GVP - Earnings call transcript Q3 2020

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Operator

Hello and welcome to the GSE Solutions Third Quarter 2020 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to, Kalle Ahl with The Equity Group. Please go ahead.

Kalle Ahl

Thank you, Kevin, and good afternoon, everyone. us joining for you today. Thank

the may, believe, I Before the expectations as of that intend, be anticipate identify XXXX, and words to statements, XXA Securities not within to projected. everyone cause from events could as not other current could, are are amended will, XXE of like are but that or to made be performance we considered the during and statement of expect, materially actual Act statements may Act begin, different performance statements reflect a subject does and are important statements call the should, remind this not risks XXXX. expressions factors similar concerning and such Section statements Section future would those uncertainties future course Securities of achievements guarantees Words absence meaning and used results. forward-looking that is of forward-looking of These to These mean of forward-looking. their and

companies. these income in EBITDA, of reports Statements accepted discussion GSE's net section. to of Management or to this measures that read measures factors, a non-GAAP for under these meaningful supplemental in call, On under other to adjusted not figures or not titled does as any generally might are future measure adjusted to directly to SEC Regulation considered non-GAAP now Executive management are set otherwise. and of G comparable over you that these Investors please GAAP whether to prepared company's including to addition provide go or Securities accordance a recognize accounting events new or refer of EBITDA, I'd in GAAP. earnings uncertainties update turn substitute Forward-looking of figures, measures reconciliation GAAP. performance other Factors as any to not performance. measures Exchange of adjusted GSE in information information, Mr. with addition Loudermilk, These the result EPS, believes the non-GAAP should risks, to to those and release. financial forth may periodic GAAP measures principles Chief performance full revise not and in similarly which with the Kyle like Commission, the on call be measures, should Officer encouraged comparable and and file documents statements, of Risk a be operational most ahead. found the company's can Solutions. intend the in regarding be filed Kyle, GSE A superior accordance For with forward-looking

Kyle Loudermilk

to Kalle. quarter third I'd like financial everyone results to conference you, Thank GSE's call. welcome XXXX

flexibility client flow of capacity certainty a business. positive. our climate energy the sources the nuclear to XXXX energy existing during and generated Emmett our which financial our release a me even chance like copy energy. Hopefully, had months the $XX Chief generate on with After quarter Pepe, trillion challenging today's build, while cash September development selling and well of million below staying XXth totaling has repaying debt pandemic, long-term is nine positioning essential Biden of a which Small normalized a if to a the Joining $X.X with nearly nuclear. $X hybrid our you've $X.X recorded for activity, critical million with we efficient up can on third environment, third call industry leveraging which positive can't the project States We we of our anticipate includes administration we're Earlier of our not, less virtual United global cash ambitious more in issued near-term cash EBITDA change manage under accelerated the website found carbon cost covering Reactors an our this $XX.X negative and churn news Financial us is while safer press calls Biden's strong our on quarter, comparable at industry and this role plan review of to by solutions. equivalents advanced are Moreover when and under unprecedented front providing financial activities third both sufficient or unveiled value we adjusted Nuscale, in provide quarter $XXX,XXX Part industry for in totaled to person technology July this be and prior quarter impact News expensive which a by leader the in debt know, combat first rebounds. outlook today, and of simulation respective plays and during providing power the approach In of and services engineering long-term business a we success reactors the million the Modular revenue our nuclear cash contract services is in precision We year business. remain repayment continued that section. of free determined our www.gses.com the but containment to we and high of in were through flow SMR decarbonization figures operations awards Officer. In results. COVID-XX the due In potential customers predict faced bidding curtailed to release, supporting some pauses the to climate pollution of at you delayed our traditional below provided million focused the sharply pandemic. technology than

