WAKEFIELD, Mass., July 25, 2007 (PRIME NEWSWIRE) -- A technology management consulting firm specializing in providing premium IT services, Edgewater Technology, Inc. (Nasdaq:EDGW) (www.edgewater.com, "Edgewater Technology" or the "Company"), today announced financial results for its second quarter ended June 30, 2007.
Second Quarter Results
Actual financial results and utilization for the quarter ended June 30, 2007:
* Total revenue increased 24.8% to $18.6 million compared to $14.9
million during the second quarter of 2006;
* Service revenue, which excludes software sales and reimbursed
expenses, increased 16.3% to $16.4 million compared to $14.1
million during the second quarter of 2006;
* Gross profit increased 26.3% to $7.6 million, or 40.7% of total
revenue, compared to $6.0 million, or 40.2% of total revenue,
during the second quarter of 2006;
* Gross profit margin related to service revenue increased to 44.9%
compared to 42.2% during the second quarter of 2006;
* Utilization increased to 82.8% compared to 77.0% during the second
quarter of 2006;
* Net income increased 140.3% to $1.0 million, or $0.08 per diluted
share, compared to net income of $0.4 million, or $0.04 per
diluted share, during the second quarter of 2006;
* Cash Net Income increased 59.3% to $1.5 million, or $0.11 per
diluted share compared to $0.9 million, or $0.08 per diluted
share, during the second quarter of 2006;
* EBITDA increased 112.0% to $1.9 million, or $0.15 per diluted
share compared to $0.9 million, or $0.07 per diluted share, during
the second quarter of 2006; and
* Cash flow provided by operating activities amounted to $2.8
million compared to cash flow used in operating activities of
$(0.7) million during the second quarter of 2006.
First Six Months of 2007
Actual financial results and utilization for the six months ended June 30, 2007:
* Total revenue increased 19.4% to $34.9 million compared to $29.2
million during the first six months of 2006;
* Service revenue, which excludes software sales and reimbursed
expenses, increased 14.6% to $31.6 million compared to $27.6
million during the first six months of 2006;
* Gross profit increased 28.7% to $14.3 million, or 41.1% of total
revenues, compared to $11.1 million, or 38.2% of total revenues
during the first six months of 2006;
* Gross profit margin related to service revenue was 44.5% compared
to 40.1% during the first six months of 2006;
* Utilization increased to 82.2% compared to 77.9% during the first
six months of 2006;
* Net income increased 110.4% to $1.9 million, or $0.15 per diluted
share, compared to net income of $0.9 million, or $0.08 per
diluted share during the first six months of 2006;
* Cash Net Income increased 58.8% to $2.6 million, or $0.20 per
diluted share, compared to $1.6 million, or $0.14 per diluted
share, during the first six months of 2006;
* EBITDA increased 106.6% to $3.5 million, or $0.27 per diluted
share, compared to $1.7 million, or $0.15 per diluted share during
the first six months of 2006; and
* Cash flow provided by operating activities was $1.6 million during
the first six months of 2007 compared to cash flow provided by
operating activities of $0.7 million during the first six months
of 2006.
Cash Net Income, Cash Earnings per Diluted Share, EBITDA and EBITDA per Diluted Share are Non-GAAP financial measures. A reconciliation of these measures to their most directly comparable GAAP measures is included in the financial data accompanying this press release.
"Overall, the second quarter proved to be another solid quarter for the Company," said Shirley Singleton, President and CEO of Edgewater Technology. "The company achieved strong operating metrics, without increasing billable headcount, through careful management of our staff utilization. As a result, we are pleased to report that our Net Income and EBITDA improved 140% and 112% over the year ago quarter."
Singleton continued, "Subsequent to the end of the second quarter, we also enhanced our national Corporate Performance Management offering with the acquisition of the Alecian Corporation business. Alecian provides capabilities and expertise in the area of financial management solutions and is expected to contribute approximately $1.5 million in annualized revenue. Alecian is also expected to be immediately accretive to Edgewater's earnings."
Singleton concluded, "At this time, we expect third quarter revenues to be consistent with second quarter due to traditional seasonality."
Second Quarter Conference Call Details
Edgewater Technology will host a conference call on Wednesday, July 25, at 10:00 a.m. (ET) to discuss second-quarter 2007 financial results. To listen to the call, you can participate by webcast at www.edgewater.com -- Investor Relations section or you can dial 866-362-4829 (pass code 78020350) approximately 10 minutes prior to the call start. A replay of the call can be accessed via www.edgewater.com -- Investor Relations section or by dialing 888-286-8010 (pass code 81289319) from 12:00 p.m. ET Wednesday, July 25 through 11:59 p.m. ET Wednesday, August 1.
