GSE Reports Fourth Quarter and Full Year 2012 Results Announces Record Revenues and Adjusted EBITDA for Full Year 2012 PR Newswire HOUSTON, March 14, 2013 HOUSTON, March 14, 2013 /PRNewswire/ -- GSE Holding, Inc. (the "Company" or "GSE") (NYSE: GSE), a leading global provider of highly engineered geosynthetic containment solutions for environmental protection and confinement applications, today reported its financial results for the Company's fourth quarter and full year 2012. (Logo: http://photos.prnewswire.com/prnh/20120320/MM73437LOGO) Selected financial highlights for the full year 2012: oSales of $476.6 million vs. $464.5 million in 2011 oGross margin of 16.3% vs. 15.2% in 2011 oAdjusted EBITDA of $45.7 million vs. $44.5 million in 2011 oAdjusted net income of $15.5 million and adjusted diluted earnings per share of $0.80 per share oUnadjusted net income of $1.1 million and diluted earnings per share of $0.06 per share Selected financial highlights for the fourth quarter of 2012: oSales of $121.4 million vs. $110.7 million in 4Q 2011 oGross margin of 16.3% vs. 15.9% in 4Q 2011 oAdjusted EBITDA of $10.0 million vs. $8.8 million in 4Q 2011 Mark Arnold, President and Chief Executive Officer stated that "During 2012 we saw gains across most of our end-markets, and began expanding our worldwide manufacturing capabilities. Most notably, we recently announced the groundbreaking on our new manufacturing facility in China, which will allow us to more readily service the fast-growing Asian Pacific geography. In addition to this facility, we also have planned capacity additions in 2013 for our existing facilities in Thailand and Egypt, and we have completed the addition of a GCL line to our Kingstree, South Carolina plant. We were recently awarded a contract with an Asian engineering company for a mining application in the region. This contract is one of the largest in our Company's history and is expected to begin shipping in the second quarter of 2013. We are confident with our growth strategy and remain focused on expanding our manufacturing capabilities and market development globally." Fourth Quarter Summary Total revenue for the fourth quarter was $121.4 million, compared to $110.7 million for the prior year period. Strong sales in Energy, Coal Ash, and Oil and Gas helped offset a decline in our North American Environmental Containment end-market. The decline in revenue from the Environmental Containment end-market reflects the Company's continued proactive decision to not pursue low margin contracts. Mr. Arnold continued, "The adoption of our innovative products such as our leak location liner system and our high performance geomembrane not only positively impacted our product mix during the quarter, but also reinforced our growth thesis that our customers want a total solution that helps them drive efficiencies to better manage their operations." Gross profit increased to $19.7 million in the fourth quarter of 2012 from $17.6 million in the prior year period, resulting in gross margin for the fourth quarter of 2012 improving to 16.3% from 15.9% in the prior year period, highlighting the Company's focus on more profitable end markets and higher value products. The fourth quarter included an income tax benefit of approximately $2.0 million or $0.10 per share representing the reversal of the beginning of year valuation allowance reserve for U.S. net operating losses, which we believe are more likely than not to be utilized. Adjusted EBITDA improved to $10.0 million from $8.8 million in the prior year period. Adjusted Net Income in the fourth quarter was $5.3 million, or $0.26 per fully diluted share compared to a loss of $0.4 million or ($0.04) per fully diluted share in the prior year period. Unadjusted net income for the quarter was $4.8 million, or $0.24 per fully diluted share, compared to a net loss of $0.9 million, or ($0.09) per fully diluted share in the prior year period. Full Year 2012 Summary Total revenue for 2012 was $476.6 million, compared to $464.5 million for the prior year. Gross profit increased to $77.7 million from $70.5 million in 2011, resulting in gross margin for the full year 2012 of 16.3%, a 110 basis point improvement from 15.2% in 2011. Adjusted Net Income for 2012 was $15.5 million, or $0.80 per fully diluted share up from $4.9 million or $0.41 per fully diluted share in 2011. Adjusted EBITDA in 2012 improved to $45.7 million from $44.5 million in 2011. Unadjusted net income for the full year was $1.1 million, or $0.06 per fully diluted share, compared to net income of $1.0 million, or $0.08 per fully diluted share in 2011. Recent Events On January 7, 2013 the Company announced the appointment of J. Michael Kirksey as Executive