

 

 

-

 

Legal settlement and related costs

 

 

-

 

 

 

-

 

 

 

102

 

 

 

-

 

Depreciation expense

 

 

940

 

 

 

892

 

 

 

2,824

 

 

 

2,528

 

Interest expense, net

 

 

368

 

 

 

814

 

 

 

1,352

 

 

 

2,594

 

Income before taxes

 

$

12,432

 

 

$

12,929

 

 

$

35,489

 

 

$

35,191

 

*Total revenue includes reimbursable expenses, which are project travel-related expenses passed through to a client with no associated operating margin.

**Corporate general and administrative expenses primarily include costs related to business support functions including accounting and finance, human resources, legal, information technology and office administration, as well as any foreign currency gains and losses. Corporate general and administrative expenses exclude one-time, non-recurring expenses and benefits.

***See Note 7.

 

 

 

 

 

11. Segment Information and Geographical Data (continued)

 

The tables below set forth information on the Company's geographical data. Total revenue, which is primarily based on the country of the contracting entity, was attributed to the following geographical areas (in thousands):

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

66,214

 

 

$

63,955

 

 

$

195,098

 

 

$

190,578

 

Europe

 

 

8,484

 

 

 

7,399

 

 

 

25,107

 

 

 

21,132

 

Other (Australia, Canada, India and Uruguay)

 

 

5,079

 

 

 

4,502

 

 

 

14,415

 

 

 

12,477

 

Total revenue

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-lived assets are attributable to the following geographic areas (in thousands):

 

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

Long-lived assets:

 

 

 

 

 

 

United States

 

$

100,210

 

 

$

91,065

 

Europe

 

 

15,152

 

 

 

14,481

 

Other (Australia, Canada, India and Uruguay)

 

 

539

 

 

 

444

 

Total long-lived assets

 

$

115,901

 

 

$

105,990

 

 

The domestic long-lived assets above include the provisional LeewayHertz allocation of goodwill of $4.5 million and intangible assets of $2.8 million. See Note 1. As of September 27, 2024 and December 29, 2023, foreign assets included $14.9 million and $14.3 million, respectively, of goodwill related to acquisitions.

v3.24.3
Basis of Presentation and General Information (Policies)
9 Months Ended
Sep. 27, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements of The Hackett Group, Inc. (“Hackett” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s accounts and those of its wholly-owned subsidiaries which the Company is required to consolidate. All intercompany transactions and balances have been eliminated in the consolidation.

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 29, 2023, included in the Annual Report on Form 10-K filed by the Company with the SEC on March 1, 2024. The consolidated results of operations for the quarter and nine months ended September 27, 2024, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Business Combination

Business Combination

 

On September 16, 2024, the Company executed an agreement to acquire 100% of the equity of LeewayHertz Technologies Private Limited (“LeewayHertz”), a technology consulting company based in India, focused on artificial intelligence (A.I.) technology solutions for a provisional purchase consideration of $7.8 million subject to a working capital achievement. This acquisition marks a significant milestone in the Company's aggressive strategy to become a leading architect of its clients' Gen A.I. journey. The acquisition closed on September 23, 2024. Leeway’s founder, one of LeewayHertz’s owners, was hired by the Company to serve as its executive vice president of the A.I. practice.

The following table summarizes the provisional fair value of the assets acquired and liabilities assumed:

 

 

 

Amount

 

Assets / Liabilities

 

(in thousands)

 

Cash

 

$

1,020

 

Current assets

 

 

2,081

 

Intangible assets

 

 

2,800

 

Current liabilities

 

 

(2,587

)

Net assets acquired

 

$

3,314

 

 

 

 

 

Consideration

 

$

7,806

 

Goodwill

 

$

4,492

 

 

As a result, the provisional excess of the purchase price over the assets acquired resulted in goodwill of $4.5 million. Additionally, the Company recognized provisional intangible assets of $2.8 million, with a remaining weighted average useful life of 4.7 years. The fair values of identifiable intangible assets acquired were prepared by a third-party valuation specialist and incorporate significant unobservable inputs, judgment, and estimates, including the amount and timing of future cash flows. The intangible assets will be amortized in accordance with the Company’s accounting policies. The following table summarizes the preliminary value of the intangible assets:

 

 

 

 

1. Basis of Presentation and General Information (continued)

 

 

 

Amount

 

 

Useful Life

Category

 

(in thousands)

 

 

(in years)

Customer Relationships

 

$

2,500

 

 

5

Technology

 

 

200

 

 

2

Non-Compete

 

 

100

 

 

2

Total

 

$

2,800

 

 

 

 

The Company recognized $53 thousand of transactions costs related to the acquisition and no amortization was recorded in the three months ended September 27, 2024.

 

The amounts recorded for certain assets and liabilities and related disclosures are preliminary in nature and are subject to adjustment as additional information is obtained about their acquisition date fair values. Since the acquisition was only recently completed, the allocation of the purchase price is preliminary and will likely change in future periods as fair value estimates of the assets acquired and liabilities assumed are finalized, including those primarily related to working capital, property and equipment, intangible assets, and taxes. The final determination of the fair values will be completed within the one-year measurement period.

 

Also, in connection with the acquisition, the Company and LeewayHertz’s founder are creating a joint venture whereby The Hackett Group will contribute its AI XPLR platform and LeewayHertz will contribute its ZBrain platform. The integration of AI XPLR and the ZBrain Gen A.I. orchestration solution will enable the joint venture to provide advanced and tailored Gen AI solutions to its clients. The joint venture is expected to be formed by the end of the Company's fiscal year 2024.

