GSE Systems Reports Second Quarter 2023 Financial Results
- Strong revenue growth in Q2 2023 with a 30% increase over Q1 2023 and 16% improvement from Q2 2022
- Backlog at June 30, 2023, was $34.4 million
- None.
Conference Call Scheduled for today, August 14, 2023 at 4:30pm ET
Q2 2023 and Recent Highlights
- Strong revenue growth from Performance Engineering, with a
30% increase over Q1 of 2023 and16% improvement from Q2 of 2022. - Software and support sales were
in Q2 of 2023 bringing our YTD total to$1.1 million , an increase of$2.3 million 20% over the six months ended Q2 2022. - Backlog at June 30, 2023, was
, including$34.4 million of Performance Improvement Solutions backlog, and$26.9 million of Workforce Solutions backlog.$7.5 million - Ended Q2 with cash, cash equivalents and restricted cash of
, including restricted cash of$3.4 million .$1.6 million
Management Commentary
"I am pleased with the progress made during the second quarter, whereby we made meaningful improvement in our operational execution. We are particularly pleased by the improvement in the revenue growth in the quarter, achieved through improved engineering utilization and focus on higher margin business. The continued pace of license revenue in the quarter is also a positive sign", commented Kyle J. Loudermilk, GSE's President and Chief Executive Officer. "Orders in Q2 were lighter than desired, as we had nearly
Emmett Pepe, CFO of GSE Systems, added, "The company's cost containment measures have started to deliver benefits during the quarter with operating expenses reflecting significant improvement over prior quarter. We expect to continue to trend favorable as initiatives enacted during the quarter will continue to keep costs under control while we execute on our sales growth strategy. I am encouraged by our improved revenue and combined with our expense management positions us for improved cash flow in the second half of 2023."
Q2 2023 FINANCIAL RESULTS
Revenue during Q2 2023 was
Engineering revenue was
Workforce Solutions revenue was
Gross profit in Q2 2023 was
Operating expenses in Q2 2023 were
Operating loss was approximately
Net loss in Q2 2023 was
Adjusted net loss1 totaled
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for Q2 2023 was approximately
Adjusted EBITDA1 totaled
Backlog at June 30, 2023, was
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 today, August 14, 2023 at 4:30 p.m. ET (1:30 p.m. PT) to review these results. Interested parties can access the conference call by dialing (833) 974-2453 or (412) 317-5784 or can listen via a live Internet webcast at: https://app.webinar.net/GoqX0AE0bPn. Access to the link is also available in the Investor Relations section of the Company's website at: https://www.gses.com/about/investors/.
A teleconference replay of the call will be available for seven days at (877) 344-7529 or (412) 317-0088, confirmation # 2953239. 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
Proven by more than 50 years of experience in the nuclear power industry, GSE knows what it takes to help customers deliver carbon-free electricity safely and reliably. Today, GSE Solutions leverages top talent, expertise, and technology to help energy facilities achieve next-level power plant performance. GSE's advanced Engineering and Workforce Solutions divisions offer highly specialized training, engineering design, program compliance, simulation, and technical staffing that reduce risk and optimize plant operations. With more than 1,100 installations and hundreds of customers in over 50 countries, GSE delivers operational excellence. 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.
Company Contact |
Investor Contact | |
Kyle Loudermilk | Lytham Partners | |
Chief Executive Officer | Adam Lowensteiner, Vice President | |
GSE Systems, Inc. | (646) 829-9702 | |
(410) 970-7800 |
GSE SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (in thousands, except share and per share data) | ||||||||||||
Three Months ended | Six Months ended | |||||||||||
June 30, | June 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Revenue | ||||||||||||
Cost of revenue | 9,172 | 9,573 | 17,650 | 19,421 | ||||||||
Gross profit | 3,215 | 3,172 | 5,610 | 5,599 | ||||||||
Selling, general and administrative | 3,653 | 4,410 | 8,441 | 8,917 | ||||||||
Research and development | 154 | 182 | 335 | 324 | ||||||||
Depreciation | 53 | 72 | 101 | 144 | ||||||||
Amortization of definite-lived intangible assets | 131 | 231 | 292 | 491 | ||||||||
Total operating expenses | 3,991 | 4,895 | 9,169 | 9,876 | ||||||||
Operating loss | (776) | (1,723) | (3,559) | (4,277) | ||||||||
Interest expense, net | (767) | (358) | (1,053) | (506) | ||||||||
