Edgewater is a leading strategic consulting firm that focuses onhelping companies drive transformational change
Wakefield, MA – October 29, 2014 – Edgewater Technology, Inc. (NASDAQ: EDGW), a leading consulting firm that brings a blend of classic and product-based consulting services to its clients, reported financial results for the third quarter ended September 30, 2014.
Increased service revenue 18% to a record $25.1 million;
Generated $4.6 million in operating cash flow;
Repurchased 142,098 shares of common stock; aggregate purchase price of $962,000 or $6.77 per share; and
Extended $23.1 million stock repurchase program to September 25, 2015.
Total revenue was $28.7 million compared to $25.4 million;
Service revenue was $25.1 million compared to $21.4 million;
Gross profit was $10.4 million, or 36.3% of total revenue, compared to $9.7 million, or 38.0% of total revenue;
Gross profit margin related to service revenue was 39.7% compared to 38.9%;
Utilization was 77.3% compared to 71.1%;
Net income was $976,000 or $0.08 per diluted share, compared to net income of $1.8 million, or $0.14 per diluted share;
Adjusted EBITDA (a non-GAAP measure) was $2.5 million, or 8.7% of total revenue and $0.19 per diluted share (see "Non-GAAP Financial Measures" below for further discussion of this non-GAAP term), compared to adjusted EBITDA of $2.5 million, or 9.9% of total revenue and $0.21 per diluted share; and
Cash flow provided by operating activities was $4.6 million compared to $5.9 million.
Total revenue was $85.6 million compared to $76.8 million;
Service revenue was $73.1 million compared to $62.7 million;
Gross profit was $31.4 million, or 36.7% of total revenue, compared to $26.8 million, or 35.0% of total revenue;
Gross profit margin related to service revenue was 39.7% compared to 36.4%;
Utilization was 77.6% compared to 72.0%;
Net income was $3.4 million, or $0.26 per diluted share, compared to net income of $2.3 million, or $0.19 per diluted share;
Adjusted EBITDA was $7.2 million, or 8.4% of total revenue and $0.55 per diluted share, compared to adjusted EBITDA of $5.1 million, or 6.7% of total revenue and $0.44 per diluted share; and
Cash flow provided by operating activities was $5.4 million compared to $2.3 million.
"For the fourth quarter in a row, our quarterly results established yet another quarterly service revenue record," said Shirley Singleton, Edgewater's chairman, president and CEO. "The strength of our third quarter and year-to-date service revenue performance positions us for double-digit service revenue growth in 2014.
"Our service revenue growth, billable consultant utilization and service revenue gross margin all showed significant improvement during the third quarter of 2014. We have always described software resale revenue as volatile, and third quarter software was lighter than anticipated. Third quarter software revenue, combined with the absence of PI2-related software revenue that we recorded during the third quarter of 2013, served to lower our comparative total gross margin performance.
"We continue to expand our sales pipeline across each of our service offerings and have secured a number of engagements that provide us with a healthy backlog entering the fourth quarter and 2015. However, as we caution each year, holiday-related seasonality during the fourth quarter, including fewer bill days, project start delays and customer shutdowns, influences our utilization and reduces our ability to generate sequential quarterly service revenue growth. As a result, we anticipate fourth quarter service revenue will be down on a sequential quarterly basis, but will be up by a percentage in the high single-digits compared to the fourth quarter of 2013."
Edgewater has scheduled a conference call today (Wednesday, October 29, 2014) at 10:00 a.m. Eastern time to discuss its third quarter 2014 results.
Date: Wednesday, October 29, 2014Time: 10:00 a.m. Eastern TimeDial-in number: 1-877-713-9347Webcast: http://ir.edgewater.com/
Date: Wednesday, October 29, 2014
Time: 10:00 a.m. Eastern Time
Dial-in number: 1-877-713-9347
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
A replay of the conference call can be accessed via Edgewater's investor relations web site at http://ir.edgewater.com/ or by dialing 1-404-537-3406 (Conference ID#: 12527820) after 1:00 p.m. Eastern time through November 12, 2014.
Edgewater Technology, Inc. (NASDAQ: EDGW) is a strategic consulting firm delivering a blend of classic and product-based consulting services. Edgewater addresses the market both vertically by industry and horizontally by product and technology specialty, providing its client base with a wide range of business and technology solutions. As one of the largest IT consulting firms based in New England, the company works with clients to reduce costs, improve processes and increase revenue through the judicious use of technology. Edgewater's brand names include Edgewater Technology, Edgewater Ranzal and Edgewater Fullscope. To learn more, please visit www.edgewater.com.
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 expected fourth quarter and full year 2014 service revenue, changes in our fourth quarter 2014 service revenue on both a sequential and year-over-year basis, sales pipeline expansion, sales pipeline activity and our ability to successfully convert sales pipeline opportunities to signed contracts, and holiday-related seasonal influence on our fourth quarter billable consultant utilization and service revenue. 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 Enterprise Resource Planning and Enterprise Performance Management solutions, custom development and system integration services and/or declines in industry-wide information technology 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; (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" in our 2013 Annual Report on Form 10-K; (7) delays in, or the failure of, our sales pipeline being converted to billable work and recorded as revenue; (8) termination by clients of their contracts with us or inability or unwillingness of clients to pay for our services, which may impact our accounting assumptions; (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; (12) the failure of the marketplace to embrace advisory and product-based consulting services; and/or (13) changes in our utilization levels. In evaluating these statements, you should specifically consider various factors described above as well as the risks outlined under "Part I - Item IA. Risk Factors" in our 2013 Annual Report on Form 10-K filed with the SEC on March 10, 2014. 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 the Company believes that the expectations in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance, growth, earnings per share or achievements. However, neither the Company nor any other person assumes responsibility for the accuracy and completeness of such statements. Except as required by law, the Company undertakes no obligation to update any of the forward-looking statements after the date of this Press Release to conform such statements to actual results.