Segment Reporting

Segment Reporting

Segments are defined as components of a company that engage in business activities from which they earn revenue and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company assesses its operating segments under the management approach in accordance with ASC 280, "Segment Reporting" (ASC 280), and has determined that it has three operating segments: Global S&BT, Oracle Solutions and SAP Solutions which are also its reportable segments. See Note 11 “Segment Information and Geographical Data” for detailed segment information.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

For acquisitions accounted for as a business combination, goodwill represents the excess of the cost over the fair value of the net assets acquired. The Company has organized its operating and internal reporting structure to align with its primary market solutions. In accordance with ASC 280, management made the determination to present three operating segments, three reportable segments and three reporting units as follows: (1) Global S&BT, (2) Oracle Solutions, and (3) SAP Solutions. Global S&BT includes the results of the Company’s Gen A.I. and strategic business consulting practices; Oracle Solutions includes the results of the Company’s Oracle EPM/ERP and Digital AMS practices; SAP Solutions includes the Company’s SAP applications and related SAP service offerings. A reporting unit is an operating segment or one level below an operating segment to which goodwill is assigned. The goodwill was allocated to the reporting unit based on the reporting unit's relative fair value. The carrying amount of goodwill by reporting unit is as follows, which includes the provisional goodwill allocated to the LeewayHertz acquisition (in thousands):

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

December 29,

 

 

Additions/

 

 

Currency

 

 

September 27,

 

 

 

2023

 

 

Adjustments

 

 

Translation

 

 

2024

 

Global S&BT

 

$

57,550

 

 

$

4,492

 

 

$

683

 

 

$

62,725

 

Oracle Solutions

 

 

16,699

 

 

 

 

 

 

 

 

 

16,699

 

SAP Solutions

 

 

9,993

 

 

 

 

 

 

 

 

 

9,993

 

Goodwill

 

$

84,242

 

 

$

4,492

 

 

$

683

 

 

$

89,417

 

 

Revenue Recognition

Revenue Recognition

The Company primarily generates its revenue from providing professional services to its clients. The Company also generates revenue from software sales, software maintenance and support and subscriptions to its executive and best practices advisory programs. A single contract could include one or multiple performance obligations. For those contracts that have multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on its relative standalone selling price. The Company determines the standalone selling price based on the respective selling price of the individual elements when sold separately.

Revenue is recognized when control of the goods and services provided are transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods and services using the following steps: 1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when the Company satisfies the performance obligations.

The Company typically satisfies its performance obligations for professional services over time as the related services are provided. The performance obligations related to software maintenance and support and subscriptions to its executive and best practice advisory programs are typically satisfied evenly over the course of the service period. Other performance obligations, such as software sales, are satisfied at a point in time.

The Company generates revenue under four types of billing arrangements: fixed-fee; time-and-materials; executive and best practice advisory services; and software sales and software maintenance and support.

In fixed-fee billing arrangements, which would also include contracts with capped fees, the Company agrees to a pre-established fee or fee cap in exchange for a predetermined set of professional services. The Company sets the fees based on its estimates of the costs and timing for completing the engagements. The Company generally recognizes revenue under fixed-fee or capped fee arrangements using a proportionate performance approach, which is based on work completed to-date as compared to estimates of the total services to be provided under the engagement. Estimates of total engagement revenue and cost of services are monitored regularly during the term of the engagement. If the Company’s estimates indicate a potential loss, such a loss is recognized in the period in which the loss first becomes probable and reasonably estimable. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty or sixty-day terms, however client terms are subject to change.

Time-and-material billing arrangements require the client to pay based on the number of hours worked by the Company’s consultants at agreed hourly rates. The Company recognizes revenue under time-and-material arrangements as the related services or goods are provided, using the right to invoice practical expedient which allows it to recognize revenue in the amount based on the number of hours worked and the agreed upon hourly rates. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty or sixty-day terms, however client terms are subject to change.

Advisory services contracts are typically in the form of a subscription agreement which allows the customer access to the Company’s executive and best practice advisory programs. There is typically a single performance obligation and the transaction price is the contractual amount of the subscription agreement. Revenue from advisory services contracts is recognized ratably over the life of the agreements. Customers are typically invoiced at the inception of the contract, with net thirty or sixty-day terms, however client terms are subject to change.

The resale of on-premise software, cloud software and maintenance contracts are in the form of SAP America ("SAP") software or maintenance agreements provided by SAP. SAP is the principal and the Company is the agent in these transactions as the Company does not obtain title to the software and maintenance which is sold simultaneously. The transaction price is the Company’s agreed-upon percentage of the software sale for either on-premise software or cloud software or maintenance amount in the contract with the vendor. Revenue for the resale of software is recognized upon contract execution and customer’s receipt of the software. The Company also provides software maintenance on other ERP systems, primarily Oracle. Revenue from maintenance contracts is recognized ratably over the life of the agreements. The customer is typically invoiced at contract inception, with net thirty or sixty-day terms, however client terms are subject to change.

Revenue before reimbursements excludes reimbursable expenses charged to clients. Reimbursements, which include travel and out-of-pocket expenses, are included in revenue, and an equivalent amount of reimbursable expenses is included in the cost of service.

Expense reimbursements that are billable to clients are included in total revenue and are substantially all billed as time-and-material billing arrangements. Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred. Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.

1. Basis of Presentation and General Information (continued)

The payment terms and conditions in the Company’s customer contracts vary. The agreements entered into in connection with a project, whether time and materials-based or fixed-fee or capped-fee based, typically allow clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by the Company through the effective date of the termination. In addition, from time to time the Company enters into agreements with its clients that limit its right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit the Company from performing a defined range of services which it might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team.

Differences between the timing of billings and the recognition of revenue are recognized as either contract assets or contract liabilities in the accompanying consolidated balance sheets. Revenue recognized for services performed but not yet billed to clients is recorded as contract assets and is included within accounts receivable and contract assets. Services not yet performed, however billed to the client and uncollected at period end, are recorded as contract assets and are included within accounts receivable and contract assets. Client prepayments are classified as contract liabilities and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and contract asset balances. During the quarter and nine months ended September 27, 2024, the Company recognized $1.7 million and $10.7 million, respectively, of revenue as a result of changes in the contract liability balance, as compared to $1.5 million and $12.1 million, respectively, for the quarter and nine months ended September 29, 2023.