About Edgewater Technology, Inc.
Edgewater Technology, Inc. is an innovative technology management consulting firm. We provide a unique blend of premium IT services by leveraging our proven industry expertise in strategy, technology and corporate performance management. Headquartered in Wakefield, MA, we go to market by vertical industry and provide our clients with a wide range of business and technology offerings. To learn more, visit www.edgewater.com or call 800-410-4014.
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Selected Financial Data:
EDGEWATER TECHNOLOGY, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
----------------- -----------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
------- ------- ------- -------
Revenue:
Service revenue $16,366 $14,074 $31,592 $27,576
Software 1,456 214 1,831 507
Reimbursable expenses 755 602 1,427 1,115
------- ------- ------- -------
Total revenue 18,577 14,890 34,850 29,198
Cost of revenue:
Project and personnel
costs * 9,010 8,137 17,540 16,505
Software costs 1,259 170 1,549 437
Reimbursable expenses 755 602 1,427 1,115
------- ------- ------- -------
Total cost of revenue 11,024 8,909 20,516 18,057
------- ------- ------- -------
Gross profit 7,553 5,981 14,334 11,141
Selling, general and
administrative * 5,628 5,073 10,788 9,425
Depreciation and
amortization 568 461 1,135 806
------- ------- ------- -------
Operating income 1,357 447 2,411 910
Interest income and other,
net 401 282 808 581
------- ------- ------- -------
Income before income taxes 1,758 729 3,219 1,491
Provision for income taxes 712 294 1,336 596
------- ------- ------- -------
Net income $ 1,046 $ 435 $ 1,883 $ 895
======= ======= ======= =======
BASIC EARNINGS PER SHARE:
Basic earnings per share $ 0.09 $ 0.04 $ 0.16 $ 0.08
======= ======= ======= =======
Weighted Average Shares 11,668 10,961 11,508 10,802
Outstanding - Basic
======= ======= ======= =======
DILUTED EARNINGS PER SHARE:
Diluted earnings per share $ 0.08 $ 0.04 $ 0.15 $ 0.08
======= ======= ======= =======
Weighted Average Shares 13,119 12,156 12,919 11,795
Outstanding - Diluted
======= ======= ======= =======
* - Amount of stock-based
compensation expense
included in each of the
respective expense
categories reported
above:
Cost of revenue - Project
and personnel costs $ 125 $ 69 $ 202 $ 161
Selling, general and
administrative
expenses 248 400 428 551
------- ------- ------- -------
Total $ 373 $ 469 $ 630 $ 712
======= ======= ======= =======
Edgewater's management believes that cash performance is the primary driver of long-term share value. As such, Edgewater views Cash Net Income, Cash Earnings per Diluted Share, EBITDA and EBITDA per Diluted Share as important indicators of performance that help investors gain a meaningful understanding of the Company's core operating results and future prospects, consistent with the manner in which management measures and forecasts the Company's performance.
EDGEWATER TECHNOLOGY, INC.
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
---------------- ----------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
------- ------- ------- -------
Reconciliation of GAAP Net Income to Cash Net Income and Cash
Earnings Per Diluted Share (Non-GAAP):
Reported GAAP Net Income $ 1,046 $ 435 $ 1,883 $ 895
Add: Amortization of Intangibles 312 327 626 544
Add: Stock-based Compensation 373 469 630 712
Less: Related Tax Effect (277) (318) (521) (502)
------- ------- ------- -------
Cash Net Income(a) $ 1,454 $ 913 $ 2,618 $ 1,649
======= ======= ======= =======
Cash Earnings Per Diluted Share1 $ 0.11 $ 0.08 $ 0.20 $ 0.14
======= ======= ======= =======
Reconciliation of GAAP Net Income, EBITDA and EBITDA Per Diluted
Share (Non-GAAP):
Reported GAAP Net Income $ 1,046 $ 435 $ 1,883 $ 895
Add: Income Tax Provision 712 294 1,336 596
Add: Deprecation and
Amortization Expense 568 461 1,135 806
Less: Interest Income and Other,
Net (401) (282) (808) (581)
------- ------- ------- -------
EBITDA(b) $ 1,925 $ 908 $ 3,546 $ 1,716
======= ======= ======= =======
EBITDA per Diluted Share(b) $ 0.15 $ 0.07 $ 0.27 $ 0.15
======= ======= ======= =======
(a) - Cash Earnings per Diluted Share is a Non-GAAP performance
measure and is not intended to be a performance measure that
should be regarded as an alternative to, or more meaningful
than, GAAP Diluted Earnings per Share. Cash Earnings per
Diluted Share measures presented may not be comparable to
similarly titled measures presented by other companies. Cash
Earnings per Diluted Share is defined as Net Income, plus
Amortization of Intangibles and Stock-based Compensation, less
related stock effect, divided by shares used in computing
Diluted Net Income per share.
