GSE Systems Inc (GVP) 2023 Q3 法說會逐字稿

Good day and welcome to the GSE Systems Inc., Reports Third Quarter Fiscal Year 2023 financial results conference call. (Operator Instructions)

美好的一天，歡迎來到 GSE Systems Inc.，報告 2023 財年第三季財務業績電話會議。 （操作員說明）

Please note this event is being recorded. I would now like to turn the conference over to Adam Lowensteiner, Vice President at Lytham Partners. Please go ahead.

請注意此事件正在被記錄。我現在想將會議交給 Lytham Partners 副總裁 Adam Lowensteiner。請繼續。

Thank you, Dave, and good afternoon, everyone. And thank you all for joining us today to review the financial results for GSE Systems third quarter fiscal 2023, ended September 30, 2023. With us on the call representing the company today are Kyle Loudermilk, president and CEO of GSE Systems, and Emmett Pepe, chief financial officer of GSE Systems.

謝謝戴夫，大家下午好。感謝大家今天與我們一起回顧 GSE Systems 2023 財年第三季（截至 2023 年 9 月 30 日）的財務業績。今天代表公司參加電話會議的是 GSE Systems 總裁兼執行長 Kyle Loudermilk 和 Emmett Pepe ，GSE Systems 財務長。

Before we begin, I would like to remind everyone that statements made during the course of this call may be considered forward-looking statements within the meaning of section 27A of the Securities Act of 1933 as amended and section 21E of the Securities Act of 1934.

在開始之前，我想提醒大家，在本次電話會議期間所做的陳述可能被視為1933 年《證券法》修正案第27A 條和1934 年《證券法》第21E 條含義內的前瞻性陳述。

These statements reflect current expectations concerning future events and results. Words such as expect, intend, believe, may, will, should, could, anticipate, and similar expressions are words that are used to identify forward-looking statements, but their absence does not mean a statement is not forward-looking.

這些陳述反映了當前對未來事件和結果的預期。期望、打算、相信、可能、將、應該、能夠、預期和類似表達等詞語是用於識別前瞻性陳述的詞語，但缺少這些詞語並不意味著該陳述不具有前瞻性。

These statements are not guarantees of future performance and are subject to risks and uncertainties and other important factors that could cause actual performance or achievements to be materially different from those projected. For a full discussion of these risks, uncertainties, and factors, you're encouraged to read GSE's documents on file with the Securities and Exchange Commission, including those set forth in periodic reports filed under the forward-looking statements and risk factors section.

這些陳述並非對未來績效的保證，並受到風險和不確定性以及其他可能導致實際績效或成就與預測有重大差異的重要因素的影響。為了全面討論這些風險、不確定性和因素，我們鼓勵您閱讀 GSE 向美國證券交易委員會存檔的文件，包括在前瞻性陳述和風險因素部分提交的定期報告中列出的文件。

GSE does not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. On this call, management may refer to EBITDA, adjusted EBITDA, adjusted net income, and adjusted EPS, which are not measures of financial performance under generally accepted accounting principles or GAAP.

GSE 無意更新或修改任何前瞻性陳述，無論是由於新資訊、未來事件或其他原因。在這次電話會議上，管理層可能會提到 EBITDA、調整後 EBITDA、調整後淨利潤和調整後每股收益，這些不是公認會計原則或 GAAP 下的財務業績衡量標準。

Management believes that these non-GAAP figures, in addition to other GAAP measures, provide meaningful supplemental information regarding the company's operational performance. Investors should recognize that these non-GAAP figures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to and not as a substitute for or superior to any measure of performance prepared in accordance with GAAP.

管理階層認為，除了其他公認會計準則衡量標準之外，這些非公認會計準則數據還提供了有關公司經營績效的有意義的補充資訊。投資者應該認識到，這些非公認會計原則數據可能無法與其他公司的類似名稱的指標進行比較。這些措施應被視為根據 GAAP 制定的任何績效衡量標準的補充，而不是替代或優於任何績效衡量標準。

A reconciliation of non-GAAP measures to the most directly comparable GAAP measures in accordance with the SEC Regulation G can be found in the company's earnings release. With that, I'd like to now turn the call over to Mr. Kyle Loudermilk, President and Chief Executive Officer of GSE Solutions. Kyle, please proceed.

根據 SEC G 條例，非 GAAP 衡量標準與最直接可比較的 GAAP 衡量標準的調整可以在公司的收益報告中找到。現在，我想將電話轉給 GSE Solutions 總裁兼執行長 Kyle Loudermilk 先生。凱爾，請繼續。

Thank you, Adam. I'd like to welcome everyone to GSE's third quarter fiscal 2023 financial results conference call. Earlier today, we issued a press release detailing our financial results. Hopefully, you've had a chance to review this news release, but if not, the copy can be found on our website at www.gses.com under the news section.

謝謝你，亞當。我歡迎大家參加 GSE 2023 財年第三季財務業績電話會議。今天早些時候，我們發布了一份新聞稿，詳細介紹了我們的財務表現。希望您有機會閱讀此新聞稿，但如果沒有，可以在我們網站 www.gses.com 的新聞部分找到副本。

To lay out the agenda for today's call, I will start with a brief update on the industry and then highlight of our quarterly results. Emmitt will then review the financial results and will conclude with a Q&A session. First, a brief update on the industry. The nuclear industry continues to gain global momentum, especially as more countries recognize that to attain certain decarbonization levels, nuclear has to be a part of the equation in accomplishing these goals.

