The Hackett Group, Inc.

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

Thank you, operator. Good afternoon, everyone, and thank you for joining us to discuss the Hackett Group's Second Quarter results. speaking on the call today and here to answer your questions. Ted Fernandez, Chairman and CEO of the Hackett Group, and myself, Robert Ramirez, Chief Financial Officer. A press announcement was released over the wire at 4.05 p.m. Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. We will also place any additional financial or statistical data discussed on this call that is not contained in the release on the investor relations page of our website. Before we begin, I would like to remind you that in the following comments and in the question and answer session, we will be making statements about expected future results, which may be forward-looking statements for the purposes of the federal securities laws. These statements relate to our current expectations, estimates and projections and are not a guarantee of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict and which may not be accurate, especially in light of COVID-19. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors that are contained in your SEC filings. At this point, I would like to turn it over to Ted.

Thank you, Rob, and welcome everyone to our second quarter earnings call. As we normally do, I will open the call with some overview comments on the quarter. I will then turn it back over to Rob to comment on the detailed operating results, cash flow, as well as comment on outlook. We will then review our market and strategy-related comments, and then we will then proceed to Q&A. Please allow me to start the call by acknowledging the incredible work and commitment of our healthcare providers, first responders, and those dedicated individuals who have continued to work nonstop and under, in some circumstances, very dangerous conditions to support all of us during this pandemic. I would also like to acknowledge our associates and clients that quickly and successfully adapted to the remote delivery requirements around the globe. In spite of the limited notice and varying circumstances, I commend their focus to their respective client initiatives and in allowing substantially all of our engagements to continue. As I said last time, we eagerly wait for the conditions to exist where all of us around the globe are able to return to our normal lives, however that is ultimately defined. Just to provide a little background on the quarter, let me go back to March. As I said last quarter, we started the year by aggressively adding associates and strategic hires consistent with our 2020 growth prospects. As we started to feel the effects of the pandemic in early March and knowing we were entering a challenging period, but with a strong cash position, we quickly decided to make the safety and well-being of our associates our top priority. That meant not only making sure that we were taking all necessary precautions to ensure our associates' safety, but to avoid any layoffs directly resulting from the pandemic through the end of our second quarter. We believe this would provide our associates with very important peace of mind to weather the storm while we gained critical market information from which to make any further decisions. on our first weekly coronavirus global update call on March 20th, we shared our commitments with our associates and we communicated that we were prepared to forego profitability in this second quarter as long as we did not weaken our strong cash position. We also informed our associates that we would update our employee-related decisions as we better understood the impact of the economic disruption on our client decision-making and address any required changes prior to the beginning of the third quarter. Consistent with this approach, as we saw the pandemic volatility continuing into Q3, we communicated our associate reductions prior to but effective at the end of our second quarter. This resulted in a $5 million severance restructuring charge. This charge should allow us to significantly improve our sequential quarterly results, fully fund are operating actions as well as our dividend without any need to use our credit facility and also continuing to maintain the high cash balances we're used to operating with. Now on to our operating results. This afternoon, we reported net revenues of $52.6 million and pro forma earnings per share of $0.06. It was clear from the onset of the quarter that the economic disruption would be significant in both the way we engage clients and delivered our services. As we expected, the technology-related implementation services, which already had significant remote delivery in place, were least affected. And in our business transformation services, which require more client-executive interaction, were most affected. Most importantly, as the virus impact lengthened, we have seen clients start to adapt to current circumstance and increase their engagement. This is allowing us to see an increase in initiatives and projects in our strategy and business transformation group. We are also seeing increasing client activity in our EEA practices, which is allowing us to build our pipeline and extend existing engagement. As an example, our meeting counts from April to June increased by over 75%. Overall, U.S. results were down 16% sequentially and year on year, with EEA slightly up sequentially, offset by the decline in our strategy and business transformation group. On the international front, Europe continued to be challenging, with our overall results down strongly sequentially and year on year. Correspondingly, we decided we needed to be more aggressive with associated reductions in this region, which accounted for approximately 50% of our total restructuring charge. The investments we have made to fully digitize all of RIP and the development of RIP as a service platforms, which include Quantum Leap, our state-of-the-art global leading benchmark platform, and our proprietary Hackett Digital Transformation Platform, or DTP, are allowing us to highly differentiate our offerings and will continue to be important drivers of our growth for many years to come. Specifically, it's important to note that we have had a significant increase in interest from potential partners' desire to license these platforms to bolster their business case development and value selling efforts over the last six months. Additionally, our investments with our rapidly growing e-procurement, EPM, and workflow automation groups continue to be key to our digital transformation strategy also. and our important future drivers of our overall growth strategy. On the balance sheet side, our ability to generate strong cash flow from operations has allowed us to continue our dividend, buy back stock if we wanted to, and fund acquisitions while continuing to invest in our business. I cannot tell you how important it was to start the year and to finish both the first and second quarters with our strong cash balances and without any outstanding debt. This has provided us with the ability to properly manage our future during this volatile economic period. With that said, let me ask Rob to provide details on our operating results, cash flow, and also comment on outlook. I will make additional comments on strategy and market conditions following Rob's comments. Rob?