November 24, 2020

Nynas Nytex BT22 | FLD Top Leaderboard | 600×75

GSE Solutions Announces Third Quarter 2020 Financial Results

COLUMBIA, Md.--(BUSINESS WIRE)--GSE Systems, Inc. (“GSE Solutions”, “GSE” or “the Company”) (Nasdaq: GVP), a leader in delivering and supporting end-to-end training, engineering, compliance, simulation and workforce solutions to the power industry, announced today its financial results for the three months ended September 30, 2020 (“Q3 2020”). Q3 2020 Financial Overview Revenue of $12.9 million, compared to $20.0 million in Q3 2019 Gross profit of $3.3 million, compared to $4.7 million in Q3 2019 Net loss of $0.7 million or $(0.03) per basic and diluted share in Q3 2020, compared to a net loss of $1.2 million, or $(0.06) per basic and diluted share in Q3 2019 Adjusted net loss1 of $ 1.0 million, or $(0.05) adjusted loss per share in Q3 2020 , compared to adjusted net income of $0.6 million or $0.03 adjusted earnings per diluted share, in Q3 2019 Adjusted EBITDA1 of $(0.6) million in Q3 2020, compared to $1.4 million in Q3 2019 Cash flow provided by operations of $1.6 million during the nine months ended September 30, 2020, compared to cash used during the nine months ended September 30, 2019 of $0.3 million New orders of $10.9 million during Q3 2020, compared to new orders of $19.0 million in Q3 2019 Repaid $9.9 million of outstanding long-term debt obligations during Q3 2020 At September 30, 2020 Cash and cash equivalents of $7.7 million Total indebtedness of $13.6 million Working capital of $2.4 million and current ratio of 1.1x Backlog of $44.6 million 1 Refer to the non-GAAP reconciliation tables at the end of this press release for a definition of "EBITDA", “adjusted EBITDA” and “adjusted net income”. Kyle J. Loudermilk, GSE’s President and Chief Executive Officer, said, “In the third quarter of 2020, industrywide RFP delays and project suspensions due to the COVID-19 pandemic continued to dampen our financial results. In this challenging environment, we remained focused on cost containment and debt repayment, while positioning GSE for success as industry demand for our services returns to normalized levels. Of note, during the quarter we repaid nearly $10 million of long-term debt and strengthened our leadership team with the appointment of Brian Greene as Vice President of our NITC business. Brian’s proven track record in staffing spans 15+ years and he already has reenergized our NITC group. Finally, our Performance segment continues to win a steady flow of fundamental engineering and simulation projects, and we remained focused on organic growth opportunities through cross selling and upselling GSE’s full range of products and services. Our services are essential to the nuclear industry, which plays a critical role in the decarbonization of energy.” Q3 2020 FINANCIAL RESULTS Q3 2020 revenue of $12.9 million, a decrease of $7.1 million, from $20.0 million in Q3 2019. Three months ended Nine months ended (in thousands) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Revenue: Performance $ 7,257 $ 11,417 $ 25,240 $ 36,617 NITC 5,665 8,614 19,727 29,066 Total revenue $ 12,922 $ 20,031 $ 44,967 $ 65,683 Performance revenue decreased to $7.3 million in Q3 2020, from $11.4 million in Q3 2019. The decrease was mainly due to delays in beginning new contracts, a reduction of DP Engineering revenue due to a customer incident in the prior year and major project completions during the third quarter of 2019. We recorded total Performance orders of $9.3 million and $10.7 million for Q3 2020 and Q3 2019, respectively. NITC revenue decreased to $5.7 million in Q3 2020 from $8.6 million in Q3 2019. The decrease in revenue was largely due to lower staffing needs during the quarter, due primarily to the COVID-19 pandemic, contributing to lower demand for staff augmentation. NITC orders were $1.6 million and $8.3 million for Q3 2020 and Q3 2019, respectively. Q3 2020 gross profit was $3.3 million or 25.7% of revenue, compared to $4.7 million or 23.3% of revenue, in Q3 2019. Three months ended Nine months ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) $ % $ % $ % $ % Gross profit: Performance $ 2,482 34.2% $ 3,548 31.1% $ 8,240 32.6% $ 11,787 32.2% NITC 837 14.8% 1,125 13.1% 2,756 14.0% 3,489 12.0% Consolidated gross profit $ 3,319 25.7% $ 4,673 23.3% $ 10,996 24.5% $ 15,276 23.3% The decrease in our gross profit of $1.4 million was primarily driven by a decrease in Performance and NITC revenue during the nine months ended September 30, 2020, as well as completion of higher margin projects in our True North and DP Engineering subsidiaries during 2019. Selling, general and administrative expenses in Q3 2020 totaled $2.9 million or 22.3% of revenue, compared to $3.5 million or 17.3% of revenue, in Q3 2019. The decrease in SG&A during Q3 2020 over Q3 2019 was due primarily to the net gain on legal settlement of $1.0 million in the current year with no similar activity in the prior year; this credit in SG&A is offset by an increase in business development expenses during the current fiscal year for two of our consolidated subsidiaries. Net loss for Q3 2020 totaled $0.7 million or $(0.03) per basic and diluted share, compared to a net loss of $1.2 million or $(0.06) per basic and diluted share, in Q3 2019. Adjusted net loss totaled $1.0 million or $(0.05) adjusted loss per diluted share in Q3 2020 compared to adjusted net income of $0.6 million, or $0.03 adjusted earnings per diluted share, in Q3 2019. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for Q3 2020 was approximately $0.2 million, compared to $0.4 million in Q3 2019. Adjusted EBITDA ("AEBITDA") totaled $(0.6) million in Q3 2020, compared to $1.4 million in Q3 2019. BACKLOG AND CASH POSITION Backlog at September 30, 2020 was $44.6 million, compared to $52.7 million at December 31, 2019. Backlog at September 30, 2020 included $33.2 million of Performance backlog and $11.4 million of NITC backlog. Performance backlog decreased by $4 million primarily due to 2019 backlog that was converted to revenues during 2020 and has only been partially replaced by new orders. Our cash position was $7.7 million at September 30, 2020, compared to $11.7 million at December 31, 2019. The decrease of $4 million during the nine months ended September 31, 2020 in our cash and cash equivalents was primarily due to payments on long-term debt of $18.5 million, offset by proceeds from the Paycheck Protection Program of $10 million and draws on our revolving line of credit, net of repayments of $3.5 million. CONFERENCE CALL Management will host a conference call today at 4:30 pm Eastern Time to discuss Q3 2020 results as well as other matters. Interested parties may participate in the call by dialing: (877) 407-9753 (Domestic) (201) 493-6739 (International) The conference call will also be accessible via the following link: https://78449.themediaframe.com/dataconf/productusers/gvp/mediaframe/41905/indexl.html For those who cannot listen to the live broadcast, an online webcast replay will be available www.gses.com or the following link: https://78449.themediaframe.com/dataconf/productusers/gvp/mediaframe/41905/indexl.html. ABOUT GSE SOLUTIONS We are the future of operational excellence in the power industry. As a collective group, GSE Solutions leverages top skills, expertise, and technology to provide highly specialized solutions that enable customers to achieve the performance they envision. Our experts deliver and support end-to-end training, engineering, compliance, simulation, and workforce solutions that help the power industry reduce risk and optimize plant operations. GSE is a proven solution provider, with more than four decades of industry experience and more than 1,100 installations serving hundreds of customers in over 50 countries spanning the globe. www.gses.com FORWARD LOOKING STATEMENTS 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. GSE SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited) Three months ended Nine months ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Revenue $ 12,922 $ 20,031 $ 44,967 $ 65,683 Cost of revenue 9,603 15,358 33,971 50,407 Gross profit 3,319 4,673 10,996 15,276 Operating expenses: Selling, general and administrative 2,878 3,465 12,548 12,231 Research and development 137 130 526 526 Restructuring charges 185 740 195 742 Loss on impairment - - 4,302 5,464 Depreciation 76 107 254 300 Amortization of intangible assets 414 596 1,528 1,804 Total operating expenses 3,690 5,038 19,353 21,067 Operating loss (371) (365) (8,357) (5,791) Interest expense, net (128) (288) (556) (812) Gain (loss) on derivative instruments, net 31 (61) 35 (69) Other (expense) income, net (77) 59 (24) 62 Loss before income taxes (545) (655) (8,902) (6,610) Provision for (benefit from) income taxes 116 568 166 (874) Net loss $ (661) $ (1,223) $ (9,068) $ (5,736) Net loss per common share - basic and diluted $ (0.03) $ (0.06) $ (0.44) $ (0.29) Weighted average shares outstanding used to compute net loss per share - basic and diluted 20,563,452 20,007,469 20,438,571 20,021,829 GSE SYSTEMS, INC AND SUBSIDIARIES Selected Balance Sheet Data (in thousands) (unaudited) (audited) September 30, 2020 December 31, 2019 Cash and cash equivalents $ 7,660 $ 11,691 Current assets $ 20,520 $ 30,778 Noncurrent assets 21,097 27,731 Total assets $ 41,617 $ 58,509 Current liabilities $ 18,135 $ 34,434 Noncurrent liabilities 12,047 3,956 Stockholders' equity 11,435 20,119 Total liabilities and shareholders’ equity $ 41,617 $ 58,509 EBITDA and Adjusted EBITDA Reconciliation (in