為了製定今天電話會議的議程，我將首先簡要介紹該行業的最新情況，然後重點介紹我們的季度業績。然後埃米特將審查財務業績，並以問答環節結束。首先，簡單介紹一下業界的最新情況。核工業繼續獲得全球動力，特別是隨著越來越多的國家認識到，要達到一定的脫碳水平，核電必須成為實現這些目標的一部分。

That said, there are many macro trends in geopolitics that are causing certain shifts in the energy industry, as well as other industries. On that front, due to the current inflationary environment and higher interest rates, we're seeing industry-wide pressures where our customers are reluctant to spend on projects that can be delayed. That said, customer spend is currently focused on necessary projects to keep their existing facilities running efficiently and up to regulatory requirements.

也就是說，地緣政治的許多宏觀趨勢正在導致能源產業以及其他產業發生某些轉變。在這方面，由於當前的通貨膨脹環境和較高的利率，我們看到了全行業的壓力，我們的客戶不願意在可以推遲的項目上花錢。也就是說，客戶支出目前主要集中在必要的項目上，以保持現有設施高效運作並符合監管要求。

As a result, GSE has won many orders this year aligned to these priorities. A little more on that later in my remarks. We believe that given the nature of the economy, non-essential projects within the power industry are being canceled or put on hold. Many clean tech projects are not providing the same economics now that interest rates are at higher levels.

因此，GSE 今年贏得了許多符合這些優先事項的訂單。我稍後將在發言中詳細介紹這一點。我們認為，鑑於經濟的性質，電力產業內的非必要項目正在被取消或擱置。由於利率處於較高水平，許多清潔技術項目無法提供相同的經濟效益。

Not only are the financing costs higher, but construction costs are much higher due to the current inflationary environment and labor-constrained environment. So where does that leave the industry? While interest rates fluctuate, they aren't returning anytime soon to prior levels. And as a result, we're witnessing a shift from new project mode to need to refurbish, upgrade existing facilities.

不僅融資成本更高，而且由於當前的通貨膨脹環境和勞動力緊張的環境，建設成本也更高。那麼這個產業將走向何方呢？儘管利率會波動，但它們不會很快恢復到之前的水平。因此，我們正在見證從新項目模式到需要翻新、升級現有設施的轉變。

Society has come to realize the importance of nuclear for achieving clean energy goals and energy security. And as a result, the US, government is supporting industry from the federal level through initiatives including the Inflation Reduction Act and infrastructure bills. The existing fleet of facilities are being recognized for the value they provide and will be relied upon for many, many years to come.

社會已經認識到核能對於實現清潔能源目標和能源安全的重要性。因此，美國政府正在透過《降低通貨膨脹法案》和基礎設施法案等措施從聯邦層級支持產業。現有的設施群因其所提供的價值而得到認可，並將在未來許多年中得到依賴。

It is nearly impossible today to justify a new build given the economics, complexities, and extended timelines associated with such an endeavor. In contrast, existing facilities can be upgraded and refurbished to produce more power over time and do so at reasonable incremental costs. The United States leads the world in the ability to produce more power from existing assets over time.

考慮到與此類努力相關的經濟性、複雜性和漫長的時間表，今天幾乎不可能證明新建築的合理性。相較之下，現有設施可以進行升級和翻新，以隨著時間的推移產生更多的電力，並以合理的增量成本實現這一點。隨著時間的推移，美國在利用現有資產生產更多電力的能力方面處於世界領先地位。

GSE is well-positioned to benefit from this trend, and we see that playing out. We have issued a series of press releases over the past few months that highlight recent wins across our lines of business, including a significant win to assist a client to upgrade procedures for their plant as they transition to a digital control environment and as well as announcing other engineering contracts aligned to the priorities outlined earlier.

GSE 處於有利地位，可以從這一趨勢中受益，我們看到這種趨勢正在顯現。在過去的幾個月裡，我們發布了一系列新聞稿，重點介紹了我們各業務領域最近的勝利，包括幫助客戶在過渡到數位控制環境時升級其工廠程序的重大勝利，以及宣布其他工程合約與先前概述的優先事項相一致。

During the third quarter, we announced a contract valued up to $15 million over several years to support a project to modernize the nuclear power plant's main control room to a digital environment. This contract is with one of the largest nuclear operators in the United States, and we are excited to play a critical role in this transformation. We expect client spending to ramp up on this project as they work through supply chain issues regarding their actual control systems in 2024.

第三季度，我們宣布了一份價值高達 1500 萬美元的合同，為期數年，以支持將核電廠主控制室現代化為數位環境的項目。該合約是與美國最大的核能運營商之一簽訂的，我們很高興能夠在這項轉型中發揮關鍵作用。我們預期客戶在 2024 年解決有關實際控制系統的供應鏈問題時，在該專案上的支出將會增加。

Other plants have announced similar plans to convert to digital controls, and while it is hard to determine the timing of future projects, we are optimistic that there are more to be awarded in the coming years as this conversion to digital evolves to a clear industry trend. As plants convert to digital control systems, they will operate more efficiently, safely, and reliably.

其他工廠也宣布了類似的轉換為數位控制的計劃，雖然很難確定未來項目的時間安排，但我們樂觀地認為，隨著數位化轉換發展成為明顯的行業趨勢，未來幾年將有更多項目獲得獎勵。隨著工廠改用數位控制系統，它們的運作將更加高效、安全和可靠。

The investment also helps set the stage to extend the lifetime of the plants and prepare for future power upgrades. The means by which this existing infrastructure can be upgraded to produce more power. As mentioned, producing more power through upgrades is an extraordinarily cost-effective means to produce more nuclear power versus building new plants. This is a critical area of focus for the nuclear power industry, and GSE is well positioned to capitalize these maintenance and upgrade opportunities.

