The Hackett Group, Inc.

Welcome to the Hackett Group Third 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. Hostings 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 Third Quarter 2023 results. speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and Chief Executive Officer of the Hackett Group, and myself, Robert Ramirez, Chief Financial Officer. A press announcement was released over the wires 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 that's discussed in 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 Q&A session, we will be making statements about expecting future results, which may be forward-looking statements for the purposes of the federal securities laws. These statements are related to our current expectations, estimates, and projections, and they're 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 that are 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 third 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, after which we will open it up to Q&A. This afternoon, we reported revenues before reimbursements of $74.6 million, which was above the high end of our guidance, and adjusted earnings per share of 41 cents, which was at the high end of our guidance. Consistent with our comments on our previous earnings call, the momentum we experienced in the second quarter continued and allowed us to exceed the results from Q3 of last year. This was most pronounced with the strong performance of our Oracle solution segment, which was up strongly at several engagements which we launched in the second quarter continued to rank. Equally important, we continued to experience strong market demand and receive strong support from the Oracle sales channel during the quarter. Our global SBT segment was up over 5% when compared to last year. We saw most new client meetings now include thoughtful discussions on GenAI considerations. We have been working on a new series of AI offerings. We recently launched our new AI Explorer tool, which allows us to deliver a comprehensive GenAI opportunity assessment for clients and provides recommendations by function at the activity level. We expect this activity to increase significantly in 2024. We're also seeing increasing activity in our enterprise performance management function, which is favorably impacting our Oracle and One Screen practices. Our SAP solution segment continued to perform strongly but was down on a year-over-year basis as it comped against very strong software sales realized in the third quarter of last year. We also continue to aggressively invest in growing our IP-based programs. In Q3, we continue to enhance the product architecture and pricing of our existing executive advisory programs into a more powerful combination of highly focused IP and access to expert practitioners, emphasizing our unmatched best practices and value realization tools, benchmark metrics, as well as applied knowledge research. While our pipeline for these offerings continues to increase meaningfully, extended client decision-making has impacted our sales more than expected. Given this development, we now expect to achieve annualized contract value growth closer to 5% to 10% in 2023. All of our executive advisory programs are delivered through our new member platform, Hackett Connect, which fully launched in October. This new state-of-the-art platform allows all of our existing and new members to avail themselves to our benchmarking and best practices IP, applied knowledge research, and dedicated experts. We are also building a community of users that we believe will result in a powerful extended expert network. These investments represent one of our organization's most significant transformative efforts. On the balance sheet side, you can expect us to use cash flow from operations to continue to pay down our outstanding credit facility through the balance of the year. Long term, we plan to use our balance sheet by using our current credit facility to fund acquisitions and to 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 condition conditions following Rob's comments.