COLUMBIA, Md. –
GSE Systems, Inc. (“GSE” or “the Company”) (Nasdaq: GVP),
a leading provider of engineering, expert staffing, and simulation
software to clients in the power and process industries, today announced
that the Company acquired DP Engineering Ltd. Co. (“DP Engineering”), a
specialized provider of high-value engineering services and solutions to
the nuclear power industry. DP Engineering is known by its clients as a
responsive and experienced organization that brings technical knowledge
and creativity to their projects.

Founded in 1995 in Fort Worth, Texas, DP Engineering generates over 90%
of its revenue from the nuclear power industry. DP Engineering employs
approximately 110 full-time professionals with core expertise in:
mechanical design; civil/structural design; electrical, instrumentation
and controls design; digital controls/cyber security; and fire
protection. DP Engineering primarily works under master service
agreements as the Engineer of Choice for leading nuclear utility
operators. More than 80% of DP Engineering’s revenue is expected to be
generated under time-and-materials contracts, with the remainder from
fixed-price agreements. Over the past three years, DP Engineering’s
average annual revenue was greater than $20 million, with gross profit
margins in excess of 30% and strong free cash flow.

Kyle Loudermilk, GSE’s President and Chief Executive Officer, commented,
“We are absolutely thrilled to add DP Engineering to the business. With
DP Engineering, GSE adds an outstanding team of nuclear-focused
professionals delivering an array of complementary high-value-added
engineering capabilities. These capabilities include a core competency
in engineering design modifications centered around regularly scheduled
nuclear plant outages. In addition to broadening GSE’s engineering
services offering, DP Engineering expands and deepens our relationships
with several of the largest U.S. nuclear energy providers, while
improving GSE’s overall operating margin profile. As one company, we
will add greater value to our customers than either could offer
independently. The acquisition of DP Engineering is yet another
compelling proof point in GSE’s strategy to create value for customers,
employees, and shareholders by consolidating a fragmented vendor
ecosystem serving the nuclear power industry.”

Transaction Details

GSE acquired 100% of the equity interest of DP Engineering for $13.5
million in cash, subject to customary working capital adjustments, with
additional purchase consideration of up to $5.0 million payable as an
earn-out contingent upon DP Engineering satisfying certain annual
adjusted EBITDA thresholds over the next two years ranging from $2.75
million to $4.3 million. GSE drew on its existing delayed draw term loan
facility to fund the transaction. GSE also expects that the transaction
will be immediately accretive to the Company’s adjusted earnings per
share. For reporting purposes, DP Engineering will be included in GSE’s
Performance Improvement Solutions segment.

Chris Sorrells, GSE’s Chief Operating Officer, commented, “Over the past
16 months, GSE has acquired DP Engineering, True North Consulting, and
Absolute Consulting, establishing GSE as the go-to provider of
specialized engineering and expert staffing solutions in the nuclear
power industry. GSE can now deploy over 500 highly specialized employees
to serve the complex needs of the nuclear power industry during a time
when it is facing acute shortages of technical talent and expertise. On
a pro forma basis, GSE’s revenue exceeds $100 million, making the
Company one of the largest independent nuclear service companies in the
United States. During our leadership team’s tenure, GSE’s pro forma
revenue growth is approximately 130%, while our stock price has
appreciated over 110%. We are extremely pleased with our progress.
Moreover, GSE’s deal pipeline remains robust, and we continue to work
diligently in pursuit of additional acquisitions that can enhance
shareholder value in our targeted areas of specialized engineering and
expert staffing for the broader power industry as well as national
laboratories focused on nuclear power.”

ABOUT GSE SYSTEMS, INC.

GSE Systems, Inc. is a leading provider of engineering, expert staffing,
and simulation software to clients in the power and process industries.
GSE’s products and services are tailored to help customers achieve
performance excellence in design, training, compliance, and operations.
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 Maryland, with offices in
Florida, Colorado, Texas, Arkansas, Louisiana, 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.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA and Adjusted earnings per share (“EPS”) are not measures
of financial performance under generally accepted accounting principles
(“GAAP”). We believe that Adjusted EBITDA and Adjusted EPS, in addition
to operating profit, net income, and other GAAP measures, are useful to
investors to evaluate financial results because they exclude certain
items not directly related to core operating performance that may, or
could, have a disproportionate positive or negative impact on results
for any particular period. Investors should recognize that Adjusted
EBITDA and Adjusted EPS might not be comparable to similarly-titled
measures of other companies. We define EBITDA as earnings before
interest, taxes, depreciation and amortization (“EBITDA”). We define
Adjusted EBITDA as EBITDA plus adjustments for consulting support for
finance restructuring, stock-based compensation expense, restructuring
charges, gain/loss from changes in fair value of contingent
consideration, acquisition-related expense, and bankruptcy related
expenses. Similarly, Adjusted EPS reflects per-share earnings on an
adjusted basis. With respect to Adjusted EBITDA and Adjusted EPS on a
forward-looking basis and as a combined company with DP Engineering, a
reconciliation of the difference between these non-GAAP expectations and
the corresponding GAAP measures (expected net income and expected
earnings per share) is not available without unreasonable effort due to
potentially high variability, complexity, and low visibility as to the
items that would be excluded from the GAAP measure in the relevant
future period, such as unusual gains and losses, adjustments to the
provision for income taxes, depreciation of fixed assets, amortization
of intangibles, costs related to restructuring actions and interest
expense, certain anticipated cost synergies, the impact and timing of
potential acquisitions and divestitures, and other structural changes or
their probable significance. The variability of the excluded items may
have a significant, and potentially unpredictable, impact on our future
GAAP financial results.

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Company
Chris Sorrells
Chief Operating Officer
GSE
Systems, Inc.
(410) 970-7802

The Equity Group Inc.
Kalle Ahl, CFA
(212) 836-9614
kahl@equityny.com