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New products performing well at GSE

11 May '12

3 min read

GSE Holding Inc, a leading global provider of highly engineered geosynthetic containment solutions for environmental protection and confinement applications, reported its financial results for the Company's first quarter of 2012.

Selected highlights for the first quarter of 2012 compared to the prior year period:

• Record first quarter sales of $94.9 million, exceeding the prior year period by $6.4 million, or 7.2%
• Gross margin of 14.8%
• Adjusted EBITDA of $7.0 million
• Adjusted EPS of $(0.07) after adjusting for non-recurring costs
• Completed an Initial Public Offering (IPO) of 100% primary shares, reducing debt by $51.5 million
• Acquired significant additional production capacity in an asset purchase from a direct competitor
• Successfully launched the new "GSE Environmental" branding and website
Selected other recent updates post March 31, 2012
• Refinanced second lien debt, resulting in $1.1 million annual savings in interest expense
• Strong results from our global introduction of Leak Detection System with first project sales in the Asia Pacific region, India, and Europe
• Our proprietary coal ash system continues to gain market acceptance

Mark Arnold, President & Chief Executive Officer, stated, "We are pleased with our record first quarter performance. Volume was strong in all regions, and we continue to be optimistic about our future. We are already gaining market traction with new products introduced during our global sales and operations meetings held in March. We continue to realize accelerated growth in the mining, fracking and coal ash sectors. Several customer field test projects were constructed during the first quarter of 2012 using our new proprietary drainage system for copper and gold mining. Additionally, our sales in China during the first quarter were substantially up over last year. Also, I wish to thank the investors, employees and advisors that made our IPO a success. I am particularly grateful to our initial investors and welcome our new investors."

Sales for the quarter increased $6.4 million, or 7.2%, to $94.9 million, compared to $88.5 million in the first quarter of 2011. An increase in selling prices contributed $6.8 million, mostly driven by increases in resin costs that were passed on to customers. Additional volume contributed $0.8 million to the Company's increase in sales for the first quarter. Sales were negatively affected $1.2 million due to changes in foreign currency exchange rates, principally the Euro.

Selling, General and Administrative (SG&A) expense for the quarter was $10.9 million compared to $9.3 million in the first quarter of 2011, an increase of $1.6 million. This increase was primarily related to the global expansion of our sales force, public company costs and increased depreciation and other costs related to our global ERP system, partially offset by lower restructuring expense and professional fees.

Adjusted EBITDA for the quarter was $7.0 million compared to $9.8 million in the same prior year period, which was positively impacted by one uniquely large and complex project. No other projects during 2011 had such an impact on quarterly earnings comparisons.

Net loss for the quarter was $(1.1) million, adjusted for non-recurring costs associated with our IPO and management fees, or $(0.07) per fully diluted share, compared to $(0.6) million, or $(0.05) per fully diluted share, in the same prior year period.

GSE Holding Inc