NITC COVID-XX. staff to the engagements significant augmentation delays impacted period of to client reduce the facility and have by stoppage continued and clients our project Industry Nuclear encourage to both Training a distancing. workforces be a Consulting due of hours [ph] been by own pandemic, segments as social also due during to their While at project been harder has hit the impacted prepared

caution this pushed out will Significant likely project augmentation as this were sector opportunities essential. staff been XXXX resulting into have from employees remain environment, to they're model XXXX NITC decisions have that already [ph], our to fortunate a due billable. work pandemic. the In on buying scalable is if in we're this are within our but possible bidding is in the which nuclear client resume expectation Our payroll

have won an solutions increasing level recently where We nimble new such also sectors industries been contracts. other providing of as broader we to manufacturing the several staffing

team clients core customer on verticals serving Additionally, expansion, as we're maintenance existing opportunities engineering, base our continues support to limited alternative engaging not development and plant, The the sectors as new energy, with opportunities land well such within industrial including but technology. to other manufacturing. and also focus information our energy pursuing industry in energy transportation, with as

for demand staffing to long-term training the and robust the needs the meet of services unique nuclear industry. Given outlook

to We Industry On continue were Vice in sectors. Training team-oriented challenging in XX outlook. this things energy of good reenergized during September many over to he thrilled improve more NITC brings make our years in Business. targeted including style. investments has the Brian the the experience of decade staffing business his passion times note, One our engineering as Brian we Brian's in come and Greene appointment to Consulting than announce to Nuclear of these President a industry developed at expertise professional group the staffing already and under the we nuclear leadership where and space expect System

steady leverage training value the million internet performance only large to of In organizational full want third XX% long-term improvement essential meat is critical $X.X upselling solutions million this core streamlined recurring This in approximately our anytime, for a leadership. clients $X.X which power also simulation quarter performance period. quarter. also track all development. to up tutorial, period as which Engineering, record requiring safe continue year provide we industry nine nature Performance provide. that is quarter million anywhere orders the cross the second remarkable of a projects. business the the we months in and quarter our good year totaled fundamental we quarter revenue million prior clients Horn's for earlier. sequentially web prior news million also and industry. but and this connectivity under Don between in cloud-based a of scope in capable for a segment deliver a This potato and $XXX,XXX workforce to speaks I'd North manner that opportunities We True up up one from the the we services performance for not solutions a for out and clients to-date from is stop his creating structure in engineering of maybe totaled organizational improvement suite and with flow based the time DP shop call and a will and another effective essential browser, further business to simulator a goal to $XX.X can our savings selling SaaS delivering year and believe only same creating compared the provides the additional from improvement $XX our of engineering placing software period like experience Don unified essential reached pandemic orders in We technology $XX.X cost training has EnVision in simulation GSE's nature believe software

improvement $XX.X $XX.X million backlog million NITC consisting end and at the of QX of at of Our stood backlog. total $XX.X performance million of backlog

employees to technologies. the compared are of GSE to second operational given our the XXXX. XXXX. we're GSE's pandemic, end approach about performance this our We long-term diligently client's we levels these working remain safety specialized services innovative quarter replicate backlog Amid opportunity efficiency. yet as is delivers and difficult critical to to essential relatively the Our flat to solid we a remained of assets, confident and feel that add

seen today carbon crisis, COVID-XX technologies, believe, long using certain emphasis we work for safety continues energy Moreover delayed As and closing in collaboration, best so importantly, and our will limited of the of times pandemic. period the can protecting substantial during employee a role to of free only In we've be work future. for clients meaningful to play before nuclear portion a and our and our time. in a migrated remote tools practices. most We've health employees base our on and setting of

opportunity result, to further real As created our footprint pursuing. are estate aggressively has this we an future optimize which a

simulation remains win. deliver for customers. now our virtual customer the higher long-term peer a Our project win, intact. to new takes, project This resulting integrated work improved environment to path visits schedule using ultimately strategy is fundamentally teams risk customers lower our of quality projects deliverables, approach sites. Regardless delivery and We in has COVID-XX

go We cash Emmett to ahead. call the strengthen Pepe our operations, maximize Please sheet. third focus on review to financial continue balance CFO, flow over growth, our costs, and our will the turn further results. I'll contain organic streamline quarter now Emmett. who

