Home / News / Geosynthetic systems provider GSE sees record performance in Q2

Geosynthetic systems provider GSE sees record performance in Q2

07 Aug '12

4 min read

GSE Holding Inc reported its financial results for the Company's second quarter of 2012.

Selected highlights for the second quarter of 2012 compared to the prior year period:
• Record second quarter sales of $139.2 million, exceeding the prior year period by $20.7 million, or 17.5%
• Gross margin of 16.9% vs. 14.8% 2Q 2011
• Record Adjusted EBITDA of $16.0 million
• Adjusted EPS of $0.29 after adjusting for non-recurring costs
• Refinanced second lien debt, resulting in $1.1 million annual savings in interest expense
• Announcement of decision to build a manufacturing plant in China

"We are pleased to report another record quarter performance," stated Mark Arnold, President & Chief Executive Officer. "For the second quarter in a row, we set a new record for that quarter's revenue. Our second quarter Adjusted EBITDA was also the strongest in GSE's history, beating our previous record set in the third quarter of 2008. Our trailing twelve month performance is now at $491.6 million in revenue and $45.4 million in Adjusted EBITDA.

Global demand for our innovative products and systems continues to build as we collaborate with our customers to develop purpose-fit solutions that solve their problems. Our SG&A is higher than last year because we expanded our global sales force with new engineers and new sales managers in order to enable execution of our strategy. This is demonstrated in sales growth that is exceeding our expectations in the coal ash and fracking markets and all applications in China.

Sales for the quarter increased $20.7 million, or 17.5%, to $139.2 million, compared to $118.5 million in the second quarter of 2011. Additional volume contributed $18.9 million to the Company's increase in sales for the second quarter. Better pricing, increases in raw material costs passed on to the customer, and changes in product mix contributed $7.4 million. Sales were partially offset by $5.6 million due to changes in foreign currency exchange rates, principally the Euro.

Gross margin for the quarter of 2012 was 16.9% compared to 14.8% in the same prior year period. Gross profit increased $5.9 million or 33.7% compared to the same prior year period. Volume contributed $2.8 million while better pricing and changes in product mix contributed $4.0 million. Gross profit was partially offset by $0.7 million by foreign currency.

Selling, General and Administrative (SG&A) expense for the quarter was $11.8 million compared to $9.4 million in the second quarter of 2011, an increase of $2.4 million. This increase was primarily related to the global expansion of our sales force ($0.7 million), public company costs ($0.7 million) and increased depreciation and other costs related to our global ERP system ($0.6 million), professional fees associated with a potential acquisition ($0.6 million), partially offset by lower restructuring expense and management fees.

Sales for the first half of the year increased $27.1 million, or 13.1%, to $234.1 million, compared to $207.0 million in the first half of 2011. Additional volume contributed $20.4 million to the Company's increase in sales for the first half of the year. Better pricing, increases in raw material costs passed on to the customer, and changes in product mix contributed $13.6 million. Sales were partially offset by $6.9 million due to changes in foreign currency exchange rates, principally the Euro.