Edgewater by the Numbers

Edgewater Technology showed an increase in revenue of 46 percent to $16.3 million for the fourth quarter of fiscal 2000, ended Dec. 31. For the entire fiscal year, revenue increased 30 percent to $60.2 million.

The bottom line, however, was a net loss of $7.3 million for the quarter (-8 cents per share), compared with a $5.2 million profit for the comparable quarter of 1999, and a net loss of $51.2 million (-11 cents per share) for the year. That compares with a net gain of $30.2 million for the previous fiscal year.

The majority of the losses, however, can be attributed to the bath the company took getting out from under the four divisions it shedded in 2000. The company showed a total loss of income of $112.3 million in 2000 from “discontinued operations.” CEO Clete Brewer said almost the entire amount was related to the sale of IntelliMark, which was cited as ground zero when the company first encountered problems in 1998 that led to a stock slide that it has yet to recover from.

Apparently, there was a lot more goodwill involved with the IntelliMark division when it was purchased than when it sold in late 2000.

But Brewer said those numbers don’t tell the real story. He prefers to look at EBITDA, which leaves out “accounting charges” from previous years that pertain to depreciation and goodwill and gives a better picture of actual revenue and expenses for 2000.

EBITDA for the fourth quarter for “continuing operations,” that is, the Edgewater and ClinForce divisions combined, brought in $614,000, down 9.8 percent from $674,000 for the comparable quarter a year ago.

EBITDA for the quarter would have been $500,000 more if it hadn’t been for a “tragedy” in the Wakefield office the day after Christmas. A gunman shot and killed seven workers there. A co-worker was arrested in connection with the shooting.

Brewer said the office was closed for the remainder of the year because of the shooting. To the company’s credit, Edgewater spent extra money to help employees cope with the situation and to bring family members to Massachusetts for the funerals.

EBITDA for the entire year, however, was up 132.7 percent from $1.9 million to $4.4 million. But the $1.9 million figure includes losses for some of the divisions that were still in operation in 1999.

EBITDA for the Edgewater division, which will be the only division left after the March 14 vote, was $4.7 million for the year, up 16.3 percent from $4.0 million in 1999. The e-solutions division had annual revenue of $31.5 million, an increase of 59.1 percent over the $15.0 million it brought in a year ago.

The Edgewater division’s fourth quarter numbers weren’t so impressive, due largely to the shooting. The division had EBITDA of $306,000, down 75.3 percent from $1.2 million for the comparable quarter of 1999. Revenue, however, was $8.1 million, up 62.2 percent from $5.0 million for the comparable quarter of 1999.

“The strong increase in revenue during the fourth quarter was driven by 62 percent growth in our e-solutions segment,” Brewer said in a press release. “Project backlog for our e-solutions business was $10.9 million at December 31, 2000, up 37.7 percent compared to a year ago.”

Brewer said he expected the Edgewater division’s revenue to grow by 20 to 25 percent in 2001.

“We expect to be cash flow positive for 2001,” he said in the press release, “with related EBITDA margins in the low double digits, as we move on from recent events.”

In a Feb. 23 interview, Brewer said the Edgewater division has brought in $21 million in sales in the first six weeks of 2001. Sales for such a company amount to contracts, rather than actual revenue brought in at that point. Since the division ended 2000 with a backlog of $10.9 million, it now has $31.9 million that will be coming in over the next two years ($10 million of it in 2002).