GSE Systems (GVP) investor relations material

Executive summary

• Revenue for Q2 2024 was $11.7 million, down 5% year-over-year but up $0.4 million sequentially; six-month revenue was $23.0 million, down 1% year-over-year.

• Net loss for Q2 2024 was $0.9 million, improved from $1.5 million loss in Q2 2023; six-month net loss was $2.8 million, improved from $4.4 million loss in 2023.

• Gross profit margin increased to 31.3% in Q2 2024 from 26.0% in Q2 2023 and 28.5% in Q1 2024; six-month gross margin rose to 29.9% from 24.1%.

• The company entered into a definitive merger agreement to be acquired for $4.10 per share in cash after Q2 2024.

• Achieved positive adjusted EBITDA for the first half of 2024 through strong Engineering results and expense management.

Financial highlights

• Engineering segment revenue grew 3% in Q2 2024 and 13% for the six months; Workforce Solutions revenue declined 28% in Q2 and 32% for the six months.

• Operating income for Q2 2024 was $0.3 million, compared to a loss of $0.8 million in Q2 2023 and $1.5 million loss in Q1 2024.

• Adjusted EBITDA for Q2 2024 was $0.6 million, compared to $(0.4) million in Q2 2023 and $(0.4) million in Q1 2024.

• Cash, cash equivalents, and restricted cash totaled $2.7 million as of June 30, 2024.

• Backlog as of June 30, 2024 was $34.7 million, down from $40.9 million at December 31, 2023.

Outlook and guidance

• Management continues to focus on organic growth, cross-selling, and upselling in the nuclear and adjacent clean energy sectors.

• The company is aligning operations to current industry spending levels and expects to benefit from future industry investment and government incentives.

• Order flow remains respectable but timing of new projects continues to be delayed, reflecting a cautious industry recovery.

• Management expects the acquisition to benefit shareholders, customers, and employees.