thousands) References to “EBITDA” means Net Income (Loss), before taking into account interest income and expense, provision for income taxes, depreciation and amortization. References to Adjusted EBITDA ("AEBITDA") exclude the impact on our net loss due to any impairment of our intangibles, gain from the change in fair value of contingent consideration, restructuring charges, stock-based compensation expense, impact of the change in fair value of derivative instruments, provision for legal settlements and acquisition-related expenses. EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles (GAAP). Management believes EBITDA and Adjusted EBITDA, in addition to operating profit, net income and other GAAP measures, are useful to investors to evaluate the Company’s results because it excludes certain items that are not directly related to the Company’s core operating performance that may, or could, have a disproportionate positive or negative impact on our results for any particular period. Investors should recognize that EBITDA and AEBITDA might not be comparable to similarly-titled measures of other companies. This measure should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP EBITDA and AEBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation G follows: Three months ended Nine months ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Net loss $ (661) $ (1,223) $ (9,068) $ (5,736) Interest expense, net 128 288 556 812 Provision for (benefit from) income taxes 116 568 166 (874) Depreciation and amortization 579 768 2,030 2,397 EBITDA 162 401 (6,316) (3,401) Gain on legal settlement, net (952) - (91) - Loss on impairment - - 4,302 5,464 Impact of the change in fair value of contingent consideration - - - (1,200) Restructuring charges 185 740 195 742 Stock-based compensation expense 33 114 357 1,150 (Gain) loss on derivative instruments (31) 61 (35) 69 Acquisition-related expenses 3 116 191 744 Adjusted EBITDA $ (600) $ 1,432 $ (1,397) $ 3,568 Adjusted Net (Loss) Income and Adjusted EPS Reconciliation (in thousands, except per share amounts) References to Adjusted Net (Loss) Income exclude the impact of gain from the change in fair value of contingent consideration, loss on impairment of our intangibles, restructuring charges, stock-based compensation expense, change in fair value of derivative instruments, acquisition-related expense, acquisition-related legal settlement, amortization of intangible assets and the income tax expense impact of any such adjustments. Adjusted Net Income and adjusted earnings per share (adjusted EPS) are not measures of financial performance under generally accepted accounting principles (GAAP). Management believes adjusted net income and adjusted EPS, in addition to other GAAP measures, are useful to investors to evaluate the Company’s results because they exclude certain items that are not directly related to the Company’s core operating performance and non-cash items that may, or could, have a disproportionate positive or negative impact on our results for any particular period. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP adjusted net income and adjusted EPS to GAAP net income, the most directly comparable GAAP financial measure, is as follows: (in thousands) Three months ended Nine months ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Net loss $ (661) $ (1,223) $ (9,068) $ (5,736) Gain legal settlement, net (952) - (91) - Loss on impairment - - 4,302 5,464 Impact of the change in fair value of contingent consideration - - - (1,200) Restructuring charges 185 740 195 742 Stock-based compensation expense 33 114 357 1,150 (Gain) loss on derivative instruments, net (31) 61 (35) 69 Acquisition-related expense 3 116 191 744 Amortization of intangible assets 414 596 1,528 1,804 Income tax expense impact of adjustments - 186 - (1,761) Adjusted net (loss) income $ (1,009) $ 590 $ (2,621) $ 1,276 Adjusted (loss) earnings per common share – diluted $ (0.05) $ 0.03 $ (0.13) $ 0.06 Weighted average shares outstanding - diluted(1) 20,563,452 20,586,145 20,438,571 20,418,960 (1) During the three and nine months ended September 30, 2020, we reported a GAAP net loss and an adjusted net loss. Accordingly, there were 66,261 and 12,172 dilutive shares from RSUs that were excluded from the adjusted net loss per common share. (1) During the three and nine months ended September 30, 2019, we reported a GAAP net loss and an adjusted net income. Accordingly, there were 578,676 and 397,131 dilutive shares from RSUs included in the adjusted earnings per share calculation that were considered anti-dilutive when calculating the net loss per share. Contacts Company ContactKyle Loudermilk Chief Executive Officer GSE Systems, Inc. (410) 970-7800 The Equity Group Inc.Kalle Ahl, CFA (212) 836-9614 [email protected]