Based on the information that management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, the Company disaggregates revenue as follows for the quarters and nine months ended September 27, 2024 and September 29, 2023 (in thousands):

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global S&BT:

 

 

 

 

 

 

 

 

 

 

 

 

    North America Consulting

 

$

36,563

 

 

$

37,032

 

 

$

105,201

 

 

$

109,642

 

    International Consulting

 

 

7,502

 

 

 

6,766

 

 

 

22,018

 

 

 

20,123

 

Total Global S&BT

 

$

44,065

 

 

$

43,798

 

 

$

127,219

 

 

$

129,765

 

Oracle Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

    Consulting and software support and maintenance

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

Total Oracle Solutions

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

SAP Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

    Consulting and software support and maintenance

 

$

10,934

 

 

$

10,605

 

 

$

31,576

 

 

$

32,372

 

    Software license sales

 

 

2,019

 

 

 

622

 

 

 

8,292

 

 

 

3,276

 

Total SAP Solutions

 

$

12,953

 

 

$

11,227

 

 

$

39,868

 

 

$

35,648

 

Total segment revenue

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The total revenue from the Global S&BT segment, the Oracle Solutions segment and the SAP Solutions segment's consulting and software support and maintenance services is all recognized over time. The software license sales revenue included in the SAP Solutions segment is recognized at a point in time.

Capitalized Sales Commissions

Sales commissions earned by the Company’s sales force are considered the incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized as project revenue is recognized. The Company determined the period of amortization by taking into consideration the customer contract period, which is generally less than 12 months. Commission expenses are included in the Selling, general and administrative costs in the accompanying consolidated statements of operations. As of December 29, 2023 and December 30, 2022, the Company had $1.7 million and $1.5 million, respectively, of deferred commissions, of which $0.2 million and $0.9 million was amortized during the quarter and nine months ended September 27, 2024, respectively, and $0.3 million and $0.9 million for the same periods in 2023, respectively. No impairment loss was recognized relating to the capitalization of deferred commissions.

1. Basis of Presentation and General Information (continued)

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be less than one year.

Sales tax collected from customers and remitted to the applicable taxing authorities is accounted for on a net basis, with no impact on revenue.

Expense reimbursements that are billable to clients are included in total revenue and are substantially all billed as time-and-material billing arrangements. Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred. Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.

Fair Value

Fair Value

The Company’s financial instruments consist of cash, accounts receivable and contract assets, accounts payable, accrued expenses and other liabilities, contract liabilities and long-term debt. As of September 27, 2024 and December 29, 2023, the carrying amount of each financial instrument approximated the instrument’s respective fair value due to either the short-term nature or the maturity of these instruments.

The Company uses significant other observable market data or assumptions (Level 2 inputs as defined in accounting guidance) that it believes market participants would use in pricing debt. The fair value of the debt approximated the carrying amount, using Level 2 inputs, due to the short-term variable interest rates based on market rates.
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In November 2023, accounting guidance was issued that requires additional disclosures of reportable segment information. The guidance requires that public entities disclose, on an annual and interim basis (1) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, (2) an amount for other segment items by reportable segment and a description of its composition, (3) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, (4) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit; at least one of the reported segment profit or loss measures should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements, (5) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and in deciding how to allocate resources, and (6) if a public entity has a single reportable segment to provide all the disclosures required by the amendments in this update and all existing segment disclosures in Topic 280. The amendments in this update do not change how operating segments are identified or aggregated nor how the quantitative thresholds are applied to determine its reportable segments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in this update should be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the impact the adoption of this accounting standard update will have on its footnote disclosures.

v3.24.3
Basis of Presentation and General Information (Tables)
9 Months Ended
Sep. 27, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Summary of Fair Value of the Assets Acquired and Liabilities Assumed The following table summarizes the provisional fair value of the assets acquired and liabilities assumed:

 

 

 

Amount

 

Assets / Liabilities

 

(in thousands)

 

Cash

 

$

1,020

 

Current assets

 

 

2,081

 

Intangible assets

 

 

2,800

 

Current liabilities

 

 

(2,587

)

Net assets acquired

 

$

3,314

 

 

 

 

 

Consideration

 

$

7,806

 

Goodwill

 

$

4,492

 

Summary of Intangible Assets The following table summarizes the preliminary value of the intangible assets:

 

 

 

 

1. Basis of Presentation and General Information (continued)

 

 

 

Amount

 

 

Useful Life

Category

 

(in thousands)

 

 

(in years)

Customer Relationships

 

$

2,500

 

 

5

Technology

 

 

200

 

 

2

Non-Compete

 

 

100

 

 

2

Total

 

$

2,800

 

 

 

Summary of Carrying Amount of Goodwill The carrying amount of goodwill by reporting unit is as follows, which includes the provisional goodwill allocated to the LeewayHertz acquisition (in thousands):

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

December 29,

 

 

Additions/

 

 

Currency

 

 

September 27,

 

 

 

2023

 

 

Adjustments

 

 

Translation

 

 

2024

 

Global S&BT

 

$

57,550

 

 

$

4,492

 

 

$

683

 

 

$

62,725

 

Oracle Solutions

 

 

16,699

 

 

 

 

 

 

 

 

 

16,699

 

SAP Solutions

 

 

9,993

 

 

 

 

 

 

 

 

 

9,993

 

Goodwill

 

$

84,242

 

 

$

4,492

 

 

$

683

 

 

$

89,417

 

 

Summary of Disaggregation of Total Revenue

Based on the information that management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, the Company disaggregates revenue as follows for the quarters and nine months ended September 27, 2024 and September 29, 2023 (in thousands):

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global S&BT:

 

 

 

 

 

 

 

 

 

 

 

 

    North America Consulting

 

$

36,563

 

 

$

37,032

 

 

$

105,201

 

 

$

109,642

 

    International Consulting

 

 

7,502

 

 

 

6,766

 

 

 

22,018

 

 

 

20,123

 

Total Global S&BT

 

$

44,065

 

 

$

43,798

 

 

$

127,219

 

 

$

129,765

 

Oracle Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

    Consulting and software support and maintenance

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

Total Oracle Solutions

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

SAP Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

    Consulting and software support and maintenance

 