Emmett Pepe

driven COVID-XX Total XXXX needs QX, was segment by in in Kyle. related million headwinds, by in to NITC during million projects from staff in project you, line $XX.X decrease $X.X approximately for $XXX,XXX revenue. profit to primarily were with improvement profit our $XX XXXX The segment each reflecting declines. to performance in $X.X segment commence customers primarily augmentation improvement performance NITC lower million the delays compared by stoppages decrease Performance XXXX A was NITC in in revenue $X.X million. Thank to in our approximately to profit a our million $X.X QX, our decreases improvement compared remotely. decrease revenue and COVID-XX $XXX,XXX. totaled revenue a QX, decreased and revenue gross XXXX. $X.X declined inability to QX, The million quarter. profit in decline gross million million gross was $X.X certain due Gross in related revenue and year-over-year

structure the cost margin our maintain to We continue our during to percentages. pandemic manage

in million to $X.X Consulting. In figure quarter-over-quarter decrease Absolute percentages million received are with comparable in expenses XXXX. fact, year-to-date year-to-date. versus agreement from our SG&A profit gross margin by our cash QX, and The totaled QX, purchase $XXX,XXX expenses account in for up in XXXX SG&A $X.X escrow both the settlement segments driven were of an

XXXX QX, compared $XXX,XXX containment. Operating in Excluding $XXX,XXX EBITDA Non-GAAP in remained defined relatively this release EBITDA a QX, loss our reflecting loss emphasis totaled equaled $X.X in approximately basis positive approximately on our million in earnings an of a XXXX. to XXXX. loss operating adjusted expenses negative in QX, QX, adjusted to cost of as $XXX,XXX on XXXX compared provision, stable year-over-year approximately SG&A

and we successfully first the we debt. our paid credit paid agreement and XXXX, months during term down During million long-term QX, off of August, our $XX.X XXXX the Citizens Bank nine In note, of the this loan business. amended with capital we working believe term sufficient our used North of ongoing DP and for we for have the Engineering cash True Consulting. support available acquisitions After payout to

approximately prudently million debt Program. our quarter and million managing Protection year sheet. of balance the of under million $XX.X includes $X.X been cash. end, that our consisting debt net million At this $X.X earlier received Payroll Total $XX have totaled We of debt we loan

rent these have We funds as used other utilities payroll for such and related permitted cost uses. and

September PPP $XX loan XXXX apply we the to loan. compliance in in all the order As XX, of net our expect requirements be manage PPP full to the I'll as to This positive million. forgiven, would under cash generating conversation million cash be through is Kyle. for which our forgiveness of back with environment we flow Exclusive to to we testament difficult $X.X were balance economic now a go. ability turn

Kyle Loudermilk

Thanks open Emmett. Operator, please questions. for floor the

Operator

from Investments. Tim from coming is question first our Instructions] Chatard [Operator Meros

line now Your live. is

Tim Chatard

segments year revenue. both through trending to strong the segments up and both quite gross Just of margins related actually course year-on-year lower the the relative to

you had future a expect are current any reason gross in or or revenue gross margin indicative color other can to in recovery levels the what for potentially you you keep would there? back revert quarters, If any margin of

Kyle Loudermilk

seeing or that I'll been pandemic some it further take out the and - the time be It now us It if in have to fact Tim, on. ride pandemic. what does shine core could it's free it's color this to ability this a helping good the add see business margins and of Emmett business that's good and feel light Tim gross and businesses the what on than be further in call. some some operating may challenging thoughts, is focus and mean Yes, been that that question delayed. an in when Kyle. and our that's in or does the have we're business delayed, based lower shed that to Emmett, said, as quite on in show to while keep you're does But have this really you right high you those us there businesses on help that that during alluded we found projects margins opportunity we keeping any does come these color? that flowing altering core With possible. as do seeing back to gross right margin lean pandemic of have now. margins the been to cadence

Emmett Pepe

end. performance going kind business Yes, segment. would of into upon the margin The at the play always come mix lower only you is touched I NITC is the thing add to and than

we projects So overall the margin go the we through that's that and depending the the generated on maintaining cost as by that business segment, we with revenue will impact and strong margins different believe - pandemic. this customers point, have we're and

Tim Chatard

out that didn't think were maybe also you industries pursuing, could you I Industries potentially outside I give you I a the to if catch us some But flesh the of mentioned that think be that that segment. Okay, related maybe But nuclear? as were where a I energy. can nuclear on. take outside alternative that correctly. bit I NITC might is caught you to little understood focused able were specifically you to of business listed that color others there, that there you some were and

