COLUMBIA, MD – August 14, 2019 – GSE Systems, Inc. (GSE or the Company) (Nasdaq: GVP), a leading provider of professional and technical engineering, staffing services and simulation software to clients in the power and process industries, today announced financial results for the second quarter (Q2) ended June 30, 2019.
Q2 2019 vs. Q2 2018 OVERVIEW
- Revenue of $23.5 million, compared to $24.7
- Gross profit of $5.9 million, compared to $6.3
- Net loss of $(0.1) million, or $(0.01) per diluted share, compared to net income of $1.0 million, or $0.05 per diluted share.
- Adjusted net income1 of $1.0 million, or $0.05 per diluted share, compared to $2.5 million, or $0.13 per diluted share.
- Adjusted EBITDA1 of $1.9 million, compared to $2.4 million.
- Reduced debt by approximately $1.2 million in Q2 2019.
At June 30, 2019
- Cash and cash equivalents of $9.7 million.
- Total debt of $21 million.
- Working capital of $10.5 million and current ratio of 1.5x.
- YTD new orders of $23.9
- Backlog of $54.9 million.
Kyle J. Loudermilk, GSE’s President and Chief Executive Officer, said, “Adjusted EBITDA was $1.9 million, up significantly from $0.2 million in the first quarter of 2019 as we continued to work through the previously disclosed work suspension with a customer at DP Engineering. The work suspension reduced adjusted EBITDA for our Performance Improvement segment by approximately $0.4 million in the second quarter of 2019 and $0.7 million year to date. This contract was terminated on August 6, 2019 and we expect to reduce expenses in line with costs by the end of Q3. Moreover, we are observing encouraging signs of a potentially significant emerging capex cycle based on industry trends, such as nuclear plant digitalization for safety related equipment, which plays to the combined strengths of our platform, positioning us well for potential future bidding activity. Moving to our NITC segment, we were impacted by weaker customer demand for our staffing services during the quarter. While disappointed with NITC’s results, we are optimistic that recent hires of several high-quality business development professionals will deliver a positive impact on orders, backlog, and sales. Finally, the international restructuring undertaken in the prior year continued to favorably impact our year over year cost comparisons this quarter.”
Mr. Loudermilk concluded, “We are actively pursuing additional business opportunities in the nuclear industry as we look to diversify the client base for our very essential services. As an example, subsequent to Q2, we were awarded an approximately $1.5 million contract with a large nuclear operating company in which we will deliver a Data Validation and Reconciliation, or DVR, solution for 11 reactors at six of the utility’s nuclear sites. This is our second contract this year with a major nuclear provider for this type of solution, bringing our total DVR-related new orders in 2019 to over $4 million. Although quarter to quarter variability can be expected given the project nature of our business, we have taken decisive actions to increase new order flow and backlog in the coming quarters. 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.