-- Creates combined company with LTM pro
forma revenue of ~$100 million --
-- Strengthens GSE’s global leadership in
nuclear training and consulting solutions --
-- Adds new capabilities to solution
offering and brings highly complementary new customers, while
deepening relationships with existing clients --
-- Transaction expected to be immediately
accretive to earnings --
GSE Systems, Inc. (GSE or the Company) (NYSE
American:GVP), the world leader in real-time high-fidelity
simulation systems and provider of training/consulting solutions to
the nuclear power industry, today announced that it acquired
Absolute Consulting, Inc., a provider of technical consulting and
staffing solutions to the global nuclear power industry.
Since its formation in 1997 in Navarre, Florida, Absolute
Consulting has established long-term relationships with blue-chip
customers primarily in the nuclear power industry. During the
twelve months ending December 31, 2016, Absolute Consulting
generated revenue of approximately $40 million, of which over 80%
came from the nuclear power industry. Absolute Consulting employs
roughly 200 professionals with expertise in areas such as procedure
writing, engineering, technical support, project management,
training, project controls, and corrective actions.
Kyle Loudermilk, GSE’s President and Chief Executive Officer,
said, “The acquisition of Absolute Consulting significantly
enhances GSE’s position as the ‘go to’ provider of training and
consulting solutions to the power industry, with a particular focus
on nuclear power. Absolute Consulting brings to GSE a collaborative
problem-solving culture, a robust recruiting network and
highly-regarded technical expertise in areas such as procedure
writing and consulting, a natural adjacency for GSE. As a result,
our customers will benefit from expanded capabilities from a
trusted solutions provider. The deal fits squarely within our
strategic growth plan, and proves the thesis that GSE is a scalable
platform for consolidating a fragmented industry. We are absolutely
delighted to have achieved the combination of GSE and
Absolute.”
Transaction Details
GSE acquired 100% of the equity interests of Absolute Consulting
for $8.75 million in cash, subject to a customary post-closing
working capital adjustment. The transaction closed simultaneously
with the execution of a stock purchase agreement on September 20,
2017, and is expected to add more than $2 million to GSE’s annual
Adjusted EBITDA as well as approximately $12 million to GSE’s
backlog. The deal is expected to be immediately accretive to GSE’s
earnings per share, with additional accretion and growth
anticipated thereafter based on identified cost and revenue
synergies. For reporting purposes, Absolute Consulting will be
included in GSE’s Nuclear Industry Training and Consulting
segment.
Chris Sorrells, GSE’s Chief Operating Officer, commented, “After
vetting more than 150 acquisition opportunities over a 12-month
period, we believe we have found a terrific fit in Absolute
Consulting. We are purchasing a well-run business, at an attractive
price, that addresses a critical challenge in our industry: the
world’s aging nuclear workforce. In addition to advancing our
growth strategy, the transaction makes excellent use of our cash on
hand and is expected to be accretive to GSE’s diluted earnings per
share. Pro-forma for this transaction, GSE’s trailing revenues
eclipse the $100 million mark for the first time, and we see
additional opportunities for similar follow-on deals. We are well
positioned to pursue such opportunities as our balance sheet
remains strong, even after the purchase of Absolute Consulting,
with estimated pro-forma cash of approximately $15 million and no
long-term debt.”
ABOUT GSE SYSTEMS,
INC.
GSE Systems, Inc. is a world leader in real-time high-fidelity
simulation, providing a wide range of simulation, training,
consulting, and engineering solutions to the power industry. Its
comprehensive and modular solutions help customers achieve
performance excellence in design, training and operations. GSE’s
products and services are tailored to meet specific client
requirements such as scope, budget and timeline. The Company has
over four decades of experience, more than 1,100 installations, and
hundreds of customers in over 50 countries spanning the globe. GSE
Systems is headquartered in Sykesville (Baltimore), Maryland, with
offices in Huntsville, Alabama; Chennai, India; Nyk�ping, Sweden;
Stockton-on-Tees, UK; and Beijing, China. Information about GSE
Systems is available at 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.
NON-GAAP FINANCIAL
MEASURES
Adjusted EBITDA is not a measure of financial performance under
generally accepted accounting principles ("GAAP"). We believe that
Adjusted EBITDA, in addition to operating profit, net income and
other GAAP measures, is useful to investors to evaluate financial
results because it excludes certain items not directly related to
core operating performance that may, or could, have a
disproportionate positive or negative impact on results for any
particular period. Investors should recognize that Adjusted EBITDA
might not be comparable to similarly-titled measures of other
companies. We defined Adjusted EBITDA as EBITDA adjusted for
gain/loss from the change in fair value of contingent
consideration, restructuring charges, stock-based compensation
expense, consulting support for finance restructuring, and a bad
debt reserve taken due to the Westinghouse bankruptcy. With respect
to Adjusted EBITDA on a forward-looking basis and as a combined
company, a reconciliation of the difference between this non-GAAP
expectation and the corresponding GAAP measure (expected net
income) is not available without unreasonable effort due to
potentially high variability, complexity and low visibility as to
the items that would be excluded from the GAAP measure in the
relevant future period, such as unusual gains and losses,
adjustments to the provision for income taxes, depreciation of
fixed assets, amortization of intangibles, costs related to
restructuring actions and interest expense, and certain anticipated
cost synergies, the impact and timing of potential acquisitions and
divestitures, and other structural changes or their probable
significance. The variability of the excluded items may have a
significant, and potentially unpredictable, impact on our future
GAAP financial results.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170920006292/en/
GSE Systems, Inc.Chris Sorrells, 410-970-7802Chief
Operating OfficerorThe Equity Group Inc.Kalle Ahl, CFA,
212-836-9614kahl@equityny.comorDevin Sullivan,
212-836-9608dsullivan@equityny.com
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