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GSE Systems Announces 2012 First Quarter Financial Results

Pre-tax income for Q1 2012 rose to $0.8 million from $0.4 million in Q1 2011.

Income tax expense was $0.2 million in Q1 2012 compared to an income tax benefit of $0.6 million in Q1 2011. In Q1 2011, GSE recorded deferred tax liabilities of $1.0 million in conjunction with the acquisition of EnVision Systems, which reduced the consolidated U.S. net deferred tax asset by $1.0 million. As GSE had a full valuation allowance on its U.S. net deferred tax assets prior to the acquisition, the Company reduced the valuation allowance by $1.0 million in Q1 2011.

Net income for Q1 2012 was $0.5 million, or $0.03 per basic and diluted share, compared to net income of $1.0 million, or $0.05 per basic and diluted share.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for Q1 2012 was $0.9 million compared to EBITDA of $0.7 million in Q1 2011.

Backlog at March 31, 2012 was $56.5 million, compared to $51.5 million at December 31, 2011. At March 31, 2012, approximately $4.7 million of GSE’s backlog was related to the Slovakia project.

GSE’s cash position at March 31, 2012 was $17.2 million, excluding $5.4 million of restricted cash and unrestricted Certificates of Deposit, as compared to cash and equivalents of $20.3 million, excluding $6.2 million of restricted cash and unrestricted Certificates of Deposit, at December 31, 2011. The reduction in cash from December 31, 2011 was primarily related to cash flow timing, $0.3 million in treasury stock purchases of GSE common stock (see “Share Repurchase” discussion, below), and a $0.5 million investment in the GSE-UNIS joint venture.

UPDATE ON SLOVAKIA CONTRACT

In May 2012, Slovenské elektrárne, a.s. (“SE”), with which GSE is contracted to provide a full scope simulator for a two unit reactor plant in Slovakia, notified the Company of its decision to suspend work under the contract due to changes in the Slovakian regulation requiring SE to redesign certain aspects of the plant. This decision to suspend the contract is not related to work being performed by GSE. GSE is currently negotiating with SE regarding ways the companies can continue to work together, including supporting the project during the suspension period, and other hardware and software changes that SE would like incorporated into the final simulator.

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