COLUMBIA, Md.–(BUSINESS WIRE)–GSE Systems, Inc. (“GSE Solutions”, “GSE” or “the Company”) (Nasdaq: GVP), a leader in delivering and supporting end-to-end training, engineering, compliance, simulation and workforce solutions to the power industry, announced today its financial results for the three months ended September 30, 2020 (“Q3 2020”).

Q3 2020 Financial Overview

  • Revenue of $12.9 million, compared to $20.0 million in Q3 2019
  • Gross profit of $3.3 million, compared to $4.7 million in Q3 2019
  • Net loss of $0.7 million or $(0.03) per basic and diluted share in Q3 2020, compared to a net loss of $1.2 million, or $(0.06) per basic and diluted share in Q3 2019
  • Adjusted net loss1 of $ 1.0 million, or $(0.05) adjusted loss per share in Q3 2020 , compared to adjusted net income of $0.6 million or $0.03 adjusted earnings per diluted share, in Q3 2019
  • Adjusted EBITDA1 of $(0.6) million in Q3 2020, compared to $1.4 million in Q3 2019
  • Cash flow provided by operations of $1.6 million during the nine months ended September 30, 2020, compared to cash used during the nine months ended September 30, 2019 of $0.3 million
  • New orders of $10.9 million during Q3 2020, compared to new orders of $19.0 million in Q3 2019
  • Repaid $9.9 million of outstanding long-term debt obligations during Q3 2020

At September 30, 2020

  • Cash and cash equivalents of $7.7 million
  • Total indebtedness of $13.6 million
  • Working capital of $2.4 million and current ratio of 1.1x
  • Backlog of $44.6 million

1 Refer to the non-GAAP reconciliation tables at the end of this press release for a definition of "EBITDA", “adjusted EBITDA” and “adjusted net income”.

