Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Jul. 31, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | GSE SYSTEMS INC | |
Entity Central Index Key | 944,480 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 0 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 15,525 | $ 21,747 |
Restricted cash | 960 | 1,140 |
Contract receivables, net | 18,616 | 18,863 |
Prepaid expenses and other current assets | 2,956 | 2,052 |
Total current assets | 38,057 | 43,802 |
Equipment, software, and leasehold improvements | 7,149 | 6,759 |
Accumulated depreciation | (5,997) | (5,527) |
Equipment, software, and leasehold improvements, net | 1,152 | 1,232 |
Software development costs, net | 756 | 982 |
Goodwill | 7,130 | 5,612 |
Intangible assets, net | 3,654 | 454 |
Other assets | 289 | 1,574 |
Total assets | 51,038 | 53,656 |
Current liabilities: | ||
Accounts payable | 676 | 923 |
Accrued expenses | 2,967 | 2,437 |
Accrued compensation | 3,418 | 2,624 |
Billings in excess of revenue earned | 16,131 | 21,444 |
Accrued warranty | 1,260 | 1,137 |
Current contingent consideration | 1,691 | 2,105 |
Other current liabilities | 867 | 716 |
Total current liabilities | 27,010 | 31,386 |
Other liabilities | 1,515 | 1,149 |
Total liabilities | 28,525 | 32,535 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock $.01 par value, 2,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock $0.01 par value, 30,000,000 shares authorized, 20,777,168 and 20,433,608 shares issued and 19,178,257 and 18,834,697 shares outstanding | 210 | 204 |
Additional paid-in capital | 76,231 | 75,120 |
Accumulated deficit | (49,471) | (49,427) |
Accumulated other comprehensive loss | (1,458) | (1,777) |
Treasury stock at cost, 1,598,911 shares | (2,999) | (2,999) |
Total stockholders' equity | 22,513 | 21,121 |
Total liabilities and stockholders' equity | $ 51,038 | $ 53,656 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 20,977,230 | 20,433,608 |
Common stock, shares outstanding (in shares) | 19,378,319 | 18,834,697 |
Treasury stock (in shares) | 1,598,911 | 1,598,911 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||||
Revenue | $ 15,409 | $ 14,428 | $ 48,876 | $ 39,820 |
Cost of revenue | 11,185 | 10,430 | 35,513 | 28,329 |
Gross profit | 4,224 | 3,998 | 13,363 | 11,491 |
Operating expenses: | ||||
Selling, general and administrative | 4,374 | 2,936 | 11,740 | 8,606 |
Research and development | 353 | 381 | 1,103 | 1,010 |
Restructuring charges | 0 | 85 | 45 | 487 |
Depreciation | 79 | 91 | 254 | 294 |
Amortization of definite-lived intangible assets | 50 | 72 | 148 | 219 |
Total operating expenses | 4,856 | 3,565 | 13,290 | 10,616 |
Operating income (loss) | (632) | 433 | 73 | 875 |
Interest income, net | 15 | 11 | 60 | 52 |
Gain (loss) on derivative instruments, net | 71 | (211) | 226 | (346) |
Other income (expense), net | 33 | 15 | (4) | 112 |
Income (loss) before income taxes | (513) | 248 | 355 | 693 |
Provision for income taxes | 92 | 80 | 399 | 275 |
Net income (loss) | $ (605) | $ 168 | $ (44) | $ 418 |
Basic earnings per common share | $ (0.03) | $ 0.01 | $ 0 | $ 0.02 |
Diluted earnings per common share | $ (0.03) | $ 0.01 | $ 0 | $ 0.02 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract] | ||||
Net income | $ (605) | $ 168 | $ (44) | $ 418 |
Foreign currency translation adjustment | 192 | (50) | 319 | (152) |
Comprehensive income (loss) | $ (413) | $ 118 | $ 275 | $ 266 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Treasury Stock [Member] | Total |
Balance at Dec. 31, 2016 | $ 204 | $ 75,120 | $ (49,427) | $ (1,777) | $ (2,999) | $ 21,121 |
Balance (in shares) at Dec. 31, 2016 | 20,433,608 | (1,598,911) | 18,834,697 | |||
Stock-based compensation expense | 1,793 | $ 1,793 | ||||
Common stock issued for options exercised (in shares) | 160,155 | |||||
Common stock issued for options exercised | $ 2 | 274 | 276 | |||
Common stock issued for RSUs vested (in shares) | 383,467 | |||||
Common stock issued for RSUs vested | $ 4 | (4) | 0 | |||
Vested RSU shares withheld to pay taxes | (952) | |||||
Foreign currency translation adjustment | 319 | 319 | ||||
Net income | (44) | (44) | ||||
Balance at Sep. 30, 2017 | $ 210 | $ 76,231 | $ (49,471) | $ (1,458) | $ (2,999) | $ 22,513 |
Balance (in shares) at Sep. 30, 2017 | 20,977,230 | (1,598,911) | 19,378,319 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ (44) | $ 418 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 254 | 294 |
Amortization of definite-lived intangible assets | 148 | 219 |
Amortization of capitalized software development costs | 352 | 296 |
Change in fair value of contingent consideration, net | 436 | (370) |
Stock-based compensation expense | 1,873 | 900 |
(Gain)/loss on derivative instruments, net | (226) | 346 |
Deferred income taxes | 78 | 96 |
Loss on sales of equipment, software, and leasehold improvements | 0 | 3 |
Changes in assets and liabilities: | ||
Contract receivables | 5,318 | (3,616) |
Prepaid expenses and other assets | 770 | (269) |
Accounts payable, accrued compensation and accrued expenses | (911) | 2,254 |
Billings in excess of revenue earned | (5,204) | 3,183 |
Accrued warranty | 112 | (80) |
Other liabilities | 359 | 208 |
Bad debt expense | 118 | 0 |
Cash provided by operating activities | 3,433 | 3,882 |
Cash flows from investing activities: | ||
Proceeds from sale of equipment, software and leasehold improvements | 0 | 30 |
Capital expenditures | (64) | (53) |
Capitalized software development costs | (126) | (196) |
Acquisition of Absolute Consulting, Inc., net of cash acquired | (8,455) | 0 |
Restrictions of cash as collateral under letters of credit | 0 | (4) |
Releases of cash as collateral under letters of credit | 180 | 254 |
Cash used in investing activities | (8,465) | 31 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock on the exercise of stock options | 276 | 594 |
Payments on contingent consideration | (850) | (1,421) |
RSUs withheld to pay taxes | (952) | 0 |
Cash used in financing activities | (1,526) | (827) |
Effect of exchange rate changes on cash | 336 | (77) |
Net increase (decrease) in cash and cash equivalents | (6,222) | 3,009 |
Cash and cash equivalents at beginning of year | 21,747 | 11,084 |
Cash and cash equivalents at end of period | $ 15,525 | $ 14,093 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Basis of Presentation The consolidated interim financial statements included herein have been prepared by GSE Systems, Inc. (the "Company," "GSE," "we," "us," or "our") and are unaudited. In the opinion of the Company's management, all adjustments and reclassifications of a normal and recurring nature necessary to present fairly the financial position, results of operations and cash flows for the periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been condensed or omitted. The results of operations for interim periods are not necessarily an indication of the results for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on March 28, 2017. Certain reclassifications have been made to prior period amounts to conform to the current presentation. The Company reclassified research and development costs from selling, general and administrative expenses and presented them as a separate caption within operating expenses on the consolidated statements of operations . In addition, the Company also reclassified the stock-based compensation related to management/employees from cost of revenue and research and development expenses to selling, general and administrative expenses. The Company has two reportable segments as follows: ● Performance Improvement Solutions (approximately 62% of revenue) Our Performance Improvement Solutions segment primarily encompasses our power plant high-fidelity simulation solutions, as well as engineering solutions and interactive computer based tutorials/simulation focused on the process industry. This segment includes various simulation products, engineering services, and operation training systems delivered across the industries we serve: primarily nuclear and fossil fuel power generation, as well as the process industries. Our simulation solutions include the following: (1) simulation software and services, including operator training systems, for the nuclear power industry, (2) simulation software and services, including operator training systems, for the fossil power industry, and (3) simulation software and services for the process industries used to teach fundamental industry processes and control systems to newly hired employees and for ongoing workforce development and training. GSE and its predecessors have been providing these services since 1976. ● Nuclear Industry Training and Consulting (approximately 38% of revenue) Nuclear Industry Training and Consulting provides highly specialized and skilled nuclear operations instructors, procedure writers, technical engineers, and other consultants to the nuclear power industry. These employees work at our clients' facilities under client direction. Examples of these highly skilled positions are senior reactor operations instructors, procedure writers, project managers, work management specialists, planners and training material developers. This business is managed through our subsidiaries Hyperspring and Absolute Consulting, Inc. The business model, management focus, margins and other factors clearly separate this business line from the rest of the Company's product and service portfolio. GSE and its predecessors have been providing these services since 1997. On September 20, 2017, the Company acquired Absolute Consulting, Inc., now a wholly-owned subsidiary of GSE Performance Solutions, Inc., for $8.9 million. Absolute Consulting, Inc. is a provider of technical consulting and staffing solutions to the global nuclear power industry and employs approximately 200 professionals with expertise in procedures writing, engineering, technical support, project management, training, project controls, and corrective actions. This acquisition brings a natural adjacency to GSE, fits well with our growth strategy, and benefits our customers from expanded capabilities and offerings. For reporting purposes, Absolute Consulting, Inc. was aggregated with Hyperspring into our Nuclear Industry Training and Consulting segment due to similarities in services provided including training and staff augmentation to the nuclear energy sector. In addition, both entities will report to the same management team and share support staff such as sales, recruiting and business development. As such, 100% of the goodwill acquired was allocated to the Nuclear Industry