Vice President and Chief Financial Officer. Mr. Kirksey has over 35 years of finance and accounting experience, and spent the last five years as the CFO of a NYSE-Listed company. Throughout his career, Mr. Kirksey has served in several executive financial and general management positions and has gained extensive domestic and international experience, including leading many acquisition and divestiture transactions, both in the US and internationally. Also in January, the Company held a groundbreaking ceremony for its new manufacturing facility in China. Construction of the facility is expected to be completed in late 2013 and add 44 million pounds of new manufacturing capacity. Once completed, the facility will have the ability to manufacture the Company's entire line of geomembrane products and service the growing demand for landfill expansions, industrial waste containment, coal ash containment and oil and gas fracking in the region. In February, the Company announced the acquisition of SynTec, a manufacturer of geosynthetic drainage and soil reinforcement products. This acquisition provides GSE entry into the civil market and access to new technology for environmental and civil applications. Conference Call GSE will hold a conference call today, March 14, 2013 at 9:30 a.m. Central Time to discuss the Company's strategy and operating results. The conference call can be accessed by dialing 877-616-4476 (domestic) or 402-875-4763 (international). A telephonic replay will be available approximately two hour after the call and can be accessed by dialing 1-855-859-2056, or for international callers, 1-404-537-3406. The passcode for the live call and the replay is 16362470. The telephonic replay will be available until 11:59 pm (Eastern Time) on March 27, 2013. Interested parties may also listen to a simultaneous webcast of the conference call via the Investor Relations section of GSE's website at http://ir.gseworld.com. Use of Non-GAAP Financial Measures (Adjusted EBITDA and Adjusted Net Income) Adjusted EBITDA represents net income (loss) before interest expense, income tax expense, depreciation, amortization of intangibles, loss (gain) on foreign currency transactions, restructuring expenses, certain professional fees, stock‑based compensation expense, public offering related costs, loss on extinguishment of debt and management fees. Adjusted Net Income represents Net Income attributable to GSE Holding, Inc. before public offering related costs and public offering related interest expense, loss on extinguishment of debt, certain professional fees and management fees. Adjusted EBITDA and Adjusted Net Income are "non-GAAP financial measures," and are intended as supplemental measures of the Company's performance that are not required by, or presented in accordance with, GAAP. Adjusted EBITDA and Adjusted Net Income should not be considered as alternatives to net income, income from continuing operations, earnings per share or any other performance measure derived in accordance with GAAP. The presentation of Adjusted EBITDA and Adjusted Net Income should not be construed to imply that future results will be unaffected by unusual or non-recurring items. Management believes these measures are meaningful to investors to enhance their understanding of the Company's financial performance. Management's calculation of these measures may not be comparable to similarly titled measures reported by other companies. A reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP measure, appears in the section of this press release titled "Reconciliation of Net Income (Loss) to Adjusted EBITDA". A reconciliation of Adjusted Net Income to net Income (loss) appears in the section of this press release titled "Reconciliation of Net Income (Loss) to Adjusted Net Income". About GSE Holding, Inc. GSE is a global manufacturer and marketer of geosynthetic lining solutions, products and services used in the containment and management of solids, liquids, and gases for organizations engaged in waste management, mining, water, wastewater, and aquaculture. GSE has a long history of manufacturing quality geosynthetic lining systems and developing innovative products. The Company's principal products are polyethylene-based geomembranes, geonets, geocomposites, geosynthetic clay liners, concrete protection liners and vertical barriers. GSE manufactures products primarily to line or cap hazardous and non-hazardous waste landfills; contain materials generated in certain mining processes; and contain water, liquid waste and industrial products in ponds, tanks, reservoirs, sewers, and canals. Headquartered in Houston, Texas, USA, GSE maintains sales offices throughout the world and manufacturing facilities