GVP - Earnings call transcript Q4 2023

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Operator

Good day, and welcome to the GSE Systems Inc. Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Adam Lowensteiner Vice President of Lytham Partners. Please go ahead.

Adam Lowensteiner

Thank you, Betsy and good afternoon, everyone, and thank you all for joining us today to review the financial results for GSE Systems Fourth Quarter and Fiscal year 2023 ended December 31, 2023. Systems. call CEO company Emmett of Financial of the Loudermilk, are Pepe, on Officer and President GSE GSE us representing today the Kyle Chief With Systems; and

remind XXE Before concerning Act as similar future but expect, used expectations and everyone words These course we results. will, a of of as this current XXXX. forward-looking be meaning their statements XXXX are such events within may intend, mean not of amended should, Act forward-looking statement Words reflect statements, call that would does of identify of to could, begin, like Section expressions of that made is may, absence XXA the believe, during not I Securities anticipate statements the and statements are forward-looking. the Section considered in to the Securities

guarantees be and uncertainties cause These future to achievements and statements from important subject and actual factors other of are that could those projected. materially to or risks not performance different performance are

For risks, Factors the not to revise a future reports and to forth under factors, periodic new Commission, or file and on statements forward-looking including any and these does whether the Exchange information, with events in uncertainties of GSE's result documents statements, encouraged those of read filed are section. set or you GSE a forward-looking Risk discussion full intend Securities update as otherwise.

superior regarding EBITDA, operational and in not believes GAAP management recognize adjusted these Management be company's to can Accounting On EPS, to non-GAAP income GAAP. non-GAAP or in company's Accepted with to performance are adjusted to supplemental directly provide these to non-GAAP be meaningful found in figures, the of net of any should comparable Principles addition not the GAAP this titled reconciliation call, that substitute financial not of Generally might Regulation should accordance information be measures of considered measures, measures other under release. the may EBITDA, refer measures measures in performance. Investors that A prepared which G accordance figures adjusted addition other and similarly measures GAAP. with as for to in These a measure earnings or companies. comparable performance most SEC

now With I'd proceed. call Chief President the to Officer like Solutions. please Kyle turn of to over that, and Mr. GSE Executive Kyle, Loudermilk,

Kyle Loudermilk

Thank on you, you've release news release, XXXX Quarter not, press our industry a but website update found at Emmett and News review welcome Financial www.gses.com of Fourth I'll our today, start to then copy Conference Earlier I'd Adam. chance with results. brief financial offer the Call. like to Q&A section. To conclude had Fiscal if and financial this our results review a GSE's Year with Results we agenda Hopefully, can the issued lay be annual to we'll the call, today's a brief everyone a and will highlights a under quarterly session. and the out results. for detailing on

are countries First, accomplishing in be uranium, of that favor certainly a of stems goals. The seen continue industry the This issues fact goals and energy in part also -- price trends the are to which geopolitical the the to is to many used that especially nuclear basis. surge update these macro clearly global the reactor recent There a in has nuclear more and energy the continues the several on and This to be momentum that in decarbonization sites. industry on that build brief equation towards from nuclear drive towards nuclear. set fuel industry. shifting recognize momentum can

XX significant in carbon-free nuclear, the Currently, newer is XX/X. A massive Station, such nascent center Bitcoin recent artificial of power its power driving demand purchased the that data X in this demonstration sure can massive net on permission Susquehanna which a a scale, the the in reactors power available the option nuclear are from power by trend Bitcoin headlines government recent globally. Amazon be the largest very Talen and as its power a to carbon of the includes grid. of -- Services request and This neutral, Paris carbon-free XXX-megawatt available power to centers be associated forward. nuclear primarily emergence goal generation center operate a going of December. for a planned Nuclear that million, serious reliably This electricity given has to a of its towards technologies order AI the becoming nuclear and and for will grid the to This restart to power capacity and power carbon enables almost back on site news becomes about $XXX weeks, To of power enough going is years offset for Steam is for which mining source Japan's nuclear in week. favorable stable Electric is the nuclear for cloud In for regulatory real-time continue X the be and heels power is its million is filing for XXXX, the this stated carbon have a Web these TEPCO the hours Regulation to the hours acquisition agreement. The restarting this capabilities a the sources step the sustainable restart Amazon source, total a Japan fed Energy provide XX nuclear intelligence revival offer plant, XXXX, of power very needed. megawatts. to desire plant the company in Pennsylvania. and zero day, the data electric as Kashiwazaki-Kariwa, Japan computing power of also in vehicles Even Authority U.S. zero nuclear the in addition, adoption is nuclear and days positive carbon-free X,XXX In technologies is use will from ahead is the significant to electricity only and and which produces granting demonstrates online achieving that securing of site per to plant kilowatt in data it XXXX. The demand largest sixth entirely through XX licensed XXXX goals secure the take is by of which been since day be the make Amazon net has scalable rise demand place center,