$

10,934

 

 

$

10,605

 

 

$

31,576

 

 

$

32,372

 

    Software license sales

 

 

2,019

 

 

 

622

 

 

 

8,292

 

 

 

3,276

 

Total SAP Solutions

 

$

12,953

 

 

$

11,227

 

 

$

39,868

 

 

$

35,648

 

Total segment revenue

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v3.24.3
Net Income Per Common Share (Tables)
9 Months Ended
Sep. 27, 2024
Earnings Per Share [Abstract]  
Reconciliation of Basic and Diluted Weighted Average Shares

The following table reconciles basic and dilutive weighted average common shares:

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

27,645,288

 

 

 

27,220,176

 

 

 

27,561,279

 

 

 

27,146,095

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Unvested restricted stock units and common stock subject
   to vesting requirements issued to employees and
   non-employees

 

 

496,226

 

 

 

597,773

 

 

 

358,764

 

 

 

398,643

 

Dilutive weighted average common shares outstanding

 

 

28,141,514

 

 

 

27,817,949

 

 

 

27,920,043

 

 

 

27,544,738

 

v3.24.3
Accounts Receivable and Contract Assets, Net (Tables)
9 Months Ended
Sep. 27, 2024
Receivables, Net, Current [Abstract]  
Accounts Receivable and Contract Assets, Net

Accounts receivable and contract assets, net, consisted of the following (in thousands):

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

Accounts receivable

 

$

39,250

 

 

$

35,640

 

Contract assets (unbilled revenue)

 

 

23,629

 

 

 

17,545

 

Allowance for doubtful accounts

 

 

(1,652

)

 

 

(1,072

)

Accounts receivable and contract assets, net

 

$

61,227

 

 

$

52,113

 

v3.24.3
Accrued Expenses and Other Liabilities (Tables)
9 Months Ended
Sep. 27, 2024
Accrued Liabilities And Other Liabilities Current [Abstract]  
Components of Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

 

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

Accrued compensation and benefits

 

$

10,389

 

 

$

9,162

 

Accrued bonuses

 

 

6,813

 

 

 

8,246

 

Accrued dividend payable

 

 

3,042

 

 

 

2,997

 

Accrued sales, use, franchise and VAT tax

 

 

2,098

 

 

 

2,862

 

Non-cash stock based compensation accrual

 

 

533

 

 

 

408

 

Other accrued expenses

 

 

3,267

 

 

 

3,126

 

Total accrued expenses and other liabilities

 

$

26,142

 

 

$

26,801

 

v3.24.3
Lease Commitments (Tables)
9 Months Ended
Sep. 27, 2024
Leases [Abstract]  
Components of Lease Expense

The components of lease expense were as follows for the nine months ended September 27, 2024 (in thousands):

 

Operating lease cost

 

$

882

 

 

 

 

 

Total net lease costs

 

$

882

 

 

Future Minimum Lease Commitments Under Non-Cancelable Operating Leases

Future minimum lease commitments under non-cancellable operating leases as of September 27, 2024, were as follows (in thousands):

2024 (excluding the nine months ended September 27, 2024)

 

$

355

 

2025

 

 

1,055

 

2026

 

 

863

 

2027

 

 

791

 

2028 and thereafter

 

 

660

 

Total lease payments

 

 

3,724

 

Less imputed interest

 

 

(510

)

Total

 

$

3,214

 

v3.24.3
Stock Based Compensation (Tables)
9 Months Ended
Sep. 27, 2024
Share-Based Payment Arrangement [Abstract]  
Summary of Stock Price Appreciation Equity Program Awards The following tables summarize information about the Company’s stock price appreciation equity program awards described above:

Award Summary

 

Tranche

 

Grant Date Fair Value

 

 

Share Price Vesting Conditions*

 

Underlying Share #

 

 

Contractual Service Period

 

Derived Service Period

 

 

September 16, 2024

 

 

September 17, 2024

 

 

Both Grant Dates

 

September 16, 2024

 

 

September 17, 2024

 

 

Both Grant Dates

 

September 16, 2024

 

September 17, 2024

1

 

$

21.26

 

 

$

22.85

 

 

>$30pershare

 

 

424,000

 

 

 

202,450

 

 

1 year

 

0.60 years

 

0.46 years

2

 

$

14.96

 

 

$

16.31

 

 

$30to$40pershare

 

 

424,000

 

 

 

202,450

 

 

2 years

 

2.00 years

 

1.86 years

3

 

$

9.93

 

 

$

11.03

 

 

$40to$50pershare

 

 

424,000

 

 

 

202,450

 

 

3 years

 

2.71 years

 

2.60 years

 

7. Stock Based Compensation (continued)

Summary of Fair Valye Assumption Utilized in Lattice Valuation Model

The following table summarizes the fair value assumption utilized in the lattice valuation model to calculate fair value:

 

 

 

 

 

 

 

 

 

 

 

Grant Date

 

Volatility

 

 

Risk Free Interest Rate

 

 

Dividend Yield

 

September 16, 2024

 

 

29.5

%

 

 

3.38

%

 

 

1.70

%

September 17, 2024

 

 

29.5

%

 

 

3.41

%

 

 

1.65

%

 

In connection with the acquisition of LeewayHertz (Note 1), the Company entered into an employment agreement with the selling shareholder and certain key employees by which the Company granted 439,453 restricted stock units, with either both performance and service requirements or just service requirements at a grant-date fair value of $25.86 per share with four year vesting terms. For the quarter and nine months ended September 27, 2024, the Company recorded $0.2 million of non-cash stock compensation expense.

v3.24.3
Segment Information and Geographical Data (Tables)
9 Months Ended
Sep. 27, 2024
Segment Reporting [Abstract]  
Segment Information and Geographical Data

The tables below set forth information about the Company’s operating segments for the quarter and nine months ended September 27, 2024 and September 29, 2023, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements (in thousands):

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Global S&BT:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

44,065

 

 

$

43,798

 

 

$

127,219

 

 