Training and Consulting segment. Financial information about the two business segments is provided in Note 16 of the accompanying condensed consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. The Company's most significant estimates relate to revenue recognition on long-term contracts, allowance for doubtful accounts, Revenue recognition The Company recognizes revenue through fixed price contracts for the sale of uniquely designed/customized systems containing hardware, software and other materials which generally apply to the Performance Improvement Solutions segment and time and material contracts for Nuclear Industry Training and Consulting support and service agreements. In accordance with Accounting Standards Codification (ASC) 605-35 , Construction-Type and Production-Type Contracts Uncertainties inherent in the performance of contracts include labor availability and productivity, material costs, change order scope and pricing, software modification and customer acceptance issues. The reliability of these cost estimates is critical to our revenue recognition as a significant change in the estimates can cause our revenue and related margins to change significantly from the amounts estimated in the early stages of the project. As we recognize revenue under the percentage-of-completion method, we provide an accrual for estimated future warranty costs based on historical and projected claims experience. Our long-term contracts generally provide for a one-year warranty on parts, labor and any bug fixes as it relates to customized software embedded in the systems. Our system design contracts do not normally provide for post contract support (PCS) in terms of software upgrades, software enhancements or telephone support. To obtain PCS, the customers must normally purchase a separate contract. Such PCS arrangements are generally for a one-year period renewable annually and include customer support, unspecified software upgrades, and maintenance releases. We recognize revenue from these contracts ratably over the term of the agreements. Revenue from the sale of software licenses without other elements in the contract and which do not require significant modifications or customization for the Company's modeling tools are recognized when the license agreement is signed, the license fee is fixed and determinable, delivery has occurred, and collection is considered probable. We utilize written contracts to establish the terms and conditions by which product support and services are sold to customers. Delivery is considered to have occurred when title and risk of loss have been transferred to the customer, which generally occurs after a license key has been delivered to the customer. We also recognize revenue from the sale of software licenses from contracts with multiple deliverables. These software license sales are evaluated under ASC 985-605, Software Revenue Recognition We recognize revenue under time and materials contracts primarily from the Nuclear Industry Training and Consulting segment and certain cost-reimbursable contracts. Revenue on time and material contracts is recognized as services are rendered and performed. Under a typical time-and-materials billing arrangement, customers are billed on a regularly scheduled basis, such as biweekly or monthly. Any unbilled amounts are typically billed the following month. Under cost-reimbursable contracts, which are subject to a contract ceiling amount, reimbursed for allowable costs and paid a fee, which may be fixed or performance based. However, if costs exceed the contract ceiling or are not allowable under the provisions of the contract or applicable regulations, may not be able to obtain reimbursement for all such costs. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements Not Yet Adopted | 2. Recent Accounting Pronouncements Accounting pronouncements recently adopted In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11). ASU 2015-11 requires that an entity measure inventory at the lower of cost and net realizable value. This ASU does not apply to inventory measured using the last-in, first-out method. ASU 2015-11 was effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We adopted ASU 2015-11 effective January 1, 20 In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation: Topic 718: Improvements to Employee Share Based Payment Accounting Accounting pronouncements not yet adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses", which introduces new guidance for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including, but not limited to, trade and other receivables, held-to-maturity debt securities, loans and net investments in leases. The new guidance also modifies the impairment model for available-for-sale debt securities and requires the entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. The standard also indicates that entities may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. The ASU is effective for public companies for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on the Company's consolidated financial position, results of operations and cash flows. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash In January 2017, the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the definition of a Business , which amends the current definition of a business. Under ASU 2017-01, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contributes to the ability to create outputs. ASU 2017-01 further states that when substantially all of the fair value of gross assets acquitted is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. The new guidance also narrows the definition of the term "outputs" to be consistent with how it is described in ASC 606, Revenue from Contracts with Customers . The changes to the definition of a business will likely result in more acquisitions being accounted for as asset acquisitions. ASU 2017-01 is effective for acquisitions commencing on or after June 30, 2019, with early adoption permitted. Adoption of this guidance will be applied prospectively on or after the effective date. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 simplifies the accounting for goodwill impairment by eliminating Step 2 of the current goodwill impairment test, which required a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which the reporting unit's carrying value exceeds its fair value, limited to the carrying value of the goodwill. ASU 2017-04 is effective for financial statements issued for fiscal years, and interim periods beginning after December 15, 2019. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation Compensation – Stock Compensation |
Basic and Diluted Earnings (Los
Basic and Diluted Earnings (Loss) Per Common Share | 9 Months Ended |
Sep. 30, 2017 | |
Basic and Diluted Earnings (Loss) Per Common Share [Abstract] | |
Basic and Diluted Earnings (Loss) Per Common Share | 3. Basic and Diluted Earnings per Common Share Basic (loss) earnings per share is based on the weighted average number of outstanding common shares for the period. Diluted (loss) earnings per share adjusts the weighted average shares outstanding for the potential dilution that could occur if outstanding vested stock options were exercised. The number of common shares and common share equivalents used in the determination of basic and diluted earnings per share were as follows: (in thousands, except for share amounts) Three months ended Nine months ended September 30, September 30, 2017 2016 2017 2016 Numerator: Net (loss) income $ (605) $ 168 $ (44) $ 418 Denominator: Weighted-average shares outstanding for basic (loss) income per share 19,280,770 18,230,148 19,204,778 18,052,019 Effect of dilutive securities: Stock options and restricted stock units - 239,969 - 235,851 Adjusted weighted-average shares outstanding and assumed conversions for diluted (loss) income per share 19,280,770 18,470,117 19,204,778 18,287,870 Shares related to dilutive securities excluded because inclusion would be anti-dilutive 534,833 734,833 550,218 741,862 |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2017 | |
Acquisition - Absolute [Abstract] | |
Acquisition - Absolute [Text Block] | 4. Acquisition On September 20, 2017, GSE, through its wholly-owned subsidiary GSE Performance Solutions, Inc. ("Performance Solutions"), acquired 100% of the capital stock of Absolute Consulting, Inc. ("Absolute") for $8.8 million pursuant to the Stock Purchase Agreement by and among Performance Solutions and the sellers of Absolute. The purchase price was subject to a customary working capital adjustment resulting in total consideration of $8.9 million (subject to post-closing adjustment). An indemnification escrow of $1.0 million was funded from the cash paid to the sellers and is available to GSE and Performance Solutions to satisfy indemnification claims until September 20, 2019. Absolute is a provider of technical consulting and staffing solutions to the global nuclear power industry. Located in Navarre, Florida, Absolute has established long-term relationships with blue-chip customers primarily in the nuclear power industry. The acquisition of Absolute is expected to strengthen the Company's global leadership in nuclear training and consulting solutions, add new capacities to our technical consulting and staffing solutions offerings and bring highly complementary customers, while deepening relationships with existing clients. The following table summarizes the consideration paid to acquire Absolute and the preliminary fair value of the assets acquired and liabilities assumed at the date of the transaction. Due to the recent completion of the acquisition of Absolute, the Company recorded the assets acquired and liabilities assumed at their preliminary estimated fair value. As of September 30, 2017, the Company had not finalized the determination of the fair value allocated to various assets and liabilities, including, but not limited to, contract receivables, prepaid expenses and other current assets, property, and equipment, intangible assets, accrued expenses, accrued compensation and the residual amount allocated to goodwill. The following amounts except for Cash are all reflected in the Consolidated Statement of Cash Flow within the "Acquisition of Absolute Consulting, Inc., net of cash acquired" line caption. (in thousands) Total purchase price $ 8,910 Purchase price allocation: Cash $ 455 Contract receivables 5,121 Prepaid expenses and other current assets 70 Property, and equipment, net 102 Intangible assets 3,340 Accounts payable, accrued expenses, and