Exhibit 99.1
Edgewater Reports Another Solid Quarter
WAKEFIELD, Mass.--(BUSINESS WIRE)--April 25, 2007--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 first quarter ended March
31, 2007.
First Quarter Results
Actual financial results and utilization for the quarter ended March 31,
2007:
-- Total revenue increased 13.7% to $16.3 million, compared to $14.3
million in the first quarter of 2006.
-- Service revenue increased 12.8% to $15.2 million, compared to $13.5
million in the first quarter of 2006;
-- Gross profit was $6.8 million, or 41.7% of total revenue, compared to
$5.2 million, or 36.1% of total revenue in the first quarter of 2006;
-- Gross profit margin related to service revenue was 44.0%, compared to
38.0% in the first quarter of 2006;
-- Utilization was 82.2%, compared to 78.8% during the first quarter of
2006;
-- Net income increased 82% to $0.84 million, or $0.07 per diluted share,
compared to net income of $0.46 million, or $0.04 per diluted share in
the first quarter of 2006;
-- Cash Net Income increased 58% to $1.2 million, or $0.09 per diluted
share during the first quarter of 2007 compared to $0.07 million, or
$0.06 per diluted share, during the first quarter of 2006;
-- EBITDA increased 100% to $1.6 million, or $0.13 per diluted share
during the first quarter of 2007 compared to $0.8 million, or $0.07
per diluted share, during the first quarter of 2006; and
Cash Net Income, Cash Earnings per Diluted Share, and EBITDA per Diluted
Share are Non-GAAP financial measures. A reconciliation of these measures to
their most directly comparable GAAP measures is included in the financial data
accompanying this press release.
Shirley Singleton, President and CEO of Edgewater Technology commented on
first quarter 2007 financial results, "We are pleased with the improvement in
our operating metrics. We leveraged higher utilization rates to achieve 31%
growth in gross profit and 82% growth in net income."
As covered and anticipated in the fourth quarter earnings conference, first
quarter operating cash flow turned negative. Cash flow used in operating
activities was $(1.2) million in the first quarter of 2007, compared to cash
flow provided by operating activities of $1.4 million during the first quarter
of 2006. This change is primarily attributable to: an increase in accounts
receivable in the first quarter of 2007 that is associated with the increase in
revenues for 2007; an expected increase in 2006 bonus payments (paid in 2007)
over 2005 bonus payments (paid in 2006), due to the significant increase in
profitability metrics for fiscal 2006 over fiscal 2005; and changes in current
assets and liabilities, most notably an increase in prepaid expenses. The
Company's average days' sales outstanding metric improved to 40 days, for the
first quarter of 2007, compared to 43 days, for the first quarter of 2006.
Singleton continued, "It is apparent that our go-to-market strategy is
working. We have realized success by consolidating our premium IT services and
emphasizing three major synergistic offerings: (1) business consulting, (2)
Corporate Performance Management ("CPM") and (3) technical consulting which is
strategically positioning Edgewater for further premium IT services growth.
While bid activity during the first quarter 2007 was consistent on a
year-over-year basis, our win rate ratio was higher compared to the first
quarter 2006. In addition, our CPM offering experienced 26% year-over-year
growth, in spite of a slow January start, and is tracking nicely as second
quarter unfolds. Sales activity in our technical and business consulting
offerings continues to be robust as we experienced growth in both offerings on a
year-over-year basis. Taking everything into account, there continues to be
strong market demand for our premium IT services."
Singleton concluded, "We are optimistic that the activity in our three
offerings can support continued revenue growth and profitability in the second
quarter."
First Quarter Conference Call Details
Edgewater Technology will host a conference call on Wednesday, April 25, at
10:00 a.m. (ET) to discuss first-quarter 2007 financial results. To listen to
the call, you can participate by webcast at www.edgewater.com - Investor
Relations section or you can dial 800-561-2601 (pass code 49831632)
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 (pass code 91541418) from 12:00 p.m. ET Wednesday, April 25 through
11:59 p.m. ET Wednesday, May 9.
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.
Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months
Ended
-----------------
March March
31, 31,
2007 2006
-------- --------
Revenue:
Service revenue $15,226 $13,502
Software 375 293
Reimbursable expenses 672 513
-------- --------
Total revenue 16,273 14,308
Cost of revenue:
Project and personnel costs (a) 8,530 8,368
Software costs 290 267
Reimbursable expenses 672 513
-------- --------
Total cost of revenue 9,492 9,148
-------- --------
Gross profit 6,781 5,160
Selling, general and administrative (a) 5,160 4,352
Depreciation and amortization 567 345
-------- --------
Operating income 1,054 463
Interest income and other, net 407 299
-------- --------
Income before income taxes 1,461 762
Provision for income taxes 624 302
-------- --------
Net income $837 $460
======== ========
BASIC EARNINGS PER SHARE:
Basic earnings per share $0.07 $0.04
======== ========
Weighted Average Shares Outstanding - Basic 11,344 10,635
======== ========
DILUTED EARNINGS PER SHARE:
Diluted earnings per share $0.07 $0.04
======== ========
Weighted Average Shares Outstanding - Diluted 12,449 11,335
======== ========
(a) - Amount of stock-based compensation expense
included in each of the respective expense
categories reported above:
Cost of revenue - Project and personnel costs $77 $93
Selling, general and administrative expenses 180 150
-------- --------
Total $257 $243
======== ========
Edgewater's management believes that cash performance is the primary driver
of long-term share value. As such, Edgewater views Cash Net Income, Cash
Earnings per Diluted Share, EBITDA and EBITDA per Diluted Share as important
indicators of performance that help investors gain a meaningful understanding of
the Company's core operating results and future prospects, consistent with the
manner in which management measures and forecasts the Company's performance.
EDGEWATER TECHNOLOGY, INC.
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share amounts)
(Unaudited)
Reconciliation of GAAP Net Income to Cash Net Income, Cash Earnings
Per Diluted Share (Non-GAAP):
Three Months
Ended
----------------
March March
31, 31,
2007 2006
------- ------
Reported GAAP Net Income $837 $460
Add: Amortization of Intangibles 314 217
Add: Stock-based Compensation 257 243
Less: Related Tax Effect (244) (184)
------- ------
Cash Net Income(1) $1,164 $736
======= ======
Cash Earnings per Diluted Share(1) $0.09 $0.06
======= ======
Reconciliation of GAAP Net Income EBITDA and EBITDA Per Diluted Share
(Non-GAAP):
Reported GAAP Net Income $837 $460
Add: Income Tax Provision 624 302
Add: Depreciation and Amortization Expense 567 345
Less: Interest Income and Other Net (407) (299)
------- ------
EBITDA(2) $1,621 $808
======= ======
EBITDA per Diluted Share(2) $0.13 $0.07
======= ======
1 - Cash Net Income and Cash Earnings per Diluted Share are Non-GAAP
performance measures and are not intended to be performance measures that should
be regarded as an alternative to, or more meaningful than, GAAP Diluted Earnings
per Share. Cash Net Income and Cash Earnings per Diluted Share measures
presented may not be comparable to similarly titled measures presented by other
companies. Cash Earnings per Diluted Share is defined as Net Income, plus
Amortization of Intangibles and Stock-based Compensation, less related stock
effect, divided by shares used in computing Diluted Net Income per share.
2 - EBITDA and EBITDA per Diluted Share are Non-GAAP performance measures
and are not intended to be performance measures that should be regarded as an
alternative to, or more meaningful than, either GAAP Operating Income, GAAP Net
Income and Diluted Net Income per Share. EBITDA and EBITDA per Diluted Share
measures presented may not be comparable to similarly titled measures presented
by other companies.
EDGEWATER TECHNOLOGY, INC.
Summary Consolidated Balance Sheet Information
(In thousands)
March 31, December 31,
2007 2006
(Unaudited) (Audited)
----------- ------------
Assets
Cash and marketable securities $31,504 $33,141
Accounts receivable, net 12,681 10,883
Deferred taxes, current 1,760 1,760
Prepaid expenses and other assets, current 869 441
----------- ------------
Total current assets 46,814 46,225
Fixed assets, net 4,132 3,391
Deferred taxes, net 16,292 16,789
Goodwill and intangible assets, net 29,734 29,163
Other assets 52 52
----------- ------------
Total Assets $97,024 $95,620
=========== ============
Liabilities and Stockholders' Equity
- ----------------------------------------------
Accounts payable and accrued liabilities $4,779 $3,914
Accrued payroll and related liabilities 2,242 4,242
Deferred revenue and other liabilities 283 252
Capital lease obligations, current 213 184
----------- ------------
Total current liabilities 7,517 8,592
Capital lease obligations 729 778
----------- ------------
Total liabilities 8,246 9,370
Stockholders' Equity 88,778 86,250
----------- ------------
Total Liabilities and Stockholders' Equity $97,024 $95,620
=========== ============
Shares Outstanding 11,804 11,522
=========== ============
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 outlook for sales activity, revenue and profitability.
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; and/or (12) the
failure of the marketplace to embrace CPM or BI services. 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 2006 Annual Report on Form 10-K
filed with the SEC on March 14, 2007. 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, 781-246-3343
Chief Financial Officer
or
Barbara Warren-Sica, 781-246-3343
Investor Relations
ir@edgewater.com