$

129,765

 

Segment profit

 

 

14,093

 

 

 

13,951

 

 

 

36,895

 

 

 

40,860

 

Oracle Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

22,759

 

 

$

20,831

 

 

$

67,533

 

 

$

58,774

 

Segment profit

 

 

5,520

 

 

 

5,031

 

 

 

16,150

 

 

 

13,966

 

SAP Solutions:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

12,953

 

 

$

11,227

 

 

$

39,868

 

 

$

35,648

 

Segment profit

 

 

3,699

 

 

 

2,861

 

 

 

11,833

 

 

 

8,486

 

Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue*

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segment profit

 

$

23,312

 

 

$

21,843

 

 

$

64,878

 

 

$

63,312

 

Items not allocated to segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate general and administrative expenses**

 

 

5,655

 

 

 

4,497

 

 

 

15,745

 

 

 

15,069

 

Non-cash stock based compensation expense***

 

 

2,989

 

 

 

2,707

 

 

 

8,438

 

 

 

7,920

 

Stock price appreciation equity program compensation expense

 

 

602

 

 

 

-

 

 

 

602

 

 

 

-

 

Acquisition-related compensation expense

 

 

41

 

 

 

-

 

 

 

41

 

 

 

-

 

Acquisition-related non-cash stock based compensation expense

 

 

232

 

 

 

4

 

 

 

232

 

 

 

10

 

Acquisition-related costs

 

 

53

 

 

 

-

 

 

 

53

 

 

 

-

 

Legal settlement and related costs

 

 

-

 

 

 

-

 

 

 

102

 

 

 

-

 

Depreciation expense

 

 

940

 

 

 

892

 

 

 

2,824

 

 

 

2,528

 

Interest expense, net

 

 

368

 

 

 

814

 

 

 

1,352

 

 

 

2,594

 

Income before taxes

 

$

12,432

 

 

$

12,929

 

 

$

35,489

 

 

$

35,191

 

*Total revenue includes reimbursable expenses, which are project travel-related expenses passed through to a client with no associated operating margin.

**Corporate general and administrative expenses primarily include costs related to business support functions including accounting and finance, human resources, legal, information technology and office administration, as well as any foreign currency gains and losses. Corporate general and administrative expenses exclude one-time, non-recurring expenses and benefits.

***See Note 7.

Geographic Revenue before Reimbursements

 

 

 

 

11. Segment Information and Geographical Data (continued)

 

The tables below set forth information on the Company's geographical data. Total revenue, which is primarily based on the country of the contracting entity, was attributed to the following geographical areas (in thousands):

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

September 27,

 

 

September 29,

 

 

September 27,

 

 

September 29,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

66,214

 

 

$

63,955

 

 

$

195,098

 

 

$

190,578

 

Europe

 

 

8,484

 

 

 

7,399

 

 

 

25,107

 

 

 

21,132

 

Other (Australia, Canada, India and Uruguay)

 

 

5,079

 

 

 

4,502

 

 

 

14,415

 

 

 

12,477

 

Total revenue

 

$

79,777

 

 

$

75,856

 

 

$

234,620

 

 

$

224,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Lived Assets Attributable To Geographic Areas

Long-lived assets are attributable to the following geographic areas (in thousands):

 

 

 

September 27,

 

 

December 29,

 

 

 

2024

 

 

2023

 

Long-lived assets:

 

 

 

 

 

 

United States

 

$

100,210

 

 

$

91,065

 

Europe

 

 

15,152

 

 

 

14,481

 

Other (Australia, Canada, India and Uruguay)

 

 

539

 

 

 

444

 

Total long-lived assets

 

$

115,901

 

 

$

105,990

 

