The Hackett Group, Inc.

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

Good afternoon, everyone, and thank you for joining us to discuss the Hackett Group's First Quarter 2023 results. Speaking on the call today, I'm here to answer your questions are Ted Fernandez, Chairman and CEO of the Hackett Group, and myself, Robert Ramirez, Chief Financial Officer. A press announcement was released over the wires at 4.24 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 go 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. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors contained in our SEC filings. At this point, I would like to turn it over to Ted.

Thank you, Rob, and welcome, everyone, to our first quarter earnings call. As we normally do, I will open the call with some overview comments on the quarter. I will then turn it back over to Rob to comment on detailed operating results, cash flow, as well as comment on outlook. We will then review our market, strategy-related comments, after which we will open it up to Q&A. Before I move to our quarterly results, let me start by mentioning our 2022 results and the comps that they will provide to our 2023 performance. In 2022, we had a very strong first half of the year with operating results exceeding our guidance in Q1 and Q2 by three cents in each quarter of that prior year. By the middle of the year, the impact of Fed interest rate increases started to disrupt economic growth and resulted in extended client decision-making. Also to our first quarter, this afternoon we reported total revenues of $69.8 million and adjusted earnings per share of $0.37, both at the midpoint of our quarterly guidance range. Broadly speaking, the economic volatility is evident. but so was the demand for digital transformation solutions required to remain competitive and drive productivity improvements for our clients. As the quarter progressed, we saw clients increasingly moving forward with significant engagements, which should allow us to be up sequentially from Q1 to Q2. This was most pronounced in the swift turnaround of our Oracle Solutions segment. Our quarterly results continue to be driven by the global SBT segment, which was down slightly on a reported basis and down 1% on a local currency basis. Our recurring higher margin research advisory and IPAS offering revenue continue to grow, and we continue to expect the annual contract value for these offerings to grow over 20% in 2023. The quarter benefited from the growth of our IPAS revenues, and we continue to add new pilot participants as we exit the quarter. We also continue to engage with large software and service companies to help them bolster their value selling and value realization efforts. During the quarter, we launched our second and third market intelligence programs, and we plan to launch additional programs throughout 2023. These programs allow us to compare the capabilities of software and services providers, which is valuable to our large Hackett benchmarking and consulting end-user client base, considering procuring these capabilities. The programs also allow us to work with the solution providers to strategically support their sales and marketing efforts. We have also continued to add new content and IP to our existing functionally focused executive advisory programs. Improvements in our existing programs, along with the new market intelligence programs, the launch of our new member platform, Hackett Connect, along with our aggressive sales hiring, should allow us to continue to grow our higher margin recurring revenues and related annual contract value throughout the year. The Oracle Solutions segment was down 22% as expected this quarter. However, we are pleased to say we had a number of significant contract wins in the latter part of the quarter, which will more than offset the large project loss that we experienced at the end of Q4. This will allow the segment to be up strongly from Q1 and into Q2. This was an exceptional response by the team to its year-end challenge and has accelerated the return to growth, which is now expected by Q3 of this year. Our SAP Solutions segment delivered as expected, with flat revenues before reimbursements and improved segment profits. We expect that segment to be up sequentially as well as on a year-over-year basis, in the second quarter. The investments we have made to fully digitize our IP and the development of our digital platforms, which include Quantum Leap, our state-of-the-art global benchmarking platform, and our proprietary hack and digital transformation platform, or DTP, are starting to pay off. These platforms are allowing us to highly differentiate all of our offerings and also develop new licensing research relationship with software and services providers across the enterprise. We also expect to launch our HackIT Connect platform in Q2, which will significantly improve our research and IPaaS member clients' ability to avail themselves of all HackIT IP as well as the virtual expertise which supports those programs. On the balance sheet side, in our first quarter, we funded our previous year's annual performance bonuses, bought back shares to fund net investing, and funded our prior quarter's dividend. For the balance of the year, you should expect to see us continue to pay down our credit facility. As we have discussed on our last few calls, we want to be more aggressive with our balance sheet by using our current credit facility to fund acquisitions and buy back stock while continuing to invest in our business. 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? Thank you, Ted.