Welcome to the Hackett Group Fourth Quarter Earnings Call. Your lines have been placed on listen-only mode until the question-and-answer session. Please be advised, that 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 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 4:25 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 Q&A 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 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 fourth quarter earnings call. As we customarily do, I will provide an overview of the quarter, and then turn it back over to Rob, so that he can go through a detailed review of our operating results, cash flow and also review guidance. Rob will turn it back over to me, and I will review some of our market or strategic related comments, and then we will open it up fro Q&A. So let me go ahead and start with the quarterly highlights. We are actually disappointed to report revenues of $53 million and pro forma earnings per share of $0.08 in the fourth quarter of fiscal 2013. The reason I say that, that after solid performance through the first three quarters of the year, very weak performance from our European and Australian operations, more than offset solid U.S. performance, which drove our fourth quarter results. The year-over-year difference in our European results on an earnings per share basis was $0.07 unfavorable in the fourth quarter, and although we have made several key leadership and sales related changes in both Europe and Australia, I wanted to make sure one knew that we will continue to make the necessary changes in our European operations in order to recapture our momentum and contribution from that region. In the U.S., very different story; our results were as expected. Hackett U.S. continued to grow at a 10% rate, consistent with last quarter. We actually saw growth across all of our groups, and this was somewhat offset by solid performance from our SAP Group, what we classify under ERP Solutions, which actually had a solid quarter, but did show a slower growth. Internationally, which is really Europe and Australia, we were down more than expected with the…

Thank you, Ted. As I typically do, I will cover the following topics during our call, an overview of our fourth quarter results, along with an overview of related key operating specifics and overview of our cash flow activities during the quarter, and I will then conclude with a discussion on our financial outlook for the first quarter of 2014. For purposes of this call, any references to Hackett Group will specifically exclude ERP Solutions, correspondingly, I will comment separately regarding the financial results of the Hackett Group, ERP Solutions and the total company. Please note that our references to gross revenue in my discussion represent net revenues plus reimbursable expenses. As mentioned in previous quarters, we exited our Oracle ERP implementation practice during the first quarter of 2013, and as such historical permission discussed on this call has been recast for comparability purposes. Additionally, references to pro forma results, specifically exclude non-cash stock compensation expense, intangible asset amortization expense, results of discontinued operations, and one time acquisition related charges and assumes a normalized tax rate of 40%. Before I move to our fourth quarter results, I'd like to make a few comments regarding our annual results for 2013. Annual revenues totaled $224 million, essentially flat in 2012. Pro forma earnings per diluted share were $0.41 in 2013, compared to $0.40 in the previous year, an increase of 3%. For both 2013 and 2012, pro form EBITDA was approximately $25 million. As we discussed last quarter, our Hackett International operations, mostly Europe, were expected to be down significantly for the fourth quarter, which offset U.S. growth. International revenues in the fourth quarter were down 31% on a year-over-year basis. This negatively impacted pro forma earnings per share by approximately $0.07 in the fourth quarter of 2013, which was approximately one…

Thank you, Rob. As we look forward, we expect continued year-over-year growth from our U.S. business, across nearly all of our groups. In fact, as we get a little bit further into the year, our SAP Group will also start comping a little bit better, than they have here in the latter part of 2013. We also expect demand internationally to remain adequate, but characterized by the uneven and prolonged decision making -- behavior that we have seen as compared to the U.S. As I mentioned last quarter, we believe that some of our international volatility may be a result of our limited solution offering when compared to the U.S. A key part of our solid U.S. activity is due to the very strong enterprise performance management and business intelligence capability that we have in the U.S., which represents over 40% of total U.S. Hackett revenues. I also mentioned last quarter, that we had a new European leader coming on board, that individual has in fact joined us in early January, and probably one of the most important things about this individual, in addition to the fat that this is someone that we had known for a while, but had been unable to attract, is that he actually specializes in the EPM and BI area, which is an area that, as I mentioned last quarter, we want to build out throughout Europe. Our plan is to do that throughout 2014, and our effort will be to try to mirror the U.S. capabilities in Europe, and that will require us to build out our EPM and BI strength globally. We think that will improve the ability to grow in Europe, we also think that it will further strengthen our global delivery capabilities for large EPM and BI jobs that originate in…

Thank you. (Operator Instructions). Our first question comes from Morris Ajzenman of Griffin Securities. Go ahead sir. Your line is open.

