SYKESVILLE, Md. –
GSE Systems, Inc. (“GSE” or “the Company”) (NYSE MKT: GVP), the
world leader in real-time high-fidelity simulation systems and training
solutions to the power and process industries, today announced financial
results for the first quarter (“Q1”) ended March 31, 2016.

Kyle J. Loudermilk, GSE’s President and Chief Executive Officer, said,
“We are pleased to report GSE’s second consecutive quarter of positive
adjusted EBITDA, operating income and net earnings, in spite of having
an extraordinary charge impacting results. In Q1 2016, GSE recorded
higher gross margins and lower operating expenses, reflecting our
efforts to reduce costs and focus on project profitability. GSE’s
backlog expanded significantly during the quarter, reaching a record $75
million at the end of March, driven by the sale of three full scope
nuclear simulator systems to a longstanding client. We are optimistic
that our operating performance will continue to improve over 2015
results as growth initiatives take hold and backlog converts to sales.
While quarter-to-quarter variability can be expected, we expect to
deliver positive adjusted EBITDA for full year 2016. We are in the
process of finalizing our strategic growth plan and I remain
enthusiastic about the opportunities not only in our existing
businesses, but also in adjacent markets. Our strong balance sheet
provides us with financial flexibility to pursue growth initiatives that
we believe will drive shareholder value.”

Q1 2016 RESULTS

Q1 2016 revenue decreased 7% to $13.0 million from $14.0 million in Q1
2015, reflecting relatively flat Performance Improvement Solutions
revenue, and a 20% decrease in Nuclear Industry Training and Consulting
revenue due to a focus on lower revenue but higher margin assignments.

Performance Improvement Solutions orders totaled $34.8 million in Q1
2016 compared to $11.1 million in Q1 2015. Nuclear Industry Training and
Consulting orders totaled $5.0 million in Q1 2016 compared to $7.0
million in Q1 2015.

Q1 2016 gross profit grew by 10% to $3.6 million, or 27.9% of revenue,
from $3.3 million, or 23.5% of revenue, in Q1 2015.

Performance Improvement Solutions gross profit for Q1 2016 was $3.1
million, or 35.6% gross margin, up from $2.8 million, or 31.4% gross
margin, in Q1 2015. Nuclear Industry Training and Consulting gross
profit for Q1 2016 was $0.5 million, or 11.6% gross margin, compared to
$0.5 million, or 10.0% gross margin, in Q1 2015.

Selling, general & administrative expenses in Q1 2016 decreased 5% to
$3.1 million, or 24.0% of revenue, from $3.3 million, or 23.3% of
revenue, in Q1 2015.

Operating income for Q1 2016 was $0.2 million compared to an operating
loss of $0.3 million in Q1 2015.

Net income for Q1 2016 was $0.1 million, or $0.01 per basic and diluted
share, compared to a net loss of $0.5 million, or $(0.03) per basic and
diluted share, in Q1 2015.

EBITDA (Earnings before interest, taxes, depreciation and amortization)
for Q1 2016 was $0.4 million compared to an EBITDA loss of $0.2 million
in Q1 2015.

Adjusted EBITDA, which excludes gain from the change in fair value of
contingent consideration, restructuring charges, stock-based
compensation expense, and consulting support for revenue recognition
analysis, increased to $0.8 million in Q1 2016 from approximately
breakeven adjusted EBITDA Q1 2015.

Backlog at March 31, 2016 increased 56% to $74.5 million from $47.9
million at December 31, 2015. Backlog at March 31, 2016 included $67.6
million of Performance Improvement Solutions backlog and $6.9 million of
Nuclear Industry Training and Consulting backlog.

GSE’s cash position at March 31, 2016 was $11.2 million, excluding $3.6
million of restricted cash, as compared to $11.1 million, excluding $3.6
million of restricted cash, at December 31, 2015.

CONFERENCE CALL

Management will host a conference call today at 4:30 pm Eastern Time to
discuss Q1 results and other matters.

Interested parties may participate in the call by dialing:

• (877) 407-9753 (Domestic) or
• (201) 493-6739 (International)

The conference call will also be accessible via the following link: http://www.investorcalendar.com/IC/CEPage.asp?ID=174943

For those who cannot listen to the live broadcast, an online webcast
replay will be available through June 15, 2016 at www.gses.com
or via the following link: http://www.investorcalendar.com/IC/CEPage.asp?ID=174943

ABOUT GSE SYSTEMS, INC.

GSE Systems, Inc. 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 St. Marys, Georgia;
Chennai, India; Nyköping, Sweden; Stockton-on-Tees, UK; and Beijing,
China. Information about GSE Systems is available at www.gses.com.

FORWARD LOOKING STATEMENTS

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.

EBITDA and Adjusted EBITDA Reconciliation (in thousands)

EBITDA and Adjusted EBITDA are not measures of financial performance
under generally accepted accounting principles (“GAAP”). Management
believes EBITDA and Adjusted EBITDA, in addition to operating profit,
net income and other GAAP measures, are useful to investors to evaluate
the Company’s results because it excludes certain items that are not
directly related to the Company’s core operating performance that may,
or could, have a disproportionate positive or negative impact on our
results for any particular period. Investors should recognize that
EBITDA and Adjusted EBITDA might not be comparable to similarly-titled
measures of other companies. This measure should be considered in
addition to, and not as a substitute for or superior to, any measure of
performance prepared in accordance with GAAP. A reconciliation of EBITDA
and Adjusted EBITDA to the most directly comparable GAAP measure in
accordance with SEC Regulation G follows:

View source version on businesswire.com: http://www.businesswire.com/news/home/20160516006239/en/

Company Contact
GSE Systems, Inc.
Chris Sorrells,
410-970-7802
Interim Chief Operating Officer
or
The
Equity Group Inc.
Devin Sullivan, 212-836-9608
Senior Vice
President
dsullivan@equityny.com
or
Kalle
Ahl, CFA, 212-836-9614
Senior Associate
kahl@equityny.com