Q1 sales rise marginally at GSE Holding

Selected financial highlights for the first quarter of 2013:
-Net sales of $95.1 million vs. $94.9 million in 1Q 2012
- Gross margin of 13.9% vs. 15.2% in 1Q 2012
- Adjusted EBITDA of $3.4 million vs. $7.0 million in 1Q 2012
- Adjusted net loss of $1.9 million or a loss of $0.09 per fully diluted share
- GAAP net loss of $2.4 million or a loss of $0.12 per fully diluted share, compared to a net loss of $12.8 million or a loss of $0.82 per fully diluted share in 1Q 2012

Mark Arnold, President and Chief Executive Officer stated that "During the first quarter, which has historically been our slowest season, we reported year-over-year revenue growth as a result of the continued adoption of our value-added technology in end-markets such as Oil and Gas Fracking and Coal Ash, as well as steady growth in our legacy Water Containment market. We are encouraged by this trend and expect the continued adoption of our advanced technologies over time. That said, the difficult economic environment in Europe, competitive headwinds in North America and the timing of projects in mining have negatively impacted our overall margins during the quarter."

First Quarter Summary

Total net sales for the first quarter were $95.1 million, compared to $94.9 million for the prior year period. Strong sales growth in Coal Ash and Oil and Gas helped offset declines in the lumpy mining markets. Gross profit was $13.3 million in the first quarter of 2013 compared to $14.4 million in the prior year period, resulting in gross margin for the first quarter of 2013 to decline to 13.9% from 15.2% in the prior year period. This decline reflects the challenging competitive environment the Company typically faces during the first quarter. 

Adjusted EBITDA was $3.4 million compared to $7.0 million in the prior year period.  Adjusted net loss in the first quarter was $1.9 million, or ($0.09) per fully diluted share compared to $1.1 million or ($0.07) per fully diluted share in the prior year period.  GAAP net loss for the quarter was $2.4 million, or ($0.12) per fully diluted share, compared to a net loss of $12.8 million, or ($0.82) per fully diluted share in the prior year period.

"The first quarter saw a competitive landscape much like what GSE has experienced in the years prior to 2011.  While we expect the volume of bidding activity around the world to continue to be robust, we remain cautious about the persistence of this competitive environment and its impact on margins, especially in certain regions.  Despite this headwind, we will continue to focus on our strategy of developing and selling higher margin productsand applications, expanding our sales and technical capabilities in key regions and adding approximately 20% more manufacturing capacity in our growing international markets by the beginning of 2014," Mr. Arnold continued.

GSE Holding