(b) - EBITDA and EBITDA per Diluted Share are Non-GAAP performance
measures and are not intended to be performance measures that
should be regarded as an alternative to, or more meaningful
than, either GAAP Operating Income, GAAP Net Income and
Diluted Net Income per Share. EBITDA and EBITDA per Diluted
Share measures presented may not be comparable to similarly
titled measures presented by other companies.
EDGEWATER TECHNOLOGY, INC.
Summary Consolidated Balance Sheet Information
(In thousands)
June 30, December 31,
2007 2006
(Unaudited) (Audited)
--------- ---------
ASSETS
Cash and marketable securities $ 33,581 $ 33,141
Accounts receivable, net 14,691 10,883
Deferred taxes, current 1,760 1,760
Prepaid expenses and other assets, current 555 441
--------- ---------
Total current assets 50,587 46,225
Fixed assets, net 4,819 3,391
Deferred taxes, net 15,694 16,789
Goodwill and intangible assets, net 29,422 29,163
Other assets 52 52
--------- ---------
Total Assets $ 100,574 $ 95,620
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 4,190 $ 3,914
Accrued payroll and related liabilities 3,809 4,242
Deferred revenue and other liabilities 961 252
Capital lease obligations, current 250 184
--------- ---------
Total current liabilities 9,210 8,592
Capital lease obligations 678 778
--------- ---------
Total liabilities 9,888 9,370
Stockholders' Equity 90,686 86,250
--------- ---------
Total Liabilities and Stockholders' Equity $ 100,574 $ 95,620
========= =========
Actual Shares Outstanding 12,012 11,522
========= =========
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This Press Release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements made with respect to our outlook for sales activity, revenue and profitability. The forward looking statements included in the Press Release relate to future events or our future financial conditions or performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "believe," "anticipate," "future," "forward," "potential," "estimate," "encourage," "opportunity," "goal," "objective," "quality," "growth," "leader," "could", "expect," "intend," "plan," "planned" "expand," "focus," "build," "through," "strategy," "expiration," "provide," "offer," "maximize," "allow," "allowed," "represent," "commitment," "create," "implement," "result," "seeking," "increase," "add," "establish," "pursue," "feel," "work," "perform," "make," "continue," "can," "will," "ongoing," "include" or the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on our current plans or assessments which are believed to be reasonable as of the date of this Press Release. Factors that may cause actual results, goals, targets or objectives to differ materially from those contemplated, projected, forecasted, estimated, anticipated, planned or budgeted in such forward-looking statements include, among others, the following possibilities: (1) inability to execute upon growth objectives, including growth in entities acquired by our Company; (2) failure to obtain new customers or retain significant existing customers; (3) the loss of one or more key executives and/or employees; (4) changes in industry trends, such as a decline in the demand for Business Intelligence ("BI") and Corporate Performance Management ("CPM") solutions, custom development and system integration services and/or delays in industry-wide information technology ("IT") spending, whether on a temporary or permanent basis and/or delays by customers in initiating new projects or existing project milestones; (5) adverse developments and volatility involving geopolitical or technology market conditions; (6) unanticipated events or the occurrence of fluctuations or variability in the matters identified under "Critical Accounting Policies"; (7) failure of our sales pipeline to be converted to billable work and recorded as revenue; (8) failure of the middle market and the needs of middle-market enterprises for business services to develop as anticipated; (9) inability to recruit and retain professionals with the high level of information technology skills and experience needed to provide our services; (10) failure to expand outsourcing services to generate additional revenue; (11) any changes in ownership of the Company or otherwise that would result in a limitation of the net operating loss carry forward under applicable tax laws; and/or (12) the failure of the marketplace to embrace CPM or BI services. In evaluating these statements, you should specifically consider various factors described above as well as the risks outlined under Item I "Business - Factors Affecting Finances, Business Prospects and Stock Volatility" in our 2006 Annual Report on Form 10-K filed with the SEC on March 14, 2007. These factors may cause our actual results to differ materially from those contemplated, projected, anticipated, planned or budgeted in any such forward-looking statements.
Although we believe that the expectations in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, growth, earnings per share or achievements. However, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. We are under no duty to update any of the forward-looking statements after the date of this Press Release to conform such statements to actual results.