GSE Systems (GVP) Stock: Why The Price Jumped

By Amit Chowdhry ● Nov 17, 2021
  • The stock price of GSE Systems, Inc. (NASDAQ: GVP) increased by 4.64% in the most recent trading session. This is why it happened.

The stock price of GSE Systems, Inc. (NASDAQ: GVP) – a leader in advanced engineering and workforce solutions that support the future of clean energy production and overall decarbonization initiatives of the power industry – increased by 4.64% in the most recent trading session. Investors are responding positively to the company’s Q3 2021 results.

Q3 2021 and Recent Highlights

— New orders in Q3 2021 increased by 35% to $14.7 million, from $10.9 million in Q3 2020. Workforce Solutions orders were $3.5 million in the third quarter while Performance Improvement Solutions (Engineering) orders were $11.2 million.

— Q3 revenue increased 13.7% over the same quarter one year ago and 8.6% sequentially to $14.7 million from $13.5 million in Q2 2021, led by improvements in Workforce Solutions.

— EnVision Software as a Service (SaaS) revenue increased by 19% sequentially.

— Adjusted EBITDA was $0.1 million in Q3 2021 compared to $(0.4) million in Q2 of 2021.

— Significantly improved balance sheet, ending Q3 with a cash position of $4.0 million and total debt of $2.1 million, a decrease of $10.4 million due to repayment and forgiveness of PPP loan. The company also recorded $2.1 million of other income pertaining to the Employee Retention Credit, with $4.3 million remaining in receivables.

KEY QUOTES:

“We are very pleased with the results in the third quarter which achieved the strongest levels since the onset of the pandemic. The results demonstrated overall improvements across GSE’s businesses, with year over year and sequential improvements in new orders and revenues, as well as positive adjusted EBITDA. Contributing to the quarter’s success and a continued growth area for the company has been EnVision, our emerging software as a service (SaaS) subscription solution, which saw revenues grow 19% compared to Q2 2021 and continues to resonate well with customers. While the industry has yet to return to the more robust levels of spend for maintenance and improvements, many customers have re-engaged with us regarding their maintenance and upgrade plans for the future and in the near-term, we believe that these pandemic related delays in client spending has created quite a bit of pent up demand for projects that will require GSE’s solutions.”

“Macro trends also continue to point in the right direction for GSE. With the U.S. focused on enhancing the grid for resiliency and decarbonization the company is well positioned to capture greater business as industry spend ramps back up to pre-pandemic levels. The Infrastructure Investment and Jobs Act includes sizable allocations towards the strengthening of the U.S. grid so that carbon-free energy, with an emphasis on nuclear among other power sources, can drive the U.S. to a zero carbon grid by 2035. Also included in the bill are federal level economic incentives for nuclear energy in the form of zero emission credits, which bolsters the viability and economics of the existing nuclear power fleet. This will help the existing fleet remain viable and create incentive for extension of plant lifetimes and producing more clean and stable power from the existing infrastructure. These are challenges that GSE can uniquely help the industry address. We have also seen an acceleration and broadening of interest in deploying small modular reactors (SMRs), which are gaining immense traction on a global basis. As these macro trends advance, GSE is well positioned to capture greater spend from industry moving forward.”

— Kyle J. Loudermilk, GSE’s President and Chief Executive Officer

“During the third quarter, we continued to focus on improving our capital structure by repaying some of our debt, receiving forgiveness on our PPP loan, which created significant improvements to the company’s the balance sheet. We also continued very efficient management of operating expenses which decreased 7.1% compared to Q2 2021 and have rightsized our corporate overhead and prepared the company for improved cash flow and profitability as our customers come back to the market. Further, we reported net income in the quarter primarily due to the PPP loan being forgiven and the recording of an Employee Retention Credit of $2.1 million, of which $4.3 million still remains outstanding.”

— Emmett Pepe, CFO of GSE Systems

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.