COLUMBIA, Md., May 17, 2021 /PRNewswire/ -- GSE Systems, Inc.
("GSE Solutions", "GSE", or "the Company") (Nasdaq: GVP),
a leader in delivering and supporting engineering,
compliance, simulation, training and workforce solutions that
support decarbonization of the power industry, today announced its
financial results for the first quarter ("Q1") ended March 31, 2021.
Q1 2021 and Recent Highlights
-
New orders in Q1 2021 was $13.0 million, up 65% sequentially from $7.9 million in Q4 2020 and at their highest levels since
Q1 2020.
- Workforce Solutions (Nuclear Industry Training and Consulting
or NITC) orders increased 111% sequentially lead by a combination
of new customer wins as well as extensions and continuation of
current contracts.
-
Performance Improvement Solutions (Engineering) orders increased 27% sequentially.
-
Revenue increased 3.2% sequentially to $13.1 million, led by an 18% sequential increase in Workforce Solutions.
-
Gross profit of $2.9 million, compared to $4.1 million in Q1 2020.
-
Operating loss of $(2.2) million, compared to $(6.1) million in Q1 2020.
- EnVision Software as a Service (SaaS) revenue increased 166%
compared to the year ago first quarter. At the end of the
quarter, the Company announced the expansion of its SaaS-based
offering through a contract with
a major energy company in Canada.
-
Net loss improved to $(2.2) million compared to $(6.3) million in Q1 2020.
- Debt on balance sheet includes $10
million of loans received under the Payroll Protection
Program for which the Company has applied for
forgiveness.
-
Subsequent to first quarter's end, applied for an Employee Retention Credit of $2.4 million.
Management Commentary
"I am pleased with the progress made during the first quarter to
drive strong sequential increases in order growth, with new orders
up 65% sequentially, as our end markets begin to return to
normalization following the slowdown throughout much of 2020,"
commented Kyle J. Loudermilk, GSE's
President and Chief Executive Officer. "This marks our highest new
order number since the pandemic began as customers continue to
value our best-in-class Workforce and Engineering Solutions. As we
focus on broadening our service offering, we continue to gain
traction with EnVision, our emerging software as a service (SaaS)
subscription solution, which saw revenues grow 166% over the prior
year quarter and continues to resonate well with customers. In the
near-term, we believe that delayed upgrades and shutdowns of power
plants caused by the pandemic has created a backlog of projects
that will require GSE's solutions. Longer term, the macro trends
towards grid stability and decarbonization are in our favor,
providing me strong optimism for the future."
Emmett Pepe, CFO of GSE Systems,
added, "We have secured the Employee Retention Credit through the
CARES Act which will provide a refund of approximately $2.4 million dollars of eligible employment
expenses from Q1 2021 and are currently calculating the credit for
Q2. Continued revenue growth, coupled with the recognition of the
tax benefit and efficient management of operating expenses which
decreased 50% year over year, should lead to improved operating
results in the coming quarters. Further, the expected forgiveness
of $10 million of debt from Payroll
Protection Program will significantly improve our balance sheet
bringing total debt to less than $3
million."
Q1 2021 FINANCIAL RESULTS
Revenue during Q1 2021 was $13.1
million an increase of 3.6% compared to $12.7 million in Q4 2020, a decrease of 26%
compared to $17.7 million in Q1 2020.
The sequential improvement in revenues is driven by 18% growth in
the company's Workforce Solutions segment, offset by a 6%
sequential decrease in Engineering Solutions. The year over year
decrease of $4.6 million is due to
the overall impact from the pandemic, which began to impact our
operations midway through Q1 2020.
Performance Improvement Solutions was $7.1 million in Q1 2021 compared to $7.6 million in Q4 2020, and $9.7 million in Q1 2020. The sequential
change was largely due to several projects ended in Q4 2020. The
year over year change was primarily due to several significant
SDB projects ending in the prior fiscal year and delays in
commencing new contracts remotely due to the COVID-19
pandemic.
Workforce Solutions revenue was $6.0
million in Q1 2021 compared to $5.1
million in Q4 2020, and $8.0
million in Q1 2020. The sequential improvement is due
to reengagement by a customer's new contract in Q1 20201. The year
over year change is primarily
due to an overall decrease in activity
due to the COVID-19 pandemic.
Gross profit in Q1 2021 was $2.9
million, or 22.3% of revenue. This compared to gross profit
of $4.1 million, or 23.2%
of revenue in Q1 2020, and $3.8
million, or 29.9% of revenue in Q4 2020. Our margin is
impacted by our mix of
business, but overall profitability of remaining
and new smaller projects increased the
profit margin.
Operating expenses (excluding restructuring and impairment
charges) in Q1 2021 were $4.3 million
compared to $5.9 million in Q1
2020. Operating expenses (excluding restructuring charges) was
$3.9 million in Q4 2020. The
company recognized $808 thousand
in non-cash restructuring charges in Q1 2021, compared $10 thousand in Q1 2020, $1.1 million in Q4 2020. The charges are
mainly due to a realization of the cumulative translation
adjustment (CTA) related
to Sweden liquidation in Q1 2021.
