The Hackett Group, Inc. EBITDA surged on 15.6% and Revenue increased on 3.4%
02/19/2019 • About The Hackett Group, Inc. (
$HCKT) • By InTwits
The Hackett Group, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The Hackett Group, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: $10m in FY2018, $7m in FY2017, $3m in FY2016, $3m in FY2015, $3m in FY2014
- The company has highly profitable business model: ROIC is 24.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The Hackett Group, Inc.'s Revenue increased on 3.4%. Revenue growth showed slowdown in FY18Q4 - it was -0.6% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.63 pp from 3.1% to 3.7% in 2018. EBITDA Margin stuck to a growing trend at 1.4 pp per annum in the last 5 years.
Gross Margin increased slightly on 0.83 pp from 41.5% to 42.3% in FY2018. SG&A as a % of Revenue showed almost no change in FY2018.
Net Income margin decreased slightly on 1.5 pp from 9.9% to 8.4% in FY2018. Net Income margin followed a growing trend at 1.3 pp per annum in FY2014-FY2018.
Investments (CAPEX, working capital and M&A)
The Hackett Group, Inc.'s CAPEX/Revenue was 3.4% in FY2018. The Hackett Group, Inc. showed CAPEX/Revenue growth of 2.2 pp from 1.2% in FY2015 to 3.4% in FY2018. For the last three years the average CAPEX/Revenue was 2.3%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2016 at 1.1% and was growing since that time.
Return on investment
The company operates at high and attractive ROIC (24.6%) and ROE (20.7%). ROIC increased slightly on 0.79 pp from 23.8% to 24.6% in FY2018. ROE decreased on 7.6 pp from 28.3% to 20.7% in FY2018. During the last 5 years ROE topped in FY2017 at 28.3%.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.2x and Debt / EBITDA is 0.2x. Debt dropped on 65.8% while cash dropped on 21.2%.
The company has no short term refinancing risk: short term debt is zero.
Valuation and dividends
The Hackett Group, Inc.'s trades at EV/EBITDA 11.7x and P/E 19.1x.
Management team
The company's CEO Ted A Fernandez is a founder and has spent 19 years with the company. Roberto A Ramirez is a The Hackett Group, Inc.'s CFO. Roberto A Ramirez has spent 11 years at the company.
Financial and operational results
FY ended 12/28/2018
The Hackett Group, Inc. ($HCKT) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 236.7 | 260.9 | 288.6 | 276.6 | 285.9 | 3.4% |
| Gross Profit | 74.6 | 87.6 | 125.3 | 114.7 | 121.0 | 5.4% |
| SG&A | 61.4 | 65.6 | 62.1 | 63.3 | 64.1 | 1.3% |
| EBITDA | 17.2 | 26.7 | 38.1 | 33.2 | 38.4 | 15.6% |
| Net Income | 9.7 | 13.8 | 21.5 | 27.4 | 23.9 | -12.6% |
Balance Sheet
|
|---|
| Cash | 14.6 | 23.5 | 19.7 | 17.5 | 13.8 | -21.2% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 18.3 | 0.0 | 7.0 | 19.0 | 6.5 | -65.8% |
Cash flow
|
|---|
| Capex | 3.1 | 3.0 | 3.2 | 6.5 | 9.6 | 47.9% |
Ratios
|
|---|
| Revenue growth | 5.8% | 10.2% | 10.6% | -4.1% | 3.4% | |
| EBITDA growth | -5.8% | 55.7% | 42.8% | -12.9% | 15.6% | |
|
|---|
| Gross Margin | 31.5% | 33.6% | 43.4% | 41.5% | 42.3% | 0.8% |
| EBITDA Margin | 7.2% | 10.2% | 13.2% | 12.0% | 13.4% | 1.4% |
| SG&A, % of revenue | 25.9% | 25.2% | 21.5% | 22.9% | 22.4% | -0.4% |
| Net Income Margin | 4.1% | 5.3% | 7.5% | 9.9% | 8.4% | -1.5% |
| CAPEX, % of revenue | 1.3% | 1.2% | 1.1% | 2.4% | 3.4% | 1.0% |
|
|---|
| ROIC | 11.2% | 19.5% | 31.7% | 23.8% | 24.6% | 0.8% |
| ROE | 10.6% | 14.4% | 22.9% | 28.3% | 20.7% | -7.6% |
| Net Debt/EBITDA | 0.2x | -0.9x | -0.3x | 0.0x | -0.2x | -0.2x |
The Hackett Group, Inc. ($HCKT) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 71 | 75 | 74 | 67 | | -0.5% | 1.3% | 3.3% | -0.6% |
| EBITDA | 9 | 15 | 9 | 4 | | 5.4% | 103.2% | -1.7% | -55.9% |
| Net Income | 7 | 12 | 5 | -0 | | -6.4% | 142.5% | -2.5% | -101.4% |
