Edgewater is a leading strategic consulting firm that focuses onhelping companies drive transformational change
"We are excited about the three strategic acquisitions completed during 2015," said Shirley Singleton, Edgewater's chairman, president and CEO. "The acquisitions bring quality cloud credentials into our service mix, enhance our big data analytics capabilities, expand our geography and add scale to our business. We did not see meaningful revenue contribution in 2015 from of our largest acquisition, M2 Dynamics, since it occurred in the latter weeks of December. We anticipate that we will see the combined revenue and EBITDA benefit from these acquisitions as we move through 2016.
"Both total revenue and service revenue were up on a year-over-year quarterly basis. Traditional seasonality, some EPM project delays, and one challenged project in which we were unable to fully recognize all revenue, had a direct impact on our fourth quarter service revenue and associated billable consultant utilization.
"The delays were primarily driven by customers requesting that project/phase kickoffs not occur during the holiday season or in the early stages of year-end closings. While a proactive headcount reduction would serve to improve current utilization in the near term, it would endanger our ability to service the current backlog going forward.
"Profitability for the quarter was significantly affected by $3.6 million of non-cash deferred tax and valuation allowance adjustments, $1.3 million in non-recurring costs and lower billable consultant utilization.
"Backlog remains strong, and early first quarter 2016 indications are that utilization is moving in the right direction. We estimate that service revenue for the first quarter of 2016 to be in the range of $27.0 million to $28.0 million."
Edgewater has scheduled a conference call today (Wednesday, March 2, 2016) at 10:00 a.m. Eastern time to discuss its fourth quarter and full year 2015 results.
Date: Wednesday, March 2, 2016Time: 10:00 a.m. Eastern timeDial-in number: 1-877-713-9347 / Passcode: 45368001Webcast:
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.
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#: 45368001) after 1:00 p.m. Eastern time through March 16, 2016.
Edgewater (NASDAQ: EDGW) helps business leaders drive transformational change through its unique selection of business and technology services and specialized product-based solutions.
Classic consulting disciplines (such as business advisory, process improvement, organizational change management, M&A due diligence, and domain expertise) are blended with technical services (such as digital transformation, technical roadmaps, data and analytics services, custom development, and system integration) to help organizations get the most out of their existing IT assets while creating new digital business models.
Delivering both on premise and in the cloud, Edgewater partners with Oracle and Microsoft to offer Business Analytics, BI, ERP, and CRM solutions. Edgewater Ranzal, an Oracle Platinum Consulting Partner, provides Business Analytics solutions leveraging Oracle EPM, BI, and Big Data technologies. As an award-winning Microsoft partner, Edgewater Fullscope delivers Dynamics AX ERP, Business Intelligence, and CRM solutions, with a specialty in manufacturing.
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 first quarter 2016 service revenue, the anticipated trend in our billable consultant utilization, the strength of our sales pipeline, our ability to continue to maintain and/or build backlog, our ability to successfully execute on our channel growth strategy, and the expected synergies from our 2015 acquisitions, including potential revenue and EBITDA benefits in 2016. 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 2014 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 the Company or inability or unwillingness of clients to pay for the Company's services, which may impact the Company's accounting assumptions; (9) inability to recruit and retain professionals with the high level of information technology skills and experience needed to provide the Company's 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 possibility that activist stockholders may wage proxy contests or gain representation on or control of the Board of Directors, causing disruption and/or uncertainty to the Company's business, customer relationships and employee retention; (13) the failure of the marketplace to embrace advisory and product-based consulting services; (14) the inability to successfully integrate the 2015 acquisitions or achieve the expected synergies; and/or (15) changes in the Company's 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 2014 Annual Report on Form 10-K filed with the SEC on March 2, 2015. 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.