In Q1 2020, the
company recognized an impairment
of $4.3 million.
Operating loss was approximately $(2.2)
million in Q1 2021, compared $(6.1)
million in Q1 2020. Operating loss was $(1.2) million in Q4 2020.
Net loss in Q1 2021 was $(2.2)
million or $(0.11) per basic
and diluted share, compared to $(6.3)
million or $(0.31)
per basic and diluted share in Q1 2020.
Net loss was $(1.5) million or
$(0.07) per basic and diluted share in
Q4 2020.
Adjusted net loss1 totaled $(1.0) million, or $(0.05) per diluted share in Q1 2021, compared to
adjusted net loss of $(0.9) million, or $(0.04) per diluted share, in Q1 2020. Adjusted
net income1 totaled $2.6
million, or $0.13 per diluted
share in Q4 2020.
Earnings before interest, taxes, depreciation and amortization
("EBITDA") for Q1 2021 was approximately $(1.7)
million, compared to $(5.3) million
in Q1 2020. EBITDA for Q4 2020 was
approximately $(0.6) million.
Adjusted EBITDA1 $(0.8)
million in Q1 2021, compared to $(0.6) million in Q1 2020. Adjusted
EBITDA1 totaled $1.1
million in Q4 2020.
Backlog at March 31, 2021, was
$40.2 million, including $28.7 million of Performance Improvement
Solutions backlog, and $11.5 million of
Workforce Solutions backlog.
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".
CONFERENCE CALL
GSE Systems has scheduled a conference call for Monday, May 17, 2021 at 4:30 p.m. ET (1:30 p.m. PT) to review these results. Interested parties can access the conference call by dialing (877) 270-2148 or (412) 902-6510 or can listen via a live
Internet webcast, which is available in the Investor Relations
section of the Company's website
at: https://www.gses.com/about/investors/
or via the following link:
https://www.webcaster4.com/Webcast/Page/2700/41113
A teleconference replay of the call will be available for three
days at (877) 344-7529 or (412) 317-0088, confirmation # 10155857.
A webcast replay will be available in the Investor Relations
section of the Company's website at
https://www.gses.com/about/investors/ for 90 days.
ABOUT GSE SOLUTIONS
We are visionaries, and
the solutions we create now will be at the forefront of the power
industry. GSE Solutions leverages five decades of proven industry
experience to provide unique and essential engineering and
workforce solutions, services and products focused on performance
optimization, regulatory compliance, simulation, training, and
staffing for customers worldwide. As one of the few independent
public companies serving the clean energy sector of nuclear power
and adjacent industries, our solutions support the future of clean
energy production and overall decarbonization initiatives of the
power industry.
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.
Company Contact
|
Lytham Partners
|
Kyle Loudermilk
|
Adam Lowensteiner, Vice President
|
Chief Executive Officer
|
(646)
829-9702
|
GSE Systems, Inc.
|
gvp@lythampartners.com
|
(410) 970-7800
|
|
GSE SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (in thousands, except share and per share data)
|
|
|
|
Three Months
ended
March 31,
|
|
2021
|
|
2020
|
|
(unaudited)
|
|
(unaudited)
|
Revenue
|
$13,104
|
|
$17,705
|
Cost of revenue
|
10,176
|
|
13,590
|
Gross profit
|
2,928
|
|
4,115
|
Selling, general and administrative
|
3,734
|
|
4,948
|
Research and development
|
157
|
|
210
|
Restructuring charges
|
808
|
|
10
|
Loss on impairment
|
-
|
|
4,302
|
Depreciation
|
76
|
|
108
|
Amortization of definite-lived intangible assets
|
340
|
|
670
|
Total operating expenses
|
5,115
|
|
10,248
|
Operating loss
|
(2,187)
|
|
(6,133)
|
Interest expense, net
|
(54)
|
|
(241)
|
Gain (loss) on derivative instruments, net
|
-
|
|
(43)
|
Other income (expense), net
|
1
|
|
29
|
Loss before income taxes
|
(2,240)
|
|
(6,388)
|
Provision for income taxes
|
(35)
|
|
(130)
|
Net loss
|
$(2,205)
|
|
$(6,258)
|
Net loss per common share - basic and diluted
|
$(0.11)
|
|
$(0.31)
|
Weighted average shares outstanding - basic and diluted
|
20,628,669
|
|
20,342,933
|
GSE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
December 31, 2020
|
|
(unaudited)
|
(audited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
Cash and cash equivalents
|
$
|
3,749
|
$
|
6,702
|
Contract receivables, net
|
|
11,749
|
|
10,494
|
Prepaid expenses and other current assets
|
1,478
|
1,554
|
Total current assets
|
16,976
|
18,750
|
Equipment, software and leasehold improvements, net