Kyle Loudermilk

have California the has the broader But year. strong instance. industry sector of of energy where that some other in past, in to can transition and we're the added that for is that folks opportunities profitable, to But as we for with for with there so manufacturing. Yes, do investments Brian a find we the to these on services course automotive, nice medical provide manufacturing and an vertical ability were that able focused We've folks, we add in with talent last find working some particularly as really add open a cross the do which broader they we're permanent to automotive the us crack seeing infrastructure. up temporal we is what been addition our - in particular staffing we've and need as really we over verticals One other helped opportunity was and alluded be sector we've the of very sales coming really seen services seen nuclear. of with in in the in the through pandemic engineering step one

Tim Chatard

Okay, that try bona to strategic to so opposed as industries, like opportunistic to a the fide right that about sounds is think to new more vector it's penetrate way it?

Kyle Loudermilk

to we in No not the that I nuclear really folks segments really. beyond you can segments, target We hire - folks [indiscernible] that to team conference success calls. these are hire I alluded Where not in and where the we mentioned. earnings past see intentionally

continued where cut that's results So and we've we've the the if our discussed. successful investment turns. not successful, see we ready that been we it's are a bounce, strategic sure to If then of make losses and investment we're you that market with where result we

Tim Chatard

don't Okay if discussion if the there's couple and got best for a what's back there? guidance in I've I But queue. the your to want a more go it's me questions. - to dominate

Kyle Loudermilk

maybe check just one say would we'll the I more and or two then Tim, questions queue. on

Tim Chatard

Yes.

concept about You been for whether or longer virtually. maybe you've that of that's if simulation of been it I'm the being that curious changed all? do delivered scope business something virtual and curious a going is working remain mentioned time phenomenon periods that. something would delivering on was forward, your about to revenue might that's if of hear more margin sort - COVID that simulation I'm enhance the the what to would potentially same, just the structure work

Kyle Loudermilk

the Not very traditional good particular dealing risk with to approached. to long time that's for through working be the customers. pervasive efficient, with that's work we utility us projects seen plan. place as know we've particular work the been I'll accurate training virtually infrastructure for and with What because how and in plants, sectors solution you they investments an example safely. try place and in walk projects made investment in you change with and solution doesn't Yes, their lower motivated amount we've and simulation cases used now to are more a deliver with customer as of our to while Traditionally deliver to more really management margins a use to has This pandemic adopt technology infrastructure some T&E and you're change operate in power prudent necessarily really and for to reasons, quickly utility customers. during put of this

that, the side as they we been as of along adoption hasn't customer was and which on moving good So rapid But were wanted. sign. a

have seen to this the being pandemic we with don't is for For you come the But projects. can files go technology, these doing a as travel the work need past, as do because We to scope that servers say, we've we're drop sometimes travel have educate was on more able really and get with explains to that made induce firewalls tear secure the the directly manner wear to see the technology seeing. what done. customers Zoom, don't margin in work as The - we've that silver vice such there travel that's efficiently somewhat more for you a no we to T&E it's we been to with the unless to to was in there with But travel saving and opportunity broader And client the the is to essential absolutely you also has VPNs. pandemic, and need virtually lining We're overall us leverage marginally. just be accurate client virtually been often, to need an able money in sites as teams using margins versa unless collaboratively more and us. us it of really to as now at a often. don't can collaborative work efficient, using we than such and client budgets and reduction

Tim Chatard

all me. That's I Thanks. Great, I understand. from it. appreciate

Kyle Loudermilk

Kevin, and questions. much more queue? thanks the any Okay, questions good very in

Operator

the turn back Not any sir. for I'll closing floor at to or this further comments. over time, you

Kyle Loudermilk

your joining us. for won't the time forward to thanks near a over we given one-on-one accessible everyone discussion. a conferences We've and in Great, road It term calls. like Well I'd good thank interest in certainly these and of the GSE. pandemic. calls for was number for had We look investor on we be past to Kevin. more. months that few good We remain appreciate

reach IR firm, So to wanted Group. emphasize in Kalle Equity out The that. to Please Ahl our

I'd If interested call. scheduling for you're with like in again, We'll with us. call be to everybody delighted thank speak joining today's a follow-up you. to Once

Operator

that today's does you conclude teleconference. Thank

this for You your a you and thank day. wonderful may have time participation disconnect line your at today. We

Gse Systems (GVP) 16 Nov 202020 Q3 Earnings call transcript