這項投資也有助於為延長發電廠的使用壽命奠定基礎，並為未來的電力升級做好準備。升級現有基礎設施以產生更多電力的方法。如前所述，與建造新核電廠相比，透過升級生產更多電力是生產更多核電的極具成本效益的方式。這是核電產業關注的關鍵領域，GSE 已做好充分利用這些維護和升級機會的準備。

Now for some perspective on GSE's business in Q3 of fiscal year 2023. The company performed at a much-improved level during the third quarter, and the financial results and new orders demonstrate that. While the industry is still conservative with regards to capital spending, investors should take note of not only the GSE's improved order flow, but also the diverse types of projects we've been awarded. Given the dampened spend from industry overall, we have focused on winning business with higher margin, and that shows in our results.

現在對 GSE 2023 財年第三季的業務進行一些展望。該公司在第三季的業績水平有了很大提高，財務業績和新訂單證明了這一點。儘管該行業在資本支出方面仍然保守，但投資者不僅應該注意到 GSE 訂單流的改善，還應該注意到我們已獲得的各種類型的項目。鑑於整個行業的支出減少，我們專注於以更高的利潤贏得業務，這在我們的業績中得到了體現。

Other positive results in the quarter was the improved utilization of our billable engineers. This has enabled the company to improve financial efficiencies and drive the business back to a just an EBITDA positive. We believe we're on the right path, and the third quarter results reflect that. In addition, several orders that were awarded earlier this year have commenced, and that progress is now hitting our income statement.

本季的其他正面成果是我們的計費工程師的利用率已提高。這使得該公司能夠提高財務效率，並推動業務恢復到 EBITDA 正值。我們相信我們正走在正確的道路上，第三季的業績反映了這一點。此外，今年稍早授予的幾項訂單已經開始，這項進展現已影響到我們的損益表。

One project in particular that I'd like to highlight is the five-year contract for the expansion of specialized support services to US government engineering laboratories dedicated to the support of the United States Navy. This contract has been a key win for GSE and has shown growth in the services we've historically provided this customer.

我要特別強調的一個項目是一份為期五年的合同，旨在擴展專門為美國政府工程實驗室提供的專業支援服務，專門為美國海軍提供支援。這份合約對 GSE 來說是一次關鍵的勝利，並且顯示出我們過去為該客戶提供的服務的成長。

Given the nature of the services, we are able to obtain solid margins as well. This business has definitely become a cornerstone for GSE, and we're delighted to serve the mission of Navy and the Department of Energy. As expressed in the last conference call, we continue to bring costs out of the business and make key strides to lower expenses compared to the second quarter a year ago.

鑑於服務的性質，我們也能夠獲得可觀的利潤。這項業務無疑已成為 GSE 的基石，我們很高興為海軍和能源部的使命服務。正如上次電話會議中所表示的，與去年第二季相比，我們繼續降低業務成本，並在降低費用方面取得了重大進展。

When adjusting for one-time costs of approximately $1 million during the quarter that are non-recurring in nature, our expenses are at a much-improved level. This helps to put the company on better footing going forward, and we'll provide more details on our cost management initiatives in this remarks.

當調整本季約 100 萬美元的一次性成本（非經常性成本）時，我們的支出水準已大大改善。這有助於使公司在未來擁有更好的基礎，我們將在本次發言中提供有關成本管理計劃的更多詳細資訊。

The company's performance engineering division continues to demonstrate improvements with a nice stream of wins of new business, many of which we have announced during the quarter and recently, wins of strategic new logos, expansion of engineering services to provide value added to a uranium enrichment company, two nuclear operators in Texas, just to name a few.

該公司的性能工程部門繼續展示改進，贏得了一系列新業務，其中許多是我們在本季度和最近宣布的戰略性新徽標的勝利，擴展工程服務以為鈾濃縮公司提供增值，德克薩斯州的兩家核能運營商，僅舉幾例。

The performance engineering division also is where we have our software and support sales, which were $1.4 million during the quarter and $3.7 million year-to-date, up 3% from the same period a year ago. As we mentioned in the past, the software side of the business has provided excellent margins and now represents a growing annuity. It's beginning to look much like a software business.

性能工程部門也是我們軟體和支援銷售額的所在地，本季銷售額為 140 萬美元，年初至今為 370 萬美元，比去年同期成長 3%。正如我們過去提到的，該業務的軟體方面提供了出色的利潤，現在代表著不斷增長的年金。它開始看起來很像軟體業務。

New orders for performance engineering during the third quarter were $13 million, significantly higher from the second quarter, which were $4.9 million due to timing of some orders that closed in Q3 instead of Q2. With that said, year-over-year increases in orders were better for the division, which were compared to $7.2 million.

第三季性能工程新訂單為 1,300 萬美元，明顯高於第二季的 490 萬美元，這是由於一些訂單在第三季而不是第二季結束的時間安排所致。話雖如此，該部門的訂單年增率好，相比之下為 720 萬美元。

We feel that this improved order flow for engineering and services and technology licenses is a leading indicator that industry is slowly ramping back. The improvement, I feel, also demonstrates GSE's tenacity in being able to develop and win more business through tight interaction with customers, and I'm proud of the team effort here and promising early results of our alignment with the market.