|
694
|
616
|
Software development costs, net
|
605
|
630
|
Goodwill
|
13,339
|
13,339
|
Intangible assets, net
|
3,893
|
4,234
|
Operating lease right-of-use assets, net
|
1,413
|
1,562
|
Other assets
|
59
|
59
|
Total assets
|
$
36,979
|
$
39,190
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Line of credit
|
$
|
2,506
|
$
|
3,006
|
PPP Loan, current portion
|
|
8,832
|
|
5,034
|
Accounts payable
|
|
739
|
|
570
|
Accrued expenses
|
|
1,462
|
|
1,297
|
Accrued compensation
|
|
2,257
|
|
1,505
|
Billings in excess of revenue earned
|
|
4,947
|
|
5,285
|
Accrued warranty
|
|
587
|
|
665
|
Income taxes payable
|
|
1,549
|
|
1,621
|
Other current liabilities
|
1,596
|
2,498
|
Total current liabilities
|
24,475
|
21,481
|
PPP Loan, noncurrent portion
|
1,260
|
5,034
|
Operating lease liabilities noncurrent
|
1,565
|
1,831
|
Other noncurrent liabilities
|
263
|
339
|
Total liabilities
|
27,563
|
28,685
|
|
|
Commitments and contingencies (Note 16)
|
|
|
|
Stockholders' equity:
|
|
Preferred
stock $.01 par value; 2,000,000 shares authorized; no shares
issued
and outstanding
|
|
Common stock
$0.01 par value; 60,000,000 shares authorized, 22,233,283
and
|
|
22,192,569 shares issued, 20,634,372 and 20,593,658 shares outstanding,
|
|
respectively
|
222
|
222
|
Additional paid-in capital
|
79,697
|
79,687
|
Accumulated deficit
|
(67,396)
|
(65,191)
|
Accumulated other comprehensive loss
|
(108)
|
(1,214)
|
Treasury stock at cost, 1,598,911 shares
|
(2,999)
|
(2,999)
|
Total stockholders' equity
|
9,416
|
10,505
|
Total liabilities and stockholders' equity
|
$
36,979
|
$
39,190
|
The accompanying notes are an integral part of these consolidated financial statements.
EBITDA and Adjusted EBITDA Reconciliation (in thousands)
References to "EBITDA" mean net income (loss), before taking
into account interest income and expense, provision for income
taxes, depreciation and amortization. References to Adjusted EBITDA
exclude the impact on our (loss) of 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, acquisition-related expense, acquisition-related
legal settlement and bad debt expense due to customer bankruptcy.
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 Adjusted EBITDA 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
Adjusted EBITDA to the most directly comparable GAAP measure in
accordance with SEC Regulation G follows:
|
|
Three Months ended
March 31,
|
|
2021
|
|
2020
|
(unaudited)
|
|
(unaudited)
|
Net loss
|
$(2,205)
|
|
$(6,258)
|
Interest expense, net
|
54
|
|
241
|
Provision for income taxes
|
(35)
|
|
(130)
|
Depreciation and amortization
|
513
|
|
853
|
EBITDA
|
(1,673)
|
|
(5,294)
|
Loss on impairment
|
-
|
|
4,302
|
Restructuring charges
|
808
|
|
10
|
Stock-based compensation expense
|
38
|
|
147
|
Change in fair value of derivative instruments
|
-
|
|
43
|
Acquisition-related expense
|
-
|
|
181
|
Adjusted EBITDA
|
$(827)
|
|
$(611)
|
Adjusted Net Income and Adjusted EPS Reconciliation (in thousands, except per share amounts)
References to Adjusted net 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
related to acquisitions, bad debt expense due to customer
bankruptcy, release of valuation allowance, 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:
|
Three Months ended March 31,
|
|
2021
|
|
2020
|
|
(unaudited)
|
|
(unaudited)
|
Net loss
|
$(2,205)
|
|
$(6,258)
|
Loss on impairment
|
-
|
|
4,302
|
Restructuring charges
|
808
|
|
10
|
Stock-based compensation expense
|
38
|
|
147
|
Change in fair value of derivative instruments
|
-
|
|
43
|
Acquisition-related expense
|
-
|
|
181
|
Amortization of intangible assets related to acquisitions
|
340
|
|
670
|
Adjusted net loss
|
$(1,019)
|
|
$(905)
|
Net loss per common share – basic
|
$(0.11)
|
|
$(0.31)
|
Adjusted loss per common share – Diluted
|
$(0.05)
|
|
$(0.04)
|
Weighted average shares outstanding – Diluted(a)
|
20,628,669
|
|
20,342,933
|
|
|
(a)
|
During the
three months ended March 31, 2021 and 2020, the Company reported
both a GAAP net loss and adjusted net loss during the three
months ended March 31, 2021 and 2020,
respectively. Accordingly, there was no dilutive
shares from RSUs included in the adjusted loss per common
share calculation that was considered anti-dilutive in
determining the GAAP diluted loss per common
share.
|
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SOURCE GSE Systems, Inc.