Exhibit 99.1
Edgewater Technology, Inc. Reports Third Quarter 2004 Financial Results
WAKEFIELD, Mass.--(BUSINESS WIRE)--Oct. 20, 2004--Custom development and
system integration consulting firm, Edgewater Technology, Inc. (NASDAQ: EDGW,
www.edgewater.com, "Edgewater Technology" or the "Company") today announced
financial results for the third quarter ended September 30, 2004.
Third Quarter Results
Actual financial results and utilization for the September 30,
2004 quarter were as follows:
-- Revenue amounted to $4.9 million, compared to $6.1 million in
the second quarter of 2004 and $6.9 million for the third
quarter of 2003;
-- Gross profit was $1.5 million, compared to $2.4 million in the
second quarter of 2004 and $3.2 million for the third quarter
of 2003;
-- Gross profit margin was 30%, compared to 39% in the second
quarter of 2004 and 46% for the third quarter of 2003;
-- Utilization was 66% for the third quarter, compared to 71%
during the second quarter of 2004 and 80% for the third
quarter of 2003, and;
-- Net loss was ($1.02) million, or ($0.09) per share, compared
to net loss of ($0.04) million, or ($0.004) per share for the
second quarter of 2004 and net income during the third quarter
of 2003 of $0.2 million or $0.01 per share.
First Nine Months of 2004
Actual financial results and utilization for the first nine months
of 2004 were as follows:
-- Revenue amounted to $17.5 million, compared to $18.3 million
during the first nine months of 2003;
-- Gross profit amounted to $6.5 million, compared to $8.5
million during the first nine months of 2003;
-- Gross profit margin amounted to 37%, compared to 46% during
the first nine months of 2003;
-- Utilization was 73%, compared to 80% during the first nine
months of 2003, and;
-- Net loss was ($1.0) million, or ($0.09) per share, compared to
net income for the first nine months of 2003 of $0.4 million,
or $0.03 per share.
"As we mentioned during our second quarter 2004 financial results
conference call and within a recent press release, customer delays in
approving spending for new IT initiatives did affect us during the
third quarter," commented Shirley Singleton, President and CEO of
Edgewater Technology. "Despite a healthy sales pipeline, closure of
several client engagements did not occur until late in the quarter. As
a consequence, we also anticipate that the delays will affect our full
year revenues for 2004, which we expect will approximate 2003 levels.
This would likely result in an operating loss for 2004, which could be
approximately $1.0 million, assuming actual 2004 revenues come in at a
level comparable to 2003 revenues."
Ms. Singleton continued, "Nonetheless, we remain enthusiastic
about our organic sales pipeline and the full year 2005 effects of the
Ranzal & Associates acquisition which was completed on October 4th.
Ranzal strengthens our capabilities in strategy and design, solidifies
our east coast presence, and expands our vertical expertise and
service offerings to the middle market, in particular in the
high-growth area of Business Performance Management (BPM). In
addition, it provides Edgewater and Ranzal with the opportunity to
provide a combined, more robust custom development and BPM service
offering to existing and prospective clients, while adding additional
scale to Edgewater in 2005 and thereafter."
Conference Call
Edgewater Technology will host a conference call today, Wednesday,
October 20, at 10:00 a.m. (EST) to discuss the Company's third quarter
2004 results. To listen to the call, you can participate by Web cast
at www.edgewater.com - Investor Relations section or you can dial
800-967-7188 approximately 15 minutes prior to start of the call. A
replay of the call can be accessed via www.edgewater.com - Investor
Relations section or by dialing 888-203-1112 or 719-457-0820 (passcode
844672) from 1:00 p.m. ET Wednesday, October 20 through 11:59 p.m. ET
Wednesday, October 27.
About Edgewater Technology
Founded in 1992, Edgewater Technology is an award-winning
consulting firm that specializes in combining strategic consulting,
technical knowledge, and industry domain expertise to develop
technology solutions that assist primarily middle-market companies and
divisions of Global 2000 companies to align their processes with their
purposes. This approach not only promotes increased efficiency, but
also supports increased effectiveness. Targeting strategic,
mission-critical applications, the Company collaborates with customers
to translate business goals into technical strategies. Headquartered
in Wakefield, Massachusetts, the Company services its client base
throughout its network of strategically positioned solutions centers.
For further information, visit www.edgewater.com or call 781-246-3343.
Selected Financial Data:
EDGEWATER TECHNOLOGY, INC.
Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
---------- ------- -------- --------
Service revenues $4,893 $6,934 $17,453 $18,281
Cost of services 3,401 3,729 10,972 9,816
---------- ------- -------- --------
Gross profit 1,492 3,205 6,481 8,465
Selling, general and
administrative 2,475 2,783 7,252 7,457
Depreciation and amortization
expense 204 262 594 689
---------- ------- -------- --------
Operating (loss) income (1,187) 160 (1,365) 319
Interest income and other,
net 156 94 370 323
---------- ------- -------- --------
(Loss) income before income
taxes (1,031) 254 (995) 642
Income (benefit) tax
provision (14) 102 - 257
---------- ------- -------- --------
Net (loss) income $(1,017) $152 $(995) $385
========== ======= ======== ========
BASIC AND DILUTED EARNINGS PER SHARE
Net (loss) income, basic $(0.09) $0.01 $(0.09) $0.03
========== ======= ======== ========
Net (loss) income, diluted $(0.09) $0.01 $(0.08) $0.03
========== ======= ======== ========
Weighted Average Shares
Outstanding - Basic 11,296 11,393 11,374 11,409
========== ======= ======== ========
Weighted Average Shares
Outstanding - Diluted 11,795 11,701 12,102 11,564
========== ======= ======== ========
EDGEWATER TECHNOLOGY, INC.
Summary Balance Sheet Information
(In thousands)
September 30, December 31,
2004 2003
(Unaudited) (Unaudited)
--------------- -------------
Assets
- -----------------------------------------
Cash and marketable securities $41,249 $44,259
Accounts receivable, net 3,315 3,532
Fixed assets, net 1,258 1,309
Deferred tax asset, net 22,213 22,175
Intangible assets, net 12,824 13,135
Prepaid expenses and Other assets 1,910 2,121
--------------- -------------
Total Assets $82,769 $86,531
=============== =============
Liabilities and Equity
- -----------------------------------------
Accounts payable & Accrued liabilities $3,005 $3,554
Accrued payroll & related liabilities 603 2,009
Other liabilities 38 84
Stockholders' Equity 79,123 80,884
--------------- -------------
Total Liabilities & Stockholders' Equity $82,769 $86,531
=============== =============
Shares Outstanding 11,233 11,366
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 the expected
revenue and accretive impacts of the Ranzal acquisition, as well as
statements regarding our sales pipeline, and estimated third quarter
2004 revenues and 2004 fiscal year revenues sales and operating
results. The forward looking statements included in the Press Release
relate to future events or our future financial conditions or
performance, Words such as "targeting," "expected," "will," "are,"
"provide," "continue," "remain," "optimistic" or the negative thereof
or variations thereon and similar expressions are intended to identify
forward-looking statements. These forward-looking statements
inherently involve certain risks and uncertainties, although they are
based on our current plans or assessments that 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, forecast, estimated,
anticipated, planned or budgeted in such forward-looking statements
include, among others, the following possibilities: (1) the inability
to promptly and effectively integrate Ranzal into the Company's
operations, culture and back office administrative support areas; (2)
loss of one or more key customers or key employees (3) changes in
industry trends, such as decline in the demand for business
intelligence and performance management solutions, custom development
and system integration services and/or spending delays with existing
information technology services projects; (4) failure to obtain new
customers or retain significant existing customers; (5) loss of key
executives; (6) general economic and business conditions (whether
foreign, national, state or local) which include but are not limited
to changes in interest or currently exchange rates and the overall
demand for information technology services and/or spending delays for
existing information technology services; (7) failure of the general
economy or IT services spending to rebound or otherwise improve; (8)
lack of available growth opportunities; (9) the inability to maintain,
sustain or grow revenues; (10) failure of middle-market companies to
spend amounts on IT projects, whether short-term or long-term; and
(11) any changes in ownership of the Company or otherwise that would
result in a limitation on the use of the net operating loss carry
forward under applicable tax laws. Actual events or results may differ
materially from those discussed, contemplated, forecasted, estimated,
anticipated, planned or implied in the forward-looking statements as a
result of the various factors described above and those further set
forth under the heading "Business- Factors Affecting Finances,
Business Prospects and Stock Volatility" in the Company's Form 10-K
filed with the Securities and Exchange Commission on March 30, 2004.
CONTACT: Edgewater Technology, Inc.
Kevin R. Rhodes, 781-246-3343
Chief Financial Officer
or
Barbara Warren-Sica, 781-246-3343
Investor Relations