我們認為，工程、服務和技術許可訂單流的改善是業界正在緩慢復甦的領先指標。我認為，這種改進也表明了 GSE 能夠透過與客戶的緊密互動來開發和贏得更多業務的頑強精神，我為團隊的努力感到自豪，並承諾我們與市場保持一致的早期成果。

Our workforce solutions business continues to experience challenges. Segment had revenue of $2.9 million in the third quarter of 2023, sequentially lower from $3.3 million in the second quarter and compared to $3.8 million one year ago. While we have retooled the division as expressed in prior conference calls, the division continues to lag as customers are still being selected with regards to on-site staff augmentation services.

我們的勞動力解決方案業務持續面臨挑戰。該部門 2023 年第三季的收入為 290 萬美元，環比第二季的 330 萬美元有所下降，而一年前的收入為 380 萬美元。雖然我們如先前的電話會議所述對該部門進行了重組，但該部門仍然落後，因為客戶仍在選擇現場員工擴充服務。

We have aligned this business to critical new opportunities in nuclear, such as the $15 million project win highlighted earlier. We're eager for client spend on the project to ramp as their supply chain challenges get addressed. We did have some solid order flow in the quarter, which were offset by early project terminations by customers in the tune of $1.7 million.

我們已將該業務與核能領域的重要新機會結合起來，例如先前強調的 1500 萬美元項目中標。隨著供應鏈挑戰得到解決，我們渴望客戶在該專案上的支出能夠增加。本季我們確實有一些穩定的訂單流，但被客戶提前終止的項目所抵消，金額為 170 萬美元。

It's hard to predict or estimate any early project terminations, but it is an inherent part of this business as customers either complete projects or allocate funds to different projects that may be deemed as a higher priority. While these challenges persist, I'm pleased that the division, despite lower volumes, reported a break-even quarter on an adjusted EBITDA basis. This gives us some solace that the division has potential upside when customers start to ramp up spending on certain projects.

很難預測或估計任何早期項目終止，但這是該業務的固有部分，因為客戶要么完成項目，要么將資金分配給可能被視為更高優先級的不同項目。儘管這些挑戰仍然存在，但我很高興該部門儘管銷量較低，但在調整後的 EBITDA 基礎上實現了收支平衡。這讓我們感到安慰，因為當客戶開始增加某些項目的支出時，該部門還有潛在的上升空間。

Summarized, we have successfully right sized the company in order to improve our utilization on an ongoing basis. I believe the third quarter really demonstrates that success. It was our first adjusted EBITDA positive quarter in two years and our strongest positive adjusted EBITDA quarter since 2020. We continue to engage with as many customers and potential new customers as well.

總而言之，我們成功地調整了公司規模，以持續提高我們的利用率。我相信第三季確實證明了這一成功。這是我們兩年來第一個調整後 EBITDA 為正的季度，也是我們自 2020 年以來調整後 EBITDA 為正的最強勁季度。我們將繼續與盡可能多的客戶和潛在新客戶合作。

We are making sure that we are the vendor of choice in educating them in the breadth of services we can offer them by using GSE as a key provider. Our recent contract wins announced over the prior weeks demonstrate meaningful progress in this dimension. Our business pipeline continues to remain strong. While we are not in control of client decisions to move forward on projects, we are doing all we can to engage with customers and prospects and develop wins.

我們透過使用 GSE 作為主要提供者，確保我們成為向他們提供廣泛服務教育的首選供應商。我們在前幾周宣布的最近贏得的合約表明在這方面取得了有意義的進展。我們的業務管道持續保持強勁。雖然我們無法控制客戶推進專案的決定，但我們正在盡一切努力與客戶和潛在客戶互動並取得勝利。

While the industry spend is still at a very conservative level compared to pre-pandemic norms, things are improving at GSE for order flow on the engineering side as a result of our efforts. Our GSE new order flow for the first nine months so far of 2023 is $39 million. This equals the order flow for the entire year of 2022. We are optimistic this momentum will continue.

儘管與疫情前的標準相比，行業支出仍處於非常保守的水平，但由於我們的努力，GSE 工程方面的訂單流情況正在改善。截至 2023 年前 9 個月，我們的 GSE 新訂單流量為 3,900 萬美元。這相當於 2022 年全年的訂單流。我們樂觀地認為這種勢頭將持續下去。

I'm proud of our team's accomplishments in driving improvement in the third quarter. I believe this demonstrates we're focused on turning this company around. While we wish that momentum was building faster, we do continue to make progress towards achieving our goals and increasing orders, backlog, and revenue growth. The new orders already received announced in the third quarter are a step in that right direction.

我為我們團隊在第三季推動改進方面所取得的成就感到自豪。我相信這顯示我們致力於扭轉這家公司的局面。雖然我們希望這種勢頭能夠更快地建立，但我們確實在實現我們的目標以及增加訂單、積壓和收入成長方面繼續取得進展。第三季宣布的新訂單是朝著正確方向邁出的一步。

I'll now turn the call over to Emmett Pepe, GSE's CFO, who will review the third quarter financial results. Emmett, please proceed.

我現在將把電話轉給 GSE 財務長 Emmett Pepe，他將審查第三季的財務表現。艾美特，請繼續。

Thank you, Kyle. With the numbers highlighted in detail in the press release, let me focus my comments on a few areas and provide added color where I can. Revenue during the third quarter of 2023 was $11.6 million. A year-over-year decrease of 3% compared to $11.9 million in the third quarter of 2022 and sequentially lower by 7% when compared to $12.4 million in the second quarter of 2023.

