Exhibit 99.1
Edgewater Technology Announces Results for Fourth Quarter and Full
Year 2004; Strong Fourth Quarter Revenue Growth and Improved Metrics
WAKEFIELD, Mass.--(BUSINESS WIRE)--Feb. 16, 2005--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 its fourth quarter and fiscal year ended December 31,
2004.
Fourth Quarter Results
Actual financial results for the quarter ended December 31, 2004
were as follows:
-- Revenue increased 60.8% to $7.9 million, compared to $4.9
million in the third quarter of 2004 and increased 16.2%,
compared to revenue of $6.8 million during the fourth quarter
of 2003;
-- Gross profit was $3.2 million or 40.4% of revenues, compared
to $1.5 million or 30.5% of revenues in the third quarter of
2004 and $3.0 million or 45.0% of revenues during the fourth
quarter of 2003;
-- Utilization was 75.4% for the fourth quarter, compared to
66.0% during the third quarter of 2004 and 74.1% for the
fourth quarter of 2003;
-- Income from continuing operations was $0.2 million or $0.02
per diluted share, compared to a loss from continuing
operations of ($1.0) million or ($0.09) per share for the
third quarter of 2004 and income from continuing operations
during the fourth quarter of 2003 of $1.6 million, or $0.14
per diluted share, which included a $1.3 million net tax
benefit to record an income tax refund receivable related to a
tax carry back claim;
-- Net income amounted to $0.4 million or $0.04 per diluted
share, which represents income from continuing operations of
$0.2 million or $0.02 per diluted share, increased by a
reversal of a portion of the Company's prior year accrual for
discontinued operations in the amount of $0.2 million or $0.02
per diluted share. This reversal relates to the Company's
successful resolution of certain IRS tax notices during the
fourth quarter of 2004. Net loss amounted to ($1.0) million,
or ($0.09) per share in the third quarter of 2004. Net income
amounted to $0.6 million, or $0.05 per diluted share in the
fourth quarter of 2003 due to a $1.3 million net tax benefit
related primarily to a $1.4 million carry back claim. Net
income was also offset by an accrual for discontinued
operations in the amount of $1.0 million related to IRS
assessments regarding the Company's former staffing
businesses; and
-- Positive cash flow from operating activities amounted to $1.5
million in the fourth quarter of 2004, compared to $0.5
million during the third quarter of 2004 and $2.1 million
during the fourth quarter of 2003.
Full-Year Consolidated Results
Actual financial results for the year ended December 31, 2004 were
as follows:
-- Revenue for 2004 was $25.3 million, a 1.1% increase over
revenue of $25.1 million in 2003;
-- Gross profit was $9.7 million or 38.2% of revenue for 2004,
compared to gross profit of $11.5 million or 46.0% of revenue
in 2003;
-- Utilization was 72.1% for 2004, compared to 78.7% for 2003;
-- Loss from continuing operations amounted to ($0.8) million or
($0.07) per share in 2004. Income from continuing operations
amounted to $2.0 million or $0.17 per diluted share in 2003,
which included a recorded $1.1 million tax benefit related
primarily to an income tax refund receivable;
-- Net loss amounted to ($0.6) million or ($0.05) per share in
2004. Net income for 2003 amounted to $1.0 million or $0.08
per diluted share, which includes income from continuing
operations of $2.0 million, offset by tax benefits and
discontinued operations accruals described above concerning
fourth quarter 2003 results; and
-- Positive cash flow from operations amounted to $0.01 million
in 2004, compared to $2.6 million in 2003.
"Our fourth quarter 2004 financial results reflect strong
incremental improvement in Edgewater's key operating metrics, along
with the positive effects of the October 4th Ranzal acquisition, which
provides the Company with a solid foundation for the coming year,"
stated Shirley Singleton, President and CEO of Edgewater Technology.
Outlook for 2005
"Edgewater has aggressively augmented core IT service capabilities
to support our holistic approach to high-value IT services. The recent
acquisition of Ranzal and organic investments in key vertical and
technology hires are current examples of how the Company continues to
address the complex and changing needs within the high-value IT
services space," Singleton continued. "The intersection of vertical
expertise, Business Intelligence ("BI"), Data Services, and complex
transactional processing are critically important in establishing
Corporate Performance Management ("CPM") and real-time metrics
directly into the operational side of businesses."
Singleton concluded, "Given the continued uncertainty of IT
spending and based on current information, we are projecting our first
quarter revenue levels to be flat, compared to the fourth quarter of
2004."
