Edgewater is a leading strategic consulting firm that focuses onhelping companies drive transformational change
Wakefield, MA – May 5, 2010 – Edgewater Technology, Inc. (NASDAQ: EDGW, http://www.edgewater.com/, “Edgewater” or the “Company”), a consulting firm that brings a synergistic blend of specialty services to its clients in the areas of business advisory, analytics, data management and technology, today announced financial results for its first quarter ended March 31, 2010.
Actual financial results and utilization for the quarter ended March 31, 2010:
Total revenue increased 36.2%, to $20.3 million compared to $14.9 million in the first quarter of 2009;
Service revenue increased 15.8%, to $15.7 million compared to $13.6 million in the first quarter of 2009;
The year-over-year increase in both total revenue and service revenue during the first quarter of 2010 is heavily influenced by the incremental service and software revenue generated in connection with our December 31, 2009 acquisition of Fullscope, Inc.;
Gross profit was $6.7 million compared to $4.6 million in the first quarter of 2009;
Gross profit, as a percentage of total revenue, was 33.1% compared to 31.2% in the first quarter of 2009;
Gross profit margin related to service revenue was 34.1% compared to 33.4% in the first quarter of 2009;
Utilization was 75.3% compared to 67.8% for the first quarter of 2009;
Operating loss amounted to $(1.0) million compared to $(802) thousand in the first quarter of 2009;
Net loss was $(639) thousand, or $(0.05) per diluted share, compared to $(454) thousand, or $(0.04) per diluted share, in the first quarter of 2009;
Adjusted EBITDA amounted to $(29) thousand, or $0.00 per diluted share, compared to $(94) thousand, or $(0.01) per diluted share, in the first quarter of 2009; and
Cash flow used in operating activities was $(5.9) million compared to $(2.4) million during the first quarter of 2009. Traditionally, our first quarter cash flows are influenced by out flows associated with our annual performance-based bonus payouts and annual insurance renewals. Cash out flows during the first quarter of 2010 were further impacted as a result of payments of liabilities assumed in connection with the Fullscope acquisition, which occurred on December 31, 2009.
Adjusted EBITDA and Adjusted 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.
“Over the past eighteen months, we have developed and implemented several strategic initiatives targeted at transforming Edgewater from a custom development-based consulting model to a product-driven consulting model,” commented Shirley Singleton, Edgewater’s Chairman, President and Chief Executive Officer.
“This product-based transition has gained traction and appears to be accelerating, as evidenced by the improvement in first quarter operating metrics. Core utilization is steadily rising and the bid and proposal pipeline remains strong across the board. Despite the cyclical resetting of FICA limits and traditional seasonality in our EPM service offerings during the first quarter, we have seen an improvement in our gross margin on service revenue. Additionally, first quarter total revenue and gross profit was lifted by software sales related to our new Microsoft Dynamics AX practice,” continued Ms. Singleton.
“We anticipate that we will generate positive cash flows from operations during the second quarter of 2010 and we continue to observe steady pipeline activity in the early stages of the second quarter. However, we remain cautious with respect to customers signing new contracts in a reasonable timeframe and for that reason, we are anticipating that second quarter service revenue will be flat with an upward bias compared to the first quarter of 2010,” concluded Ms. Singleton.
Edgewater has scheduled a conference call on Wednesday, May 5, at 10:00 a.m. (ET) to discuss its first quarter 2010 financial results and other matters. To listen to the call, you can participate by webcast on Edgewater’s investor relations website at http://ir.edgewater.com/ or you can dial 877-713-9347. Investors are advised to dial into the call at least ten minutes prior to the call to register.
A replay of the call can be accessed via Edgewater’s investor relations website at http://ir.edgewater.com/ or by dialing 800-642-1687 (domestic) and 706-645-9291 (international) (pass code 67345039) from 1:00 p.m. ET Wednesday, May 5 through 11:59 p.m. ET Wednesday, May 19.
About Edgewater Technology, Inc.
Edgewater is a consulting firm that brings a synergistic blend of specialty services to its clients in the areas of business advisory, analytics, data management and technology. We develop business strategies and technology solutions that address our clients’ specific needs while providing them with an increased competitive advantage. Headquartered in Wakefield, MA, we typically go to market both vertically by industry and horizontally by product and technology specialty and provide our clients with a wide range of business and technology offerings. To learn more, visit http://www.edgewater.com/ or call 800-410-4014.
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 concerning our 2010 outlook, future revenue and growth, cost savings and cost control efforts, customer spending outlook, general economic trends, IT service demand, future revenue and revenue mix, utilization, training and new service offerings, significant customers, backlog, competitive and strategic initiatives, growth plans, potential stock repurchases, future results, tax consequences and liquidity needs . In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “believe,” “anticipate,” “forecast,” “project,” “target,” “potential,” “estimate,” “encourage,” “opportunity,” “goal,” “objective,” “could,” “expect,” “intend,” “plan,” “focus,” “build,” “strategy,” “maximize,” “commitment,” “create,” “implement,” “seek,” “establish,” “pursue,” “continue,” “can,” or terms of similar meaning. 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) failure to obtain new customers or retain significant existing customers; (2) the loss of one or more key executives and/or employees; (3) changes in industry trends, such as a decline in the demand for Business Intelligence (“BI”) and Enterprise Performance Management (“EPM”) solutions, custom development and system integration services and/or declines 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; (4) inability to execute upon growth objectives, including new services and growth in entities acquired by our Company; (5) adverse developments and volatility involving economic, geopolitical or technology market conditions; (6) unanticipated events or the occurrence of fluctuations or variability in the matters identified under “Critical Accounting Policies;” (7) delays in, or the failure of, our sales pipeline being converted to billable work and recorded as revenue; (8) inability to recruit and retain professionals with the high level of information technology skills and experience needed to provide our services; (9) failure to expand outsourcing services to generate additional revenue; (10) 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 (11) the failure of the marketplace to embrace specialty consulting 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 2009 Annual Report on Form 10-K filed with the SEC on March 15, 2010. 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.