Canadian other nuclear to carbon. announced its recent addition for is In is going fast-track also recognizes XXXX zero to zero looking get fully grid is on Japan, emissions The net to government by country for The achieve in ways approvals be Canada net that necessary baseload its zero projects. working power to news, nuclear government electrical by that be net energy to XXXX. to and

a nuclear promote company quicker and bond The simultaneously $XXX possible. In the government can raised quickly investing power the is a we that projects. energy to to them deliver that impacts As Energy and first issued it bond result, environmental to the and in that issued market, finance nuclear as working the announced enabling this its other for sustainability climate in positive order green expansion million, green in bring used to instrument solve issues. fruition in corporate is announced extensions green approval investments used life nuclear that environmental that proceeds financial U.S. investors maintenance, finance while fleet. issue, projects be is the for it making has projects processes on Under as that the invest recently to Constellation specifically of or U.S. bond

the pre-COVID the within although its While recent shoots to are into capital the yet at way said, is there make apparent spending slower back near-term moving signs system. tailwinds nuclear for abound, That spent the a industry some of industry green legislation of not levels but the the certainly outlook still days. positive, are is funding from starting and with pace, to

put this money does on managing industry spending having to some where our wins, key While the to business, is been today. we've able our business land aligned strain

XXXX. operations latter -- seen improvements We and our will have have in the half we in of significant

year of our power By this, plant set their upgrades. infrastructure for the has and which in accomplished for for One very control some efficiency, be -- to doing plants more power. this by ways. and can in is specific a reliably. over a the the to prepare more produce existing system. area improve the company expect full a been safely is can also future digital plant which result, investment help means as is this have the We that means This operate effort can lifetime convert which extend of efficiently, stage upgraded be to helps The is to the benefit very One customers encouraging. a to to XXXX fruitful plant

carbon-free mentioned, through building focus is means industry produce capitalize is nuclear As maintenance to well nuclear for producing versus and of is power power extraordinarily area This new we are power more to opportunities plants. today. these and upgrade GSE nuclear an power the a as upgrades in positioned cost-effective critical more

safe of part efficient sites with assisting on our fleet be will the sure focus and major and in a existing most forward, operate manner. they the nuclear making Going the operators of can

but but This said, QX The a This where able in consuming to successful close quarter some level was news, and the GSE's XXXX QX an call. That out XXXX. cost it expected year as it slipped good was in now limit at transition. and than structure we position seen off performance details were and in the have orders lighter the easy earnings year bit forward a of look company's was cash financial we for that quarter. a order XXXX. orders were get a is side half in continue the QX. on operate to QX the our high business task, reviewing of seen and reworking during second perspective burn Now not company's fiscal on are in of to is Overall, fourth we We cash. into paying in we

areas additional new aligned, we the especially bottom operating in engineering We are to focused to structure. are business now any will also business profitable given on the the flow growing which business the line on the as

expressed year details will cut as fourth compared As last initiatives lower seen out of in ago, fiscal on costs to the the year more to strides and management cost we to provide in a remarks. in expenses his and continue call, business Emmett results. our quarter conference make key the

just our of XXXX. in divisions. results these at demonstrate XXXX. the fiscal XX% orders year looking X quarter value-added the logos, which which software of division Services fiscal where were XXXX, enrichment is orders continued operators, $XX.X The provide with to strong division we of uranium sales, during wins many fourth expansion nuclear support $X.X had Engineering our name during million wins. The of the company in our million including million strategic and We to have new X the Many Engineering also new to over critical during $XX is company's key to from and to up Engineering XXXX. solid recorded Performance solutions came Performance Now and and

excellent software provided in are and mentioned side we the results. margins the As with has and business these predictability, of past, the pleased we

positive New Cautious the in of $X.X that quarter with we the drive customer through engineering million timing ramping is of feel but orders produce $XX elements third comprise the this won of engineering ago what nature X digital for the year the pleased lifetimes XXXX. $X million of to in during fourth The These the investment. current spending will quarter compared orders $XX million were process orders technology, approximately and lumpy. extend the million. in super second adopt approximately during be of the market. level tentative quarter to the targeted the power more for year orders disappointed capital to were by half It's up. of in cycle multi-decade industry compared We the now just a demonstrates the of in and

