Exhibit 99.1
Edgewater Reports Fourth Quarter, Full Year 2005 Results and Strategic
Acquisition; Total Revenue up 70% Year-over-Year
WAKEFIELD, Mass.--(BUSINESS WIRE)--Feb. 15, 2006--A technology
management consulting firm specializing in providing premium IT
services, 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,
2005.
Fourth Quarter Results
Actual financial results and utilization for the quarter ended
December 31, 2005:
-- Total revenue increased 5.3% to $12.1 million, compared to
$11.5 million in the third quarter of 2005 and increased
53.9%, compared to total revenue of $7.9 million during the
fourth quarter of 2004;
-- Service revenue increased 9.7% to $11.5 million, compared to
$10.5 million in the third quarter of 2005 and increased
53.8%, compared to service revenue of $7.5 million during the
fourth quarter of 2004, which included the effects of our
Ranzal acquisition effective October 4, 2004;
-- Gross profit decreased (2.3%) to $4.7 million, or 39.1% of
total revenues, compared to $4.9 million, or 42.2% of total
revenues, in the third quarter of 2005 and increased 48.9%
compared to $3.2 million, or 40.4% of total revenues, during
the fourth quarter of 2004;
-- Gross profit margin related to service revenue was 40.9%,
compared to 46.0% in the third quarter of 2005 and 42.2% in
the fourth quarter of 2004;
-- Utilization was 78.5%, compared to 80.3% during the third
quarter of 2005 and 75.4% for the fourth quarter of 2004. The
sequential decline in fourth quarter utilization was a direct
result of traditional seasonality;
-- Net income from continuing operations amounted to $0.3
million, or $0.03 per diluted share, compared to $0.4 million,
or $0.04 per diluted share, in the third quarter of 2005. Net
income from continuing operations was $0.2 million, or $0.02
per diluted share, in the fourth quarter of 2004;
-- Net income was $0.3 million, or $0.03 per diluted share. Net
income amounted to $0.7 million, or $0.07 per diluted share,
in the third quarter of 2005, which represented income from
continuing operations of $0.4 million, or $0.04 per diluted
share, increased by a reversal of a portion of the Company's
2003 accrual for discontinued operations in the amount of $0.3
million, or $0.03 per diluted share. Net income amounted to
$0.4 million, or $0.04 per diluted share, in the fourth
quarter of 2004, which represented 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 2003
accrual for discontinued operations in the amount of $0.2
million, or $0.02 per diluted share. The reversals relate to
the Company's successful resolution of certain IRS tax notices
during 2004 & 2005; and
-- Cash flow used in operating activities was ($0.3) million,
compared to cash flow provided by operating activities of $0.8
million during the third quarter of 2005 and cash flow
provided by operating activities of $1.6 million during the
fourth quarter of 2004.
"Edgewater experienced a decline in utilization and subsequent
operating income in the fourth quarter compared to the third quarter
2005, which was primarily attributed to fourth quarter seasonality,"
said Shirley Singleton, President and CEO of Edgewater Technology,
Inc. "However, the Company reported a 53.8% increase in service
revenue, or $4.0 million relative to the fourth quarter of 2004."
Singleton continued, "The Company's financial results demonstrate
strong organic growth, as well as the positive acquisitive effects of
Ranzal & Associates. Of the $4.0 million increase in service revenue
for the fourth quarter of 2005, $3.3 million was attributable to
growth in our core business, which represents a 60.5% increase over
the fourth quarter of 2004 and Ranzal contributed $0.7 million, which
represents a 35.6% increase over the fourth quarter of 2004. "
Full Year Consolidated Results
Actual financial results and utilization for the fiscal year ended
December 31, 2005:
-- Total revenues increased 70.3% to $43.1 million, compared to
$25.3 million in fiscal 2004;
-- Service revenue increased 60.9% to $39.8 million, compared to
$24.7 million in fiscal 2004;
-- Gross profit increased 86.3% to $18.0 million, or 41.7% of
total revenues, compared to $9.7 million, or 38.2% of total
revenues in fiscal 2004;
-- Gross profit margin related to service revenue was 45.1%,
compared to 39.0% in fiscal 2004;
-- Utilization was 81.1%, compared to 72.1% in fiscal 2004;
-- Net income from continuing operations amounted to $1.3
million, or $0.12 per diluted share, compared to a net loss
from continuing operations of ($0.8) million, or ($0.07) per
diluted share, in fiscal 2004;
-- Net income amounted to $1.6 million, or $0.15 per diluted
share, compared to a net loss of ($0.6) million, or ($0.05)
per diluted share in fiscal 2004; and
-- Cash flow provided by operating activities was $1.8 million,
as compared to cash flow provided by operating activities of
$0.01 million in fiscal 2004.
