FULL YEAR 2016 OVERVIEW
- Revenue totaled $53.1 million, compared
to $56.8 million in 2015.
- Net income increased to $1.4 million,
or $0.08 per diluted share, from a net loss of $4.7 million, or
$(0.26) per diluted share, in 2015.
- Adjusted net income1 expanded to $3.6
million, or $0.20 per diluted share, from approximately breakeven,
or $0.00 per diluted share, in 2015.
- Adjusted EBITDA1 rose 231% to $4.6
million from $1.4 million in 2015.
- Cash flow from operations grew to $10.2
million from $1.0 million in 2015.
- New orders increased to $79.5 million
from $56.0 million in 2015.
Q4 2016 OVERVIEW
- Revenue totaled $13.3 million, compared
to $14.3 million in Q4 2015.
- Net income was $1.0 million, or $0.05
per diluted share, compared to $1.0 million, or $0.06 per diluted
share, in Q4 2015.
- Adjusted net income increased 43% to
$1.9 million, or $0.10 per diluted share, from $1.3 million, or
$0.07 per diluted share, in Q4 2015.
- Adjusted EBITDA grew 17% to $2.1
million from $1.8 million in Q4 2015.
- New orders rose to $16.8 million from
$13.9 million in Q4 2015, driven by a major contract expansion with
EDF Energy.
At December 31, 2016
- Cash and equivalents of $22.9 million,
including $1.1 million of restricted cash, up 56% from $14.6
million, including $3.6 million of restricted cash, at December 31,
2015.
- Working capital of $12.0 million and
current ratio of 1.4x.
- $0 long-term debt.
- Backlog totaled $73.2 million, up 53%
compared to year-end 2015 backlog of $47.9 million.
1 Refer to the non-GAAP reconciliation tables at the end of this
press release for a definition of “adjusted EBITDA” and “adjusted
net income”.
GSE Systems, Inc. (“GSE” or “the Company”) (NYSE MKT:
GVP), the world leader in real-time high-fidelity simulation
systems and training solutions to the power and process industries,
today announced financial results for the fourth quarter (“Q4”) and
full year ended December 31, 2016.
Kyle J. Loudermilk, GSE’s President and Chief Executive Officer,
said, “GSE closed an outstanding 2016 with a solid fourth quarter,
successfully delivering on our commitments to our customers and our
shareholders. We finished the year with a significantly higher cash
balance of $22.9 million, reflecting GSE’s improved operations and
strong cash flow generation. Our strengthened financial position
enhances our ability to pursue a number of exciting organic and
inorganic growth opportunities that we have identified. Our focus
on organic growth is most recently illustrated by our major
contract expansion in Q4 2016 with EDF Energy to upgrade the
control room station simulation system at their Torness nuclear
power plant in the United Kingdom. As a result of this and other
major new orders we won in 2016, we finished the year with
near-record backlog. 2016 was a transformational year for GSE in
many ways. In 2017, we aim to build on our success to grow revenue
and further enhance shareholder value.”
2016 FULL YEAR RECAP
Revenue totaled $53.1 million in 2016, compared to $56.8 million
in 2015.
Gross profit increased 18.5% to $15.2 million, or 28.7% of
revenue, from $12.9 million, or 22.6% of revenue in 2015, including
$1.5 million for a write-down of capitalized software development
costs in 2015.
Operating income totaled $1.6 million in 2016, up from an
operating loss of $4.1 million in 2015.
Net income rose to $1.4 million, or $0.08 per diluted share,
from a net loss of $4.7 million, or $(0.26) per diluted share, in
2015.
Adjusted net income, excluding the impact of gain/loss from the
change in fair value of contingent consideration, restructuring
charges, stock-based compensation expense, consulting support for
finance restructuring and write-down of capitalized software
development costs increased to $3.6 million, or $0.20 per diluted
share, from roughly breakeven, or $0.00 per diluted share in
2015.
EBITDA totaled $2.4 million in 2016, up from an EBITDA loss of
$3.3 million in 2015.
Adjusted EBITDA, excluding the impact of gain/loss from the
change in fair value of contingent consideration, restructuring
charges, stock-based compensation expense, consulting support for
finance restructuring and write-down of capitalized development
costs rose 231% to $4.6 million in 2016 from $1.4 million in
2015.
Q4 2016 RESULTS
Q4 2016 revenue totaled $13.3 million, compared to $14.3 million
in Q4 2015, reflecting a 20% decrease in Performance Improvement
Solutions revenue due to timing of hardware revenues in U.S.
Nuclear. Specifically, in Q4 2015 the Company recognized $1.3
million for a large project when hardware was delivered to the
customer and the project was completed. This decline was partially
offset by a 25% increase in Nuclear Industry Training and
Consulting revenue.
