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Edgewater Reports Second Quarter 2014 Results

WAKEFIELD, Mass., July 30, 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 second quarter ended June 30, 2014.

Second Quarter 2014 Highlights

  • Service revenue increased 14% to a record $24.5 million;
  • Introduced Fullscope EDGE for AX, intellectual property designed to complement existing functionality in Microsoft Dynamics AX 2012 enterprise resource planning;
  • Recognized as 2014 Microsoft Dynamics Industry Partner of the Year;
  • Received the inaugural 2014 Customer Reference Excellence Award from the U.S. Microsoft Dynamics Customer Reference Team; and
  • Received $1.9 million in connection with the successful resolution of Fullscope Acquisition-related escrow claims.

Second Quarter 2014 Financial Results vs. Same Year-Ago Quarter

  • Total revenue was $29.2 million compared to $27.9 million;
  • Service revenue was $24.5 million compared to $21.6 million;
  • Gross profit was $10.9 million, or 37.3% of total revenue, compared to $10.0 million, or 36.0% of total revenue;
  • Gross profit margin related to service revenue was 40.5% compared to 37.7%;
  • Utilization was 77.6% compared to 75.0%;
  • Net income was $1.7 million, or $0.13 per diluted share, compared to net income of $1.4 million, or $0.12 per diluted share;
  • Adjusted EBITDA (a non-GAAP measure) was $2.7 million, or 9.4% 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 $2.4 million, or 8.7% of total revenue and $0.21 per diluted share; and
  • Cash flow provided by operating activities was $3.5 million compared to cash flow used in operating activities of $(1.4) million.

First Half of 2014 Financial Results vs. Same Year-Ago Period

  • Total revenue was $56.8 million compared to $51.4 million;
  • Service revenue was $48.0 million compared to $41.3 million;
  • Gross profit was $21.0 million, or 36.9% of total revenue, compared to $17.2 million, or 33.4% of total revenue;
  • Gross profit margin related to service revenue was 39.7% compared to 35.2%;
  • Utilization was 77.8% compared to 72.5%;
  • Net income was $2.4 million, or $0.19 per diluted share, compared to net income of $525,000, or $0.05 per diluted share;
  • Adjusted EBITDA (a non-GAAP measure) was $4.7 million, or 8.3% of total revenue and $0.36 per diluted share, compared to adjusted EBITDA of $2.6 million, or 5.1% of total revenue and $0.23 per diluted share; and
  • Cash flow provided by operating activities was $819,000 compared to cash flow used in operating activities of $(3.6) million.

Management Commentary

"The second quarter of 2014 was a very busy and productive quarter with numerous awards and significant growth in all of our important operating metrics," said Shirley Singleton, Edgewater's chairman, president and CEO. "We experienced organic growth in each of our service offerings —on both a year-over-year and sequential quarterly basis— and converted a significant amount of pipeline activity to signed projects during the first six months, leading us to add to our billable headcount to meet the demand.

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