other liabilities (78) Accrued compensation (1,618) Total identifiable net assets 7,392 Goodwill 1,518 Net assets acquired $ 8,910 The goodwill is primarily attributable to the additional capacities to offer broader solutions to new and existing customers and the expected enhanced cost and growth synergies as a result of the acquisition. The total amount of goodwill that is expected to be tax deductible is $1.5 million. All of the $1.5 million of goodwill was assigned to our Nuclear Industry Training and Consulting segment. As discussed above, the goodwill amount is provisional pending receipt of the final valuations for various assets and liabilities. The fair value of the assets acquired includes gross trade receivables of $5.1 million, of which the Company expects to collect in full. GSE did not acquire any other class of receivable as a result of the acquisition of Absolute. The Company identified $3.3 million of other intangible assets, including customer relationships, trademarks/names and non-compete agreements, with amortization periods of three to five years. The fair values of the intangible assets are provisional pending receipt of the final valuations for those assets. Unaudited Pro Forma Financial Information The acquired business contributed revenue of $1.2 million and earnings of $36,000 to GSE for the period from September 20, 2017 to September 30, 2017. The following unaudited pro forma summary presents consolidated information of GSE as if the business combination had occurred on January 1, 2016. The unaudited pro forma financial information was prepared based on historical financial information. These pro forma amounts have been calculated after applying GSE's accounting policies and adjusting the results of Absolute to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2016, with the consequential tax effects. In 2017, GSE has incurred $0.5 million of acquisition-related costs. These expenses are included in general and administrative expense on GSE's consolidated statements of operations and are reflected in pro forma earnings for the nine months ended September 30, 2016, in the table below. The pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the acquisition had been completed on January 1, 2016, nor is it intended to be an indication of future operating results. Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 (unaudited and in thousands) Revenue $ 23,055 $ 24,097 $ 77,470 $ 70,175 Net (loss) income (293) 241 448 (69) |
Contingent Consideration
Contingent Consideration | 9 Months Ended |
Sep. 30, 2017 | |
Contingent Consideration [Abstract] | |
Contingent Consideration | 5. Contingent Consideration Acquisitions may include contingent consideration payments based on future financial measures of an acquired company. Under ASC 805, " Business Combination", As of September 30, 2017 and December 31, 2016, contingent consideration, related to our acquisition of Hyperspring via an earnout, included in current liabilities totaled $1.7 million and $2.1 million, respectively. The Company made a payment of $0.9 million and $1.4 million in the first quarter of 2017 and 2016, respectively, related to the liability-classified contingent consideration arrangements. As of November 14, 2017, we will not record contingent consideration adjustments for the Hyperspring acquisition due to the expiration of the earnout period. |
Contract Receivables
Contract Receivables | 9 Months Ended |
Sep. 30, 2017 | |
Contract Receivables [Abstract] | |
Contract Receivables | 6. Contract Receivables Contract receivables represent balances due from a broad base of both domestic and international customers. All contract receivables are considered to be collectible within twelve months. Recoverable costs and accrued profit not yet billed represent costs incurred and associated profit accrued on contracts that will become billable upon future milestones or completion of contracts. The components of contract receivables are as follows: (in thousands) September 30, December 31, 2017 2016 Billed receivables $ 12,039 $ 13,325 Recoverable costs and accrued profit not yet billed 6,715 5,555 Allowance for doubtful accounts (138) (17) Total contract receivables, net $ 18,616 $ 18,863 During October 2017, the Company invoiced $4.6 million of the unbilled amounts related to the balance at September 30, 2017. As of September 30, 2017, the Company had one customer that accounted for 26.3% of the Company's consolidated contract receivables. As of December 31, 2016, the Company did not have any customers that accounted for more than 10% of the Company's consolidated contract receivables. On March 29, 2017, Westinghouse, a customer of our Performance Improvement Solutions segment, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York, Case No. 17-10751. During the second quarter of 2017, Westinghouse assumed one of our contracts related to Southern Nuclear Company. Therefore, we have not recorded a reserve for outstanding receivables related to this contract. On July 31, 2017, South Carolina Electric and Gas Company announced that it will cease construction of new nuclear plants at the V.C. Summer Nuclear Station, one of the facilities for which the Company has an executory contract with Westinghouse for the provision of simulator software and equipment. Although there has been no formal rejection of the contract as part of the Westinghouse bankruptcy process, GSE now considers it likely that Westinghouse will reject the parties' contract pertaining to the V.C. Summer Nuclear Station. Therefore, at June 30, 2017, GSE reserved 100% of accounts receivable, unbilled receivables, and billings in excess related to the V.C. Summer Nuclear Station, resulting in a net bad debt charge of $118,000. At September 30, 2017, in addition to the foregoing amounts associated with the V.C. Summer Nuclear Station, the Company had approximately $0.1 million in net billed and unbilled pre-petition receivables attributable to Westinghouse. The Company has assessed the recoverability of the remaining $0.1 million in net billed and unbilled pre-petition receivables and concluded that the likelihood of loss is not probable, and therefore, none of the remaining outstanding amounts have been reserved at September 30, 2017. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Prepaid Expenses and Other Current Assets | 7. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: (in thousands) September 30, December 31, 2017 2016 Inventory $ 1,159 $ - Income taxes receivable 268 446 Prepaid expenses 451 422 Other current assets 1,078 1,184 Total prepaid expenses and other current assets $ 2,956 $ 2,052 At September 30, 2017, prepaid expenses and other current assets are comprised primarily of inventory that is being purchased to support the construction of three major nuclear simulation projects related to a significant contract that was executed during the first quarter of 2016. Inventory is recorded at the lower of cost or market value in accordance with ASC 330, Inventory. |
Software Development Costs
Software Development Costs | 9 Months Ended |
Sep. 30, 2017 | |
Software Development Costs [Abstract] | |
Software Development Costs | 8. Software Development Costs, Net Certain computer software development costs are capitalized in the accompanying consolidated balance sheets. Capitalization of computer software development costs begins upon the establishment of technological feasibility. Capitalization ceases and amortization of capitalized costs begins when the software product is commercially available for general release to customers. Amortization of capitalized computer software development costs is included in cost of revenue and is determined using the straight-line method over the remaining estimated economic life of the product, typically three years. On an annual basis, and more frequently as conditions indicate, the Company assesses the recovery of the unamortized software development costs by estimating the net undiscounted cash flows expected to be generated by the sale of the product. If the undiscounted cash flows are not sufficient to recover the unamortized software costs, the Company will write down the carrying amount of such asset to its estimated fair value based on the future discounted cash flows. The excess of any unamortized computer software costs over the related fair value is written down and charged to operations. Software development costs capitalized were $38,000 and $126,000 for the three and nine months ended September 30, 2017, respectively, and $10,000 and $196,000 for the three and nine months ended September 30, 2016, respectively. Total amortization expense was $118,000 and $352,000 for the three and nine months ended September 30, 2017, respectively, and $111,000 and $296,000 for the three and nine months ended September 30, 2016, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | 9. Goodwill and Intangible Assets The Company's intangible assets include amounts recognized in connection with business acquisitions, including customer relationships, trade names, non-compete agreements, contract backlog, and software. The Company reviews goodwill for impairment annually as of December 31 and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company tests goodwill at the reporting unit level. A reporting unit is an operating segment, or one level below an operating segment, as defined by U.S. GAAP. After the acquisition of Hyperspring on November 14, 2014, the Company determined that it had two reporting units, which are the same as our two operating segments: (i) Performance Improvement Solutions; and (ii) Nuclear Industry Training and Consulting (which includes Hyperspring and Absolute). As of the report date, the Company is still evaluating the impact of the Absolute acquisition on our reporting units. As of September 30, 2017, and December 31, 2016, goodwill of $7.1 million and $5.6 million, respectively, is related to the Nuclear Industry Training and Consulting segment. The increase of $1.5 million in the carrying amount of goodwill during the nine months ended September 30, 2017 was due to the acquisition of Absolute. No events or circumstances occurred during the current reporting period that would indicate impairment of such goodwill and indefinite-lived intangible assets. As discussed in Note 4, we recognized finite-lived intangible assets of $3.3 million upon acquisition of Absolute on September 20, 2017. Amortization of finite-lived intangible assets is recognized on a straight-line basis over the estimated useful life of the intangible assets, except for contract backlog and contractual customer relationships which are recognized in proportion to the related projected revenue streams. Intangible assets with definite lives are reviewed for impairment if indicators of impairment arise. The Company does not have any intangible assets with indefinite useful lives, other than goodwill. There were no indications of impairment of intangible assets during the current reporting period. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | 10. Fair Value of Financial Instruments ASC 820, Fair Value Measurement The levels of the fair value hierarchy established by ASC 820 are: Level 1: inputs are quoted prices, unadjusted, in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. A Level 2 input must be observable for substantially the full term of the asset or liability. Level 3: inputs are unobservable and reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The Company considers the recorded value of certain of its financial assets and liabilities, which consist primarily of cash equivalents, accounts receivable and accounts payable, to approximate the fair value of the respective assets and liabilities at September 30, 2017, and December 31, 2016, based upon the short-term nature of the assets and liabilities. For the three and nine months ended September 30, 2017, the Company did not have any transfers between fair value Level 1, Level 2 or Level 3. The Company did not hold any non-financial assets or non-financial liabilities subject to fair value measurements on a recurring basis at September 30, 2017. The following table presents assets and liabilities measured at fair value at September 30, 2017: (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Money market funds $ 3,238 $ - $ - $ 3,238 Foreign exchange contracts - 280 - 280 Total assets $ 3,238 $ 280 $ - $ 3,518 Foreign exchange contracts $ - $ - $ - $ - Contingent consideration - - (1,691) (1,691) Total liabilities $ - $ - $ (1,691) $ (1,691) Money market funds at both September 30, 2017 and December 31, 2016 are included in cash and cash equivalents in the respective consolidated balance sheets. The following table presents assets and liabilities measured at fair value at December 31, 2016: (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Money market funds $ 16,435 $ - $ - $ 16,435 Foreign exchange contracts - 141 - 141 Total assets $ 16,435 $ 141 $ - $ 16,576 Foreign exchange contracts $ - $ (20) $ - $ (20) Contingent consideration - - (2,105) (2,105) Total liabilities $ - $ (20) $ (2,105) $ (2,125) The following table provides a roll-forward of the fair value of the contingent consideration categorized as Level 3 for the nine months ended September 30, 2017: (in thousands) Balance, January 1, 2017 $ 2,105 Payments made on contingent liabilities (850) Change in fair value 436 Balance, September 30, 2017 $ 1,691 |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments [Abstract] | |
Derivative Instruments | 11. Derivative Instruments The Company utilizes forward foreign currency exchange contracts to manage market risks associated with the fluctuations in foreign currency exchange rates. It is the Company's policy to use such derivative financial instruments to protect against market risk arising in the normal course of business to reduce the impact of these exposures. The Company minimizes credit exposure by limiting counterparties to nationally recognized financial institutions. As of September 30, 2017, the Company had foreign exchange contracts outstanding of approximately 212.5 million Japanese Yen, 0.2 million Euro, and 0.2 million Australian Dollars at fixed rates. The contracts expire on various dates through December 2018. At December 31, 2016, the Company had contracts outstanding of approximately 281.4 million Japanese Yen, 0.1 million Euro, 0.6 million Australian Dollars, and 0.5 million Canadian Dollars at fixed rates. The Company has not designated the foreign exchange contracts as hedges and recorded the estimated net fair values of the contracts on the consolidated balance sheets as follows: September 30, December 31, (in thousands) 2017 2016 Asset derivatives Prepaid expenses and other current assets $ 133 $ 57 Other assets 147 84 280 141 Liability derivatives Other current liabilities - (20) - (20) Net fair value $ 280 $ 121 The changes in the fair value of the foreign exchange contracts are included in gain (loss) on derivative instruments, net, in the consolidated statements of operations. The foreign currency denominated contract receivables, billings in excess of revenue earned, and subcontractor accruals that are related to the outstanding foreign exchange contracts are remeasured at the end of each period into the functional currency using the current exchange rate at the end of the period. The gain or loss resulting from such remeasurement is also included in gain (loss) on derivative instruments, net, in the consolidated statements of operations. For the three and nine months ended September 30, 2017 and 2016, the Company recognized a net gain (loss) on its derivative instruments as outlined below: Three months ended September 30, Nine months ended September 30, (in thousands) 2017 2016 2017 2016 Foreign exchange contracts-change in fair value $ 74 $ (125) $ 145 $ (302) Remeasurement of related contract receivables, billings in excess of revenue earned, and subcontractor accruals (3) (86) 81 (44) Gain (loss) on derivative instruments, net $ 71 $ (211) $ 226 $ (346) |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | 12. Stock-Based Compensation The Company recognizes compensation expense for all equity-based compensation awards issued to employees and directors that are expected to vest. Compensation cost is based on the fair value of awards as of the grant date. The Company recognized $0.5 million and $0.4 million of stock-based compensation expense related to equity awards for the three months ended September 30, 2017 and 2016, respectively, and recognized $1.8 million and $0.9 million of stock-based compensation expense related to equity awards for the nine months ended September 30, 2017 and 2016, respectively. In addition to the equity-based compensation expense recognized, the Company also recognized $92,000 and $80,000 of stock-based compensation related to the change in the fair value of cash-settled restricted stock units ("RSUs") during the three and nine months ended September 30, 2017, respectively. For the three and nine months ended September 30, 2017, the Company did not grant market-based RSUs . The market-based RSUs granted during 2016 include 450,000 RSUs, which were canceled and reissued in accordance with the Chief Executive Officer's amended employment agreement dated July 1, 2016 and approved by the Board of Directors. The aggregate fair value of the RSUs reissued totaled $469,000. Additionally, on July 1, 2016, the Board of Directors approved an amendment to the market-based RSU agreements with other employees, which reduced the time period from 90 to 30 consecutive trading days during which the volume weighted-average price ("VWAP") target must be attained in order for the RSUs to vest. This change resulted in an increase in the fair value of the RSUs granted of approximately $250,000, which will be expensed ratably over the remaining requisite service period. During the three months ended September 30, 2017, the Company did not grant time-based RSUs. For the nine months ended September 30, 2017, the Company granted 396,677 time-based RSUs with an aggregate fair value of $1.4 million. A portion of the RSUs vested immediately, a portion will vest quarterly in equal amounts over the course of eight quarters, a portion will vest one year after grant, and the remainder will vest annually in equal amounts over the course of three years. For the three and nine months ended September 30, 2016, the Company granted 70,000 and 204,824 time-based RSUs with an aggregate fair value of $172,300 and $471,650, respectively. . The Company did not grant stock options during the three or nine month periods ended September 30, 2017. The Company did not grant any options during the three month period ended September 30, 2016, and granted 40,000 stock options during the nine month period ended September 30, 2016. The fair value of the options granted during the nine months ended September 30, 2016 was $46,000. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | 13. Debt Line of Credit Citizens Bank The Company entered into a three-year, $5.0 million revolving line of credit facility ("RLOC") with Citizens Bank on December 29, 2016, to fund general working capital needs, including acquisitions. Working capital advances bear interest of one-month LIBOR plus 2.25% per annum and letter of credit fees are 1.25% per annum. The Company is not required to maintain a restricted cash collateral account at Citizens Bank for outstanding letters of credit and working capital advances. The maximum availability under the RLOC is subject to a borrowing base equal to 80% of eligible accounts receivable, and is reduced for any issued and outstanding letters of credit and working capital advances. At September 30, 2017, there were no outstanding borrowings on the RLOC and six letters of credit totaling $1.7 million. We have two letters of credit with Citizen Bank totaling $0.4 million, which have expired and are pending release by the bank and customer. The amount available at September 30, 2017, after consideration of the borrowing base, letters of credit and working capital advances was approximately $3.3 million. The credit facility agreement is subject to standard financial covenants and reporting requirements. At September 30, 2017, the Company was in compliance with its financial covenants. BB&T Bank At September 30, 2017, the Company had three letters of credit with BB&T totaling $0.9 million, which have expired and are pending release by the bank and customer. At September 30, 2017 and December 31, 2016, the cash collateral account with BB&T totaled $1.0 million and $1.1 million, respectively. The balances were classified as restricted cash on the consolidated balance sheets. |
Product Warranty
Product Warranty | 9 Months Ended |
Sep. 30, 2017 | |
Product Warranty [Abstract] | |