Change in fair value of derivative instruments, net | 171 | 695 | 240 | 114 | ||||||||
Other income, net | (98) | (72) | (88) | (56) | ||||||||
Loss before income taxes | (1,470) | (1,458) | (4,460) | (4,725) | ||||||||
Provision for (benefit from) income taxes | 28 | (57) | (11) | 110 | ||||||||
Net loss | ||||||||||||
Net (loss) income per common share - basic and diluted | ||||||||||||
Weighted average shares outstanding - basic and diluted | 24,188,265 | 21,033,447 | 23,564,133 | 21,006,910 | ||||||||
GSE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) | |||||
June 30, 2023 | December 31, 2022 | ||||
(unaudited) | (audited) | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 1,775 | $ | 2,789 | |
Restricted cash, current | 500 | 1,052 | |||
Contract receivables, net of allowance for credit loss | 10,190 | 10,064 | |||
Prepaid expenses and other current assets | 830 | 2,165 | |||
Total current assets | 13,295 | 16,070 | |||
Equipment, software and leasehold improvements, net | 682 | 772 | |||
Software development costs, net | 646 | 574 | |||
Goodwill | 6,299 | 6,299 | |||
Intangible assets, net | 1,395 | 1,687 | |||
Restricted cash - long term | 1,080 | 535 | |||
Operating lease right-of-use assets, net | 609 | 506 | |||
Other assets | 42 | 53 | |||
Total assets | $ | 24,048 | $ | 26,496 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Current portion of long-term note | 851 | 3,038 | |||
Accounts payable | 1,719 | 1,262 | |||
Accrued expenses | 2,490 | 2,084 | |||
Accrued compensation | 1,842 | 1,071 | |||
Billings in excess of revenue earned | 3,157 | 4,163 | |||
Accrued warranty | 276 | 370 | |||
Income taxes payable | 1,731 | 1,774 | |||
Derivative liabilities | 1,718 | 603 | |||
Other current liabilities | 483 | 1,286 | |||
Total current liabilities | 14,267 | 15,651 | |||
Long-term note, less current portion | 1,670 | 310 | |||
Operating lease liabilities noncurrent | 358 | 160 | |||
Other noncurrent liabilities | 214 | 144 | |||
Total liabilities | 16,509 | 16,265 | |||
Commitments and contingencies (Note 16) | |||||
Stockholders' equity: | |||||
Preferred stock | - | - | |||
Common stock | 264 | 240 | |||
Additional paid-in capital | 84,641 | 82,911 | |||
Accumulated deficit | (74,433) | (69,927) | |||
Accumulated other comprehensive income | 66 | 6 | |||
Treasury stock at cost, 1,598,911 shares | (2,999) | (2,999) | |||
Total stockholders' equity | 7,539 | 10,231 | |||
Total liabilities and stockholders' equity | $ | 24,048 | $ | 26,496 |
EBITDA and Adjusted EBITDA Reconciliation (in thousands)
References to "EBITDA" mean net (loss) income, before considering interest expense, (benefit from) provision for income taxes, depreciation and amortization. References to Adjusted EBITDA excludes stock-based compensation expense and the impact of the change in fair value of derivative instruments. EBITDA and Adjusted EBITDA are not measures of financial performance under
Three Months ended | Six Months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||
Net loss | ||||||||||||||
Interest expense, net | 767 | 358 | 1,053 | 506 | ||||||||||
(Benefit from) provision for income taxes | 28 | (57) | (11) | 110 | ||||||||||
Depreciation and amortization | 267 | 387 | 560 | 802 | ||||||||||
EBITDA | (436) | (713) | (2,847) | (3,417) | ||||||||||
Stock-based compensation expense | 246 | 693 | 531 | 1,101 | ||||||||||
Change in fair value of derivative instruments, net | (171) | (695) | (240) | (114) | ||||||||||
Adjusted EBITDA | ||||||||||||||
Adjusted Net (Loss) Income and Adjusted EPS Reconciliation (in thousands, except per share amounts)
References to Adjusted Net Loss excludes the stock-based compensation expense, the impact of the change in fair value of derivative instruments, and amortization of intangible assets. Adjusted Net Loss and Adjusted Loss per Share (adjusted EPS) are not measures of financial performance under
Three Months ended | Six Months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||
Net loss | (1,498) | (1,401) | ||||||||||||
Stock-based compensation expense | 246 | 693 | 531 | 1,101 | ||||||||||
Change in fair value of derivative instruments, net | (171) | (695) | (240) | (114) | ||||||||||
Amortization of intangible assets related to acquisitions | 131 | 231 | 292 | 491 | ||||||||||
Adjusted net loss | (1,292) | (1,172) | ||||||||||||
Adjusted loss per common share – Diluted | (0.05) | (0.06) | (0.16) | (0.16) | ||||||||||
Weighted average shares outstanding – diluted(1) | 24,188,265 | 21,033,447 | 23,564,133 | 21,006,910 | ||||||||||
(1) During the three and six months ended June 30, 2023, we reported a |
(1) During the three and six months ended June 30, 2022 we reported a |
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SOURCE GSE Systems, Inc.