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 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 and full year 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 4.07 PM 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. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly in 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. I will start by providing some overview comments on the fourth quarter and the annual results. I’ll then turn it back over to Rob, so that he can provide details relative to our operating results, cash flow and also provide the details of our guidance. Rob will then turn it back over to me and it will provide me with an opportunity to make some comments relative to market and strategic related comments, and then as we customarily do, we will then open it up for Q&A. So let me start first with our quarterly overview highlight and start by thanking everyone for joining us for the fourth quarter earnings call. This was another strong quarter. This afternoon we reported revenues of $70.1 million, up 5.6%, or 6.5% when adjusting for constant currency and pro forma earnings per share of $0.26, up 24%, both above the high end of our guidance. For the fiscal year, revenues increased 11% to 288 million, while earnings per share increased 25% to $0.94. What makes this year so special is that the results are on top of the two previous pro forma EPS results, which were up 34% in 2015 and 37% in 2014 respectively. Solid U.S. demand drove our results along with the anticipated improvement in European results led by our European EPM business. The quarter included the seasonal increase of vacation dates driven by the end of year holidays in both the U.S. and Europe, which decreased available days by 8% on a sequential basis. Revenue in the U.S. was up as expected with Hackett revenues up 7%, offset by the decrease in SAP revenues, which were impacted by the decreased software sales in the current quarter when compared to the prior year. Europe had better than expected results…

Thank you, Ted. As I typically do, I'll cover the following topics during our call. An overview of our 2016 fiscal year results as well as our fourth quarter results along with an overview of the related supporting key operating statistics. I'll give an overview of our cash flow activities in the quarter, and I will conclude my section of this discussion with our financial outlook for the first quarter of 2017. For purposes of this call, any references to Hackett Group will specifically exclude SAP, ERP solutions. Correspondingly, I will comment separately regarding financial results for The Hackett Group, SAP Solutions and the total company. Please note that all references to gross revenues in my discussion represent revenues including reimbursable expenses. Additionally, references to pro forma results specifically exclude non-cash stock compensation expense, intangible asset amortization expense, acquisition related charges and gains, and assumes a normalized long-term cash tax rate of 30%. A few highlights from fiscal 2016, our annual revenues totaled 288.6 million, an increase of 10.6% over the prior fiscal year. Pro forma earnings per diluted share were $0.94 in 2016, compared to $0.75 in 2015, an increase of 25%. North American revenues were up 13%, with international revenues down 3% for the fiscal year on a reported basis, but flat on a constant currency basis. Pro forma EBITDA for the fiscal year was 46.9 million, an increase of 27% over the prior year. This also represented 18% of net revenues, a 220 basis points improvement from fiscal 2015. During fiscal 2016, we continued to utilize our strong cash flow to return capital to our shareholders. We declared dividends of $0.26 per share for a total of 8 million paid semi-annually. The semi-annual dividend declared in December 2016 was paid shortly after the end of our fiscal…

Thank you, Rob. And before I move on to those comments, let me first remind everyone that in the most recent meeting of our company’s board of directors, board authorized an annual dividend increase of 15% taking on annual dividend from $0.26 to $0.30 per share which will continue to be paid semi-annually. As I look forward, let me take a moment to speak more broadly about the demand environment that we have been experiencing and more importantly that is emerging. As I had mentioned in the last several quarter the rapid development and move to cloud applications and infrastructure along with the improving mobile functionality and user experience being introduced into the market place by technology providers is dramatically influencing the way businesses compete and deliver their services. This will disrupt entire industry at an accelerated pace, forcing organizations to fundamentally change and adapt new capabilities in order to remain competitive. The speed of change will only be limited by the ability of these technology providers to deliver on their functionality, security and performance of promises. But regardless of their delivery limitations, the mere threat or opportunity promise will lead to one of the most significant enterprise transformation periods of our lifetime. This will redefine traditional sequential and linear based business models and activities to fully network the dynamic automated workflow and events with enhanced analytics that will finally deliver on the much anticipated predictive analytics and artificial intelligence expectations. This so called digital transformation era is very attractive to our organization, since we believe our clients will increasingly turn to us to provide them with best practice insight on what technology can actually deliver; what changes in business models actually work and will justify significant investments that they must consider. On a near-term basis, we expect continued growth…

[Operator Instructions] Our first question is coming from George. Your line is now open.