Hi guys.

Hey Morris.

International, Europe and Australia, I guess we kind of got a heads-up on the previous quarter, as you exit the third quarter. Back then, you also talked about some deferral projects, and then during your [indiscernible], you talked about lack of product offerings, let's call it, relative to U.S. How much is actually clients just deferring or is that a small part of it, are they [indiscernible] or are they just not going forward with projects? Put more color if you can on, the nuances of what these difficulties are? I guess, specifically in the U.K.?

Well I would say, our comments now would be consistent, Morris. We continue to work with a significant number of clients in Europe, on significant initiatives. But we have seen, specially as we got, as they started looking at -- it really started to tail into Q3 if you recall, impacted a little bit of Q3 and then we felt the full weight of it into Q4, and then, we are seeing improved activity in some areas, in the first quarter, but we also think that they were -- we just didn't come out of the box, the way we would have hoped they could have, just so we could get a quick rebound. But we are probably -- we have some optimism that we will see some of our activity pick up, as we head into Q2. But given the volatility, you know the way I am, I will tell you about it once I actually see it. But that is our hope. Clients simply knowing that they have to do some things, but deferring, second guessing, and we saw a little bit of that happening in Q1, with things starting out a little bit later than we hoped in Europe, and probably more specifically in the U.K., probably more solid activity relative to Germany, but we also think Germany could be a much bigger business for us as well. But as I said in my opening comments, not only did we make the people change in order to expand the capability, we do know that we need to work the client, and those clients -- and execute with those clients, probably as well as ever, and will continue to make changes in each of those. We really region into -- if you want to call regional groups, we will continue to make changes, until our execution improves; because I think market opportunity is more volatile than the U.S., but as you recall, we had Europe give us a quarter blip, if you said -- if you look back at 2010, 2011 and 2012, we had some quarter that disappointed us, but we saw the bounce come back a little quicker. I would say, the timing of this hitting in the fourth quarter, and then I was waiting to see projects initiate in Q1, not the way we hoped, mainly, that we need to be a little bit more aggressive in both the transition. The introduction of our EPM and BI offering in Europe, which we will be, and continue that talent make for the changes if we have to.

And just a follow-up on that, you say you work with a significant number of clients in Europe, and then you highlight U.K. being weak. Is this of course the broader weakness, or was it one or two customers particularly that really hindered the comparisons?

No the end decision was more prevalent in the U.K. than in Germany, that's probably the best way to characterize it. I look at it one or two ways, we know clients are challenged by the volatile and complex environments. We see how these multinationals are using us with increasing, in a nice and meaningful way. Let's not just kind of push aside the 10% growth in U.S., Hackett core U.S. last two quarters, and in fact, we will do better than 10% in Q1. We just think that these are large companies that are based in Europe, and that the need for our services shouldn't differ that much though. We still believe that the opportunity in Europe is significant, and until we turnaround, I will just chalk it up for poor execution on our part, and also expanding the service offering, to more closely mirror U.S.

Ted, my question was specific to UK. Is this one or two customers, or is this a plethora of customers that --

It's broader. Clients' willingness to move forward through phases, the velocity of those decisions, I would say it has been more difficult in the U.K. for us, than it has in Germany.

Okay. One last question, and I'll get back in queue here. When you talk about Hackett Performance Exchange, entering the first quarter 2014, are we on schedule or are we behind schedule? Where were you looking at this a year ago? Where are we right now, and where are we on actually paid subscriptions?