謝謝你，凱爾。鑑於新聞稿中詳細突出顯示的數字，讓我將我的評論集中在幾個領域，並盡可能提供補充說明。 2023 年第三季的營收為 1,160 萬美元。與 2022 年第三季的 1,190 萬美元相比，年減 3%；與 2023 年第二季的 1,240 萬美元相比，環比下降 7%。

The engineering division continued to perform well for the company with revenues of $8.7 million for the third quarter of 2023. This compared to $9 million in the second quarter of 2023 and compared to $8.1 million in the third quarter of 2022. Orders for engineering performance were $13 million, which demonstrated significant increases from the $4.9 million in Q2 of 2023, which is up from last year's $7.2 million in Q3 of 2022. Increases are due to an improved order flow environment for engineering services as well as the timing of when the orders are received.

公司工程部門持續表現良好，2023 年第三季營收為 870 萬美元。相較之下，2023 年第二季營收為 900 萬美元，2022 年第三季營收為 810 萬美元。工程業績訂單為1,300萬美元，較2023 年第二季的490 萬美元顯著增加，而去年2022 年第三季的720 萬美元則有所增加。增加的原因是工程服務訂單流環境的改善以及訂單的時間安排已收到。

Workforce Solutions division revenue in the quarter was $2.9 million compared to $3.3 million in the second quarter of 2023 and compared to $3.8 million in the third quarter of 2022. Orders were $1.7 million in the third quarter of 2023, which was slightly improved on a sequential basis when compared to $1.3 million in the second quarter of 2023.

勞動力解決方案部門本季營收為290 萬美元，而2023 年第二季為330 萬美元，2022 年第三季為380 萬美元。2023 年第三季訂單為170 萬美元，比上一季略有改善與 2023 年第二季的 130 萬美元相比。

Looking year over year, the division continues to experience some challenges with revenues recorded at $3.8 million in the third quarter of 2022. The decrease in orders in the third quarter stem from early terminations we received from our clients in the magnitude of $1.7 million combinations can occur depending on the scope of service, speed of project completion and other variables. The division is still experienced some distance from customers who are closely monitoring this business, and we are optimistic about the book to business that is available to the marketplace.

與去年同期相比，該部門繼續面臨一些挑戰，2022 年第三季的收入為 380 萬美元。第三季訂單減少的原因是我們從客戶那裡收到了價值 170 萬美元的提前終止訂單，發生情況取決於服務範圍、專案完成速度和其他變數。該部門與密切關注該業務的客戶仍有一定距離，我們對市場上可用的圖書業務持樂觀態度。

Gross profit in the third quarter of 2023 was $3.7 million, or 32.1% of revenue. This compared to gross profit of $3.2 million, or 26% of revenue in the second quarter of 2023. And $3.3 million, or 27.4% of revenue in the third quarter of 2022. Gross margin improved over the second quarter of 2023 and third quarter of 2022 due primarily to greater percentage of engineering revenue, increased utilization, and margin improvements on our large engineering projects.

2023 年第三季毛利為 370 萬美元，佔營收的 32.1%。相較之下，2023 年第二季的毛利為320 萬美元，佔營收的26%。2022 年第三季的毛利為330 萬美元，佔營收的27.4%。毛利率較2023 年第二季度和 2023 年第三季度有所改善。2022 年，這主要是由於我們的大型工程項目的工程收入比例提高、利用率提高以及利潤率提高。

Gross profit margin of 32.1% was the highest it's been since 2016. In the beginning of Q3, we implemented a utilization initiative for the engineering segment that has reduced unproductive labor costs and improved margins. Operating expenses, excluding depreciation and amortization in the third quarter of 2023, was $4.4 million compared to $3.8 million in the second quarter of 2023, and compared to $4.5 million in the third quarter of 2022.

毛利率為 32.1%，是自 2016 年以來的最高水準。在第三季初，我們對工程部門實施了一項利用計劃，減少了非生產性勞動力成本並提高了利潤率。 2023 年第三季的營運費用（不包括折舊和攤提）為 440 萬美元，而 2023 年第二季為 380 萬美元，2022 年第三季為 450 萬美元。

The operating expenses in the quarter were affected by a couple of non-recurring expenses driven primarily by a $750,000 settlement of a lawsuit stemming from a technical dispute in our Workforce Solutions Division, and the repayment of this settlement will be done quarterly during 2024. If these expenses were not incurred, operating expenses would have been around $3.4 million, which is lower than OpEx costs of $3.8 million in Q2 of this year, and the $4.4 million in Q3 of a year ago.

本季度的營運費用受到一些非經常性費用的影響，這些費用主要是由於我們的勞動力解決方案部門的技術糾紛引發的訴訟的 750,000 美元和解費用造成的，該和解費用將在 2024 年按季度償還。如果沒有發生這些費用，營運費用約為340 萬美元，低於今年第二季的營運支出成本380 萬美元和去年第三季的營運支出成本440 萬美元。

We are confident in the expense cutting that was conducted in the past few quarters, and that the OpEx per quarter should remain at similar levels in future quarters. The net loss in the third quarter of 2023 was $2 million, or a loss of $0.82 per share, compared to a loss of $1.5 million in the second quarter of 2023, or $0.62 per share. The net loss in Q3 of 2022 was $9 million, or $4.22 million loss per basic and diluted share, which included a loss on impairment of $7.5 million.

