The Hackett Group, Inc.

Welcome to the Hackett Group fourth 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.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us to discuss the Hackett Group's fourth quarter 2023 results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of the Hackett Group, and myself, Rob 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 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 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. 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 fourth 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 and strategy-related comments, after which we will open it up to Q&A. This afternoon, we reported total revenues of $72.4 million and revenues before reimbursements of $71.2 million. which was above the high end of our guidance, and adjusted earnings per share of 39 cents, which was also above the high end of our guidance. Our results were driven by the performance of our Oracle Solutions segment, which was up strongly. This is consistent with the momentum that we have experienced in that segment since the second quarter. A new important development for the segment is the notable increase in demand that we're experiencing in our historically strong enterprise performance management offering. Our global SBT segment was up when compared to last year. Although the segment was impacted by market conditions, we continue to see an increased interest in Gen AI initiatives. More importantly, our recently launched Gen AI assessment platform, AI Explorer, is receiving favorable feedback. It has led to a significant number of new client meetings, enabling us to showcase our unique ability to assess, readiness, and identify organizational transformation opportunities. We are leveraging our rapidly growing use case repository to establish GenAI roadmaps with related benefit case analysis using our highly recognized benchmark database. The rapidly emerging GenAI interest is creating an entirely new way to engage clients broadly and strategically. AI Explorer is creating a unique opportunity to expand our trusted performance improvement access to become strategic architects of our clients' Gen AI journey. Our SAP Solutions segment continued its solid performance but was down on a year-over-year basis as the sales investments we made during the year did not start to generate revenues until the end of the year. However, this should benefit the first half of 2024. We also continue to aggressively invest in growing our IP-based programs. We are enhancing the product architecture and pricing of our existing executive advisory programs, resulting in a more powerful combination of highly focused IP and access to expert practitioners, emphasizing our advisor expertise and applied knowledge research. All of our executive advisory programs are now 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 experts, research, benchmarking metrics, as well as our best practices IP. While our pipeline for these offerings continues to increase, our conversion rates were lower than what we expected during the year. We believe the lower conversion rates were primarily due to the large number of new hires during the year and their lack of familiarity with our offering. In 2023, annual contract value grew 2%, but we expect all of the foundational work we did in 2023 to lead to increasing growth in 2024. On the balance sheet side, in the short term, you can expect us to use our strong cash flow from operations to continue to pay down our outstanding balance of our credit facility. Longer 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 conditions following Rob's comments.