v3.24.3
Basis of Presentation and General Information (Narrative) (Details)
3 Months Ended 9 Months Ended
Sep. 23, 2024
USD ($)
Sep. 27, 2024
USD ($)
Sep. 29, 2023
USD ($)
Sep. 27, 2024
USD ($)
Segment
Sep. 29, 2023
USD ($)
Sep. 16, 2024
USD ($)
Dec. 29, 2023
USD ($)
Dec. 30, 2022
USD ($)
Basis Of Presentation And General Information [Line Items]                
Goodwill   $ 89,417,000   $ 89,417,000     $ 84,242,000  
Amortization expense   0            
Transactions costs related to the acquisition   53,000   $ 53,000        
Number of operating segments | Segment       3        
Number of reportable segments | Segment       3        
Number of reporting units | Segment       3        
Revenue recognized as a result of change in contract liability   1,700,000 $ 1,500,000 $ 10,700,000 $ 12,100,000      
Deferred commissions             $ 1,700,000 $ 1,500,000
Commissions expense   200,000 300,000 900,000 900,000      
Impairment loss recognized to capitalization of deferred commissions       0        
Segment revenue   $ 79,777,000 $ 75,856,000 $ 234,620,000 $ 224,187,000      
Minimum [Member]                
Basis Of Presentation And General Information [Line Items]                
Business relationship agreement period       6 months        
Maximum [Member]                
Basis Of Presentation And General Information [Line Items]                
Business relationship agreement period       12 months        
Customer contract period       12 months        
Leewayhertz Technologies Private Limited [Member]                
Basis Of Presentation And General Information [Line Items]                
Percentage of agreement acquired 100.00%              
Purchase consideration $ 7,806,000              
Goodwill 4,492,000              
Intangible assets $ 2,800,000         $ 2,800,000    
Intangible assets, remaining weighted average useful life 4 years 8 months 12 days              
v3.24.3
Basis of Presentation and General Information (Summary of Fair Value of the Assets Acquired and Liabilities Assumed) (Details) - USD ($)
$ in Thousands
Sep. 23, 2024
Sep. 27, 2024
Sep. 16, 2024
Dec. 29, 2023
Business Acquisition [Line Items]        
Goodwill   $ 89,417   $ 84,242
Leewayhertz Technologies Private Limited [Member]        
Business Acquisition [Line Items]        
Cash $ 1,020      
Current assets 2,081      
Intangible assets 2,800   $ 2,800  
Current liabilities (2,587)      
Net assets acquired 3,314      
Consideration 7,806      
Goodwill $ 4,492      
v3.24.3
Basis of Presentation and General Information (Summary of Intangible Assets) (Details) - Leewayhertz Technologies Private Limited [Member] - USD ($)
$ in Thousands
Sep. 23, 2024
Sep. 16, 2024
Acquired Finite-Lived Intangible Assets [Line Items]    
Total $ 2,800 $ 2,800
Customer Relationships [Member]    
Acquired Finite-Lived Intangible Assets [Line Items]    
Total   $ 2,500
Useful Life (in years)   5 years
Technology [Member]    
Acquired Finite-Lived Intangible Assets [Line Items]    
Total   $ 200
Useful Life (in years)   2 years
Non-Compete [Member]    
Acquired Finite-Lived Intangible Assets [Line Items]    
Total   $ 100
Useful Life (in years)   2 years
v3.24.3
Basis of Presentation and General Information (Summary of Carrying Amount of Goodwill) (Details)
$ in Thousands
9 Months Ended
Sep. 27, 2024
USD ($)
Goodwill [Line Items]  
Goodwill, Beginning Balance $ 84,242
Additions/Adjustments 4,492
Foreign Currency Translation 683
Goodwill, Ending Balance 89,417
Global S&BT [Member]  
Goodwill [Line Items]  
Goodwill, Beginning Balance 57,550
Additions/Adjustments 4,492
Foreign Currency Translation 683
Goodwill, Ending Balance 62,725
Oracle Solutions [Member]  
Goodwill [Line Items]  
Goodwill, Beginning Balance 16,699
Goodwill, Ending Balance 16,699
SAP Solutions [Member]  
Goodwill [Line Items]  
Goodwill, Beginning Balance 9,993
Goodwill, Ending Balance $ 9,993
v3.24.3
Basis of Presentation and General Information (Summary of Disaggregation of Total Revenue) (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 27, 2024
Sep. 29, 2023
Sep. 27, 2024
Sep. 29, 2023
Disaggregation Of Revenue [Line Items]        
Segment revenue $ 79,777 $ 75,856 $ 234,620 $ 224,187
Global S&BT [Member]        
Disaggregation Of Revenue [Line Items]        
Segment revenue 44,065 43,798 127,219 129,765
Global S&BT [Member] | Consulting [Member] | North America [Member]        
Disaggregation Of Revenue [Line Items]        
Segment revenue 36,563 37,032 105,201 109,642
Global S&BT [Member] | Consulting [Member] | International [Member]        
Disaggregation Of Revenue [Line Items]        
Segment revenue 7,502 6,766 22,018 20,123
Oracle Solutions [Member]        
Disaggregation Of Revenue [Line Items]        
Segment revenue 22,759 20,831 67,533 58,774
Oracle Solutions [Member] | Consulting and Software Support and Maintenance [Member]        
Disaggregation Of Revenue [Line Items]        
Segment revenue 22,759 20,831 67,533 58,774
SAP Solutions [Member]        
Disaggregation Of Revenue [Line Items]        
Segment revenue 12,953 11,227 39,868 35,648
SAP Solutions [Member] | Consulting and Software Support and Maintenance [Member]        
Disaggregation Of Revenue [Line Items]        
Segment revenue 10,934 10,605 31,576 32,372
SAP Solutions [Member] | Software License Sales [Member]        
Disaggregation Of Revenue [Line Items]        
Segment revenue $ 2,019 $ 622 $ 8,292 $ 3,276
v3.24.3
Net Income Per Common Share (Reconciliation of Basic and Diluted Weighted Average Shares) (Details) - shares
3 Months Ended 9 Months Ended
Sep. 27, 2024
Sep. 29, 2023
Sep. 27, 2024
Sep. 29, 2023
Earnings Per Share [Abstract]        
Basic weighted average common shares outstanding 27,645,288 27,220,176 27,561,279 27,146,095
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees 496,226 597,773 358,764 398,643
Dilutive weighted average common shares outstanding 28,141,514 27,817,949 27,920,043 27,544,738
v3.24.3
Net Income Per Common Share (Narrative) (Details) - shares
shares in Thousands
3 Months Ended 9 Months Ended
Sep. 27, 2024
Sep. 29, 2023
Sep. 27, 2024
Sep. 29, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive common share equivalents 1 102 1 2
Restricted Stock Units [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive common share equivalents 84   84  
v3.24.3
Accounts Receivable and Contract Assets, Net (Details) - USD ($)
$ in Thousands
Sep. 27, 2024
Dec. 29, 2023
Receivables, Net, Current [Abstract]    
Accounts receivable $ 39,250 $ 35,640
Contract assets (unbilled revenue) 23,629 17,545
Allowance for doubtful accounts (1,652) (1,072)
Accounts receivable and contract assets, net $ 61,227 $ 52,113
v3.24.3
Accrued Expenses and Other Liabilities (Details) - USD ($)
$ in Thousands
Sep. 27, 2024
Dec. 29, 2023
Accrued Liabilities And Other Liabilities Current [Abstract]    
