GSE Systems Acquires Hyperspring, LCC and 50% Interest in IntelliQlick, LLC
SYKESVILLE, MD – November 17, 2014 – GSE Systems, Inc. (NYSE MKT: GVP) (“GSE”), a global energy services solutions provider, today announced that its operating subsidiary, GSE Power Systems, Inc. (“GSE Power”), acquired Hyperspring, LLC (“Hyperspring”), which specializes in staff augmentation, training and development, and plant operations support services, primarily in the United States nuclear industry. In conjunction with the Hyperspring acquisition, GSE Power also acquired a 50% interest in IntelliQlik, LLC (“IntelliQlik”), which is developing a software platform for online learning and learning management for the energy market.
Jim Eberle, CEO of GSE, commented, “As part of our lofty strategy to change the way the energy industry learns, the acquisition of Hyperspring delivers on our promise to diversify GSE’s business model and positions us to better address the growing demands of the energy services industry. Together we will improve operator performance through turnkey training solutions, with our unique visualization and simulation environment, a next-generation learning delivery platform through IntelliQlik, and through a staff of instructors, engineers and specialists to support our clients’ internal projects.”
Mr. Eberle continued, “GSE has grown into a world leader in developing and providing real-time, high-fidelity simulation, training and engineering solutions to the energy industry. The energy industry in the U.S. is facing a skilled labor shortage that is especially acute among nuclear professionals. As these individuals retire, a significant void in operator experience will be created. The staffing solutions offered by Hyperspring provide us with a complementary way to address this growing global issue.”
GSE Power paid the sellers of Hyperspring an aggregate of $3 million at closing (subject to adjustment based on a subsequent determination of the amount of actual working capital of Hyperspring at closing). In addition, GSE Power may be required, pursuant to the terms of the Purchase Agreement, to pay the sellers up to an additional $8.4 million if Hyperspring attains certain EBITDA (earnings before interest, taxes, depreciation and amortization) targets for the three-year period ending November 13, 2017. Hyperspring will operate as a wholly-owned subsidiary of GSE Power and will be run by its current Chief Executive Officer, Paul Abbott.
Based upon its unaudited results of operations for the year ended December 31, 2013 and the nine months ended September 27, 2014, Hyperspring generated revenues of approximately $19.2 million and $13.0 million, respectively, and EBITDA of approximately $710,000 and $950,000, respectively. GSE expects the acquisition will be immediately accretive to earnings. Based upon the elimination of certain costs, GSE believes that if it had owned Hyperspring on January 1, 2013 and January 1, 2014, on a pro forma basis, Hyperspring would have generated EBITDA of approximately $1.4 million and $1.2 million, for the year ended December 31, 2013 and the nine months ended September 27, 2014, respectively.
Although GSE has received representations and warranties from the sellers of Hyperspring with respect to the accuracy of its financial statements, including its results of operations, the financial statements have not been audited or reviewed, and do not provide the same assurances as audited or reviewed financial statements. As a result, indications by GSE in this press release as to the likely results of operations of Hyperspring on a pro forma basis are subject to the same risks and uncertainties as the Hyperspring unaudited financial statements; if the Hyperspring unaudited financial statements turn out to be inaccurate in any material respect, the proforma results discussed above are not likely to be correct. In addition, those statements are not guarantees of results that would have been (or will be) achieved by Hyperspring going forward.
Hyperspring, founded in 2004, is headquartered in Huntsville, AL. Approximately 90% of Hyperspring’s revenues are generated from its staff augmentation business, and approximately 70% of revenues are generated from one utility. Hyperspring primarily serves the nuclear energy industry in the United States in areas such as providing training instructors, plant operations and engineering, procedure writing, corrective action management and work management.
Mr. Eberle noted, “GSE and Hyperspring have distinct client bases, creating a significant opportunity to crosssell our respective products and services.”
In connection with the Hyperspring acquisition, GSE Power invested $250,000 for a 50% interest in IntelliQlik, and is obligated to contribute an additional $250,000 upon the attainment by IntelliQlik of certain milestones. IntelliQlik is jointly owned by GSE and one of the former owners of Hyperspring. IntelliQlik is developing a software platform for online learning and learning management for all energy sectors, including nuclear, thermal, oil & gas, and hydro-electric. The IntelliQlik platform will also include applications to support plant engineering, operations and maintenance, as well as provide a platform for Software as a Service (SaaS) to deliver learning materials, industry recruitment services, and specialized simulator training programs.
“Through IntelliQlik we hope to transform the landscape for training across the power industry,” said Mr. Eberle. “We are combining a proven, systematic approach to training with the conveniences that 21st century students take for granted, such as flexible scheduling, a student-centered environment, online classes, and computer simulation. Our end goal is to provide knowledgeable workers for an industry with an ever increasing need for skilled professionals.”
About GSE Systems, Inc.
GSE is a world leader in real-time high-fidelity simulation, providing a wide range of simulation, training and engineering solutions to the power and process industries. Its comprehensive and modular solutions help customers achieve performance excellence in design, training and operations. GSE’s products and services are tailored to meet specific client requirements such as scope, budget and timeline. The Company has over four decades of experience, more than 1,100 installations, and hundreds of customers in over 50 countries spanning the globe. GSE Systems is headquartered in Sykesville (Baltimore), Maryland, with offices in Huntsville, Alabama; Chennai, India; Nyköping, Sweden; Stockton-on-Tees, UK; Glasgow, UK; and Beijing, China.
We make statements in this press release that are considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. These statements reflect our current expectations concerning future events and results. We use words such as “expect,” “intend,” “believe,” “may,” “will,” “should,” “could,” “anticipates,” and similar expressions to identify forward-looking statements, but their absence does not mean a statement is not forward-looking. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance or achievements to be materially different from those we project. For a full discussion of these risks, uncertainties, and factors, we encourage you to read our documents on file with the Securities and Exchange Commission, including those set forth in our periodic reports under the forward-looking statements and risk factors sections. We do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.