Hey, Gentleman, good afternoon. This is Jason on for George Sutton. Congrats on the nice results. I’m wondering if you can talk a little bit more about, obviously you are winning lot of deals for digital transformation; just maybe you can give some examples of some wins in the quarter where you done in with an advisory service and you have been able to expand that into more of a larger scale digital transformation deal.

Let me be even more specific, as I mentioned in the current quarter over 60% of our total fourth quarter sales came from an advisory relationship. So best example is the client engages us in one or multiple of these advisory programs, they are functional program so it could be a program in finance and accounting or HR or IT or procurement or in shared services like GBS centers or in enterprise performance management and those are, that percentage of the client use us in order to have access to all of our IP, performance metrics in the area research that we conduct, our access to best practice insight that they want to look at or consider as they are looking as some transformation initiatives but basically they gain access to all of the Hackett insight and people for an annual fee that we refer to as a subscription or a retainer. But by providing clients with - responding to their strategic questions by providing them with examples of how leading global companies are addressing the similar issues that they may be approaching us with. They quickly understand the capabilities of the organization. And once we help them identify or solve or research a specific issue and introduce to some of our people what they quickly have and obviously we want to quickly say is that we are every bit as good at helping you access or research an issue as implementing or architecting or implementing a solution. And in most cases or in very limited cases we are only limited then by perhaps scale required for some of the requirements that they approach us with. But it provides us with a very strategic and trusted relationship. We know what information they are trying to access, we know what areas they are looking into, it allows us to really help them think through things properly and quickly and early on position our ability then to help them either in the planning, the architecture or the implementation of those issues that they have approached us with that they have decided then to take action on. Does that respond to your question Jason?

Absolutely, no that was great. You mentioned potentially expanding in two different additional modules with Vantage offering and I am just wondering if you can go into maybe a little bit more detail what that could be related to?

Well, if you recall to give you an example - if you recall our relationship with vantage started with a minimum contract guarantee and it was available that acquired Vantage product plus one extra module, it was called Vantage plus one. We will soon introduce the Hackett Advisory Program will now extend to payroll only client. So that we can help clients strategically even if their relationship with ADP through Vantage it starts as a payroll only user. We think our ability to help them understand how to improve the intra-organization and specifically how to do that by leveraging our product offering is a great way for us to help them extend or up sell that client over the future period. So that is one example of something that we will be launching with them soon.

Okay and just a last one for me, maybe you can term as a little bit on the linearity of the results of the quarter, you know obviously strength but just wondering if there was any macro shifted all from the election that you saw things accelerate or thing slow down after that or perhaps things were slow flatter throughout the quarter.

No, we actually - we see the quarter trending pretty similar to prior year. January you always have open - you have a full available day period in January but we never seen to fully realize the deployment in January as people come back from vacation and that extended holiday period. So know what we are seeing already right is a significant ramp from January to February and to give you an idea if that February ramp just continues in tomorrow just in fact was to continue to Q2, that’s the kind of visibility that allows us to stay that our long term growth rate remains unchanged.

Great thank you.

Our next question comes from Jeff Martin from Roth Capital Partners. Your line is now open.

Thank you. Can you hear me operator?

We can hear you great Jeff.

Okay, excellent. Ted, why don’t you get some additional reference around your comment about the transition from premise to cloud as being transitional and a little bit impactful on current period, just wondering if there is something specific driving that and that transformation thing going on for years now. I’m just curious if there’s anything specific that’s triggering that right now.

No, I mean you could follow the software companies transition, their own transition from on premise license sales to cloud and you look at that shift right the rapid increase of one versus either some slow down and eventual if you play that out some deterioration of the other cloud software in their strategy, will fully replace on premise software over the next five to ten year. It is simply getting it from the client and for the software providers, one they have changed over our driving doses - clouded option. It provides the client with options and when you provide the client with option that requires client to make a decision, that’s one and they are driving their sales channel through that. The other one is making sure that the product is appropriate for the client regardless of scale or industry which also as you have early version of the product right may vary as well. So some combination of the product maturity some combinations of sales channel and incentives as well of adoption that you can see in any of the results release by the software vendors. We are simply following that activity and in doing that it changes a couple of things, that changes the implementation support we provide for person or the other and actually the resources cost and your ability to deliver implement these software alternatives differently and when you consider both of those changes, the clients going through that decision process, we are following - we are trying to follow that curve as closely as we can. I believe it is disrupted - let’s go back, disrupted or incredible growth rates that we have had over the last couple of years. We obviously are continuing to grow and we believe that product matures in…

Okay, great that’s good color, I appreciate that. And then your transition to [indiscernible] that’s same thing you touched about mid-year 2016 if I recall, and that turn us around the automation of the input and enhanced service offering to that right?