Product Warranty | 14. Product Warranty The Company accrues for estimated warranty costs at the time the related revenue is recognized based on historical experience and projected claims. The Company's long-term contracts generally provide for a one-year warranty on parts, labor and any bug fixes as it relates to customized software embedded in the systems. The portion of the warranty provision expected to be incurred within 12 months is classified as current within accrued warranty and totals $1.3 million, while the remaining $0.5 million is classified as long-term within other liabilities. The activity in the accrued warranty accounts is as follows: (in thousands) Balance, January 1, 2017 $ 1,478 Current period provision 474 Current period claims (194) Currency adjustment 11 Balance at September 30, 2017 $ 1,769 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes [Abstract] | |
Income Taxes | 15. Income Taxes The following table presents the provision for income taxes and the effective tax rates: (in thousands) Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Provision for income taxes $ 92 $ 80 $ 399 $ 275 Effective tax rate -17.9 % 32.3% 112.4 % 39.7% The Company's income tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. Tax expense in both periods is comprised mainly of foreign income tax expense, Alternative Minimum Tax, state taxes, and deferred tax expense relating to the tax amortization of goodwill. Because of its net operating loss carryforwards, the Company is subject to U.S. federal and state income tax examinations from the year 1997 forward. The Company is subject to foreign tax examinations by tax authorities for years 2011 forward for Sweden, 2014 forward for China, and 2015 forward for both India and the UK. An uncertain tax position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not ( i.e. The Company recognizes deferred tax assets to the extent that it is believed that these assets are more likely than not to be realized. The Company has evaluated all positive and negative evidence and determined that it will continue to assess a full valuation allowance on its U.S., Swedish, U.K., and Chinese net deferred assets as of September 30, 2017. The Company has determined that it is more likely than not that it will realize the benefits of its deferred taxes in India. In 2016, the Company paid income taxes in India and expects to do so again in 2017. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Information [Abstract] | |
Segment Information | 16. Segment Information The Company has two reportable business segments. The Performance Improvement Solutions segment provides simulation, training and engineering products and services delivered across the breadth of industries we serve. Solutions include simulation for both training and engineering applications. Example training applications include turnkey and custom training services, while engineering services include plant design verification and validation. The Company provides these services across all market segments. Contracts typically range from nine months to 24 months. The Company and its predecessors have been providing these services since 1976. The Nuclear Industry Training and Consulting segment provides specialized workforce solutions primarily to the nuclear industry, working at clients' facilities. This business is managed through our Hyperspring and newly acquired Absolute subsidiaries. The business model, management focus, margins and other factors clearly separate this business line from the rest of the GSE product and service portfolio. The Company and its predecessors have been providing these services since 1997. On September 20, 2017, the Company acquired Absolute Consulting, Inc., now a wholly-owned subsidiary of GSE Performance Solutions, Inc., for $8.9 million. Absolute Consulting, Inc. is a provider of technical consulting and staffing solutions to the global nuclear power industry and employs approximately 200 professionals with expertise in procedures writing, engineering, technical support, project management, training, project controls, and corrective actions. This acquisition brings a natural adjacency to GSE, fits well with our growth strategy, and benefits our customers from expanded capabilities and offerings. For reporting purposes, Absolute Consulting, Inc. was aggregated with Hyperspring into our Nuclear Industry Training and Consulting segment due to similarities in services provided including training and staff augmentation to the nuclear energy sector. In addition, both entities will report to the same management team and share support staff such as sales, recruiting and business development. As such, 100% of the goodwill acquired was allocated to the Nuclear Industry Training and Consulting segment. The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated income before income taxes: (in thousands) Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Revenue: Performance Improvement Solutions $ 8,737 $ 10,215 $ 30,093 $ 27,382 Nuclear Industry Training and Consulting 6,672 4,213 18,783 12,438 15,409 14,428 48,876 39,820 Operating income: Performance Improvement Solutions (1,545) (413) (1,885) (890) Nuclear Industry Training and Consulting 1,052 321 2,394 1,395 Change in fair value of contingent consideration, net (139) 525 (436) 370 Operating (loss) income (632) 433 73 875 Interest income, net 15 11 60 52 Gain (loss) on derivative instruments, net 71 (211) 226 (346) Other income (expense), net 33 15 (4) 112 (Loss) income before income taxes $ (513) $ 248 $ 355 $ 693 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated interim financial statements included herein have been prepared by GSE Systems, Inc. (the "Company," "GSE," "we," "us," or "our") and are unaudited. In the opinion of the Company's management, all adjustments and reclassifications of a normal and recurring nature necessary to present fairly the financial position, results of operations and cash flows for the periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been condensed or omitted. The results of operations for interim periods are not necessarily an indication of the results for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on March 28, 2017. Certain reclassifications have been made to prior period amounts to conform to the current presentation. The Company reclassified research and development costs from selling, general and administrative expenses and presented them as a separate caption within operating expenses on the consolidated statements of operations . In addition, the Company also reclassified the stock-based compensation related to management/employees from cost of revenue and research and development expenses to selling, general and administrative expenses. The Company has two reportable segments as follows: ● Performance Improvement Solutions (approximately 62% of revenue) Our Performance Improvement Solutions segment primarily encompasses our power plant high-fidelity simulation solutions, as well as engineering solutions and interactive computer based tutorials/simulation focused on the process industry. This segment includes various simulation products, engineering services, and operation training systems delivered across the industries we serve: primarily nuclear and fossil fuel power generation, as well as the process industries. Our simulation solutions include the following: (1) simulation software and services, including operator training systems, for the nuclear power industry, (2) simulation software and services, including operator training systems, for the fossil power industry, and (3) simulation software and services for the process industries used to teach fundamental industry processes and control systems to newly hired employees and for ongoing workforce development and training. GSE and its predecessors have been providing these services since 1976. ● Nuclear Industry Training and Consulting (approximately 38% of revenue) Nuclear Industry Training and Consulting provides highly specialized and skilled nuclear operations instructors, procedure writers, technical engineers, and other consultants to the nuclear power industry. These employees work at our clients' facilities under client direction. Examples of these highly skilled positions are senior reactor operations instructors, procedure writers, project managers, work management specialists, planners and training material developers. This business is managed through our subsidiaries Hyperspring and Absolute Consulting, Inc. The business model, management focus, margins and other factors clearly separate this business line from the rest of the Company's product and service portfolio. GSE and its predecessors have been providing these services since 1997. On September 20, 2017, the Company acquired Absolute Consulting, Inc., now a wholly-owned subsidiary of GSE Performance Solutions, Inc., for $8.9 million. Absolute Consulting, Inc. is a provider of technical consulting and staffing solutions to the global nuclear power industry and employs approximately 200 professionals with expertise in procedures writing, engineering, technical support, project management, training, project controls, and corrective actions. This acquisition brings a natural adjacency to GSE, fits well with our growth strategy, and benefits our customers from expanded capabilities and offerings. For reporting purposes, Absolute Consulting, Inc. was aggregated with Hyperspring into our Nuclear Industry Training and Consulting segment due to similarities in services provided including training and staff augmentation to the nuclear energy sector. In addition, both entities will report to the same management team and share support staff such as sales, recruiting and business development. As such, 100% of the goodwill acquired was allocated to the Nuclear Industry Training and Consulting segment. Financial information about the two business segments is provided in Note 16 of the accompanying condensed consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. The Company's most significant estimates relate to revenue recognition on long-term contracts, allowance for doubtful accounts, |
