GSE Systems, Inc. (NYSE: GVP) said its third quarter 2013 revenue declined 8.7% to USD11.9m from USD13.0m in Q3 2012.
Higher revenue from the USD36.0m Slovakia simulator project in Q3 2013 (USD3.7m) compared to Q3 2012 (USD0.3m) was offset by a nearly USD2.0m decline in revenue at GSE EnVision LLC, reflecting the wind down of a large contract awarded in 2012. In addition, GSE experienced a further decline in nuclear simulation revenue from clients in Japan and Germany and lower fossil fuel simulation revenue. The Slovakia simulator project is expected to be substantially completed in the first quarter of 2014.
Gross profit in Q3 2013 was USD3.1m, or 25.9% of revenue, as compared to USD5.0m, or 38.8% of revenue, in Q3 2012. The decline in gross profit was largely driven by the higher percentage of revenue associated with the Slovakian project in Q3 2013 (31.1%) as compared to the percentage of revenue from the Slovakian project in Q3 2012 (2.3%). Revenue from the Slovakia project has a substantially lower gross profit margin than GSE´s normal gross profit margin due to an inordinate amount of hardware being supplied. Lower revenue from GSE EnVision LLC, which has an overall gross profit that is substantially higher than GSE´s normal gross profit margin, also contributed to lower overall gross margin for the quarter.
Operating loss for Q3 2013 was USD0.9m compared to operating income of USD1.4m in Q3 2012.
GSE Systems is a world leader in real-time high-fidelity simulation, providing a wide range of simulation, training and engineering solutions to the energy and process industries. Information about GSE Systems is available at www.gses.com.