Kyle J. Loudermilk, GSE’s President and Chief Executive Officer, said, “In the third quarter of 2020, industrywide RFP delays and project suspensions due to the COVID-19 pandemic continued to dampen our financial results. In this challenging environment, we remained focused on cost containment and debt repayment, while positioning GSE for success as industry demand for our services returns to normalized levels. Of note, during the quarter we repaid nearly $10 million of long-term debt and strengthened our leadership team with the appointment of Brian Greene as Vice President of our NITC business. Brian’s proven track record in staffing spans 15+ years and he already has reenergized our NITC group. Finally, our Performance segment continues to win a steady flow of fundamental engineering and simulation projects, and we remained focused on organic growth opportunities through cross selling and upselling GSE’s full range of products and services. Our services are essential to the nuclear industry, which plays a critical role in the decarbonization of energy.”

Q3 2020 FINANCIAL RESULTS

Q3 2020 revenue of $12.9 million, a decrease of $7.1 million, from $20.0 million in Q3 2019.

Three months ended

Nine months ended

(in thousands)

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Revenue:

Performance

$

7,257

$

11,417

$

25,240

$

36,617

NITC

5,665

8,614

19,727

29,066

Total revenue

$

12,922

$

20,031

$

44,967

$

65,683

Performance revenue decreased to $7.3 million in Q3 2020, from $11.4 million in Q3 2019. The decrease was mainly due to delays in beginning new contracts, a reduction of DP Engineering revenue due to a customer incident in the prior year and major project completions during the third quarter of 2019. We recorded total Performance orders of $9.3 million and $10.7 million for Q3 2020 and Q3 2019, respectively.

NITC revenue decreased to $5.7 million in Q3 2020 from $8.6 million in Q3 2019. The decrease in revenue was largely due to lower staffing needs during the quarter, due primarily to the COVID-19 pandemic, contributing to lower demand for staff augmentation. NITC orders were $1.6 million and $8.3 million for Q3 2020 and Q3 2019, respectively.

Q3 2020 gross profit was $3.3 million or 25.7% of revenue, compared to $4.7 million or 23.3% of revenue, in Q3 2019.

Three months ended

Nine months ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

(in thousands)

$

%

$

%

$

%

$

%

Gross profit:

Performance

$

2,482

34.2%

$

3,548

31.1%

$

8,240

32.6%

$

11,787

32.2%

NITC

837

14.8%

1,125

13.1%

2,756

14.0%

3,489

12.0%

Consolidated gross profit

$

3,319

25.7%

$

4,673

23.3%

$

10,996

24.5%

$

15,276

23.3%

The decrease in our gross profit of $1.4 million was primarily driven by a decrease in Performance and NITC revenue during the nine months ended September 30, 2020, as well as completion of higher margin projects in our True North and DP Engineering subsidiaries during 2019.

Selling, general and administrative expenses in Q3 2020 totaled $2.9 million or 22.3% of revenue, compared to $3.5 million or 17.3% of revenue, in Q3 2019. The decrease in SG&A during Q3 2020 over Q3 2019 was due primarily to the net gain on legal settlement of $1.0 million in the current year with no similar activity in the prior year; this credit in SG&A is offset by an increase in business development expenses during the current fiscal year for two of our consolidated subsidiaries.

Net loss for Q3 2020 totaled $0.7 million or $(0.03) per basic and diluted share, compared to a net loss of $1.2 million or $(0.06) per basic and diluted share, in Q3 2019.

Adjusted net loss totaled $1.0 million or $(0.05) adjusted loss per diluted share in Q3 2020 compared to adjusted net income of $0.6 million, or $0.03 adjusted earnings per diluted share, in Q3 2019.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for Q3 2020 was approximately $0.2 million, compared to $0.4 million in Q3 2019.

Adjusted EBITDA ("AEBITDA") totaled $(0.6) million in Q3 2020, compared to $1.4 million in Q3 2019.

BACKLOG AND CASH POSITION

Backlog at September 30, 2020 was $44.6 million, compared to $52.7 million at December 31, 2019. Backlog at September 30, 2020 included $33.2 million of Performance backlog and $11.4 million of NITC backlog. Performance backlog decreased by $4 million primarily due to 2019 backlog that was converted to revenues during 2020 and has only been partially replaced by new orders.