我們對過去幾季進行的費用削減充滿信心，並且未來幾季每季的營運支出應保持在類似的水平。 2023 年第三季的淨虧損為 200 萬美元，即每股虧損 0.82 美元，而 2023 年第二季的淨虧損為 150 萬美元，即每股虧損 0.62 美元。 2022 年第三季的淨虧損為 900 萬美元，即每股基本和稀釋每股虧損 422 萬美元，其中包括 750 萬美元的減損損失。

The net loss in the third quarter of 2023 also included a loss on impairment of $900,000 coming from the reevaluation of the company's Workforce Solutions business. Due to the market capitalization of the company and the slowdown in Workforce Solutions Divisions, we performed an impairment analysis on both segments, of which resulted in the lowering of the goodwill carrying value of the Workforce Solutions Division.

2023 年第三季的淨虧損還包括因重新評估公司勞動力解決方案業務而產生的 90 萬美元減損損失。由於公司市值和勞動力解決方案部門成長放緩，我們對這兩個部門進行了減損分析，導致勞動力解決方案部門的商譽帳面價值下降。

While the Workforce Solutions Division has not shown the stability and growth that we would have liked, it is still a critical piece of our business and has promising opportunities moving forward, such as the $15 million project Kyle mentioned, expected to ramp up in 2024.

雖然勞動力解決方案部門沒有表現出我們希望的穩定性和成長，但它仍然是我們業務的關鍵部分，並且有光明的發展機會，例如凱爾提到的價值1500 萬美元的項目，預計將在2024 年擴大規模。

Adjusted net income was a positive $175,000, or $0.07 per share, in the third quarter of 2023, compared to an adjusted net loss of $1.3 million, or $0.53 per share, in the second quarter of 2023. An adjusted net loss totaled $1.1 million, or $0.49 per diluted share, in Q3 of 2022. Adjusted EBITDA totaled positive $659,000 for the third quarter of 2023, an improvement compared to the negative adjusted EBITDA of $361,000 in Q2 of 2023, and the negative adjusted EBITDA of $690,000 in the third quarter from a year ago.

2023 年第三季調整後淨利為正 17.5 萬美元，即每股 0.07 美元，而 2023 年第二季調整後淨虧損為 130 萬美元，即每股 0.53 美元。調整後淨虧損總計 110 萬美元，或稀釋後每股0.49 美元，2022 年第三季。2023 年第三季調整後EBITDA 總計為正659,000 美元，比2023 年第二季調整後EBITDA 負值361,000 美元有所改善，第三季調整後EBITDA 為負690,000 美元。一年前。

The company's backlog improved during the third quarter to $38 million, as order flow gained in the quarter primarily within the Engineering Performance Division. There was an improvement from $34 million at the end of Q2 of 2023, and higher than the $32 million level a year ago. Performance Engineering segment backlog was $31.4 million at the end of Q3 2023, compared to the $26.9 million at the end of Q2 2023.

該公司的積壓訂單在第三季有所改善，達到 3,800 萬美元，因為該季度的訂單流量主要來自工程性能部門。較 2023 年第二季末的 3,400 萬美元有所改善，也高於一年前的 3,200 萬美元水準。截至 2023 年第三季末，性能工程部門的積壓訂單為 3,140 萬美元，而 2023 年第二季末為 2,690 萬美元。

It also improved when compared to the $26.9 million at the same period a year ago. Workforce Solutions Division was $6.2 million at the end of the third quarter of 2023, compared to $7.5 million at the end of Q2 of this year, and then that compares to $5.6 million at the end of Q3 of a year ago.

與去年同期的 2,690 萬美元相比也有所改善。截至 2023 年第三季末，勞動力解決方案部門的營收為 620 萬美元，而今年第二季末為 750 萬美元，而去年同期第三季末為 560 萬美元。

Moving our discussion to the company's balance sheet, we exited the third quarter with $2 million in cash, which compares to $1.8 million at the end of the second quarter of 2023. The cash levels do not include restricted cash of $1.5 million, which is to secure four letters of credit with various customers, totaling $1.1 million, and $400,000 to secure our corporate credit card program.

將我們的討論轉移到公司的資產負債表上，我們在第三季結束時持有200 萬美元的現金，而2023 年第二季末的現金為180 萬美元。現金水準不包括150 萬美元的限制性現金，這是與不同客戶簽訂四份信用證，總計 110 萬美元，並為我們的企業信用卡計劃擔保 40 萬美元。

We continue to make payments on our convertible debt secured with Lind and anticipate full repayment by March of 2025. We continue to review on a monthly basis the determination on whether to repay in cash, stock, or a combination of both, and given recent improvements in the business, we've been paying in cash in the past five months.

我們繼續支付由Lind 擔保的可轉換債務，並預計在2025 年3 月之前全額償還。我們將繼續每月審查是否以現金、股票或兩者相結合的方式償還的決定，並考慮到最近的改進在業務方面，過去五個月我們一直以現金支付。

On October 30, we implemented the reverse stock split and have subsequently traded above the minimum stock price threshold for more 10 consecutive days. And as the company previously disclosed in its Form 8-K filed on November 3, the company expected to regain compliance with the Nasdaq listing standards on November 10.

10月30日，我們實施了反向股票分割，隨後連續10多天交易價格高於最低股價門檻。正如該公司先前在 11 月 3 日提交的 8-K 表格中所披露的那樣，該公司預計將在 11 月 10 日重新符合納斯達克上市標準。

The company is now in compliance with all ethical Nasdaq listing standards, and we received a confirmatory letter to that effect from Nasdaq this afternoon. While we are still working in a challenging environment, we continue to examine every expenditure and will reduce costs where we can to preserve our cash position. That said, we have reduced our expenditures by roughly $1 million per quarter as compared to one year ago.

