GVP GSE Systems

Kalle Ahl Investor Relations-The Equity Group
Kyle Loudermilk President and Chief Executive Officer
Emmett Pepe Chief Financial Officer
Call transcript
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Greetings and welcome to GSE Solutions’ Fourth Quarter and Year End 2020 Financial Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Kalle Ahl of The Equity Group. begin. may you you, Thank

Kalle Ahl

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

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

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

Kyle Loudermilk

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

our good adjusted achieve adjusted global COVID-XX negative the of even year, can This positive GSE Emmett on demonstrating Joining the quarters fourth amidst pandemic. the straight three news the of amidst to EBITDA, COVID-XX really onset to team's on XXXX under not, Pepe, finished positive improving chance project on website and top adjusted impact EBITDA year our I'm today's EBITDA, the very covering line compared can a at section. that start me our year. a found release, significant issued but work note. release is and News Earlier if stoppages quarter financial of Officer. Chief proud delays industry-wide pandemic ability quarter at through quarter. copy work million full a news this caused the by resilience business the fourth Hopefully, you've encouraging The be Financial today, in toward results. press revenues $X.X review this the to our had we call a and We to is

on year of to industry. positive the a a services a essential a broad set multi-year align for Our intentionally is ability GSE result also note effort end of the to direct to

has priority to offices proud as Our to the and our pandemic enable employees keep and the I of services, customers. open during health efforts employees essential our been our wellbeing also am of through to with work work and use technology of and from effective critical technology, to onsite via visits. customers home effective to and pivot, keep possible, to of when engaged remote coworkers use

movement, our decarbonization touch will long-term very about which growing are I bullish the prospects. we on later, Given

XXXX. for We also optimistic to our reason about have be outlook

year. Group work over QX Fortunately, service two utility we in the that backlog NITC yet upswing anticipate the of of which we in under of at years. reflected million start bidding end the agreements, second continue activity a build In not is combined and a started to two or and December for of We a our quarter as has these XXXX. year, the approach end end with into half master agreements first new which quarter will meaningful to of order U.S. the budgeted to ramp $XX won continued our see the major value

track The allow our models grow which software training simulation in customer Catalytic license We've to business with service model increased the cannot these best to energy services. areas the so the our momentum The this of stream and fidelity nuclear for years. well grow We news. of performance successfully the compared Sulfur investors our predictable were to critical recurring fourth its revenue, personnel efforts recurring SaaS high SaaS large beat the provides annuity. is combined out our have very and intentionally and oil be wins, to anywhere conduct with personalized solutions, team increased matter companies. as pandemic simulation provided our market contracts of to significant particular, valuation for We'll our all that additional longstanding client's expand we to to large Cracking, NITC on-demand proven deep this these in We prior staff do tough scalability, of services elite robust In and available projects. augmentation a January, industry. continue mandate non-nuclear our flexible, provide development expertise. made support subscription continued million potential that solutions place importance as In our great Fluid and multi-year such commenced a supplying significant decentralized providing progress the fundamentals, services value support EnVision Treating, and specialized similar client million highly three revenue in people maintenance to related for tutorials would with to to services in to of and and reflecting EnVision others operation engineers our expand both multiples million the among we software interest Amine subject put in in in computer-based XXXX, considering deliver by Recovery. us platforms. And process progress. training a U.S. approach platform. field a quarter. grow the Alkylation, technology we are competition, simulation workforce winning revenues, staffing $X.X overstate revenue and agreements include in customer strategy revenue value, training $X.X This professionals, cloud-based pleased and a Sulfuric a that to with year. I skilled has on has $X.X as company for expertise, record to In many and hidden The anytime, underpinned and XX% the customer qualified engineering nuclear

management and web SaaS to costly Our browser for eliminate a connectivity only burdensome corporation customers the client end the internet technology. the of require and user, enabling on-premises

energy software value solution. platform with So This our their has announced as from subscription a Further the to yesterday GSE company our another a solutions. of Canadian subscription customer high for aforementioned clients we to GSE subscription licenses very business active, essential on-premises upgrade licenses as stream model customer, the ensures major is perpetual as EnVision that win-win sticky, longtime and a to long revenue recurring for reasons. from for new GSE. Conversion industry, the a our growing this contracted and demand training just is emphasizing benefit service

progress are for in and this solutions’ in roadmap about investing growth XXXX. excited very our are We further

performance New orders for $X.X consisting improvement million $X.X XXXX totaled of for $X.X and NITC. for million million,