Our cash position was $7.7 million at September 30, 2020, compared to $11.7 million at December 31, 2019. The decrease of $4 million during the nine months ended September 31, 2020 in our cash and cash equivalents was primarily due to payments on long-term debt of $18.5 million, offset by proceeds from the Paycheck Protection Program of $10 million and draws on our revolving line of credit, net of repayments of $3.5 million.

CONFERENCE CALL

Management will host a conference call today at 4:30 pm Eastern Time to discuss Q3 2020 results as well as other matters.

Interested parties may participate in the call by dialing:

(877) 407-9753 (Domestic)

(201) 493-6739 (International)

The conference call will also be accessible via the following link: https://78449.themediaframe.com/dataconf/productusers/gvp/mediaframe/41905/indexl.html

For those who cannot listen to the live broadcast, an online webcast replay will be available www.gses.com or the following link: https://78449.themediaframe.com/dataconf/productusers/gvp/mediaframe/41905/indexl.html.

ABOUT GSE SOLUTIONS

We are the future of operational excellence in the power industry. As a collective group, GSE Solutions leverages top skills, expertise, and technology to provide highly specialized solutions that enable customers to achieve the performance they envision. Our experts deliver and support end-to-end training, engineering, compliance, simulation, and workforce solutions that help the power industry reduce risk and optimize plant operations. GSE is a proven solution provider, with more than four decades of industry experience and more than 1,100 installations serving hundreds of customers in over 50 countries spanning the globe. www.gses.com

FORWARD LOOKING STATEMENTS

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.

GSE SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

Three months ended

Nine months ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Revenue

$

12,922

$

20,031

$

44,967

$

65,683

Cost of revenue

9,603

15,358

33,971

50,407

Gross profit

3,319

4,673

10,996

15,276

Operating expenses:

Selling, general and administrative

2,878

3,465

12,548

12,231

Research and development

137

130

526

526

Restructuring charges

185

740

195

742

Loss on impairment

4,302

5,464

Depreciation

76

107

254

300

Amortization of intangible assets

414

596

1,528

1,804

Total operating expenses

3,690

5,038

19,353

21,067

Operating loss

(371)

(365)

(8,357)

(5,791)

Interest expense, net

(128)

(288)

(556)

(812)

Gain (loss) on derivative instruments, net

31

(61)

35

(69)

Other (expense) income, net

(77)

59

(24)

62

Loss before income taxes

(545)

(655)

(8,902)

(6,610)

Provision for (benefit from) income taxes

116

568

166

(874)

Net loss

$

(661)

$

(1,223)

$

(9,068)

$

(5,736)

Net loss per common share – basic and diluted

$

(0.03)

$

(0.06)

$

(0.44)

$

(0.29)

Weighted average shares outstanding used to compute net loss per share – basic and diluted

20,563,452

20,007,469

20,438,571

20,021,829

GSE SYSTEMS, INC AND SUBSIDIARIES

Selected Balance Sheet Data

(in thousands)

(unaudited)

(audited)

September 30, 2020

December 31, 2019

Cash and cash equivalents

$

7,660

$

11,691

Current assets

$

20,520

$

30,778

Noncurrent assets

21,097

27,731

Total assets

$

41,617

$

58,509

Current liabilities

$

18,135

$

34,434

Noncurrent liabilities

12,047

3,956

Stockholders' equity

11,435

20,119

Total liabilities and shareholders’ equity

$

41,617

$

58,509

EBITDA and Adjusted EBITDA Reconciliation (in thousands)

References to “EBITDA” means Net Income (Loss), before taking into account interest income and expense, provision for income taxes, depreciation and amortization. References to Adjusted EBITDA ("AEBITDA") exclude the impact on our net loss due to any impairment of our intangibles, gain from the change in fair value of contingent consideration, restructuring charges, stock-based compensation expense, impact of the change in fair value of derivative instruments, provision for legal settlements and acquisition-related expenses. EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles (GAAP). Management believes EBITDA and Adjusted EBITDA, in addition to operating profit, net income and other GAAP measures, are useful to investors to evaluate the Company’s results because it excludes certain items that are not directly related to the Company’s core operating performance that may, or could, have a disproportionate positive or negative impact on our results for any particular period. Investors should recognize that EBITDA and AEBITDA might not be comparable to similarly-titled measures of other companies. This measure should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP EBITDA and AEBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation G follows:

