GSE Systems Inc (GVP, Financial) filed Quarterly Report for the period ended 2009-09-30.
GSE Systems, Inc. develops and delivers business and technology solutions by applying process control and simulation software, systems and services to the pharmaceutical and chemical research & development, energy, process and manufacturing industries worldwide. The company's products are used in the following industries: specialty chemical, food and beverage, petroleum refining, pharmaceutical, fossil and nuclear power generation, metals and water treatment. (PRESS RELEASE) Gse Systems Inc has a market cap of $83.43 million; its shares were traded at around $5.2 with a P/E ratio of 65 and P/S ratio of 2.88.
In the first quarter 2009, the Company was awarded a contract valued at over $18 million to build a new nuclear power plant simulator for a two unit reactor plant in Slovakia. The contract includes approximately $12 million of hardware that the customer has requested be a part of the contract in addition to approximately $6 million related specifically to the simulator. Margins on the hardware portion of the contract are minimal, while margins on the more traditional simulation portions will be consistent with those in the past. The utility customer in Slovakia is constructing two new Russian designed VVER-440 nuclear reactors at the site that will incorporate Siemens / Areva control systems. Work on this contract commenced in the first quarter 2009 and is scheduled for completion in approximately 30 months. GSE, in partnership with Siemens, built the first full scope simulator at the same site in 1997. Including this contract, the Company logged approximately $43.0 million in nuclear simulation orders in the nine months ended September 30, 2009.
Contract Revenue. Total contract revenue for the quarter ended September 30, 2009 totaled $10.2 million, which was 45.9% higher than the $7.0 million total revenue for the quarter ended September 30, 2008. For the nine months ended September 30, 2009, contract revenue totaled $29.0 million, a 40.5% increase from the $20.6 million for the nine months ended September 30, 2008. The Company recorded total orders of $47.3 million in the nine months ended September 30, 2009 versus $31.2 million in the nine months ended September 30, 2008. Included in the 2009 orders was an $18.4 million contract to build a new nuclear power plant simulator for a two unit reactor plant in Slovakia. The contract includes approximately $12 million for hardware, the largest portion being a digital control system from Siemens, that the customer has requested be a part of the contract in addition to approximately $6 million related specifically to the simulator. Due to the significant hardware portion of the project, the overall margin on the project is lower than the Company s normal gross margin. In the three and nine months ended September 30, 2009, the Company recognized $1.9 million and $3.7 million, respectively, of contract revenue on this project using the percentage-of-completion method, which accounted for 18.9% and 12.8%, respectively, of the Company s consolidated revenue. At September 30, 2009, the Company s backlog was $58.6 million, of which $14.7 million related to this contract.
Gross Profit. Gross profit totaled $2.6 million for the quarter ended September 30, 2009 versus $2.0 million for the same quarter in 2008. As a percentage of revenue, gross profit decreased from 28.2% for the three months ended September 30, 2008 to 25.0% for the three months ended September 30, 2009. For the nine months ended September 30, 2009, gross profit increased $1.8 million from the same period in 2008 to $7.6 million, however, as a percentage of revenue, gross profit decreased from 27.9% to 26.2%. The decrease in gross profit percentage mainly reflects the impact of the lower margin on the $18.4 million full scope simulator and digital control system order received in the first quarter 2009 from a Slovak utility.
Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses totaled $2.0 million in the quarter ended September 30, 2009, an 18.1% increase from the $1.7 million for the same period in 2008. For both the nine months ended September 30, 2009 and 2008, SG&A expenses totaled $5.6 million. The spending variances reflect the following:
Depreciation. Depreciation expense totaled $127,000 and $114,000 during the quarters ended September 30, 2009 and 2008, respectively. For the nine months ended September 30, 2009 and 2008, depreciation expense totaled $369,000 and $317,000, respectively. The higher 2009 depreciation expense is a result of the Company s 2008 capital purchases related to the Company s move to its Sykesville, Maryland headquarters in 2008 and the purchase of new computers for new hires.
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GSE Systems, Inc. develops and delivers business and technology solutions by applying process control and simulation software, systems and services to the pharmaceutical and chemical research & development, energy, process and manufacturing industries worldwide. The company's products are used in the following industries: specialty chemical, food and beverage, petroleum refining, pharmaceutical, fossil and nuclear power generation, metals and water treatment. (PRESS RELEASE) Gse Systems Inc has a market cap of $83.43 million; its shares were traded at around $5.2 with a P/E ratio of 65 and P/S ratio of 2.88.