Well, we are not going to provide those paid subscriptions, because we are building that base right now. Once you have enough, I will start commenting. But now I consider 2014, we realize 2013 -- it took all of 2013 to complete the plan changes we wanted to make to HPE. So as I mentioned last quarter, we started then going back and say, okay, let's start bringing on some sales, support etcetera, that are going to be dedicated to the offering, and we think 2014 for us, now that the product is working as intended, is really to make 2014 for us, a proof point, and that would be to have a nice number of clients across both platforms, SAP and Oracle platforms by the end of 2014. But, other than our own internal targets, we are not providing any guidance or commenting on specific numbers until we see them materialize.

Thank you.

Our next question comes from George Sutton of Craig Hallum Capital. Go ahead sir, your line is open.

Hey good afternoon guys. Its Jason on for George Sutton.

Hi Jason.

So, you talked about the European EPM update and you put some new leadership in place there, just wondering if you can may be walk through, what further changes you need to make and what kind of a timeframe we should expect for those changes, and when we should kind of see a turnaround in that business?

I would break it up into two pieces. In fairness to the new leader, who actually will be leading the charge to build our EPM and BI capabilities, that's [indiscernible] came on board, January 10. We are excited to have him. We think he's going to be a terrific leader, and the fact that he has this capability, is going to be very helpful to us, given our capabilities in the U.S. So I would say, for us to start building on that capability and getting some EPM activity on board, will take at least a couple of quarters, and that's specific to EPM. What was the second part of your question, Jason?

I think you nailed both parts there.

Okay. I just wasn't sure.

No, that's fine. And so another question for me. You did talk last quarter about one deal in Europe and one deal in Australia that got pushed from Q4 into Q1; and just wondering if those opportunities have been locked up since that time and if you've seen any other deals that have had further push-outs?

Well we clearly saw a number of clients not make decisions in the normal timeframe that we expect. The Australian one, actually we do expect it to start shortly. So we will expect to see some of that benefit towards the tail end of this quarter and going into next. But it did take an extra, put at least half quarter to start, then we would have hoped. The large U.K. opportunity, we are still working with the client, but we still haven't gotten them off the dime, so that it can have a material impact on our result. If we had, you would not see the 30% year-on-year decline that we are projecting in Europe for Q1. Are we still working with that client? Yes. Reviewing several projects, yes. But meaningfully, start any of those initiatives in a meaningful way, the answer is no.

Okay. Thanks for the color. Then just the last one for me, the U.S. business seems to be moving along pretty well, and just wondering if you can talk about anything specific points of the business, that are really driving that growth?

Its really across the board. Its across the board, and if you think about the fact that we are saying that the SAP performance, which has been solid, financially, but coming off slower growth after some really rapid growth in 2012, we saw growth across almost every one of the practices, last quarter and we expect the same this quarter; so when you look at that, right, look at our overall scale and net opportunity, we are saying look, we obviously looked at the right mix. We clearly are only strengthening our leadership position in being able to measure, and as we tell clients, strategically size the price for improvement with engaged PE [ph] is only helping to tell that message with more credence, specially as it relates to anyone says that they are competing with us in that, if you want to call it entry space, that entry level space for benchmarking. But, the other keys that we talked about quite a bit over the last couple of years, are EPM and BI Group continue to see quite a bit of activity, and that continues to grow. It's just a shame, that that's all really not what we are talking about, given how weak Europe was last quarter and will be this quarter.

Sure. Well hopefully, we start talking more about the U.S. and less about Europe soon.

Believe me, we are all over it.

Okay. Thanks Ted.

Yeah.

At this time, I show no further questions. I would now like to turn the call back to Mr. Fernandez.

Well let me thank everyone for participating in our fourth quarter earnings call. We look forward to updating you again, once we report the first quarter. Thanks again for participating.