and order it earlier, And flow Given leading the for related license, orders up technology orders a industry basis. is team initial here, at results winning is Engineering engineering alignment important nature the with showing market. ramping the we as XXXX, and and proud are the an meaningful our feel positive improvement interaction the look XX% business of which that services for clearly of -- clearly customers. back. demonstrates through I'm this the is the close of demonstrating GSE's in more metric is on annual industry, improved was and in indicator developing I effort I more with this new to of tenacity

industry from had Our revenue XXXX, fourth the challenges, third $X.X Workforce continues in Solutions up X million marketplace a $X.X to to difficulties quarter segment year as staffing quarter the experience although quarter customers had of lower services business well the within division million due industry. highly experiencing given slightly is staff million, still to in it of sequentially of The $X.X as during nature quarter. the improved but fragmented from regards the the to ago. augmentation being the The on-site with selective fourth competitive providers

We currently this sense targeted providing us environment. on industry market in to for are focused that customers solutions our makes staffing nuclear and

summarize, unfolded, So the to company operations engineering and this streamlined improved successfully utilization. XXXX of our we the

we The fiscal as a a benefit third in expect XXXX. have This head and fourth to year really success, position quarters demonstrated reap XXXX. we efforts is fully full to and as -- begun and the in results be of we XXXX great year's that these

to forward We're remain control projects. not to on of decisions move client continues pipeline business Our in strong.

engage We engagement, making XXXX educating are we wins the The can the business. Through early and are services this using prospects choice customers are develop of new can in with aggressively traction. sure doing breadth the are wins vendor and and of GSE. them by indicators and them to client in all we logo offer for value of we we

of accomplishments into and at today. can $XX.X this team's thank a company the total XXXX optimistic driving to to conservative worked things to help million, are during proud our in capitalize GSE's $XX.X order million on norms, all While new was compared and QX like fiscal $X.X and employees get momentum. I'm improving GSE level GSE pre-pandemic We're for momentum million from who this clear. point fiscal to XXXX. during improvements flow up where our I'd positioned to the this well very is of XXXX. still is fiscal back turn we the and spend or at diligently new around XX% that's period, in almost that continue are XXXX industry GSE,

solutions. grow forward. who's technology to Senior Specifically, XX engineering more been a of over since I'd like to and software Services, moving which instrumental of been GSE Professional Vice GSE business, state-of-the-art in and acknowledge simulation President the critical brings of experience of to been Khanna, our XXXX Ravi Ravi with years services be contributor side has critical in our has only delivery

since Damian experience and of utility domestically keeping like and to better instrumental with business. Thanks within also engineering continues in definitely key and a and DeLongchamp, President, to brings from regulatory that since been the to edge been The been He's He is processes. that for team. at the by have with highlight the in we XXXX, cutting XX our by and abroad. I'd and is industry standpoint he efforts GSE than wins Programs has pandemic. a Damian in the various leadership over thought both with and company place, Performance. and of demonstrated Vice GE both plant financial deep the our applied drive roles compliance years energy GSE Engineering improvement specializes has experience nuclear industries and codes operational

is of to company to possible accomplish. profitability future. the in and the of It stage EBITDA this. great for be will sets a in progress near Emmett the have for and to the debt-free growth speak This forward. position moving We be more is details

Emmett please financial quarter I'll now over will XXXX review results. Emmett, to Pepe, fiscal proceed. turn call fourth who and GSE's the the CFO,

Emmett Pepe

Kyle. you, Thank

press and comments lower XXXX. focus ago, XX% the during million quarter sequential third release, compared I provide of to the in $XX.X decrease of detail a and my in highlighted quarter in Revenue slightly from numbers a where a the on can. million, was few year the XXXX $XX.X fourth areas With let color me added of

period revenues the from and heavy trends with slightly million third XXXX. this lower than the $X.X higher quarter to in quarter Orders While revenues continues million million a of division holiday slightly positive below prior of usage sequentially revenues the quarter, prior with million $XX $X.X the of a fourth Engineering received were was due consistent the is which $X billable end decrease for in ago million, a of to lower division Despite of year a quarter overall. year hours. The the but third $X.X results to Services PTO slower million at show from lower year, Engineering experienced than the ago, of leads Services XXXX. and $X.X slight which from for the quarter