Balance Sheet
|
|---|
| Cash | 24 | 13 | 13 | 14 | | 38.8% | -8.0% | -18.8% | -21.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 19 | 14 | 12 | 7 | | 111.1% | -32.5% | -47.7% | -65.8% |
Ratios
|
|---|
| Gross Margin | 43.7% | 43.7% | 43.0% | 45.1% | | 2.0% | 2.5% | 1.3% | 1.2% |
| EBITDA Margin | 13.3% | 20.7% | 12.0% | 6.0% | | 0.7% | 10.4% | -0.6% | -7.5% |
| Net Income Margin | 10.4% | 15.5% | 7.0% | -0.2% | | -0.7% | 9.0% | -0.4% | -14.3% |
Peers in IT Consulting & Other Services
Below you can find The Hackett Group, Inc. benchmarking vs. other companies in IT Consulting & Other Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Gopher Protocol Inc ($GOPH) | | -25.0% | 83.3% | 5,471.1% | 461.0% |
| CLPS Incorporation ($CLPS) | | | | 8.1% | 56.0% |
| EPAM Systems, Inc. ($EPAM) | | 25.2% | 26.9% | 25.0% | 27.1% |
| Gartner, Inc. ($IT) | | 7.0% | 13.0% | 35.5% | 20.1% |
| Computer Task Group, Incorporated ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
| |
|---|
| Median (35 companies) | | 3.3% | 7.7% | 4.0% | 3.9% |
|---|
| The Hackett Group, Inc. ($HCKT) | | 10.2% | 10.6% | -4.1% | 3.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inpixon ($INPX) | 29.8% | 28.9% | 28.1% | 68.7% | 71.4% |
| Gartner, Inc. ($IT) | 60.5% | 61.2% | 61.3% | 60.1% | 63.1% |
| InterXion Holding N.V. ($INXN) | 59.2% | 60.8% | 61.5% | 61.1% | 60.9% |
| LiveRamp Holdings, Inc. ($RAMP) | 25.1% | 38.6% | 42.5% | 45.7% | 56.2% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (37 companies) | 25.8% | 30.9% | 28.1% | 27.7% | 28.9% |
|---|
| The Hackett Group, Inc. ($HCKT) | 31.5% | 33.6% | 43.4% | 41.5% | 42.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 41.3% | 44.9% | 43.3% | 42.2% | 42.8% |
| Switch, Inc. ($SWCH) | | 50.7% | 37.0% | 28.5% | 39.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 20.4% | 19.9% | 19.8% | 19.7% | 20.5% |
| Taoping Inc. ($TAOP) | -54.0% | -237.5% | -117.7% | 13.2% | 18.7% |
| DXC Technology Company ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (36 companies) | 4.8% | 3.3% | 6.7% | 6.3% | 7.2% |
|---|
| The Hackett Group, Inc. ($HCKT) | 7.2% | 10.2% | 13.2% | 12.0% | 13.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 62.5% | 48.1% | 57.4% | 50.5% | 78.3% |
| Switch, Inc. ($SWCH) | | 71.5% | 90.2% | 106.4% | 67.9% |
| Taoping Inc. ($TAOP) | 1.4% | 29.2% | 34.0% | 20.8% | 8.7% |
| Teradata Corporation ($TDC) | 2.0% | 2.1% | 2.3% | 3.6% | 7.1% |
| ServiceSource International, Inc. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| |
|---|
| Median (35 companies) | 0.9% | 0.8% | 1.2% | 1.2% | 1.5% |
|---|
| The Hackett Group, Inc. ($HCKT) | 1.3% | 1.2% | 1.1% | 2.4% | 3.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Accenture plc ($ACN) | 80.5% | 81.0% | 81.3% | 61.7% | 66.1% |
| Cognizant Technology Solutions Corporation ($CTSH) | 24.7% | 22.0% | 21.3% | 21.9% | 23.8% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 25.3% | 26.5% | 23.1% | 22.6% | 22.5% |
| EPAM Systems, Inc. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) | 24.4% | 27.4% | 19.6% | 18.3% | 18.4% |
| |
|---|
| Median (44 companies) | 6.2% | 4.7% | 7.3% | 4.7% | 6.9% |
|---|
| The Hackett Group, Inc. ($HCKT) | 11.2% | 19.5% | 31.7% | 23.8% | 24.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Infinite Group Inc ($IMCI) | | | 169.6x | | 10.5x |
| InterXion Holding N.V. ($INXN) | 3.3x | 2.9x | 3.4x | 3.8x | 4.6x |
| Gartner, Inc. ($IT) | 0.1x | 1.3x | 0.6x | 11.7x | 4.1x |
| Switch, Inc. ($SWCH) | | 2.2x | 4.0x | 3.2x | 3.3x |
| Presidio, Inc. ($PSDO) | 0.0x | | 5.6x | 3.6x | 3.1x |
| |
|---|
| Median (28 companies) | -0.2x | -0.2x | 0.4x | 0.8x | 1.0x |
|---|
| The Hackett Group, Inc. ($HCKT) | 0.2x | -0.9x | -0.3x | 0.0x | -0.2x |
