GSE Systems, Inc. (GSE or the company), a world leader in real time high fidelity simulation systems and training solutions to the power and process industries, has announced financial results for the second quarter (2Q16) ended 30 June 2016.
Kyle J. Loudermilk, GSE’s President and Chief Executive Officer, said, “We are pleased to report GSE’s fourth consecutive quarter of positive adjusted EBITDA. In 2Q16, GSE recorded significantly higher gross margins and lower operating expenses, reflecting our continuing efforts to reduce costs and focus on project profitability. We have reduced annualised operating expenses by more than US$4 million since approximately one year ago. We also have continued to invest in resources for growth, hiring key leadership positions in the areas of technology, finance and operations. On that note, we are pleased to announce that Chris Sorrells, who has played an instrumental role in GSE’s operational turnaround, has agreed to assume the COO role on a permanent basis. Furthermore, we strengthened our financial and accounting leadership with the appointment of Emmett Pepe as our new CFO and Jim Stanker as a new member of our Board of Directors and Audit Committee. With the benefit of an enhanced leadership team and streamlined operations, we are now firmly focused on implementing our strategy to revitalise GSE’s growth.”
2Q16 revenue decreased 9% to US$12.4 million from US$13.7 million in 2Q15, reflecting a 1% increase in performance improvement solutions revenue and a 25% decrease in nuclear industry training and consulting revenue due to a strategic shift in sales focus to higher margin assignments.
Performance improvement solutions orders totalled US$5.8 million in 2Q16 compared to US$12.7 million in 2Q15. Nuclear industry training and consulting orders totalled US$3.4 million in 2Q16 compared to US$6.1 million in 2Q15. 2Q16 gross profit grew by 24% to US$3.6 million, or 29% of revenue, from US$2.9 million, or 21% of revenue, in 2Q15.
Performance improvement solutions gross profit for 2Q16 increased 27% to US$2.9 million, or 35% gross margin, from US$2.3 million, or 28% gross margin, in 2Q15. Nuclear industry training and consulting gross profit for 2Q16 increased 10% to approximately US$649 000, or 16% gross margin, from approximately US$590 000, or 11% gross margin, in 2Q15.
Selling, general and administrative expenses in 2Q16 decreased 27% to US$2.9 million, or 23% of revenue, from US$4 million, or 29% of revenue, in 2Q15. Operating income for 2Q16 was US$0.2 million compared to an operating loss of US$1.4 million in 2Q15.
Net income for 2Q16 was US$0.1 million, or US$0.01 per basic and diluted share, compared to a net loss of US$1.5 million, or US$0.08 per basic and diluted share, in 2Q15. 2Q16 adjusted net income, excluding the impact of restructuring charges, loss from the change in fair value of contingent consideration and stock-based compensation expense, increased to US$0.9 million, or US$0.05 per basic and diluted share, from an adjusted net loss of US$0.8 million, or US$0.05 per basic and diluted share, in 2Q15.
EBITDA (Earnings before interest, taxes, depreciation and amortisation) for 2Q16 was US$0.4 million compared to an EBITDA loss of US$1.2 million in 2Q15. Adjusted EBITDA, which excludes the impact of restructuring charges, loss from the change in fair value of contingent consideration and stock-based compensation expense, increased to US$1.1 million in 2Q16 from an adjusted EBITDA loss of approximately US$0.5 million in 2Q15.
Backlog at 30 June 2016, increased 48% to US$71.1 million from US$47.9 million at 31 December 2015. Backlog at 30 June 2016, included US$64.7 million of Performance Improvement Solutions backlog and US$6.4 million of Nuclear Industry Training and Consulting backlog.
GSE’s cash position at 30 June 2016, was US$14.3 million, including US$3.4 million of restricted cash, as compared to US$14.6 million, including US$3.6 million of restricted cash, at 31 December 2015.
Adapted from press release by Francesca Brindle
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