GSE Solutions Announces Fourth Quarter and Full Year 2020 Financial Results
GSE Solutions (Nasdaq: GVP) reported its Q4 and full-year 2020 financial results, revealing a revenue decline to $57.6 million from $83.0 million in 2019. Gross profit also fell to $14.8 million, with an operating loss of $(9.5) million. However, net loss improved to $(10.5) million, or $(0.52) per diluted share, compared to $(12.1) million in 2019. Q4 revenue decreased to $12.7 million, with a net loss of $(1.5) million. Despite these challenges, GSE secured new master service agreements worth $35 million and saw a 34% increase in recurring software revenue, totaling $3.9 million.
- New master service agreements worth $35 million awarded.
- Recurring software revenue increased by 34%, reaching $3.9 million.
- Q4 adjusted EBITDA improved to positive $1.1 million.
- Full-year revenue decreased to $57.6 million from $83.0 million.
- Operating loss expanded to $(9.5) million compared to $(7.4) million in 2019.
- Backlog decreased from $52.7 million to $40.4 million year-over-year.
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 fourth quarter (“Q4”) and fiscal year ended December 31, 2020.
FULL YEAR 2020 OVERVIEW
-
Revenue of
$57.6 million , compared to$83.0 million in 2019. -
Gross profit of
$14.8 million , compared to$20.3 million in 2019. -
Operating loss of
$(9.5) million , compared to$(7.4) million in 2019. -
Net loss of
$(10.5) million , or$(0.52) per diluted share, compared to$(12.1) million , or$(0.60) per diluted share, in 2019. -
Adjusted net income1 of
$3 thousand , or approximately$0.00 per diluted share, compared to$8.0 million , or$0.39 per diluted share, in 2019. -
Adjusted EBITDA1 of
$(0.3) million , compared to$4.8 million in 2019. -
Cash flow provided by operations totaled
$0.3 million , compared to$4.0 million in 2019. -
New orders totaled
$45.3 million , compared to$59.1 million in 2019.
Q4 2020 Overview
-
Revenue of
$12.7 million , compared to$17.3 million in Q4 2019. -
Gross profit of
$3.8 million , compared to$5.0 million in Q4 2019. -
Operating loss of
$(1.2) million , compared to$(1.6) million in Q4 2019. -
Net loss of
$(1.5) million , or$(0.07) per diluted share, compared to$(6.3) million , or$(0.32) per diluted share, in Q4 2019. -
Adjusted net income1 of
$2.6 million , or$0.13 per diluted share, compared to$6.7 million , or$0.33 per diluted share, in Q4 2019. -
Adjusted EBITDA1 of
$1.1 million , compared to$1.2 million in Q4 2019. -
New orders equaled
$7.9 million , compared to$16.2 million in Q4 2019. -
Awarded master service agreements with a major U.S. utility for a combined value of
$35 million during a two- year period, commencing in 2021 and ramping up during the year. These agreements are not included in the Company’s fourth quarter new orders or quarter-ending backlog.
At December 31, 2020
-
Cash and cash equivalents totaled
$6.7 million . -
Working capital totaled
$(2.7) million and current ratio equaled 0.9x. -
Total debt equaled
$13.1 million . -
Backlog totaled
$40.4 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, “We concluded 2020 on a very encouraging note, with fourth quarter adjusted EBITDA improving to positive
Mr. Loudermilk continued, “While uncertainties related to the pandemic persist, we noted a surge in RFP activity to start 2021 and, depending on our success rate converting bids to wins, we could see a meaningful upswing in business in the second half of the year. We are optimistic about our near- and long-term prospects, especially as a result of the renewed focus on decarbonizing the power sector. Our services are essential to the nuclear industry, which plays a critical role in the decarbonization of energy. We remain focused on growing our businesses organically, executing on an exciting product and solutions roadmap as well as emphasizing cross selling and upselling opportunities.”
2020 FULL YEAR RECAP
Revenue decreased to
Gross profit decreased
Operating loss totaled
Net loss was
Adjusted net income1 decreased to
Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled
Adjusted EBITDA1 totaled
Performance new orders totaled
Q4 2020 RESULTS
Q4 2020 revenue decreased
The decrease in the Performance segment's revenue primarily reflects major projects at the end of 2019 that were completed at the beginning of 2020 and delays in commencing new contracts remotely due to the COVID-19 pandemic.
The year-over-year decrease in the NITC segment's revenue was primarily caused by stoppage of existing projects and delays in commencing new contracts due to the COVID-19 pandemic and lower customer demand for staffing during the year.
