COLUMBIA, MD – May 15, 2019 – GSE Systems, Inc. (GSE or the Company) (Nasdaq: GVP), a leading provider of engineering, expert staffing, and simulation software to clients in the power and process industries, today announced financial results for the first quarter (Q1) ended March 31, 2019.
Q1 2019 OVERVIEW
- Revenue totaled $22.2 million, compared to$22.9 million in Q1 2018.
- Gross profit equaled $4.7 million, compared to$4.9 million in Q1 2018.
- Net loss totaled $(4.2) million, or $(0.21) per diluted share, compared to $(1.5) million, or $(0.08) per diluted share, in Q1 2018.
- Net loss in Q1 2019 included a non-cash impairment charge of $5.4 million, of which $2.1 million related to goodwill and $3.4 million related to intangible assets, initially recognized through the acquisition of DP Engineering in February 2019.
- Adjusted net income1 equaled $1.7 million, or $0.08 per diluted share, compared to adjusted net income of $0.4 million, or $0.02 per diluted share, in Q1 201
- Adjusted EBITDA1 totaled $0.2 million, compared to $0.8 million in Q1 2018.
- New orders equaled$14.4 million, compared to $24.7 million in Q1 2018.
At March 31, 2019
- Cash and equivalents of $11.3 million, compared to $12.1 million, at December 31, 2018.
- Total debt of $22.1 million, compared to $8.5 million, at December 31, 2018.
- Working capital of $10.2 million and current ratio of 5x.
- Backlog of $68.9 million, compared to $69.0 million at December 31, 2018.
Kyle J. Loudermilk, GSE’s President and Chief Executive Officer, said, “We were disappointed in our first quarter 2019 financial results. While Q1 is traditionally a weaker quarter for our business, we were especially impacted by the conclusion of two significant projects in our NITC segment, the temporary work suspension at DP Engineering, a slower start to the year for True North, higher operating expenses in the quarter related to higher accounting and consultant costs offset by some savings from our international restructuring. Moreover, the acquisition of DP Engineering in February 2019 resulted in lower than expected contribution to revenue. We continue to work through a prior design modification issue that, under GAAP accounting rules, required us to recognize a material, non-cash impairment.”
Mr. Loudermilk concluded, “We expect DP Engineering to contribute positively to GSE’s overall EBITDA once it returns to historic levels of work and we remain confident in the long-term value of this unique asset. Although quarter to quarter variability can be expected given the project nature of our business, the fundamentals of our end markets remain solid and we have taken decisive actions to increase new order flow and backlog in the coming quarters. This quarter’s results are not indicative of the earnings capacity of GSE. We are committed and well positioned to drive improved performance through our strategic set of assets, talented employees and specialized technologies that deliver value-added solutions to the nuclear power industry, which is increasingly recognized throughout the world as a critical source of carbon-free baseload energy.”
We make statements in this press release that are considered 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. These statements reflect our current expectations concerning future events and results. We use words such as “expect,” “intend,” “believe,” “may,” “will,” “should,” “could,” “anticipates,” and similar expressions to identify forward-looking statements, but their absence does not mean a statement is not forward-looking. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance or achievements to be materially different from those we project. For a full discussion of these risks, uncertainties, and factors, we encourage you to read our documents on file with the Securities and Exchange Commission, including those set forth in our periodic reports under the forward-looking statements and risk factors sections. We do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.