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

signs throughout as new segments. XXXX improvement are figures levels, backlog our wins pre-pandemic NITC in as we new see in orders these While and both see is business our begin we that our contract backlog appear leveled below numbers, win we to recent out expect and to and

one performance already latter have expect would strategy we a significant converting NITC this a and seen for up we rebound both our roadmap in bids to bidding of improvement upon entails successful have integrating XXXX, our industry. we result the investor of that in comprised is solutions are to deck. the part The activity end evaluate solutions integrate, segments the our growth in XXXX. pick We Integrate, most essential company, three to We're to through elements; build, in execute for building what entails The organic roadmap highlighted services organic solutions has our as and we Build, worked growth roadmap GSE year. continuing excited our our wins, deep effort undertook a the strategy and in dive of year. our beyond. expand. new very and growth deliver of team compelling recent is historically key At XXXX as If go-to-market. to

ourselves streamlined of we new a to upselling and significant collaborative to markets. adjacent are industry end delivering process technology cross integrated on into add expanding and manner. compelling unique the and customers and one selling and ensure comprehensive such traditional as we've effectively market. will a potential have that We and solutions existing focused that the We're gone in aligned service company defining to value detailed through markets nuclear and Expand, provide products to

solutions solutions and moving some our seeing services licensable monitoring, as market news We're unique to front are to this, as broader are unfolds. swiftly promising for well to us entail decarbonization generation. thermal the traction our their and and positioned such performance on for have customers solutions, expect year new lead decarbonize this technology. other as These exciting data that reconciliation the we new We and validation power essential

organic continuing balance sheet. focusing in effectively investment the Now growth, can target while we manage to on business our

proceed solid through totaled we financial the sufficient providing to a Our business. for million $X.X us XX, cash December equivalents on a flexibility XXXX. and This as is foundation manage

a entry. essential an chip As have in barriers XXXX fortunate to provides industry to of group demonstrated services are unique business high with diversified and to very durable a we clients blue that

Our existing with new we of client as solutions. are number even relationships an stickier increasing becoming provide them

sources, to a is greenhouse February the tailwind. the Reactors designed expect gap agreement, and address skills known to several planned To important as The an industry. very reach widening a and to economy aging de-carbonization including new increases energy from a including workforce. Small made as area XXXX in net proposed must energy, and a and emissions return spending U.S. power announced power administration benefit of recently carbon In we U.S. deployment the to industry a power official major which sector the energy industry. ahead, targeted XXXX, the jobs role, clear warming. including a limit nuclear Looking Paris the clean for nuclear global American nuclear The is industry GSE stands enabler of climate Modular drivers, by free zero investment key public play carbon is for SMRs, free by this of and on gas

the tractionable. Another is SMR industry key of development deployment significant gained which driver technology, and the has within

regulatory by GSE customer. example, September services new which the improved designed technology an with scale existing is the simulation supporting For solutions. nuclear U.S. engineering scale, We're in first XXXX, new and commission SMR

reliability and SMR be had and Utah that key as safer and proceed estimates reactors, in solar could factory first energy. that based cheaper, reactors operational by scale wind than These having built, to while greater build, New modular, they traditional XXXX. are advantages easier smaller, generally its than

as $XX called while recent last power news Representative, Committee resources plant River replacing Simpson voted energy four to as the Further October month for jobs into with plan. well Montana awarded feasibility initial to another In new reactor designs, small-scale DOE American XXXX, of the demonstration models just SMR generation dams breaching to for those dams working nuclear Mike highlighted ecosystems its and advanced million is Another U.S. pass reactor for US million advanced salmon replace SMRs. coal-fired announced program. SMRs, under in study build in restore Snake of of advanced a Senate investment power Calstrip funding as nuclear such $XXX December

look next Finally, expected to utilities baby vendor large Industry several to our a This lose the present as will years, is workforce over fill greater U.S. the of boomers the percentage Energy business as opportunities expertise retire. gap. for should its to

clear Pepe; offer value the for much short with well short-term for We growth sheet an are operations and a as We're qualified In now on to provide reviewed quarter opportunity financial flow. long-term the the go to near our our very Emmett very industry special shareholders tailwinds sector positioned favor streamline and we ahead. to as and as and XXXX I'll de-carbonization containing power services for the to our please due of results. our a maximize unique be these rebounds intend CFO stronger power industries essential confident power aging Emmett, whether organic tech that or manage skills. create and cash professionals remain nuclear enabled industry, who fourth turn due our spikes will our in costs, to growth we project very heavily demand for over year to alike. identify activity given long-term company, assignments, our workforce optimistic In in other exciting and both position to our provider strategy. our highly we substantial call term, described, in drive will solutions continue the to very balance for closing and that execute of