Shirley Singleton commented, "We are pleased with the Company's
outstanding performance in 2005, represented by the 70% revenue growth
achieved this year. In addition, we expanded our billable consultant
base from 161 to 233 during the year. Our two-prong approach for
growth, through both organic and acquisition investments, has been
successful."
Outlook for 2006; NDS Acquisition
Today, Edgewater announced in a separate press release that it has
expanded its footprint and solidified its strategic service offerings
by acquiring National Decision Systems ("NDS"), a leader in strategic
business process consulting. NDS adds scale and expands Edgewater's
offerings in Program Management Office ("PMO"), Business Process
Improvement, and Project Management, and complements our core
competencies by adding new strategic service offerings, such as Merger
and Acquisition Consulting and Research Advisory Services. NDS also
strengthens Edgewater's vertical expertise in areas such as
Hospitality, Consumer Packaged Goods and Financial Services.
Singleton concluded, "By expanding our business and technology
expertise during 2005, we believe the Company has a strong platform to
capitalize on new sales opportunities. As for guidance, we believe
that Edgewater revenues will be up in the first quarter. Looking
further into 2006, we anticipate that the NDS acquisition will be
additive to our organic double-digit revenue growth objective for 2006
and should contribute to increased overall profitability, relative to
2005."
Conference Call
Edgewater Technology will host a conference call on Wednesday,
February 15, at 10:00 a.m. (ET) to discuss fourth quarter and full
year 2005 financial results. To listen to the call, you can
participate by webcast at www.edgewater.com - Investor Relations
section or by dialing 888-396-2369 (passcode 52685443) 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 40094582) from 12:00 p.m. (ET)
Wednesday, February 15 through 11:59 p.m. (ET) Wednesday, February 22.
About Edgewater Technology, Inc.
Edgewater Technology, Inc. is an innovative technology management
consulting firm. We provide a unique blend of premium IT services by
leveraging our proven industry expertise in strategy, technology and
corporate performance management. Headquartered in Wakefield, MA, we
go to market by vertical industry and provide our clients with a wide
range of business and technology offerings. To learn more, visit
www.edgewater.com or call 800-410-4014.
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,
---------------- -----------------
2005 2004 2005 2004
-------- ------- -------- --------
Revenue:
Service revenue $11,546 $7,509 $39,788 $24,731
Software revenue 70 60 1,528 60
Reimbursable expenses 495 300 1,810 531
-------- ------- -------- --------
Total revenue 12,111 7,869 43,126 25,322
Cost of revenue:
Project and personnel costs 6,825 4,338 21,841 15,079
Software costs 54 49 1,475 49
Reimbursable expenses 495 300 1,810 531
-------- ------- -------- --------
Total cost of revenue 7,374 4,687 25,126 15,659
-------- ------- -------- --------
Gross profit 4,737 3,182 18,000 9,663
Selling, general and
administrative expense 4,377 2,902 15,883 10,154
Depreciation and amortization
expense 208 302 1,046 896
-------- ------- -------- --------
Operating income (loss) 152 (22) 1,071 (1,387)
Interest income, net 317 186 1,054 556
-------- ------- -------- --------
Income (loss) before income taxes
and discontinued operations 469 164 2,125 (831)
Provision for income taxes 188 - 850 -
-------- ------- -------- --------
Income (loss) from continuing
operations before discontinued
operations 281 164 1,275 (831)
Income from discontinued
operations, net - 236 325 236
-------- ------- -------- --------
Net income (loss) $281 $400 $1,600 ($ 595)
======== ======= ======== ========
BASIC EARNINGS (LOSS) PER SHARE:
From continuing operations $0.03 $0.02 $0.13 ($ 0.07)
Discontinued operations - 0.02 0.03 0.02
-------- ------- -------- --------
Net income (loss) $0.03 $0.04 $0.16 ($ 0.05)
======== ======= ======== ========
Weighted Average Shares
Outstanding- Basic 10,346 11,012 10,241 11,283
======== ======= ======== ========
DILUTED EARNINGS (LOSS) PER SHARE:
From continuing operations $0.03 $0.02 $0.12 ($ 0.07)
Discontinued operations - 0.02 0.03 0.02
-------- ------- -------- --------
Net income (loss) $0.03 $0.04 $0.15 ($ 0.05)
======== ======= ======== ========
Weighted Average Shares
Outstanding- Diluted 11,210 11,283 10,972 11,283
======== ======= ======== ========
EDGEWATER TECHNOLOGY, INC.