Revenue Recognition | Revenue recognition The Company recognizes revenue through fixed price contracts for the sale of uniquely designed/customized systems containing hardware, software and other materials which generally apply to the Performance Improvement Solutions segment and time and material contracts for Nuclear Industry Training and Consulting support and service agreements. In accordance with Accounting Standards Codification (ASC) 605-35 , Construction-Type and Production-Type Contracts Uncertainties inherent in the performance of contracts include labor availability and productivity, material costs, change order scope and pricing, software modification and customer acceptance issues. The reliability of these cost estimates is critical to our revenue recognition as a significant change in the estimates can cause our revenue and related margins to change significantly from the amounts estimated in the early stages of the project. As we recognize revenue under the percentage-of-completion method, we provide an accrual for estimated future warranty costs based on historical and projected claims experience. Our long-term contracts generally provide for a one-year warranty on parts, labor and any bug fixes as it relates to customized software embedded in the systems. Our system design contracts do not normally provide for post contract support (PCS) in terms of software upgrades, software enhancements or telephone support. To obtain PCS, the customers must normally purchase a separate contract. Such PCS arrangements are generally for a one-year period renewable annually and include customer support, unspecified software upgrades, and maintenance releases. We recognize revenue from these contracts ratably over the term of the agreements. Revenue from the sale of software licenses without other elements in the contract and which do not require significant modifications or customization for the Company's modeling tools are recognized when the license agreement is signed, the license fee is fixed and determinable, delivery has occurred, and collection is considered probable. We utilize written contracts to establish the terms and conditions by which product support and services are sold to customers. Delivery is considered to have occurred when title and risk of loss have been transferred to the customer, which generally occurs after a license key has been delivered to the customer. We also recognize revenue from the sale of software licenses from contracts with multiple deliverables. These software license sales are evaluated under ASC 985-605, Software Revenue Recognition We recognize revenue under time and materials contracts primarily from the Nuclear Industry Training and Consulting segment and certain cost-reimbursable contracts. Revenue on time and material contracts is recognized as services are rendered and performed. Under a typical time-and-materials billing arrangement, customers are billed on a regularly scheduled basis, such as biweekly or monthly. Any unbilled amounts are typically billed the following month. Under cost-reimbursable contracts, which are subject to a contract ceiling amount, reimbursed for allowable costs and paid a fee, which may be fixed or performance based. However, if costs exceed the contract ceiling or are not allowable under the provisions of the contract or applicable regulations, may not be able to obtain reimbursement for all such costs. |
Recent Accounting Pronounceme25
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | Accounting pronouncements recently adopted In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11). ASU 2015-11 requires that an entity measure inventory at the lower of cost and net realizable value. This ASU does not apply to inventory measured using the last-in, first-out method. ASU 2015-11 was effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We adopted ASU 2015-11 effective January 1, 20 In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation: Topic 718: Improvements to Employee Share Based Payment Accounting Accounting pronouncements not yet adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses", which introduces new guidance for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including, but not limited to, trade and other receivables, held-to-maturity debt securities, loans and net investments in leases. The new guidance also modifies the impairment model for available-for-sale debt securities and requires the entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. The standard also indicates that entities may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. The ASU is effective for public companies for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on the Company's consolidated financial position, results of operations and cash flows. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash In January 2017, the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the definition of a Business , which amends the current definition of a business. Under ASU 2017-01, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contributes to the ability to create outputs. ASU 2017-01 further states that when substantially all of the fair value of gross assets acquitted is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. The new guidance also narrows the definition of the term "outputs" to be consistent with how it is described in ASC 606, Revenue from Contracts with Customers . The changes to the definition of a business will likely result in more acquisitions being accounted for as asset acquisitions. ASU 2017-01 is effective for acquisitions commencing on or after June 30, 2019, with early adoption permitted. Adoption of this guidance will be applied prospectively on or after the effective date. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 simplifies the accounting for goodwill impairment by eliminating Step 2 of the current goodwill impairment test, which required a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which the reporting unit's carrying value exceeds its fair value, limited to the carrying value of the goodwill. ASU 2017-04 is effective for financial statements issued for fiscal years, and interim periods beginning after December 15, 2019. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation Compensation – Stock Compensation |
Basic and Diluted Earnings (L26
Basic and Diluted Earnings (Loss) Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Basic and Diluted Earnings (Loss) Per Common Share [Abstract] | |
Number of Common Shares and Common Share Equivalents Used in the Determination of Basic and Diluted Income (Loss) per Share | The number of common shares and common share equivalents used in the determination of basic and diluted earnings per share were as follows: (in thousands, except for share amounts) Three months ended Nine months ended September 30, September 30, 2017 2016 2017 2016 Numerator: Net (loss) income $ (605) $ 168 $ (44) $ 418 Denominator: Weighted-average shares outstanding for basic (loss) income per share 19,280,770 18,230,148 19,204,778 18,052,019 Effect of dilutive securities: Stock options and restricted stock units - 239,969 - 235,851 Adjusted weighted-average shares outstanding and assumed conversions for diluted (loss) income per share 19,280,770 18,470,117 19,204,778 18,287,870 Shares related to dilutive securities excluded because inclusion would be anti-dilutive 534,833 734,833 550,218 741,862 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Acquisition - Absolute [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following table summarizes the consideration paid to acquire Absolute and the preliminary fair value of the assets acquired and liabilities assumed at the date of the transaction. Due to the recent completion of the acquisition of Absolute, the Company recorded the assets acquired and liabilities assumed at their preliminary estimated fair value. As of September 30, 2017, the Company had not finalized the determination of the fair value allocated to various assets and liabilities, including, but not limited to, contract receivables, prepaid expenses and other current assets, property, and equipment, intangible assets, accrued expenses, accrued compensation and the residual amount allocated to goodwill. The following amounts except for Cash are all reflected in the Consolidated Statement of Cash Flow within the "Acquisition of Absolute Consulting, Inc., net of cash acquired" line caption. (in thousands) Total purchase price $ 8,910 Purchase price allocation: Cash $ 455 Contract receivables 5,121 Prepaid expenses and other current assets 70 Property, and equipment, net 102 Intangible assets 3,340 Accounts payable, accrued expenses, and other liabilities (78) Accrued compensation (1,618) Total identifiable net assets 7,392 Goodwill 1,518 Net assets acquired $ 8,910 |
Business Acquisition, Pro Forma Information [Table Text Block] | Unaudited Pro Forma Financial Information The acquired business contributed revenue of $1.2 million and earnings of $36,000 to GSE for the period from September 20, 2017 to September 30, 2017. The following unaudited pro forma summary presents consolidated information of GSE as if the business combination had occurred on January 1, 2016. The unaudited pro forma financial information was prepared based on historical financial information. These pro forma amounts have been calculated after applying GSE's accounting policies and adjusting the results of Absolute to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2016, with the consequential tax effects. In 2017, GSE has incurred $0.5 million of acquisition-related costs. These expenses are included in general and administrative expense on GSE's consolidated statements of operations and are reflected in pro forma earnings for the nine months ended September 30, 2016, in the table below. The pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the acquisition had been completed on January 1, 2016, nor is it intended to be an indication of future operating results. Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 (unaudited and in thousands) Revenue $ 23,055 $ 24,097 $ 77,470 $ 70,175 Net (loss) income (293) 241 448 (69) |
Contract Receivables (Tables)
Contract Receivables (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Contract Receivables [Abstract] | |
Components of Contract Receivables | The components of contract receivables are as follows: (in thousands) September 30, December 31, 2017 2016 Billed receivables $ 12,039 $ 13,325 Recoverable costs and accrued profit not yet billed 6,715 5,555 Allowance for doubtful accounts (138) (17) Total contract receivables, net $ 18,616 $ 18,863 |
Prepaid Expenses and Other Cu29
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following: (in thousands) September 30, December 31, 2017 2016 Inventory $ 1,159 $ - Income taxes receivable 268 446 Prepaid expenses 451 422 Other current assets 1,078 1,184 Total prepaid expenses and other current assets $ 2,956 $ 2,052 |
Fair Value of Financial Instr30
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value of Financial Instruments [Abstract] | |