in the United States, Chile, Germany, Thailand and Egypt. Forward-Looking Statements This press release contains forward‑looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward‑looking statements. Forward‑looking statements give management's current expectations and projections relating to the Company's financial condition, results of operations, plans, objectives, future performance and business. You can identify forward‑looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "can have," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. The forward‑looking statements are based on the Company's beliefs, assumptions and expectations of future performance, taking into account the information currently available to management. Important factors that could cause actual results to differ materially from statements included in this press release can be found in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and other documents filed with the SEC. These documents are available in the Investor Relations section of the Company's website at http://www.gseworld.com. The Company cannot assure you that it will realize the results or developments it expects or anticipates or, even if substantially realized, that they will result in the consequences or affect the Company or its operations in the way it expects. The forward‑looking statements included in this press release are made only as of the date hereof. Management undertakes no obligation to update or revise any forward‑looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Contact: Mike Kirksey, Executive Vice President and Chief Financial Officer, +1-281-443-8564, email@example.com GSE Holding, Inc. Consolidated Balance Sheets (In thousands, except share amounts) December 31, 2012 2011 ASSETS Current assets: Cash and cash equivalents $18,068 $9,076 Accounts receivable: Trade, net of allowance for doubtful accounts of $869 and 96,987 80,705 $1,736 Other 3,626 3,054 Inventory, net 64,398 58,109 Deferred income taxes 1,111 935 Prepaid expenses and other 6,681 5,741 Income taxes receivable 1,538 2,447 Total current assets 192,409 160,067 Property, plant and equipment, net 70,172 57,270 Goodwill 58,895 58,895 Intangible assets, net 1,549 2,727 Deferred income taxes 5,858 2,519 Deferred debt issuance costs, net 7,003 8,387 Other assets 212 2,561 TOTAL ASSETS $336,098 $292,426 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $36,632 $34,848 Accrued liabilities and other 20,198 22,812 Short-term debt 985 2,864 Current portion of long-term debt 3,147 2,709 Income taxes payable 1,691 964 Deferred income taxes 1,156 1,135 Total current liabilities 63,809 65,332 Other liabilities 1,211 1,124 Deferred income taxes 1,078 1,416 Long-term debt, net of current portion 167,282 192,885 Total liabilities 233,380 260,757 Commitments and Contingencies (Note 15) Stockholders' equity: Common stock, $.01 par value, 150,000,000 shares authorized, 19,846,684 and 10,809,987 shares issued and outstanding at 198 108 December 31, 2012 and 2011, respectively Additional paid-in capital 130,617 61,407 Accumulated deficit (28,372) (29,456) Accumulated other comprehensive income (loss) 275 (390) Total stockholders' equity 102,718 31,669 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $336,098 $292,426 GSE Holding, Inc Consolidated Statements of Operations and Comprehensive Income (Loss) (In thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 2012 2011 2012 2011 Net sales $121,360 $110,660 $476,644 $464,451 Cost of products 101,626 93,019 398,955 393,944 Gross profit 19,734 17,641 77,689 70,507 Selling, general and administrative 14,642 12,975 49,326 44,474 expenses Public offering related costs — — 9,655 — Amortization of intangibles 290 322 1,182 1,379 Operating income 4,802 4,344 17,526 24,654 Other expenses (income): Interest expense, net 3,961 5,103 16,797 20,081 Foreign currency transaction (gain) loss 54 (604) (459) (568) Loss on extinguishment of debt — — 1,555 2,016 Other income, net (951) (254) (2,269) (1,182) Income from continuing operations before 1,738 99 1,902 4,307 income taxes Income tax (benefit) provision (3,127) 1,089 356 3,490 Income (loss) from continuing operations 4,865 (990) 1,546 817 Income (loss) from discontinued (51) 53 (462) 136 operations, net of tax Net income (loss) 4,814 (937) 1,084 953 Other comprehensive income (loss): Foreign currency translation adjustment 684 (1,814) 665 (2,125) Comprehensive income (loss) $5,498 $(2,751) $1,749 $(1,172) Basic net income (loss) per common share: Continuing operations $0.24 $(0.09) $0.08 $0.08 Discontinued operations (0.00) 0.00 (0.02) 0.01 $0.24 $(0.09) $0.06 $0.09 Diluted net income (loss) per common share: Continuing operations $0.24 $(0.09) $0.08 $0.07 Discontinued operations (0.00) 0.00 (0.02) 0.01 $0.24 $(0.09) $0.06 $0.08 Basic weighted-average common shares 19,683 10,810 18,407 10,810 outstanding Diluted weighted-average common shares 20,440 11,810 19,336 11,841 outstanding GSE Holding, Inc Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2012 2011 2010 Cash flows from operating activities: Net income (loss) $1,084 $953 $(16,772) (Income) loss from discontinued operations 462 (136) 4,428 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and amortization 13,114 11,419 10,416 Amortization of debt issuance costs 2,418 2,025 1,844 Amortization of intangible assets 1,182 1,379 2,284 Amortization of premium/discount on senior notes 935 744 (40) Loss on extinguishment of debt 1,555 2,016 — Deferred income tax (benefit) provision (3,862) 683 (1,854) Stock-based compensation 4,666 75 67 Revaluation of non-dollar denominated debt 340 (815) 345 Other 176 75 116 Change in cash from operating assets and liabilities: Accounts receivable (16,757) (16,498) (24,539) Inventory (6,288) (7,463) (19,561) Prepaid expenses and other (1,781) 550 (6,837) Accounts payable 1,878 395 12,827 Accrued liabilities (1,398) 741 8,164 Income taxes (receivable) payable 1,235 (1,243) 2,615 Other assets and liabilities (489) 977 (44) Net cash used in operating activities – (1,530) (4,123) (26,541) continuing operations Net cash provided by (used in) operating (142) 5,010 (3,219) activities – discontinued operations Net cash provided by (used in) operating (1,672) 887 (29,760) activities Cash flows from investing activities: Purchase of property, plant and equipment (26,137) (11,694) (3,337) Proceeds from the sale of assets 33 32 – Net cash used in investing activities – (26,104) (11,662) (3,337) continuing operations Net cash provided by investing activities – – – 2,284 discontinued operations Net cash used in investing activities (26,104) (11,662) (1,053) Cash flows from financing activities: Proceeds from lines of credit 100,635 86,948 137,865 Repayments of lines of credit (110,490) (90,667) (109,918) Proceeds from long-term debt 25,674 173,083 — Repayments of long-term debt (44,318) (153,172) (2,256) Net proceeds from initial public offering 65,927 — — Payments for debt issuance costs (1,748) (9,179) — Payments for public offering costs — (2,311) — Proceeds from the exercise of stock options 1,018 — — Net cash provided by financing activities – 36,698 4,702 25,691 continuing operations Net cash used in financing activities – — (650) — discontinued operations Net cash provided by financing activities 36,698 4,052 25,691 Effect of exchange rate changes on cash – 27 611 (228) continuing operations Effect of exchange rate changes on cash – 43 4 (280) discontinued operations Net increase (decrease) in cash and cash 8,992 (6,108) (5,630) equivalents Cash and cash equivalents at beginning of year 9,076 15,184 20,814 Cash and cash equivalents at end of year $18,068 $9,076 $15,184 Supplemental cash flow disclosure: Cash paid for interest $15,840 $15,626 $16,341 Cash paid for income taxes $1,375 $2,643 $22 GSE Holding, Inc. Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) (unaudited) Three Months Ended Year Ended December 31, December 31, 2012 2011 2012 2011 Net Income (loss) $4,814 $ (937) $1,084 $953 (Income) loss from discontinued 51 (53) 462 (136) operations, net of income tax Interest expense 3,961 5,105 16,797 20,088 Income tax (benefit) expense (3,127) 1,089 356 3,490 Depreciation and amortization expense 3,611 3,458 14,296 12,798 Foreign exchange (gain) loss 53 (604) (459) (568) Loss on extinguishment of debt — — 1,555 2,016 Restructuring expense — 569 93 950 Professional fees 460 (431) 1,056 2,712 Stock-based compensation expense 213 — 360 75 Public offering costs — — 9,655 — Management fees — 554 229 2,074 Other — 76 188 84 Adjusted EBITDA $10,036 $8,826 $45,672 $ 44,536 GSE Holding, Inc. Reconciliation of Net Income (Loss) to Adjusted Net Income (in thousands) (unaudited) Three Months Ended Year Ended December 31, December 31, 2012 2011 2012 2011 Net Income (loss) $4,814 $(937) $1,084 $ 953 (Income) loss from discontinued operations, 51 (53) 462 (136) net of income tax Professional fees 460 — 1,056 — Management fees — 554 229 2,074 Loss on extinguishment of debt — — 1,555 2,016 Public offering costs — — 9,655 — Public offering interest related expense — — 1,470 — Adjusted net income (loss) $5,325 $(436) $15,511 $ 4,907 Diluted weighted-average common shares 20,440 10,810 19,336 11,841 outstanding Adjusted earnings (loss) per share $0.26 $(0.04) $0.80 $0.41 SOURCE GSE Holding, Inc. Website: http://www.gseworld.com
GSE Reports Fourth Quarter and Full Year 2012 Results
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