Summary Consolidated Balance Sheet Information
(In thousands)
December 31, December 31,
2005 2004
(Unaudited) (Audited)
------------- -------------
Assets
- ------------------------------------------
Cash and marketable securities $33,763 $33,908
Accounts receivable, net 9,858 5,272
Deferred taxes, current 1,323 710
Prepaid expenses and other assets, current 985 2,252
------------- -------------
Total current assets 45,929 42,142
Fixed assets, net 1,364 1,364
Deferred taxes, net 20,168 21,503
Intangible assets, net 17,076 16,628
Other assets 52 65
------------- -------------
Total Assets $84,589 $81,702
============= =============
Liabilities and Stockholders' Equity
- ------------------------------------------
Accounts payable and accrued liabilities $3,159 $3,650
Accrued payroll and related liabilities 3,085 1,091
Deferred revenue and other liabilities 260 365
------------- -------------
Total current liabilities 6,504 5,106
Stockholders' Equity 78,085 76,596
------------- -------------
Total Liabilities and Stockholders'
Equity $84,589 $81,702
------------- -------------
Shares Outstanding 10,460 10,549
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 future revenue
growth and fiscal 2006 outlook. The forward looking statements
included in the Press Release relate to future events or our future
financial conditions or performance. In some cases, you can identify
forward-looking statements by terminology such as "may," "should,"
"believe," "anticipate," "future," "forward," "potential," "estimate,"
"encourage," "opportunity," "goal," "objective," "quality," "growth,"
"leader," "could", "expect," "intend," "plan," "planned" "expand,"
"focus," "build," "through," "strategy," "expiration," "provide,"
"offer," "maximize," "allow," "allowed," "represent," "commitment,"
"create," "implement," "result," "seeking," "increase," "add,"
"establish," "pursue," "feel," "work," "perform," "make," "continue,"
"can," "will," "ongoing," "include" or the negative of such terms or
comparable terminology. 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) inability to execute upon growth
objectives, including growth in entities acquired by our Company; (2)
failure to obtain new customers or retain significant existing
customers; (3) the loss of one or more key executives and/or
employees; (4) changes in industry trends, such as a decline in the
demand for Business Intelligence ("BI") and Corporate Performance
Management ("CPM") solutions, custom development and system
integration services and/or delays 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; (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"; (7) failure of our
sales pipeline to be converted to billable work and recorded as
revenue; (8) failure of the middle market and the needs of
middle-market enterprises for business services to develop as
anticipated; (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 CPM or BI services; and/or (13)
the failure to obtain remaining predecessor entity tax records that
are not in our control and/or successfully resolve remaining
outstanding IRS matters relating to our former staffing businesses. 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 2004 Annual Report on Form 10-K filed with the SEC
on March 29, 2005. 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.
CONTACT: Edgewater Technology, Inc.
Kevin Rhodes or Barbara Warren-Sica
781-246-3343
ir@edgewater.com