Accrued compensation and benefits $ 10,389 $ 9,162
Accrued bonuses 6,813 8,246
Accrued dividend payable 3,042 2,997
Accrued sales, use, franchise and VAT tax 2,098 2,862
Non-cash stock based compensation accrual 533 408
Other accrued expenses 3,267 3,126
Total accrued expenses and other liabilities $ 26,142 $ 26,801
v3.24.3
Lease Commitments (Narrative) (Details)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 27, 2024
USD ($)
Sep. 27, 2024
USD ($)
Lessee Lease Description [Line Items]    
Weighted average remaining lease term 3 years 8 months 12 days 3 years 8 months 12 days
Weighted average discount rate 5.80% 5.80%
Operating lease payments $ 0.3 $ 1.1
Lessee, operating lease not yet commenced description   As of September 27, 2024, the Company does not have any additional material operating leases that have not yet commenced
Minimum [Member]    
Lessee Lease Description [Line Items]    
Operating leases terms 1 year 1 year
Maximum [Member]    
Lessee Lease Description [Line Items]    
Operating leases terms 5 years 5 years
v3.24.3
Lease Commitments (Components of Lease Expense) (Details)
$ in Thousands
9 Months Ended
Sep. 27, 2024
USD ($)
Leases [Abstract]  
Operating lease cost $ 882
Total net lease costs $ 882
v3.24.3
Lease Commitments (Future Minimum Lease Commitments Under Non-Cancelable Operating Leases) (Details)
$ in Thousands
Sep. 27, 2024
USD ($)
Leases [Abstract]  
2024 (excluding the nine months ended September 27, 2024) $ 355
2025 1,055
2026 863
2027 791
2028 and thereafter 660
Total lease payments 3,724
Less imputed interest (510)
Total $ 3,214
v3.24.3
Credit Facility (Narrative) (Details) - Revolving line of credit facility [Member] - USD ($)
9 Months Ended 12 Months Ended
Nov. 07, 2022
Sep. 27, 2024
Dec. 29, 2023
Line of Credit Facility [Line Items]      
Borrowing capacity under credit facility $ 100,000,000    
Maturity date Nov. 07, 2027    
Frequency of interest payments   Interest payments are made monthly  
Commitment fees percentage   0.125%  
Additional borrowing capacity $ 55,000,000    
Debt balance   $ 20,000,000 $ 33,000,000
Amount drawn on loan   $ 300,000 $ 300,000
Secured Overnight Financing Rate (SOFR) [Member]      
Line of Credit Facility [Line Items]      
Margin percentage base rate   1.50%  
Interest rate on outstanding debt   6.60%  
Base Rate [Member]      
Line of Credit Facility [Line Items]      
Margin percentage base rate   0.75%  
v3.24.3
Stock Based Compensation (Narrative) (Details)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 23, 2024
$ / shares
Sep. 17, 2024
$ / shares
Sep. 16, 2024
$ / shares
shares
Sep. 27, 2024
USD ($)
$ / shares
shares
Sep. 29, 2023
USD ($)
Sep. 27, 2024
USD ($)
TradingDay
$ / shares
shares
Sep. 29, 2023
USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Percentage of annual reduction in performance awards           50.00%  
Non-cash stock compensation expense | $       $ 2,989 $ 2,707 $ 8,438 $ 7,920
First Tranche              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Share price   $ 30 $ 30        
Weighted average grant-date fair value   22.85 21.26        
Second Tranche              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Weighted average grant-date fair value   16.31 14.96        
Third Tranche              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Weighted average grant-date fair value   $ 11.03 $ 9.93        
Performance-based Restricted Stock Units [Member]              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Number of consecutive trading days | TradingDay           20  
Non-cash stock compensation expense | $       600   $ 600  
Compensation expense | $       $ 29,100   $ 29,100  
Weighted average period           3 years  
Performance-based Restricted Stock Units [Member] | First Tranche              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Share price       $ 30   $ 30  
Performance-based Restricted Stock Units [Member] | Second Tranche              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Share price       40   40  
Performance-based Restricted Stock Units [Member] | Third Tranche              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Share price       $ 50   $ 50  
Performance-based Restricted Stock Units [Member] | Chief Executive Officer [Member]              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Shares granted | shares           786,885  
Performance-based Restricted Stock Units [Member] | Chief Operating Officer [Member]              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Shares granted | shares           413,115  
Performance-based Restricted Stock Units [Member] | Chief Financial Officer [Member]              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Shares granted | shares           72,000  
Performance-based Restricted Stock Units [Member] | Other Company Leaders [Member]              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Shares granted | shares           607,350  
Restricted Stock Units [Member]              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Shares granted | shares       2,443,082   2,867,035  
Non-cash stock compensation expense | $       $ 200   $ 200  
Weighted average grant-date fair value       $ 18.11   $ 18.89  
Shares outstanding | shares       3,462,128   3,462,128  
Nonvested weighted average grant-date fair value       $ 19.15   $ 19.15  
Compensation expense | $       $ 56,600   $ 56,600  
Weighted average period           2 years 9 months 18 days  
Restricted Stock Units [Member] | Leewayhertz Technologies Private Limited [Member] | Employment Agreement [Member]              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Shares granted | shares     439,453        
Weighted average grant-date fair value $ 25.86            
Vesting period     4 years        
v3.24.3
Stock Based Compensation (Summary of Stock Price Appreciation Equity Program Awards) (Details) - $ / shares
Sep. 17, 2024
Sep. 16, 2024
First Tranche    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Grant Date Fair Value $ 22.85 $ 21.26
Share Price Vesting Conditions $ 30 $ 30
Underlying Share 202,450 424,000
Contractual Service Period 1 year 1 year
Derived Service Period 5 months 15 days 7 months 6 days
Second Tranche    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Grant Date Fair Value $ 16.31 $ 14.96
Underlying Share 202,450 424,000
Contractual Service Period 2 years 2 years
Derived Service Period 1 year 10 months 9 days 2 years
Second Tranche | Minimum [Member]    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Share Price Vesting Conditions $ 30 $ 30
Second Tranche | Maximum [Member]    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Share Price Vesting Conditions 40 40
Third Tranche    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Grant Date Fair Value $ 11.03 $ 9.93
