GSE Systems, Inc.

Revenue in Q1 2024 was $11.3 million, up from $10.9 million in Q1 2023 and up 10.5% sequentially from $10.2 million in Q4 2023. Gross profit was $3.2 million, or 28.5% of revenue, versus $2.6 million, or 25.5%, in Q4 2023 and $2.4 million, or 22% in Q1 2023. Net loss was $2.0 million, or $0.63 per share, versus a net loss of $3.0 million, or $1.29 per share, a year ago; adjusted net loss was $1.1 million, or $0.35 per share, versus $2.574 million, or $1.12 per share, a year ago. Adjusted EBITDA was negative $447,000 versus negative $2.2 million in Q1 2023. Engineering Services revenue was $8.7 million, up 26% year over year, and orders were $12.1 million. Workforce Solutions revenue was $2.6 million, down from $3.9 million a year ago, and orders were $2.5 million. Backlog ended at $37.7 million, up from $34.5 million at fiscal 2023 year-end. Cash was $1.4 million, with $1.5 million of restricted cash. Management said it had repaid $6.2 million of the convertible debt, with $100,000 remaining on the first note; the second tranche of $1.8 million begins repayment in June 2024 and is expected to be fully repaid by May 2025. For expenses, management said quarterly OpEx should remain around $3.5 million to $4 million going forward.

Ravi Khanna’s tone was optimistic and strategic, centered on the idea that nuclear is in a new growth cycle driven by decarbonization, rising power demand, data centers, AI, EVs, and the need for reliable carbon-free baseload power. He emphasized that GSE is focusing on the existing nuclear fleet while also positioning for SMRs, digital upgrades, and higher-margin, more integrated engineering and software work. He also pointed to a soon-to-be-announced SMR-related order in the U.K. and said the company’s breadth of services gives it a strong value proposition.

Emmett Pepe focused on improving operating efficiency and balance-sheet progress. He said the quarter’s revenue increase was driven by higher utilization, with billable utilization reaching 94.4% versus 83.9% a year ago, and gross margin improved to 28.5% as engineering services strengthened. He noted OpEx excluding depreciation and amortization was $4.6 million, including $500,000 of one-time advisory fees, and said quarterly OpEx should stay around $3.5 million to $4 million. He also highlighted cash of $1.4 million, restricted cash of $1.5 million, repayment of $6.2 million of convertible debt, and a target of being debt-free in about one year.

With no live analyst questions, management used the Q&A to expand on strategy, the SMR opportunity, cost cuts, and debt reduction. Ravi said he wants to connect GSE’s engineering expertise with technology across divisions to support digital plant upgrades and other multi-discipline projects, while noting the SMR win has been in the works for over a year and more details will come in a future press release. Emmett said the company is always looking for efficiencies, and when asked about debt he said becoming debt-free is the target, with the first note essentially winding down this month and the second tranche expected to be repaid by May 2025.