Assets and Liabilities Measured at Fair Value | The following table presents assets and liabilities measured at fair value at September 30, 2017: (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Money market funds $ 3,238 $ - $ - $ 3,238 Foreign exchange contracts - 280 - 280 Total assets $ 3,238 $ 280 $ - $ 3,518 Foreign exchange contracts $ - $ - $ - $ - Contingent consideration - - (1,691) (1,691) Total liabilities $ - $ - $ (1,691) $ (1,691) Money market funds at both September 30, 2017 and December 31, 2016 are included in cash and cash equivalents in the respective consolidated balance sheets. The following table presents assets and liabilities measured at fair value at December 31, 2016: (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Money market funds $ 16,435 $ - $ - $ 16,435 Foreign exchange contracts - 141 - 141 Total assets $ 16,435 $ 141 $ - $ 16,576 Foreign exchange contracts $ - $ (20) $ - $ (20) Contingent consideration - - (2,105) (2,105) Total liabilities $ - $ (20) $ (2,105) $ (2,125) |
Rollforward of Fair Value of Contingent Consideration as Level 3 | The following table provides a roll-forward of the fair value of the contingent consideration categorized as Level 3 for the nine months ended September 30, 2017: (in thousands) Balance, January 1, 2017 $ 2,105 Payments made on contingent liabilities (850) Change in fair value 436 Balance, September 30, 2017 $ 1,691 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments [Abstract] | |
Estimated Fair Value of the Contracts in the Consolidated Balance Sheets | The Company has not designated the foreign exchange contracts as hedges and recorded the estimated net fair values of the contracts on the consolidated balance sheets as follows: September 30, December 31, (in thousands) 2017 2016 Asset derivatives Prepaid expenses and other current assets $ 133 $ 57 Other assets 147 84 280 141 Liability derivatives Other current liabilities - (20) - (20) Net fair value $ 280 $ 121 |
Net (Loss) Gain on Derivative Instruments | For the three and nine months ended September 30, 2017 and 2016, the Company recognized a net gain (loss) on its derivative instruments as outlined below: Three months ended September 30, Nine months ended September 30, (in thousands) 2017 2016 2017 2016 Foreign exchange contracts-change in fair value $ 74 $ (125) $ 145 $ (302) Remeasurement of related contract receivables, billings in excess of revenue earned, and subcontractor accruals (3) (86) 81 (44) Gain (loss) on derivative instruments, net $ 71 $ (211) $ 226 $ (346) |
Product Warranty (Tables)
Product Warranty (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Product Warranty [Abstract] | |
Activities in the Product Warranty Accounts | The Company accrues for estimated warranty costs at the time the related revenue is recognized based on historical experience and projected claims. The Company's long-term contracts generally provide for a one-year warranty on parts, labor and any bug fixes as it relates to customized software embedded in the systems. The portion of the warranty provision expected to be incurred within 12 months is classified as current within accrued warranty and totals $1.3 million, while the remaining $0.5 million is classified as long-term within other liabilities. The activity in the accrued warranty accounts is as follows: (in thousands) Balance, January 1, 2017 $ 1,478 Current period provision 474 Current period claims (194) Currency adjustment 11 Balance at September 30, 2017 $ 1,769 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes [Abstract] | |
Schedule of Income Taxes | The following table presents the provision for income taxes and the effective tax rates: (in thousands) Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Provision for income taxes $ 92 $ 80 $ 399 $ 275 Effective tax rate -17.9 % 32.3% 112.4 % 39.7% |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Information [Abstract] | |
Reconciliation of Revenue and Operating Results to Consolidated Income (Loss) Before Income Tax Expense | The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated income before income taxes: (in thousands) Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Revenue: Performance Improvement Solutions $ 8,737 $ 10,215 $ 30,093 $ 27,382 Nuclear Industry Training and Consulting 6,672 4,213 18,783 12,438 15,409 14,428 48,876 39,820 Operating income: Performance Improvement Solutions (1,545) (413) (1,885) (890) Nuclear Industry Training and Consulting 1,052 321 2,394 1,395 Change in fair value of contingent consideration, net (139) 525 (436) 370 Operating (loss) income (632) 433 73 875 Interest income, net 15 11 60 52 Gain (loss) on derivative instruments, net 71 (211) 226 (346) Other income (expense), net 33 15 (4) 112 (Loss) income before income taxes $ (513) $ 248 $ 355 $ 693 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2017Segment | |
Summary of Significant Accounting Policies [Abstract] | |
Number of reportable segment | 2 |
Term of warranty | 1 year |
Period of post customer support service (PCS) | 1 year |
Revenue [Member] | Performance Improvement Solutions [Member] | |
Revenue by major customers [Abstract] | |
Percentage of revenue contributed by major customers | 62.00% |
Revenue [Member] | Nuclear Industry Training and Consulting [Member] | |
Revenue by major customers [Abstract] | |
Percentage of revenue contributed by major customers | 38.00% |
Basic and Diluted Earnings (L36
Basic and Diluted Earnings (Loss) Per Common Share (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator [Abstract] | ||||
Net income | $ (605) | $ 168 | $ (44) | $ 418 |
Denominator [Abstract] | ||||
Weighted-average shares outstanding for basic earnings per share (in shares) | 19,280,770 | 18,230,148 | 19,204,778 | 18,052,019 |
Effect of dilutive securities [Abstract] | ||||
Stock options and restricted stock units (in shares) | 0 | 239,969 | 0 | 235,851 |
Adjusted weighted-average shares outstanding and assumed conversions for diluted income (loss) per share (in shares) | 19,280,770 | 18,470,117 | 19,204,778 | 18,287,870 |
Shares related to dilutive securities excluded because inclusion would be anti-dilutive (in shares) | 534,833 | 734,833 | 550,218 | 741,862 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 20, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||||||
Cash consideration before working capital adj | $ 8,750 | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||||
Goodwill | $ 7,130 | $ 7,130 | $ 7,130 | $ 5,612 | |||
Business Combination, Acquired Receivables [Abstract] | |||||||
Business Combination, Acquired Receivable, Fair Value | 5,121 | ||||||
Business Combination, Acquired Receivables, Gross Contractual Amount | 5,121 | ||||||
Business Combination, Acquired Receivables, Estimated Uncollectible | 0 | ||||||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | 1,518 | ||||||
Business Acquisition, Pro Forma Information [Abstract] | |||||||
Business Acquisition, Pro Forma Revenue | 23,055 | $ 24,097 | 77,470 | $ 70,175 | |||
Business Acquisition, Pro Forma Net Income (Loss) | $ (293) | $ 241 | $ 448 | $ (69) | |||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | 1,156 | ||||||
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual | $ 36 | ||||||
Acquisition-related Costs [Member] | |||||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 473 | ||||||
Absolute Consulting, Inc. [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of ownership interest acquired | 100.00% | ||||||
Business Acquisition, Name of Acquired Entity | Absolute Consulting, Inc. | ||||||
Business Acquisition, Effective Date of Acquisition | Sep. 20, 2017 | ||||||
Cash purchase price | $ 8,910 | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||||
Cash | 455 | ||||||
Contract receivables | 5,121 | ||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets | 70 | ||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Equipment | 102 | ||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 3,340 | ||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable | (78) | ||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other | (1,618) | ||||||
Identifiable Net assets acquired | 7,392 | ||||||
Goodwill | 1,518 | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net, Total | $ 8,910 | ||||||
Business Combination, Acquired Receivables [Abstract] | |||||||
Maximum term of intangible assets amortization | 5 years | ||||||
Minimum term of intangible assets amortization | 3 years | ||||||
Cash consideration in escrow | $ 1,000 |
Contingent Consideration (Detai
Contingent Consideration (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Contingent Consideration [Abstract] | |||
Contingent consideration accrued, current | $ 1,691 | $ 2,105 | |
Payments on contingent consideration | $ (850) | $ (1,421) |
Contract Receivables (Details)
Contract Receivables (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Oct. 31, 2017USD ($) | Sep. 30, 2017USD ($)CustomerContract | Sep. 30, 2017USD ($)Customer | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($)Customer | Jul. 31, 2017Facility | Mar. 29, 2017USD ($) | |
Contract Receivables [Abstract] | |||||||
Maximum term of contract receivables | 12 months | ||||||
Components of contract receivables [Abstract] | |||||||
Billed receivables | $ 12,039,000 | $ 12,039,000 | $ 13,325,000 | ||||
Recoverable costs and accrued profit not yet billed | 6,715,000 | 6,715,000 | 5,555,000 | ||||
Allowance for doubtful accounts | (138,000) | (138,000) | (17,000) | ||||
Total contract receivables, net | 18,616,000 | 18,616,000 | $ 18,863,000 | ||||
Unbilled contract receivables billed during Oct 2017 | $ 4,600,000 | ||||||
Reorganizations [Abstract] | |||||||
Bad debt expense | 118,000 | $ 0 | |||||
Westinghouse [Member] | |||||||
Reorganizations [Abstract] | |||||||
Borrowings outstanding | $ 800,000,000 | ||||||
Billed and unbilled pre-petition receivables | $ 100,000 | 100,000 | |||||
Bad debt expense | $ 118,000 | ||||||
Number of contracts | Contract | 1 | ||||||
Westinghouse [Member] | Subsequent Event [Member] | |||||||
Reorganizations [Abstract] | |||||||
Number of facilities | Facility | 1 | ||||||
Contract Receivable [Member] | |||||||
Concentration Risk [Line Items] | |||||||
Number of customers accounting for contract receivables | Customer | 1 | 1 | 0 | ||||
Percentage of contract receivables accounted by major customers | 26.30% | 10.00% | |||||
Reorganizations [Abstract] | |||||||
Percentage of accounts receivable, unbilled receivables, and billings in excess reserved | 26.30% | 10.00% | |||||
Contract Receivable [Member] | Westinghouse [Member] | |||||||
Concentration Risk [Line Items] | |||||||
Percentage of contract receivables accounted by major customers | 100.00% | ||||||