Underlying Share 202,450 424,000
Contractual Service Period 3 years 3 years
Derived Service Period 2 years 7 months 6 days 2 years 8 months 15 days
Third Tranche | Minimum [Member]    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Share Price Vesting Conditions $ 40 $ 40
Third Tranche | Maximum [Member]    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Share Price Vesting Conditions $ 50 $ 50
v3.24.3
Stock Based Compensation (Summary of Fair Valye Assumption Utilized in Lattice Valuation Model) (Details) - Restricted Stock Units [Member]
Sep. 17, 2024
Sep. 16, 2024
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Volatility 29.50% 29.50%
Risk Free Interest Rate 3.41% 3.38%
Dividend Yield 1.65% 1.70%
v3.24.3
Shareholders' Equity (Narrative) (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 28, 2024
Jul. 30, 2022
Sep. 27, 2024
Jun. 28, 2024
Mar. 29, 2024
Sep. 29, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 27, 2024
Sep. 29, 2023
Oct. 01, 2024
Jul. 01, 2024
Apr. 01, 2024
Equity, Class of Treasury Stock [Line Items]                          
Total cost     $ 1,737   $ 1,055   $ 23 $ 711          
Amount available under repurchase plan     11,100           $ 11,100        
Stock repurchase additional authorized amount   $ 287,200                      
Cumulative purchases     276,000           276,000        
Cost of shares withheld and not issued                 4,070 $ 3,712      
Dividend payment     $ 3,041 $ 3,037 $ 3,036 $ 2,994 $ 2,991 $ 2,990 $ 9,100        
Dividends payable, date to be paid, year and month                       2024-07 2024-04
Subsequent Event [Member]                          
Equity, Class of Treasury Stock [Line Items]                          
Stock repurchase additional authorized amount $ 20,000                        
Dividends payable, date declared, year 2024                        
Dividends payable, date to be paid, year and month 2025-01                   2024-10    
Share Repurchase Plan [Member]                          
Equity, Class of Treasury Stock [Line Items]                          
Repurchase of common stock     65     0     108 37      
Purchase price per share     $ 26.77                    
Total cost     $ 1,700           $ 2,800 $ 700      
Tax Withholding [Member]                          
Equity, Class of Treasury Stock [Line Items]                          
Shares withheld and not issued     6     3     174 171      
Cost of shares withheld and not issued     $ 100     $ 66     $ 4,100 $ 3,700      
Director [Member] | Share Repurchase Plan [Member]                          
Equity, Class of Treasury Stock [Line Items]                          
Purchase price per share                 $ 25.8 $ 18.96      
v3.24.3
Transactions with Related Parties (Narrative) (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 27, 2024
Mar. 29, 2024
Jun. 30, 2023
Mar. 31, 2023
Sep. 27, 2024
Related Party Transaction [Line Items]          
Total cost $ 1,737 $ 1,055 $ 23 $ 711  
Director [Member]          
Related Party Transaction [Line Items]          
Repurchase of common stock         43
Total cost         $ 1,100
Purchase price per share         $ 24.34
v3.24.3
Segment Information and Geographical Data (Narrative) (Details)
$ in Thousands
9 Months Ended
Sep. 27, 2024
USD ($)
Segment
Sep. 23, 2024
USD ($)
Sep. 16, 2024
USD ($)
Dec. 29, 2023
USD ($)
Segment Reporting Information [Line Items]        
Number of operating segments | Segment 3      
Number of reportable segments | Segment 3      
Goodwill $ 89,417     $ 84,242
Goodwill included in foreign assets 14,900     $ 14,300
Leewayhertz Technologies Private Limited [Member]        
Segment Reporting Information [Line Items]        
Goodwill   $ 4,492    
Intangible assets   $ 2,800 $ 2,800  
Leewayhertz Technologies Private Limited [Member] | United States [Member]        
Segment Reporting Information [Line Items]        
Goodwill 4,500      
Intangible assets $ 2,800      
v3.24.3
Segment Information and Geographical Data (Segment Information and Geographical Data) (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 27, 2024
Sep. 29, 2023
Sep. 27, 2024
Sep. 29, 2023
Segment Reporting Information [Line Items]        
Total revenue $ 79,777 $ 75,856 $ 234,620 $ 224,187
Segment profit 23,312 21,843 64,878 63,312
Corporate general and administrative expenses 5,655 4,497 15,745 15,069
Non-cash stock compensation expense 2,989 2,707 8,438 7,920
Stock price appreciation equity program compensation expense 602   602  
Acquisition-related compensation expense 41   41  
Acquisition-related non-cash stock based compensation expense 232 4 232 10
Acquisition-related costs 53   53  
Legal settlement and related costs     102  
Depreciation expense 940 892 2,824 2,528
Interest expense, net 368 814 1,352 2,594
Income before income taxes 12,432 12,929 35,489 35,191
Global S&BT [Member]        
Segment Reporting Information [Line Items]        
Total revenue 44,065 43,798 127,219 129,765
Segment profit 14,093 13,951 36,895 40,860
Oracle Solutions [Member]        
Segment Reporting Information [Line Items]        
Total revenue 22,759 20,831 67,533 58,774
Segment profit 5,520 5,031 16,150 13,966
SAP Solutions [Member]        
Segment Reporting Information [Line Items]        
Total revenue 12,953 11,227 39,868 35,648
Segment profit $ 3,699 $ 2,861 $ 11,833 $ 8,486
v3.24.3
Segment Information and Geographical Data (Geographic Revenue before Reimbursements) (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 27, 2024
Sep. 29, 2023
Sep. 27, 2024
Sep. 29, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]        
Total revenue $ 79,777 $ 75,856 $ 234,620 $ 224,187
United States [Member]        
Revenues from External Customers and Long-Lived Assets [Line Items]        
Total revenue 66,214 63,955 195,098 190,578
Europe [Member]        
Revenues from External Customers and Long-Lived Assets [Line Items]        
Total revenue 8,484 7,399 25,107 21,132
Other (Australia, Canada, India and Uruguay) [Member]        
Revenues from External Customers and Long-Lived Assets [Line Items]        
Total revenue $ 5,079 $ 4,502 $ 14,415 $ 12,477
v3.24.3
Segment Information and Geographical Data (Long-Lived Assets Attributable To Geographic Areas) (Details) - USD ($)
$ in Thousands
Sep. 27, 2024
Dec. 29, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]    
Total long-lived assets $ 115,901 $ 105,990
United States [Member]    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Total long-lived assets 100,210 91,065
Europe [Member]    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Total long-lived assets 15,152 14,481
Other (Australia, Canada, India and Uruguay) [Member]    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Total long-lived assets $ 539 $ 444

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