Highlight of Business Operations:
On September 4, 2009, the Company raised $15.0 million through the sale of 2.5 million shares of its common stock, $.01 par value per share. The shares were sold under a shelf registration statement which was declared effective by the Securities and Exchange Commission on August 21, 2009. On September 23, 2009, the Company raised an additional $2,250,000 when the Company s underwriter exercised an over-allotment option in full to purchase an additional 375,000 shares of the Company s common stock at the public offering price of $6.00 per share. The aggregate net proceeds received by the Company from the two transactions was approximately $15.9 million. The Company paid the underwriter a fee in the amount of 6% of the gross proceeds received by the Company from the offering ($1,035,000) and paid $323,000 in other transaction fees. The Company intends to use the net proceeds for general working capital purposes and to fund acquisitions and other strategic opportunities.In the first quarter 2009, the Company was awarded a contract valued at over $18 million to build a new nuclear power plant simulator for a two unit reactor plant in Slovakia. The contract includes approximately $12 million of hardware that the customer has requested be a part of the contract in addition to approximately $6 million related specifically to the simulator. Margins on the hardware portion of the contract are minimal, while margins on the more traditional simulation portions will be consistent with those in the past. The utility customer in Slovakia is constructing two new Russian designed VVER-440 nuclear reactors at the site that will incorporate Siemens / Areva control systems. Work on this contract commenced in the first quarter 2009 and is scheduled for completion in approximately 30 months. GSE, in partnership with Siemens, built the first full scope simulator at the same site in 1997. Including this contract, the Company logged approximately $43.0 million in nuclear simulation orders in the nine months ended September 30, 2009.
Contract Revenue. Total contract revenue for the quarter ended September 30, 2009 totaled $10.2 million, which was 45.9% higher than the $7.0 million total revenue for the quarter ended September 30, 2008. For the nine months ended September 30, 2009, contract revenue totaled $29.0 million, a 40.5% increase from the $20.6 million for the nine months ended September 30, 2008. The Company recorded total orders of $47.3 million in the nine months ended September 30, 2009 versus $31.2 million in the nine months ended September 30, 2008. Included in the 2009 orders was an $18.4 million contract to build a new nuclear power plant simulator for a two unit reactor plant in Slovakia. The contract includes approximately $12 million for hardware, the largest portion being a digital control system from Siemens, that the customer has requested be a part of the contract in addition to approximately $6 million related specifically to the simulator. Due to the significant hardware portion of the project, the overall margin on the project is lower than the Company s normal gross margin. In the three and nine months ended September 30, 2009, the Company recognized $1.9 million and $3.7 million, respectively, of contract revenue on this project using the percentage-of-completion method, which accounted for 18.9% and 12.8%, respectively, of the Company s consolidated revenue. At September 30, 2009, the Company s backlog was $58.6 million, of which $14.7 million related to this contract.
Gross Profit. Gross profit totaled $2.6 million for the quarter ended September 30, 2009 versus $2.0 million for the same quarter in 2008. As a percentage of revenue, gross profit decreased from 28.2% for the three months ended September 30, 2008 to 25.0% for the three months ended September 30, 2009. For the nine months ended September 30, 2009, gross profit increased $1.8 million from the same period in 2008 to $7.6 million, however, as a percentage of revenue, gross profit decreased from 27.9% to 26.2%. The decrease in gross profit percentage mainly reflects the impact of the lower margin on the $18.4 million full scope simulator and digital control system order received in the first quarter 2009 from a Slovak utility.
Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses totaled $2.0 million in the quarter ended September 30, 2009, an 18.1% increase from the $1.7 million for the same period in 2008. For both the nine months ended September 30, 2009 and 2008, SG&A expenses totaled $5.6 million. The spending variances reflect the following:
Depreciation. Depreciation expense totaled $127,000 and $114,000 during the quarters ended September 30, 2009 and 2008, respectively. For the nine months ended September 30, 2009 and 2008, depreciation expense totaled $369,000 and $317,000, respectively. The higher 2009 depreciation expense is a result of the Company s 2008 capital purchases related to the Company s move to its Sykesville, Maryland headquarters in 2008 and the purchase of new computers for new hires.
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