Reorganizations [Abstract] | |||||||
Percentage of accounts receivable, unbilled receivables, and billings in excess reserved | 100.00% |
Prepaid Expenses and Other Cu40
Prepaid Expenses and Other Current Assets (Details) $ in Thousands | Sep. 30, 2017USD ($)Project | Dec. 31, 2016USD ($) |
Prepaid Expenses and Other Current Assets [Abstract] | ||
Inventory | $ 1,159 | $ 0 |
Income tax receivable | 268 | 446 |
Prepaid expenses | 451 | 422 |
Other current assets | 1,078 | 1,184 |
Total prepaid expenses and other current assets | $ 2,956 | $ 2,052 |
Number of projects | Project | 3 |
Software Development Costs (Det
Software Development Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Software Development Costs [Abstract] | ||||
Economic life of product | 3 years | |||
Additions | $ 38 | $ 10 | $ 126 | $ 196 |
Capitalized software amortization | $ 118 | $ 111 | $ 352 | $ 296 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($)Segment | Dec. 31, 2016USD ($) | |
Goodwill and Intangible Assets [Abstract] | ||
Number of operating segments | Segment | 2 | |
Goodwill | $ 7,130 | $ 5,612 |
Goodwill, Acquired During Period | 1,518 | |
Intangible Assets, Explanation of Significant Additions | $ 3,340 |
Fair Value of Financial Instr43
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Assets and liabilities measured at fair value [Abstract] | ||
Money market funds | $ 3,238 | $ 16,435 |
Foreign exchange contracts - Assets | 280 | 141 |
Total assets | 3,518 | 16,576 |
Foreign exchange contracts - Liabilities | 0 | (20) |
Contingent consideration | (1,691) | (2,105) |
Total liabilities | (1,691) | (2,125) |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, January 1, 2017 | 2,105 | |
Payments made on contingent liabilities | (850) | |
Change in fair value | 436 | |
Balance, March 31, 2017 | 1,691 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Assets and liabilities measured at fair value [Abstract] | ||
Money market funds | 3,238 | 16,435 |
Foreign exchange contracts - Assets | 0 | 0 |
Total assets | 3,238 | 16,435 |
Foreign exchange contracts - Liabilities | 0 | 0 |
Contingent consideration | 0 | 0 |
Total liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Assets and liabilities measured at fair value [Abstract] | ||
Money market funds | 0 | 0 |
Foreign exchange contracts - Assets | 280 | 141 |
Total assets | 280 | 141 |
Foreign exchange contracts - Liabilities | 0 | (20) |
Contingent consideration | 0 | 0 |
Total liabilities | 0 | (20) |
Significant Unobservable Inputs (Level 3) [Member] | ||
Assets and liabilities measured at fair value [Abstract] | ||
Money market funds | 0 | 0 |
Foreign exchange contracts - Assets | 0 | 0 |
Total assets | 0 | 0 |
Foreign exchange contracts - Liabilities | 0 | 0 |
Contingent consideration | (1,691) | (2,105) |
Total liabilities | $ (1,691) | $ (2,105) |
Derivative Instruments, Foreign
Derivative Instruments, Foreign Exchange Contracts (Details) - Foreign Exchange Contract [Member] € in Millions, ¥ in Millions, CAD in Millions, AUD in Millions | 9 Months Ended | |||||||
Sep. 30, 2017AUD | Sep. 30, 2017CAD | Sep. 30, 2017EUR (€) | Sep. 30, 2017JPY (¥) | Dec. 31, 2016AUD | Dec. 31, 2016CAD | Dec. 31, 2016EUR (€) | Dec. 31, 2016JPY (¥) | |
Derivative [Line Items] | ||||||||
Foreign exchange contract outstanding | AUD 0.2 | CAD 0 | € 0.2 | ¥ 212.5 | AUD 0.6 | CAD 0.5 | € 0.1 | ¥ 281.4 |
Expiration date of contract | Dec. 31, 2018 |
Derivative Instruments, Fair Va
Derivative Instruments, Fair Values Derivatives, Balance Sheet Location (Details) - Foreign Exchange Contract [Member] - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Estimated fair value of the contracts in the consolidated balance sheets [Abstract] | ||
Asset derivatives | $ 280 | $ 141 |
Liability derivatives | 0 | (20) |
Net fair value | 280 | 121 |
Prepaid Expenses and Other Current Assets [Member] | ||
Estimated fair value of the contracts in the consolidated balance sheets [Abstract] | ||
Asset derivatives | 133 | 57 |
Other Assets [Member] | ||
Estimated fair value of the contracts in the consolidated balance sheets [Abstract] | ||
Asset derivatives | 147 | 84 |
Other Current Liabilities [Member] | ||
Estimated fair value of the contracts in the consolidated balance sheets [Abstract] | ||
Liability derivatives | $ 0 | $ (20) |
Derivative Instruments, Gain (L
Derivative Instruments, Gain (Loss) On Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Foreign exchange contracts- change in fair value | $ 74 | $ (125) | $ 145 | $ (302) |
Remeasurement of related contract receivables, billings in excess of revenue earned, and subcontractor accruals | (3) | (86) | 81 | (44) |
(Loss) gain on derivative instruments, net | $ 71 | $ (211) | $ 226 | $ (346) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | Jul. 01, 2016USD ($)shares | Sep. 30, 2017USD ($)Quartershares | Sep. 30, 2016USD ($)shares | Sep. 30, 2017USD ($)Quartershares | Sep. 30, 2016USD ($)shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 535,000 | $ 412,000 | $ 1,793,000 | $ 900,000 | |
Number of shares canceled and reissued | shares | 450,000 | ||||
Fair value of the RSUs reissued | $ 469,000 | ||||
Restricted Stock Units [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 92 | $ 80 | |||
Granted market-based RSUs (in shares) | shares | 0 | 1,162,500 | 0 | 1,322,500 | |
Aggregate fair value for market-based RSUs | $ 1,600,377 | $ 1,882,377 | |||
Granted time-based RSUs (in shares) | shares | 0 | 70,000 | 396,677 | 204,824 | |
Aggregate fair value for time-based RSUs | $ 0 | $ 172,300 | $ 1,368,763 | $ 471,650 | |
Number of quarters RSU's will vest quarterly | Quarter | 8 | 8 | |||
Period in which a portion of RSU's will vest after grant date | 1 year | 1 year | |||
Period in which RSU's will vest annually in equal amounts | 3 years | 3 years | |||
Increase in fair value of RSUs granted | $ 250,000 | ||||
Consecutive trading days | 90 days | 30 days | |||
Restricted Stock Units [Member] | Minimum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Requisite service period | 1 year | 1 year | |||
Restricted Stock Units [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Requisite service period | 3 years | 5 years | |||
Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted under stock options (in shares) | shares | 0 | 0 | 0 | 40,000 | |
Fair value of shares granted under stock option plan | $ 46,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2017USD ($)Letter | Dec. 31, 2016USD ($) | |
Citizen's Bank [Member] | ||
Line of Credit Facility [Line Items] | ||
Number of letters of credit | Letter | 2 | |
Letters of credit, amount outstanding | $ 0.4 | |
Citizen's Bank [Member] | Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility term | 3 years | |
Principal amount of the line of credit | $ 5 | |
Percentage of letter of credit fees per annum | 1.25% | |
Percentage of borrowing base equal to eligible accounts receivable | 80.00% | |
Outstanding borrowings | $ 0 | |
Number of letters of credit | Letter | 6 | |
Letters of credit, amount outstanding | $ 1.7 | |
Line of credit facility, remaining borrowing capacity | $ 3.3 | |
Citizen's Bank [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 2.25% | |
BB&T Bank [Member] | Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Number of letters of credit | Letter | 3 | |
Letters of credit, amount outstanding | $ 0.9 | |
Restricted cash and cash equivalents | $ 1 | $ 1.1 |
Product Warranty (Details)
Product Warranty (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Product warranty provision [Abstract] | |
Warranty terms for long-term contracts | 1 year |
Accrued warranty, current | $ 1,260 |
Accrued warranty, noncurrent | 509 |
Activities in product warranty account [Abstract] | |
Balance, January 1, 2017 | 1,478 |
Warranty provision | 474 |
Warranty claims | (194) |
Currency adjustment | 11 |
Balance, March 31, 2017 | $ 1,769 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Taxes [Abstract] | ||||
Provision for income taxes | $ 92 | $ 80 | $ 399 | $ 275 |
Effective tax rate | (17.90%) | 32.30% | 112.40% | 39.70% |
Minimum [Member] | ||||
Income Tax Examination [Line Items] | ||||
Probability of uncertain tax position to be recognized | 50.00% | |||
Percentage of tax position realized upon ultimate settlement | 50.00% | |||
Sweden [Member] | Minimum [Member] | ||||
Income Tax Examination [Line Items] | ||||
Income tax examination, year under examination | 2,011 | |||
China [Member] | Minimum [Member] | ||||
Income Tax Examination [Line Items] | ||||
Income tax examination, year under examination | 2,014 | |||
India [Member] | Minimum [Member] | ||||
Income Tax Examination [Line Items] | ||||
Income tax examination, year under examination | 2,015 | |||
UK [Member] | Minimum [Member] | ||||
Income Tax Examination [Line Items] | ||||
Income tax examination, year under examination | 2,015 | |||
Federal [Member] | Minimum [Member] | ||||
Income Tax Examination [Line Items] | ||||
Income tax examination, year under examination | 1,997 | |||
State [Member] | Minimum [Member] | ||||
Income Tax Examination [Line Items] | ||||
Income tax examination, year under examination | 1,997 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)Segment | Sep. 30, 2016USD ($) | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ||||
Number of reportable business segments | Segment | 2 | |||
Segment Reporting Information, Profit (Loss) [Abstract] | ||||
Total revenue | $ 15,409 | $ 14,428 | $ 48,876 | $ 39,820 |
Change in fair value of contingent consideration, net | (139) | 525 | (436) | 370 |
Operating income (loss) | (632) | 433 | 73 | 875 |
Interest income, net | 15 | 11 | 60 | 52 |
Gain (loss) on derivative instruments, net | 71 | (211) | 226 | (346) |
Other income (expense), net | 33 | 15 | (4) | 112 |
Income (loss) before income taxes | (513) | 248 | 355 | 693 |
Performance Improvement Solutions [Member] | ||||
Segment Reporting Information, Profit (Loss) [Abstract] | ||||
Total revenue | 8,737 | 10,215 | 30,093 | 27,382 |
Operating income (loss) | (1,545) | (413) | (1,885) | (890) |
Nuclear Industry Training and Consulting [Member] | ||||
Segment Reporting Information, Profit (Loss) [Abstract] | ||||
Total revenue | 6,672 | 4,213 | 18,783 | 12,438 |
Operating income (loss) | $ 1,052 | $ 321 | $ 2,394 | $ 1,395 |
Minimum [Member] | Performance Improvement Solutions [Member] | ||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ||||
Contract term | 9 months | |||
Maximum [Member] | Performance Improvement Solutions [Member] | ||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ||||
Contract term | 24 months |