Conference Call
Edgewater Technology will host a conference call on Wednesday,
February 16, at 10:00 a.m. (ET) to discuss fourth-quarter and year-end
2004 financial results. To listen to the call, you can participate by
webcast at www.edgewater.com - Investor Relations section or you can
dial 800-299-0148 (passcode 44908529) 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 (passcode 27653711) from 12:00 p.m. (ET) Wednesday,
February 16 through 11:59 p.m. (ET) Wednesday, February 23.
About Edgewater Technology, Inc.
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 Twelve Months
Ended Ended
December 31, December 31,
2004 2003 2004 2003
------- -------- -------- --------
Service revenues $7,869 $6,773 $25,322 $25,054
Cost of services 4,687 3,724 15,659 13,540
------- -------- -------- --------
Gross profit 3,182 3,049 9,663 11,514
Selling, general
and administrative 2,902 2,623 10,154 10,080
Depreciation and
amortization expense 302 259 896 948
------- -------- -------- --------
Operating (loss)
income (22) 167 (1,387) 486
Interest income and other, net 186 132 556 455
------- -------- -------- --------
Income (loss) before income taxes 164 299 (831) 941
Benefit from tax, net - (1,310) - (1,053)
------- -------- -------- --------
Net income (loss) from
continuing operations 164 1,609 (831) 1,994
Income (loss) from
discontinued
operations, net 236 (1,020) 236 (1,020)
------- -------- -------- --------
Net income (loss) $400 $589 ($ 595) $974
======= ======== ======== ========
BASIC EARNINGS PER SHARE
From continuing operations $0.02 $0.14 ($ 0.07) $0.18
======= ======== ======== ========
Discontinued operations $0.02 ($ 0.09) $0.02 ($ 0.09)
======= ======== ======== ========
Net income (loss) $0.04 $0.05 ($ 0.05) $0.09
======= ======== ======== ========
Weighted Average Shares
Outstanding- Basic 11,012 11,401 11,283 11,381
======= ======== ======== ========
DILUTED EARNINGS PER SHARE
From continuing operations $0.02 $0.14 ($ 0.07) $0.17
======= ======== ======== ========
Discontinued operations $0.02 ($ 0.09) $0.02 ($ 0.09)
======= ======== ======== ========
Net income (loss) $0.04 $0.05 ($ 0.05) $0.08
======= ======== ======== ========
Weighted Average Shares
Outstanding- Diluted 11,283 11,897 11,283 11,694
======= ======== ======== ========
EDGEWATER TECHNOLOGY, INC.
Summary Balance Sheet Information
(In thousands)
(Unaudited)
December 31, December 31,
2004 2003
------------- -------------
Assets
Cash and marketable securities $33,908 $44,259
Accounts receivable, net 5,272 3,532
Fixed assets, net 1,364 1,309
Deferred tax assets, net 22,213 22,175
Intangible assets, net 16,628 13,135
Prepaid expenses and other assets 2,317 2,121
------------- -------------
Total Assets $81,702 $86,531
============= =============
Liabilities and Equity
Accounts payable & accrued liabilities $3,650 $3,554
Accrued payroll & related liabilities 1,091 2,009
Other liabilities 365 84
Stockholders' Equity 76,596 80,884
------------- -------------
Total Liabilities & Stockholders' Equity $81,702 $86,531
============= =============
Shares Outstanding 10,549 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 our fiscal 2005
outlook. The forward looking statements included in the Press Release
relate to future events or our future financial conditions or
performance, Words such as "will," "provide," "focused," "believe,"
"continue," "remain," "optimistic," and "emerge," 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) changes in
industry trends, such as decline in the demand for custom development
and system integration services and/or spending delays with existing
information technology services projects; (2) failure to obtain new
customers or retain significant existing customers; (3) loss of key
executives; (4) 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; (5) failure of the general
economy or IT services spending to rebound or otherwise improve; (6)
lack of available growth opportunities; (7) the inability to maintain,
sustain or grow revenues; (8) the strength or visibility of the
Company's backlog of business for 2005; (9) 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;
and (10) the failure of the marketplace to embrace Corporate
Performance Management or Business Intelligence ("BI") services.
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. Edgewater disclaims any
intention to update any forward- looking statements as a result of
developments occurring after the date of this press release, including
the potential impact of any future acquisitions, mergers, or
dispositions it may make.
CONTACT: Edgewater Technology, Inc.
Kevin Rhodes, 781-246-3343
Chief Financial Officer
or
Barbara Warren-Sica, 781-246-3343
Investor Relations