(in thousands)
Three Months endedDecember
31,
Twelve Months endedDecember
31,
Revenue: 2016 2015 2016
2015 (unaudited) (unaudited) (unaudited)
(audited) Performance Improvement Solutions $ 8,211 $ 10,276 $
35,593 $ 37,074 Nuclear Industry Training and Consulting
5,070 4,051 17,508 19,729 Total Revenue $
13,281 $ 14,327 $ 53,101 $ 56,803
Performance Improvement Solutions new orders totaled $13.1
million in Q4 2016 compared to $9.3 million in Q4 2015. Nuclear
Industry Training and Consulting new orders totaled $3.7 million in
Q4 2016 compared to $4.6 million in Q4 2015.
Q4 2016 gross profit was $4.3 million, or 32.7% of revenue,
compared to $4.6 million, or 32.3% of revenue, in Q4 2015.
(in thousands)
Three Months ended
December 31,
Twelve Months ended December
31,
Gross Profit: 2016 %
2015 % 2016
% 2015 %
(unaudited) (unaudited) (unaudited) (audited)
Performance Improvement Solutions $ 3,357 40.9 % $ 4,002
38.9 % $ 12,644 35.5 % $ 11,995 32.4 % Nuclear Industry Training
and Consulting 980 19.3 % 620 15.3 % 2,600
14.9 % 2,402 12.2 % Total Gross Profit 4,337 32.7 % 4,622
32.3 % 15,244 28.7 % 14,397 25.3 % Less: Write-down of Capitalized
Software Development Costs
- - - - - - 1,538 2.7 % Consolidated
Gross Profit $ 4,337 32.7 % $ 4,622 32.3 % $ 15,244 28.7 % $ 12,859
22.6 %
Performance Improvement Solutions gross profit for Q4 2016 was
$3.4 million, or 40.9% gross margin, compared to $4.0 million, or
38.9% gross margin, in Q4 2015. Nuclear Industry Training and
Consulting gross profit for Q4 2016 was $1.0 million, or 19.3%
gross margin, compared to approximately $620,000, or 15.3% gross
margin, in Q4 2015.
Selling, general and administrative expenses in Q4 2016 totaled
$3.5 million, or 26.2% of revenue, compared to $3.2 million, or
22.2% of revenue, in Q4 2015. The increase in selling, general, and
administrative expenses resulted from the increase in stock
compensation expense.
Operating income was approximately $699,000 in Q4 2016, compared
to $1.2 million in Q4 2015. Operating income included stock
compensation expense of approximately $650,000 in Q4 2016, compared
to approximately $149,000 in Q4 2015.
Net income for Q4 2016 totaled $1.0 million, or $0.05 per basic
and diluted share, compared to net income of $1.0 million, or $0.06
per basic and diluted share, in Q4 2015.
Adjusted net income, excluding the impact of gain/loss from the
change in fair value of contingent consideration, restructuring
charges, stock-based compensation expense, and consulting support
for finance restructuring increased 43% to $1.9 million, or $0.10
per diluted share, from $1.3 million, or $0.07 per diluted share,
in Q4 2015.
Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) for Q4 2016 was approximately $1.2 million compared to
$1.5 million in Q4 2015.
Adjusted EBITDA, which excludes the impact of gain/loss from the
change in fair value of contingent consideration, restructuring
charges, stock-based compensation expense, and consulting support
for finance restructuring, increased 17% to $2.1 million in Q4
2016, from $1.8 million in Q4 2015.
BACKLOG AND CASH
POSITION
Backlog at December 31, 2016, increased 53% to $73.2 million
from $47.9 million at December 31, 2015. Backlog at December 31,
2016, included $68.8 million of Performance Improvement Solutions
backlog and $4.4 million of Nuclear Industry Training and
Consulting backlog.
GSE’s cash position at December 31, 2016, was $22.9 million,
including $1.1 million of restricted cash, as compared to $14.6
million, including $3.6 million of restricted cash, at December 31,
2015.
CONFERENCE CALL
Management will host a conference call today at 4:30 pm Eastern
Time to discuss Q4 and full year 2016 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:
http://www.investorcalendar.com/IC/CEPage.asp?ID=175649
For those who cannot listen to the live broadcast, an online
webcast replay will be available at www.gses.com or through June 6,
2017 at the following link:
http://www.investorcalendar.com/IC/CEPage.asp?ID=175649.
ABOUT GSE SYSTEMS,
INC.
GSE Systems, Inc. is a world leader in real-time high-fidelity
simulation, providing a wide range of simulation, training and
engineering solutions to the power and process industries. 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.
