GSE Systems, Inc. (“GSE” or “the Company”) (NYSE MKT: GVP), a global energy services solutions provider, today announced financial results for the quarter ended June 30, 2013.
Jim Eberle, Chief Executive Officer of GSE, commented, “Our results for Q2 2013 were materially impacted by a decline in revenue caused by delays in customers’ decisions with respect to in excess of $17.0 million of potential orders and, more significantly, $6.6 million of one-time, non-cash charges. We believe decisions on a number of projects that were delayed from the first half of 2013 will be made in the second half of 2013 and the first quarter of 2014. We have taken appropriate actions by reducing staff and operating expenses that we believe will produce annualized savings of approximately $1.0 million. We believe that the combination of expected new orders and cost savings will produce an improvement in the third quarter of 2013 and a return to profitability in the fourth quarter of 2013. If the expected new orders do not occur on a timely basis, we are prepared to take additional measures to return to profitability. We ended the quarter with a very strong balance sheet, including cash and equivalents of $21.1 million, or $1.16 per diluted share, working capital of $26.3 million, and no long-term debt. Reflecting the long-term optimism we have for our business, we repurchased 216,399 shares of our common stock in Q2 2013 and expect to remain in the market on a go forward basis.
“Based on the last several quarters, it is clear that some nuclear customers and governments have paused, slowed, and in some cases canceled nuclear related capital projects. This is mainly the result of three issues: the impact of the Fukushima disaster in March 2011, the overall sluggishness of the world economy, and the very low natural gas prices. Thus the Company is focusing on nuclear simulation business in those areas of the world where nuclear energy will be expanding, selling its Post-Fukushima solution products PSA-HD TM and DesignEP TM, and ControlSim TM which helps with the design and testing of new plants and modifications.”
Q2 2013 RESULTSQ2 2013 revenue declined 16.3% to $11.0 million from $13.2 million in Q2 2012. Higher revenue from the $36.0 million Slovakia simulator project in Q2 2013 ($2.5 million) compared to Q2 2012 ($0.5 million) was offset by a $2.0 million decline in revenue from nuclear simulation projects in Japan and Germany. The Slovakia simulator project is expected to be substantially completed in Q1 2014. In addition, in Q2 2012 the Company completed two significant nuclear simulation projects: one was for a full scope AGR replacement simulator with a British utility, the other was for significant upgrades to a Ukrainian simulator. These projects generated revenue of $1.4 million in Q2 2012.