(in thousands) |
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Revenue: |
2020 |
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2019 |
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2020 |
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2019 |
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(unaudited) |
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(unaudited) |
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(unaudited) |
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(audited) |
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Performance |
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NITC |
5,103 |
|
8,133 |
|
24,830 |
|
37,199 |
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Total Revenue |
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Performance new orders totaled
Q4 2020 gross profit was
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Gross Profit: |
2020 |
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% |
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2019 |
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% |
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2020 |
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% |
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2019 |
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% |
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(unaudited) |
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(unaudited) |
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(unaudited) |
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(audited) |
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Performance |
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NITC |
634 |
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|
1,578 |
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|
3,390 |
|
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|
5,067 |
|
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Consolidated Gross Profit |
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The decrease in our gross profit of
Selling, general, and administrative expenses (SG&A) in Q4 2020 totaled
Operating loss was approximately
The Company recorded a tax expense of
Net loss for Q4 2020 totaled
Adjusted net income1 totaled
EBITDA for Q4 2020 was approximately
Adjusted EBITDA1 totaled
BACKLOG AND CASH POSITION
Backlog at December 31, 2020, was
GSE’s cash position at December 31, 2020, was
CONFERENCE CALL
Management will host a conference call today at 4:30 pm Eastern Time to discuss Q4 and full year 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/44080/indexl.html.
For those who cannot listen to the live broadcast, an online webcast replay will be available at the following link: https://78449.themediaframe.com/dataconf/productusers/gvp/mediaframe/44080/indexl.html or at www.gses.com for a longer period.
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
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2020 |
2019 |
2020 |
2019 |
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(unaudited) |
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(unaudited) |
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(unaudited) |
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(audited) |
Revenue |
|
|
|
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|
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Cost of revenue |
8,864 |
|
12,270 |
|
42,835 |
|
62,677 |
|
Gross profit |
3,789 |
|
5,022 |
|
14,785 |
|
20,298 |
|
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|
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|
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Selling, general and administrative |
3,217 |
|
3,938 |
|
15,765 |
|
16,169 |
|
Research and development |
160 |
|
184 |
|
686 |
|
710 |
|
Restructuring charges |
1,102 |
|
1,736 |
|
1,297 |
|
2,478 |
|
Loss on impairment |
- |
|
133 |
|
4,302 |
|
5,597 |
|
Depreciation |
76 |
|
63 |
|
330 |
|
363 |
|
Amortization of definite-lived intangible assets |
415 |
|
596 |
|
1,943 |
|
2,400 |
|
Total operating expenses |
4,970 |
|
6,650 |
|
24,323 |
|
27,717 |
|
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Operating loss |
(1,181) |
|
(1,628) |
|
(9,538) |
|
(7,419) |
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Interest expense |
(67) |
|
(176) |
|
(623) |
|
(988) |
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Loss on derivative instruments, net |
(52) |
|
56 |
|
(17) |
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(13) |
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Other income (expense), net |
20 |
|
2,006 |
|
(4) |
|
2,068 |
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Loss before income taxes |
(1,280) |
|
258 |
|
(10,182) |
|
(6,352) |
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Provision for income taxes |
189 |
|
6,607 |
|
355 |
|
5,733 |
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Net loss |
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Basic loss per common share |
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Diluted loss per common share |
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Weighted average shares outstanding - Basic |
20,566,121 |
|
20,017,028 |
|
20,439,157 |
|
20,062,021 |
|
Weighted average shares outstanding - Diluted |
20,566,121 |
|
20,017,028 |
|
20,439,157 |
|
20,062,021 |
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GSE SYSTEMS, INC AND SUBSIDIARIES
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(audited) |
(audited) |
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December 31, 2020 |
December 31, 2019 |
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Cash and cash equivalents |
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Current assets |
18,469 |
30,778 |
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Total assets |
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Current liabilities |
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Long-term liabilities |
7,204 |
3,956 |
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Stockholders' equity |
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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:
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2020 |
2019 |
2020 |
2019 |
|||
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(audited) |
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Net loss |
|
|
|
|
|
|
|
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Interest expense |
67 |
|
176 |
|
623 |
|
988 |
|
Provision for income taxes |
189 |
|
6,607 |
|
355 |
|
5,733 |
|
Depreciation and amortization |
582 |
|
732 |
|
2,612 |
|
3,129 |
|
EBITDA |
(631) |
|
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