該公司現在遵守納斯達克的所有道德上市標準，今天下午我們收到了納斯達克的確認信。雖然我們仍然在充滿挑戰的環境中工作，但我們將繼續審查每項支出，並將盡可能降低成本，以保持我們的現金狀況。也就是說，與一年前相比，我們每季的支出減少了約 100 萬美元。

And I'll reiterate that while there is always some quarterly shifts of costs, lowering our quarterly expenses to around $3.4 million, we are optimistic that the company can book additional orders in the coming months, which will improve our utilization and result in improved cash flow. I'll now turn the conversation back to Kyle.

我要重申的是，雖然每季都會發生一些成本變化，從而將我們的季度開支降低至340 萬美元左右，但我們樂觀地認為該公司可以在未來幾個月內預訂更多訂單，這將提高我們的利用率並改善現金流動。我現在將話題轉回凱爾身上。

Thank you, Emmitt. To summarize, the third quarter demonstrated improvements to the business as we removed additional costs and were able to drive better efficiency through our engineering division. We're laser-focused on winning more business where we can, and this has been seen in recent wins we announced during the fourth quarter. We're cautiously optimistic about the remainder of the year in the longer term.

謝謝你，艾米特。總而言之，第三季業務有所改善，我們消除了額外成本，並能夠透過我們的工程部門提高效率。我們專注於盡可能贏得更多業務，這一點從我們在第四季度宣布的最近的勝利中就可以看出。從長遠來看，我們對今年剩餘時間持謹慎樂觀態度。

While we're doing what we can during this continued lull in industry spend, we remain positive that in the longer term that the nuclear industry is undergoing a long-term resurgence for the reasons we outlined on this call. There are three key drivers to this, such as the future-- for the future of the nuclear industry. One, the need for a stable grid. Two, the drive towards energy security and independence. And three, and not least, the decarbonization of the power sector.

雖然我們在行業支出持續低迷的情況下竭盡全力，但我們仍然樂觀地認為，從長遠來看，由於我們在這次電話會議中概述的原因，核工業正在經歷長期復甦。這有三個關鍵驅動因素，例如核工業的未來。一、需要穩定的電網。第二，推動能源安全和獨立。第三，也是最重要的一點，電力產業的脫碳。

Given GSE's unique positioning as a heavily tech-enabled provider of essential services to the nuclear power industry, we remain optimistic in our opportunity to create substantial long-term value. With that said, Adam, please proceed with the question-and-answer session.

鑑於 GSE 作為核電行業基本服務的高科技提供者的獨特定位，我們對創造巨大長期價值的機會保持樂觀。話雖如此，Adam，請繼續進行問答環節。

Operator, first, you may wish to open it up to anyone on the call, and if we don't, Adam, you can ask some questions.

接線生，首先，您可能希望向通話中的任何人開放，如果我們不這樣做，Adam，您可以問一些問題。

(Operator Instructions)

（操作員說明）

Dave, it's Adam Lowensteiner from Litham Partners. I'll ask a few questions in the meantime. Kyle, order flow improved nicely in the quarter. Can you discuss the quality of your orders and how your margins are improving as a result?

戴夫，我是 Litham Partners 的 Adam Lowensteiner。在這段期間我會問幾個問題。凱爾，本季訂單流改善良好。您能否討論一下您的訂單品質以及您的利潤如何因此而提高？

Yeah, good question, Adam. Thank you. Look, the order flow has really improved on the engineering side. We have a great team leading the three lines of business, simulation. We have our design and analysis group, and we have our programs and performance. We've seen very solid quarter across the board, including winning new logos, such as the uranium enrichment provider, which is a mission-critical program for the United States to produce its own Halu and light-enriched uranium.

是的，好問題，亞當。謝謝。看，工程方面的訂單流程確實得到了改善。我們擁有一支優秀的團隊，領導著模擬這三個業務領域。我們有我們的設計和分析小組，我們有我們的程序和性能。我們看到了整個季度非常穩健的表現，包括贏得了新標誌，例如鈾濃縮供應商，這是美國生產自己的 Halu 和輕濃縮鈾的關鍵任務計劃。

And that's been a great relationship that keeps growing. Likewise, we recently announced these two wins to provide engineering services to two significant nuclear power operators in the state of Texas. And again, we feel this is just the momentum is building. So that order flow has been solid because it's on the engineering side. That explains our improvement in gross margin. Engineering margin is much higher than the workforce solution side of the house, and so we expect that trend to continue.

這是一種不斷發展的良好關係。同樣，我們最近宣布了這兩場勝利，為德克薩斯州的兩家重要核電運營商提供工程服務。我們再次認為這只是正在形成的勢頭。因此，訂單流一直很穩定，因為它是在工程方面。這解釋了我們毛利率的提高。工程利潤率遠高於勞動力解決方案方面，因此我們預計這種趨勢將持續下去。

You've had a very good diversification of services provided on the engineering side of the business. This shows some great depth at GSE as well as the industry. How many more types of these contracts exist? Could potentially every nuclear plant operator have a need for the various services wins that you've been awarded recently?

你們在業務的工程方面提供了非常好的多元化服務。這顯示了 GSE 以及整個行業的深度。這些合約還有多少種類型？每個核電站運營商是否可能需要您最近獲得的各種服務？

Yeah, that's a good question, Adam. The fact of the matter is we are aligned to the key drivers we are aligned to the key drivers as a company. GSE is a purpose-built company that is aligned to the critical drivers that are leading the nuclear plant operators to make investments in extending the lifetime of the plants and therefore also applying for lifetime, excuse me, operating license extensions.

