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Edgewater Reports Fourth Quarter And Full Year 2013 Results

Stocks in this article: EDGW

WAKEFIELD, Mass., Feb. 26, 2014 (GLOBE NEWSWIRE) -- Edgewater Technology, Inc. (Nasdaq:EDGW), a leading consulting firm that brings a blend of classic and product-based consulting services to its clients, reported financial results for the fourth quarter and full year ended December 31, 2013.

Fourth Quarter 2013 Highlights

  • Service revenue increased 12% to $21.9 million;
  • Adjusted EBITDA increased 97% to $2.7 million;
  • Increased cash and cash equivalents to $20.3 million, compared to $16.7 million in the fourth quarter of 2012; and
  • Successfully completed Microsoft Process Industries 2 ("PI2") development and training services.

Fourth Quarter 2013 Financial Results vs. Same Year-Ago Quarter

  • Total revenue was $26.8 million compared to $24.2 million;
  • Service revenue was $21.9 million compared to $19.5 million;
  • Gross profit was $10.7 million, or 40.1% of total revenue, compared to $8.4 million, or 34.8% of total revenue;
  • Gross profit margin related to service revenue was 41.2% compared to 36.0%;
  • Utilization was 73.7% compared to 67.7%;
  • Net income was $32.4 million, or $2.55 per diluted share, compared to net income of $345,000, or $0.03 per diluted share. The reported net income for the fourth quarter of 2013 included a $30.4 million tax benefit in connection with the reversal of a majority of the Company's valuation allowance against the carrying value of its gross deferred tax assets;
  • Adjusted EBITDA (a non-GAAP measure) was $2.7 million, or 10.1% of total revenue and $0.21 per diluted share (see "Non-GAAP Financial Measures" below for further discussion of this non-GAAP term), compared to adjusted EBITDA of $1.4 million, or 5.7% of total revenue and $0.12 per diluted share; and
  • Cash flow provided by operating activities was $2.4 million compared to cash flow provided by operating activities of $3.9 million.

Full Year 2013 Highlights

  • Adjusted EBITDA increased 39% to $7.9 million;
  • Secured first time engagements with 92 new customers;
  • Repurchased 365,000 shares of common stock at an aggregate purchase price of $1.5 million, or $4.14 per share;
  • Secured a $10.0 million credit facility to fund strategic growth initiatives; and
  • Acquired a Microsoft Dynamics-based Trade Promotion Management software asset and intellectual property.

Full Year 2013 Financial Results vs. Same Year-Ago Period

  • Total revenue was $103.6 million compared to $100.9 million;
  • Service revenue was $84.6 million compared to $83.1 million;
  • Gross profit was $37.6 million, or 36.3% of total revenue, compared to $35.3 million, or 35.0% of total revenue;
  • Gross profit margin related to service revenue was 37.7% compared to 37.9%;
  • Utilization was 72.4% compared to 71.5%;
  • Net income was $34.7 million, or $2.88 per diluted share, compared to net income of $1.4 million, or $0.13 per diluted share. The reported net income for full year 2013 included a $30.4 million tax benefit in connection with the reversal of a majority of the Company's valuation allowance against the carrying value of its gross deferred tax assets;
  • Adjusted EBITDA (a non-GAAP measure) was $7.9 million, or 7.6% of total revenue and $0.65 per diluted share (see "Non-GAAP Financial Measures" below for further discussion of this non-GAAP term), compared to adjusted EBITDA of $5.7 million, or 5.6% of total revenue and $0.49 per diluted share; and
  • Cash flow provided by operating activities was $4.7 million compared to cash flow provided by operating activities of $8.8 million.

Management Commentary

"During the fourth quarter of 2013, our profitability was in part fueled by an improvement in billable consultant utilization and software sales," said Shirley Singleton, Edgewater's chairman, president and CEO. "We continued to experience organic revenue growth while keeping our expenses in-line and generated leverage by combining our consulting services with the development and monetization of intellectual property. Further, we were encouraged by the robust sales activity and closings we experienced across each of our service offering channels during the quarter.

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