Three months ended

Nine months ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Net loss

$

(661)

$

(1,223)

$

(9,068)

$

(5,736)

Interest expense, net

128

288

556

812

Provision for (benefit from) income taxes

116

568

166

(874)

Depreciation and amortization

579

768

2,030

2,397

EBITDA

162

401

(6,316)

(3,401)

Gain on legal settlement, net

(952)

(91)

Loss on impairment

4,302

5,464

Impact of the change in fair value of contingent consideration

(1,200)

Restructuring charges

185

740

195

742

Stock-based compensation expense

33

114

357

1,150

(Gain) loss on derivative instruments

(31)

61

(35)

69

Acquisition-related expenses

3

116

191

744

Adjusted EBITDA

$

(600)

$

1,432

$

(1,397)

$

3,568

Adjusted Net (Loss) Income and Adjusted EPS Reconciliation (in thousands, except per share amounts)

References to Adjusted Net (Loss) Income exclude the impact of gain from the change in fair value of contingent consideration, loss on impairment of our intangibles, restructuring charges, stock-based compensation expense, change in fair value of derivative instruments, acquisition-related expense, acquisition-related legal settlement, amortization of intangible assets and the income tax expense impact of any such adjustments. Adjusted Net Income and adjusted earnings per share (adjusted EPS) are not measures of financial performance under generally accepted accounting principles (GAAP). Management believes adjusted net income and adjusted EPS, in addition to other GAAP measures, are useful to investors to evaluate the Company’s results because they exclude certain items that are not directly related to the Company’s core operating performance and non-cash items that may, or could, have a disproportionate positive or negative impact on our results for any particular period. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP adjusted net income and adjusted EPS to GAAP net income, the most directly comparable GAAP financial measure, is as follows:

(in thousands)

Three months ended

Nine months ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Net loss

$

(661)

$

(1,223)

$

(9,068)

$

(5,736)

Gain legal settlement, net

(952)

(91)

Loss on impairment

4,302

5,464

Impact of the change in fair value of contingent consideration

(1,200)

Restructuring charges

185

740

195

742

Stock-based compensation expense

33

114

357

1,150

(Gain) loss on derivative instruments, net

(31)

61

(35)

69

Acquisition-related expense

3

116

191

744

Amortization of intangible assets

414

596

1,528

1,804

Income tax expense impact of adjustments

186

(1,761)

Adjusted net (loss) income

$

(1,009)

$

590

$

(2,621)

$

1,276

Adjusted (loss) earnings per common share – diluted

$

(0.05)

$

0.03

$

(0.13)

$

0.06

Weighted average shares outstanding – diluted(1)

20,563,452

20,586,145

20,438,571

20,418,960

(1) During the three and nine months ended September 30, 2020, we reported a GAAP net loss and an adjusted net loss. Accordingly, there were 66,261 and 12,172 dilutive shares from RSUs that were excluded from the adjusted net loss per common share.

(1) During the three and nine months ended September 30, 2019, we reported a GAAP net loss and an adjusted net income. Accordingly, there were 578,676 and 397,131 dilutive shares from RSUs included in the adjusted earnings per share calculation that were considered anti-dilutive when calculating the net loss per share.

Contacts

Company Contact
Kyle Loudermilk

Chief Executive Officer

GSE Systems, Inc.

(410) 970-7800

The Equity Group Inc.
Kalle Ahl, CFA

(212) 836-9614

[email protected]

< Previous

PPG Appoints Scott Bartlett as Vice President, Operations, Global Architectural Coatings

Fisker and Magna Achieve Key Engineering and Purchasing Milestones