Yes, it dramatically improves our data capture capabilities. We think it could decrease client’s effort from a current benchmark, it could reduce it to as much as half as the current effort that they put today when they utilize our product. But then the granularity of the information that they will receive and ability to update and get reporting capabilities that we built over the last couple of years will significantly improve both our ability to serve the client at that event and we have also built capabilities so that product then is utilized on a continuous basis. So it will not only evaluate the opportunity at a point in time, it allows the client to up that information and significantly lower time and cost and it allows the company to track with some great granularity. The project improvement that comes from any of the initiative identified. We think it will be a very significant improvement and our goal as I know my entire team involved in that area is listening very closely is to introduce that at our Best Practices conference and expose our most significant clients that will be attending our North American Best Practice conference in Atlanta in early May. So you will see, our goal is to announce the launch before then and then to formally launch and to let client see it and touch it and be fully exposed to it and our best practice conference in Atlanta in early May, Jeff.

Okay, that’s great and then final question Ted, I mean IP as a service initiative; I know a lot of people out there that have following the story closely are trying to get their arms around what quantifiably that might mean. Curious if you plan to quantify and expected and anticipated impact from that this year and if so, when might you do that and what kind of visibility are you waiting to see before you do that.

Well, I’m committed to providing more granularity when we reported the first quarter of 2017 and I still plan to do that. That will provide - hopefully I can provide more color around what we consider to be noticeable and then meaningful which would we think would follow would simply be come multiples of whatever information I provide to you and when we report to first quarter.

Okay, great. Thanks Ted.

Thank you, Jeff.

[Operator Instructions] Our next question comes from Vincent Colicchio from Barrington. Your line is now open.

Yeah, Ted, nice quarter. I’m curious any lingering impact from the changes that occur on the sales side, it appears that there is not, I am giving you numbers just wanted to you hear at on that.

Well, as I was just trying to explain one - we obviously we outperform the guidance we provided and we grew at a better rate than we expected in the fourth quarter. And we are very pleased with the first quarter guidance, but no - I am - based on the comments Rob made, we’re saying that the U.S. growth rate for us is being impacted by that transition from on premise to cloud. Having said that; I also responded to Jason, who is the first analyst to ask, we’re also saying that the current run rate that we’re on really provides the guidance for Q1 and provides us with - I think it positions us nicely into Q2. So even though the U.S. growth rate in EPM is being tempered, we just don’t think that it changes our opportunity to be able to grow 10% to 20% and obviously provide a 15 plus EPS increase that we also provided as our long-term opportunity.

And you’re sounding a bit more confident in the turnaround that’s occurring in Europe. If you can give us some more color, I know you’ve invested on the EPM side and you’ve put more management attention there, any more color on why you feel to be more confident on that sort of things.

Well, the confidence comes from closing significant new business that allows us to provide that guidance for Europe in Q1 and allows us to be pretty optimistic about the impact that can have throughout 2017. So we’re just - the team has been assembled, the team is having success getting in front of client and providing the client with our clause in that EPM space. We’ve closed meaningful business with a meaningful client and that’s providing the guidance that we’re providing and the optimism that we think we’ll have throughout 2017.

And meaningful is the UK and related to that, are you seeing any Brexit related changes in sales cycles?

No, the UK is leading the way. So for us we’ve seen absolutely no Brexit disrupters at all.

Okay, thanks for answering my questions.

Alright.

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

Thank you, operator. Let me thank everyone again for participating in our fourth quarter and fiscal annual results call. We look forward to updating you again when we report the first quarter in April. I’m sorry, in early May. So I stand corrected. I look forward to catching up with everyone at our upcoming May call. Thanks again for participating on our call this evening.

Thank you for participating in today's conference call.