As experienced orders Kyle company QX. few from indicated, the some with slippage QX a into

and flow company on looking annual an from the this customers. the $XX While the a nicely doors winning business, year, does move at business Engineering to XX% order past improved the to $XX.X that key due in The which XXXX. is investment increases right. The the team focus an order sales opened million are basis, our improved to flow in development million, for some has increase in to is new

in us an fourth Orders division Solutions the investment slightly in slight a of quarter $X.X when $X.X third quarter million XXXX, was spending slightly the improvement increase and in This compares third Our were lower led a million, of compared the quarter. to X year million from on positioned to sequential XXXX. Workforce $X.X the for to XXXX which customer basis. million million improved and in ago. $X.X solid has $X.X revenue fourth quarter was the in well sequential quarter in a

and were including from early Looking $X.X a certain million. less as terminations worker on-site year ago, well experience for and as orders competition continues received The we to clients projects. Solutions Workforce division challenges, increased

about for efficient the this the starting in advantageous monitoring plan more and to business longer company are term. making We internally and closely this unit

remaining resulted which balance in sheet. Solutions challenges fourth this related loss the of impairment a elimination on we segment, the had Workforce the in the of to $XXX,XXX, quarter goodwill Given on the during

due segment business, with have to compared This $X.X lower mentioned compared when explore profit fourth level revenue and lower or sequentially and taken the XXXX, As for of previously, revenue. Engineering million to The quarter hours to XX.X% caused of to XXXX revenue the $X.X decrease were third XX.X% this the ways XX.X% the profit to of we gross of margin third holiday was continue million of primarily to of compared gross fourth quarter and current value. Gross a fourth the of the -- which the quarter align XXXX was decline the percentage in XXXX. of of during million Kyle use maximize its steps profit or due to we of quarter. gross $X.X fourth in a PTO to revenue, or billable by quarter quarter

utilization reflected decrease fourth fourth public expenses that second the quarter quarter compared in half $X.X were $X.X in certain XXXX, compared of cost the been of results such and a billable half and has utilization have audit million. year, increased third year, million second the Engineering operating in major costs were to fees lower the $X.X XXXX, in the and margin XXXX. The quarter We factor XXXX. half incurred in segment expenses, excluding to we million, and certain focus from quarter the which the the amortization a first were depreciation the improvement. the is company second in Engineering which seen of of costs. to second uptick our This X.X% the percentage half in in XX% the of as also the half of containment of the not driving to when Operating the X.X% are of due sequential

the in quarter. in $X of $X.X future should year. per per reduction in are The to levels the million the conducted expense range that measures million in quarters at the quarter similar were We confident remain OpEx past

was adjusted $X to the adjusted of share. a share or third share Net or fourth $X.XX $XXX,XXX ended to fourth of quarter the was of in positive to backlog company per quarter the fiscal and fourth of an slippage $X.XX prior loss $X.XX share was XXXX. Adjusted or slightly compared in million lower quarter quarter fourth million during EBITDA the of per a quarter $XXX,XXX the lower fourth or which first to compared $X.X a the loss X share, in income the million loss $X.X third year, to of as third of of a $XXX,XXX per compared 'XX the net loss from net share XXXX per of order loss at of XXXX quarter quarter loss million the XXXX, at million the an or the in $X.XX negative compared negative to year of per and in loss which million the net $X.XX per or ago. in $XX.X of Company's the and compared a than of when quarter compared fourth $XX.X slightly quarter $XXX,XXX some totaled quarter $X.XX into XXXX. of end $XX,XXX $X.X was quarter experienced a Adjusted

division the major backlog example, XXXX the lie a QX, the the million For was fourth at of the expected million to million slightly sequentially third of was the the quarter quarter, $X.X of of lower $XXX,XXX the quarter XXXX. third at fourth of $XX.X compared end end to end ago. years. The of part at at in end expected X $XX.X million than over million improved in end lower which funding quarter to project fourth majority within of Solutions Performance at the as the continues was XXXX, of XXXX. $X.X which of same the million This period from compared the engineering $X.X to Engineering when a received Workforce $X.X approximately million the XXXX, of backlog Engineering of the $XX roughly year fourth in quarter the quarter segment division. Performance but was the total

secure exited sheet. which balance cash. of with company's X The totaling program. with customers the not the quarter discussions card $XXX,XXX $X.X letters We million credit to of in corporate is $X.X include various do our secure our $X.X levels Moving cash million, credit to cash million fourth the and to restricted

with Lind. repayments May, our We'll debt this make 'XX. of the payments to first We on be on secured our May convertible tranche concluding continue

million demonstrates the And the June of of $XXX,XXX and with $X Lind have today, In XXXX. begin the second year, first the convertible paid full tranche forward. by progress million $X.X we as we anticipate from from This will to moving and just this remaining company great note. May of for payment potential repay of

review the on prioritize determination we monthly continue whether a stock basis, repay and to on to combination both, in or possible. paying cash, We cash will a in of whenever

are to While that $X.X cash reduced always said, expenses costs in to of our some remain a in quarterly and which, orders we lowering we with our costs, are still in shifts coming book improved will optimistic can expenditures reduce the we our year along quarters, improved we flow. That expenditure utilization to $X where additional that quarterly million, cash working per examine company we reiterate while compared by million the every environment, continue $X have there challenging around our million to can result to I'll quarter position. roughly reserve ago. as we And X

cash done, work now to the a Kyle. improve made more becoming to and to company conversation there's has financial operation and While back positioned further be the leaner results. I'll significant turn flow to is stride