是的，這是個好問題，亞當。事實上，我們與關鍵驅動因素保持一致，作為一家公司，我們與關鍵驅動因素保持一致。 GSE 是一家專門建立的公司，它與核電廠營運商投資延長核電廠使用壽命的關鍵驅動因素保持一致，因此也申請終身運行許可證延期。

So, in extending the lifetime of the plants through operating license extensions and investing in their plants to produce more power from those plants over time versus building new nuclear power plants. Those are two things that we're already aligned to as business. We really took advantage of what we could during COVID to make sure we put in commercial infrastructure throughout new customers and existing customers.

因此，透過延長營運許可證和投資核電廠來延長核電廠的使用壽命，以便隨著時間的推移從這些核電廠生產更多的電力，而不是建造新的核電廠。這是我們已經在業務上調整的兩件事。我們確實充分利用了新冠疫情期間的優勢，確保為新客戶和現有客戶建立商業基礎設施。

And as they start to head down the path to spend on these two dimensions, spend the lifetime of the plant, produce more power, every plant should be taking advantage of what GSC has to offer. And we're, you know, we're still a small company, call it $50 million Ish.

當他們開始在這兩個維度上投入資金、利用電廠的使用壽命、生產更多電力時，每個電廠都應該利用 GS​​M 所提供的優勢。我們，你知道，我們仍然是一家小公司，稱之為 5000 萬美元 Ish。

And, but the amount of engineering services consumed by the US nuclear fleet by conservative estimates could be as much as half a billion dollars a year and then some. So we're a small player in what has a very large served available market. And so there's a lot of upside ahead for us as we execute and deliver, improve our quality and customer value.

而且，根據保守估計，美國核子艦隊每年消耗的工程服務金額可能高達 5 億美元，甚至更多。因此，在擁有非常大的可用市場的領域，我們只是一個小參與者。因此，當我們執行和交付、提高我們的品質和客戶價值時，我們有很多優勢。

What's the feedback from salespeople with regards to the project flow? It seems, although a bit lumpy that the tempo of bidding has improved. Is that correct?

銷售人員對專案流程的回饋如何？看起來，雖然有點坎坷，但投標的節奏有所改善。那是對的嗎？

You know, I'd say it's a little multidimensional. What we see is buy in large, and this is, we've done our own channel checks with other vendors that serve the nuclear power industry, as well as from customers and prospects that we deal with. They're only spending money where they have to spend money, either to keep up with regulatory compliance issues, or to address these critical projects around addressing lifetime extension and or preparing to invest more in the plants to produce more power.

你知道，我想說這有點多維。我們看到的是大量購買，我們已經與服務於核電行業的其他供應商以及與我們打交道的客戶和潛在客戶進行了自己的通路檢查。他們只在必須花錢的地方花錢，要么是為了跟上監管合規問題，要么是為了解決這些圍繞延長使用壽命的關鍵項目，或者準備對工廠進行更多投資以產生更多電力。

Other than that, it's really noise. So what we see from the industry is, conservative, focused on two things, very cautious about how they're moving forward, and so the only way we can affect that is to be in front of these customers on a regular basis, make sure they're aware of our story and capabilities, make sure that what we're doing for them is delivered on time, on budget, and of high quality, that they are building their confidence as they get to know GSE, and that improves their likelihood of giving us the next opportunity.

除此之外，這確實是噪音。因此，我們從行業中看到的是，保守，專注於兩件事，對他們的前進方式非常謹慎，因此我們能夠影響這一點的唯一方法就是定期站在這些客戶面前，確保他們了解我們的故事和能力，確保我們為他們所做的事情按時、按預算、高品質地交付，他們在了解GSE 的過程中建立了信心，這提高了他們的能力給我們下一次機會的可能性。

The company's done a great job in rightsizing itself and getting expenses down. Are there any more cost cuts to be had?

該公司在調整自身規模和降低開支方面做得很好。是否還需要進一步削減成本？

Hey Adam, this is Emmett, I'll take that one. I think it's important to note, we positioned ourselves through the actions we've taken, that as the company grows, we will not need to add any significant costs, right?

嘿，亞當，這是艾米特，我接那個。我認為值得注意的是，我們透過所採取的行動對自己進行了定位，隨著公司的發展，我們不需要增加任何重大成本，對吧？

So that's an important aspect, I believe. We always look, we change the culture, we'll continue to monitor our utilization and not let that slip, and vendor spend is always something we're gonna look at. As the supplier agreements come up for any renewals, we'll look to take costs out of the business on an ongoing basis, for sure.

我認為這是一個重要的方面。我們總是關注，我們改變文化，我們將繼續監控我們的利用率，不要讓這種情況溜走，供應商支出始終是我們要關注的事情。隨著供應商協議的任何續簽，我們肯定會尋求持續降低業務成本。

Thanks, gentlemen, that's all my questions.

謝謝，先生們，這就是我的所有問題。

Well look, thanks for joining us, everybody. Just to make some conclusionary remarks here, we really appreciate your time and interest in GSC. I think we're headed in the right direction, and this quarter can demonstrate where we're headed. If you have any questions, please reach out to Adam Lowensteiner from Litham Partners, and we'd be happy to schedule a follow-up call. We're always available. Thanks again, everyone and have a great day.

好吧，謝謝大家加入我們。在此僅作一些總結性發言，我們非常感謝您抽出寶貴時間對 GSC 表示關注。我認為我們正朝著正確的方向前進，本季可以展示我們的前進方向。如果您有任何疑問，請聯絡 Litham Partners 的 Adam Lowensteiner，我們很樂意安排後續電話。我們隨時為您服務。再次感謝大家，祝您有美好的一天。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。