I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicize valuable information for shareholder community.
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Latest posts by Marie Martinez (see all)
- Earnings Results under Review: Himax Technologies Inc. (NASDAQ: HIMX) - November 30, 2019
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- Hot Stock of the Day: Turtle Beach Corporation (NASDAQ: HEAR) - November 30, 2019
COLUMBIA, Md, November 30, 2019 – Shares of GSE Systems Inc. (NASDAQ: GVP) showed the bearish trend with a lower momentum of -0.85% to $1.17. The company traded total volume of 21.172K shares as contrast to its average volume of 16.79K shares. The company has a market value of $23.21M and about 19.84M shares outstanding.
GSE Systems, Inc. (GSE or the Company) (NASDAQ:GVP) reported total Performance Improvement Solutions (Performance) revenue of $13.00M and $10.90M for Q2 2019 and Q2 2018, respectively. The Company recorded total Performance orders of $3.70M and $8.60M for Q2 2019 and Q2 2018, respectively. The increase in revenue was primarily driven by the acquisition of DP Engineering in Q1 2019, which contributed $2.70M of revenue in Q2 2019. It was partially offset by the decrease of $0.60M revenue from foreign subsidiaries as a result of the winding down of the international subsidiaries.
Nuclear Industry Training and Consulting (NITC) revenue decreased to $10.40M for Q2 2019 from $13.80M for Q2 2018. NITC orders totaled $5.80M and $7.40M for Q2 2019 and Q2 2018, respectively. The decrease in revenue was largely due to lower staffing needs during the quarter. Q2 2019 gross profit decreased to $5.90M, or 25% of revenue, from $6.30M, or 26% of revenue, in Q2 2018.
Performance gross profit for Q2 2019 was $4.50M, or 34.9% gross margin, compared to $4.40M, or 40.8% gross margin, in Q2 2018. The gross margin percentage for Performance was lower in Q2 2019, primarily due to the recent acquisitions of True North and DP Engineering which have lower margin projects.
NITC gross profit for Q2 2019 was $1.30M, or 12.7% gross margin, compared to approximately $1.90M, or 13.8% gross margin, in Q2 2018. The lower gross profit percentage in Q2 2019 was primarily due to lower margin work from a major customer in 2019.
Selling, general and administrative (SG&A) expenses in Q2 2019 totaled $4.30M, or 18.5% of revenue, compared to $4.80M, or 19.4% of revenue, in Q2 2018. The minor fluctuations in SG&A expenses represented the normal changes in the regular business operation.
Amortization of definite-lived intangible assets increased to $0.50M in Q2 2019, compared to $0.30M in Q2 2018. The increase in amortization of definite-lived intangible assets in 2019 was primarily due to acquisitions of DP Engineering and True North. In Q2 2019, DP Engineering and True North’s amortization expenses totaled $0.10M and $0.30M, respectively.
Operating income was approximately $0.70M and $0.70M in Q2 2019 and Q2 2018, respectively.
Net loss for Q2 2019 totaled approximately $0.10M, or $(0.01) per basic and diluted share, compared to net income of $1.00M, or $0.05 per basic and diluted share, in Q2 2018. The change was primarily driven by $0.30M of increase on interest expense and $0.90M increase on provision for income taxes.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for Q2 2019 were $1.30M compared to $1.20M in Q2 2018.
BACKLOG AND CASH POSITION
Backlog at June 30, 2019 was $54.90M, compared to $68.90M at March 31, 2019. Backlog at June 30, 2019, included $38.60M of Performance backlog, $4.90M of which was attributable to DP Engineering, and $16.30M of NITC backlog.
GSE’s cash position at June 30, 2019, was $9.70M, as compared to $11.30M, at March 31, 2019. The change in cash position was primarily driven by the timing difference of cash collection and payments in different periods and $1.20M payment on the principal of long-term debt.
The Company offered net profit margin of -5.40% while its gross profit margin was 24.60%. ROE was recorded as -17.10% while beta factor was 1.26. The stock, as of recent close, has shown the weekly downbeat performance of -4.11% which was maintained at -44.29% in this year.