Emmett Pepe

as in certain commence The in $XXX,XXX bidding in to NITC believe essentially performance basis, during approximately wins the given Thank gross remotely. total decrease decline you, compared $X progress declined year-over-year contract recent we million and improvement our our XXXX in NITC to $XX.X increase total $XX.X due staff well by and the related XXXX, million lower $X.X reflecting million QX sequential profit are was to profit on revenue and revenue to delays headwinds to to project by QX $X.X $XXX,XXX remained we XXXX year-over-year compared QX revenue. activity, gross to a this through profit we decrease decreased QX COVID-XX base XXXX, XXXX from QX a build inability positioned related NITC COVID-XX in flat revenue $X And revenue compared revenue Kyle to mentioned stoppages improvement Gross The earlier. QX projects approximately was $X.X needs performance and totaled in primarily XXXX. Performance XXXX revenue. by Kyle. revenue million; and million segment our driven primarily was a in recent $XXX,XXX. decrease augmentation quarter. improvement in Total our segment in customers million million On

uncertainty. XXXX, versus decrease driven of being of while business SG&A primarily figure XXXX expenses historic caused agile margin $X.X for QX pandemic. overall development Our gross in XXXX. COVID-XX and given SG&A by profit cost delays in was by million in costs. The our expenses, stoppages. project the $X.X the increased counteract adapt able year-over-year, despite entire the level to quickly by we revenue challenges were to industry-wide the comparable organization the Credits QX lower million to structure caused We totaled declines face in

to function support systems integrate subsidiaries will back all project our We is growth currently the strategy Kyle the office they that better organic of in execute exciting fully This to platform. that the overhaul onto process of outlined. one businesses the allow an corporate as are

XXXX. approximately very operating $X.X As loss significant cost approximately that will million EBITDA. QX normalization online pleased results post million after release full to turnaround XXXX the EBITDA are that break QX positive defined loss EBITDA a we produced wanted year three reached there earnings synergies QX to in these approximately as in our to QX structure. Non-GAAP of quarters in we the which XXXX, step even for million will reduce XXXX, in adjusted Engineering, We're EBITDA equaled $X.X Also adjusted at come in compared XXXX million adjusted $X.X COVID. systems of begin nearly that DP QX consecutive compared $X.X toward XXXX. totaled further QX our to an highlight XXXX, capture Operating negative anticipate be in XXXX. in an to of

base business outline continue Engineering the the we that deepens our service to Kyle Now on strategy. to central sized to organic growth using industry detailed further that provides right that DP have nuclear that grow another excited service we DP the Engineering our offerings. power are surrounding

balance prudently have our We managing sheet. been

we our the totaled we paid end this debt million XXXX includes received net our year The million debt, under long-term that program. $X.X and cash. $XX.X that million consisting protection During million quarter of approximately $XX.X of $X.X debt, $XX paycheck earlier debt at million of of total

permitted We have rent, utilities used other related payroll these funds for costs, and uses.

of forgiveness the to which been forward turn business. We requires report. million file would in a and to late cash is expect We and ongoing has to conversation the we were me time XXb-XX XXXX SBA. application final response our notification believe sufficient conferences. of anticipate to available Kyle extension positive bank the And to well XXXX $X.X the the annual of capital filed On our in complete to for We order loan quarter under presentations compliance believe Kyle. be million. first by requirements approved especially full now in of cash file quarter currently order with thorough efforts work within our for we approval filing this said loan. balance have we the considering XX, will additional $XX the decarbonisation. GSE today, with the by and program As support to window. we XXXX. company That a surrounding be for push in of note as to I'll able back net the be doing very look apply investor waiting further the forgiveness these for a quarter December working continue second in continuing PPP applied forgiven; and We is publicize XXXX. been busy to throughout QX XXXX paycheck renewed of the protection loan, and In we Exclusive it's a all

Kyle Loudermilk

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


to the closing no questions this there call management [Operator I like Instructions] turn at over Since would any further are remarks. time, back to for

Kyle Loudermilk

GSC, just and about of Okay. pleased interest XXXX. the and appreciate excited thank your I time for us. very everybody us in in quarter what's ahead with joining very to like We really

to safe, and group soon, the to If our you please Thanks reach you forward again, look we and IR questions, Be call. have speaking happy with to everyone. out any a equity be we'd follow-up from, ticker. schedule all


that, today's with And this teleconference. concludes

disconnect now for your may have a participation wonderful You this lines your Thank you at time. day. and