GSE SYSTEMS, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of
Operations
(in thousands, except share and per share
data)
Three Months endedDecember 31,
Twelve Months endedDecember 31, 2016
2015 2016 2015
(unaudited) (unaudited) (unaudited) (audited) Revenue $ 13,281 $
14,327 $ 53,101 $ 56,803 Cost of revenue 8,944 9,705 37,857 42,406
Write-down of capitalized software dev. costs - -
- 1,538 Gross profit 4,337 4,622
15,244 12,859 Selling, general and administrative 3,475
3,186 12,507 14,217 Restructuring charges 3 45 490 1,791
Depreciation 89 110 383 493 Amortization of definite-lived
intangible assets 71 124 289 494
Operating expenses 3,638 3,465 13,669
16,995 Operating income (loss) 699
1,157 1,575 (4,136 ) Interest income, net 33 21 85 88 Gain
(loss) on derivative instruments, net 328 19 (18 ) (40 ) Other
income (expense), net 18 89 130
(146 ) Income (loss) before income taxes 1,078 1,286 1,772
(4,234 ) Provision for income taxes 75 260
350 471 Net income (loss) $
1,003 $ 1,026 $ 1,422 $ (4,705 ) Basic earnings
(loss) per common share $ 0.05 $ 0.06 $ 0.08 $ (0.26 )
Diluted earnings (loss) per common share $ 0.05 $ 0.06 $ 0.08
$ (0.26 ) Weighted average shares outstanding - Basic
18,722,743 17,901,414 18,218,681
17,892,891 Weighted average shares outstanding - Diluted
19,073,513 17,902,489 18,512,266
17,892,891
GSE SYSTEMS, INC AND
SUBSIDIARIES
Selected Balance Sheet Data (in
thousands)
(unaudited)
December 31, 2016 (audited)
December 31,
2015 Cash and cash equivalents $ 21,747 $ 11,084 Restricted
cash – current 1,140 1,771 Current assets 43,770 28,414 Long-term
restricted cash - 1,779 Total assets 53,617 39,371 Current
liabilities $ 31,731 $ 19,708 Long-term liabilities 801 1,295
Stockholders' equity 21,085 18,368
EBITDA and Adjusted EBITDA
Reconciliation (in thousands)
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
endedDecember 31, Twelve Months endedDecember
31, 2016 2015 2016
2015 Net income (loss) $ 1,003 $ 1,026 $ 1,422 $
(4,705 ) Interest income, net (33 ) (21 ) (85 ) (88 ) Provision for
income taxes 75 260 350 471 Depreciation and amortization
160 234 672 987
EBITDA 1,205 1,499 2,359 (3,335 ) Write-down of capitalized
software development costs - - - 1,538 Gain (loss) from the change
in fair value of contingent consideration 163 110 (207 ) 849
Restructuring charges 3 45 490 1,791 Stock-based compensation
expense 650 149 1,550 541 Consulting support for finance
restructuring 84 - 394
- Adjusted EBITDA $ 2,105 $ 1,803 $
4,586 $ 1,384
Adjusted Net Income and Adjusted EPS
Reconciliation (in thousands, except per share amounts)
Adjusted Net Income and adjusted earnings (loss) 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, provide meaningful supplemental information
regarding our operational performance. Our management uses Adjusted
Net Income and other non-GAAP measures to evaluate the performance
of our business and make certain operating decisions (e.g.,
budgeting, planning, employee compensation and resource
allocation). This information facilitates management's internal
comparisons to our historical operating results as well as to the
operating results of our competitors. Since management finds this
measure to be useful, we believe that our investors can benefit by
evaluating both non-GAAP and GAAP results. 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
endedDecember 31, Twelve Months endedDecember
31, 2016 2015 2016
2015 Net income (loss) $
1,003 $ 1,026 $ 1,422 $
(4,705 ) Gain (loss) from the change in fair value of
contingent consideration 163 110 (207 ) 849 Restructuring charges 3
45 490 1,791 Stock-based compensation expense 650 149 1,550 541
Consulting support for finance restructuring 84 - 394 - Write-down
of capitalized software development costs - -
- 1,538 Adjusted net income $ 1,903 $ 1,330 $
3,649 $ 14 Diluted earnings (loss) per common share $ 0.05 $
0.06 $ 0.08 $ (0.26 ) Adjusted earnings per common share –
Diluted $ 0.10 $ 0.07 $ 0.20 $ 0.00 Weighted average shares
outstanding – Diluted 19,073,513 17,902,489 18,512,266 17,892,891
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170309006348/en/
GSE Systems, Inc.Chris Sorrells, 410-970-7802Chief
Operating OfficerorThe Equity Group Inc.Devin Sullivan,
212-836-9608Senior Vice
Presidentdsullivan@equityny.comorKalle
Ahl, CFA, 212-836-9614Senior
Associatekahl@equityny.com
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