Kyle Loudermilk

higher-margin to been especially revenue in GSE, Thanks in manner. of much, and more efficient Emmett. half, as on focus businesses aligned improvement company demonstrates, has it the a year and second been has Summarized for deliver streamlined a very the XXXX

We're more question-and-answer Market set the focused please conservative, the future. can still we do year an for full industry position we improved winning environment We strong expect to It's be there great improvements the XXXX. in. believe where could business is for to somewhat proceed on remain long are a but will the of these of and reap the optimistic term. Adam, environment the highly tailwinds for that about you half benefits result nuclear with session. second in

Adam Lowensteiner

Thanks you please Kyle. proceed. Betsy will

Operator

no begin phone over will hand the Q&A are [Operator Adam line Instructions] time. this back session I'd We the session. the to question-and-answer at like to Lowensteiner. questions from now There

Adam Lowensteiner

flows And off you. Kyle to the fourth the streaky. what little questions. in somewhat Emmett but color order add it Kyle, Okay, like? ask look Can a Betsy. does Thank quarter, and you bit seems pipeline few a that? a I'll

Kyle Loudermilk

has call, we Yes. build for up. our bit prior in grown [indiscernible] And And of the lag a half then Engineering always Look, and you looking of it's look of the the pipeline the over I as build orders time. second up up period quarter-to-quarter, look a year-over-year, you like very year there's significantly. a stated you and you at think from for diagram, significantly

So that really orders had in closed we instance. some expect to for continue. And QX, we've that nice

So on highlighting we're looking earnings forward the business and the QX call call. conference to

remain just We're traction. to as we we demonstrated Engineering business. business really that. starting especially see this positive, really the And around Engineering focused So significant that on for to side, we've winning in continue some growth expect

have things believe do we So turned.

Adam Lowensteiner

is that lumpy the of tempo bidding flow? improved, what's regards correct? the from And that feedback with salespeople to as you mentioned, has the project It seems the although,

Kyle Loudermilk

has. labs, -- improved the a particularly significant of the board with our engineering, order for that's investment analysis, really on improved design design of well, long-term and and performance, in of expecting flow which simulation, government, Navy, ours, programs growing. an DOE likewise on which the our bids, work should yield seeing area certainly U.S. Particularly an It Yes. Department across for client is and

to to hearing force. So sales we're again, details we but look forward that, the that's from talking the of what

Adam Lowensteiner

more You've any rightsizing down. at the be cost Are company, there getting cuts done a to job expenses great had?

Kyle Loudermilk

you Emmett, take that? want do to

Emmett Pepe

got couple look, of on office Yes, headquarters We're at We've not going done. rest year. of right? building Kyle. leases, a sort constantly looking that cost, we've that, take to what to the our are I'll including -- we're expired this

be size savings on to our look office always going other So on and I cost to spend the leases. is we'll think assess the Vendor table.

be year, to and I through to went think we combing did on there's do savings see there's the side. some if think, additional through a with had but job cost comb fine-tooth the last I good

Adam Lowensteiner

can or becoming give in you the little an a the low. time is it? update debt-free company the still us a And what bit And on possibility of of then a future? line reminder debt What's is the

Emmett Pepe

Yes.

start then the note February call, completing of year June. we're a ago, million note couple we'll be payments $X.X will And the I the of we the 'XX, 'XX coming be on be in a I we think -- off. year, paying As up of from paid to signed within May second first mentioned should in debt-free. -- that in months, a under the And expected normal that on yes,

Adam Lowensteiner

That's all conclude? Kyle, the questions to I would you like had

Kyle Loudermilk

in in Yes. your appreciate joining to us future We joined time like here. the Thanks, for today everybody interest and GSE. I'd thank who moving and Adam, forward about I'm us. excited

have any from to management. Again, much, great Adam call and Lytham Partners, a a questions, be with so you you please we'd day. happy If thank everybody, out have to schedule follow-up Lowensteiner and reach

Operator

The conference for Thank attending presentation. has you today's now concluded.

now may disconnect. You

Gse Systems (GVP) 1 Apr 242023 Q4 Earnings call transcript