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 second quarter (“Q2”) ended June 30, 2016.

Kyle J. Loudermilk, GSE’s President and Chief Executive Officer, said,
“We are pleased to report GSE’s fourth consecutive quarter of positive
adjusted EBITDA. In Q2 2016, GSE recorded significantly higher gross
margins and lower operating expenses, reflecting our continuing efforts
to reduce costs and focus on project profitability. We have reduced
annualized operating expenses by more than $4 million since I joined GSE
approximately one year ago. We also have continued to invest in
resources for growth, hiring key leadership positions in the areas of
technology, finance and operations. On that note, we are pleased to
announce that Chris Sorrells, who has played an instrumental role in
GSE’s operational turnaround, has agreed to assume the COO role on a
permanent basis. Furthermore, we strengthened our financial and
accounting leadership with the appointment of Emmett Pepe as our new CFO
and Jim Stanker as a new member of our Board or Directors and Audit
Committee. With the benefit of an enhanced leadership team and
streamlined operations, we are now firmly focused on implementing our
strategy to revitalize GSE’s growth.”

Q2 2016 RESULTS

Q2 2016 revenue decreased 9% to $12.4 million from $13.7 million in Q2
2015, reflecting a 1% increase in Performance Improvement Solutions
revenue and a 25% decrease in Nuclear Industry Training and Consulting
revenue due to a strategic shift in sales focus to higher margin
assignments.

Performance Improvement Solutions orders totaled $5.8 million in Q2 2016
compared to $12.7 million in Q2 2015. Nuclear Industry Training and
Consulting orders totaled $3.4 million in Q2 2016 compared to $6.1
million in Q2 2015.

Q2 2016 gross profit grew by 24% to $3.6 million, or 29% of revenue,
from $2.9 million, or 21% of revenue, in Q2 2015.

Performance Improvement Solutions gross profit for Q2 2016 increased 27%
to $2.9 million, or 35% gross margin, from $2.3 million, or 28% gross
margin, in Q2 2015. Nuclear Industry Training and Consulting gross
profit for Q2 2016 increased 10% to approximately $649,000, or 16% gross
margin, from approximately $590,000, or 11% gross margin, in Q2 2015.

Selling, general & administrative expenses in Q2 2016 decreased 27% to
$2.9 million, or 23% of revenue, from $4.0 million, or 29% of revenue,
in Q2 2015.

Operating income for Q2 2016 was $0.2 million compared to an operating
loss of $1.4 million in Q2 2015.

Net income for Q2 2016 was $0.1 million, or $0.01 per basic and diluted
share, compared to a net loss of $1.5 million, or $(0.08) per basic and
diluted share, in Q2 2015.

Q2 2016 adjusted net income, excluding the impact of restructuring
charges, loss from the change in fair value of contingent consideration
and stock-based compensation expense, increased to $0.9 million, or
$0.05 per basic and diluted share, from an adjusted net loss of $0.8
million, or $(0.05) per basic and diluted share, in Q2 2015.

EBITDA (Earnings before interest, taxes, depreciation and amortization)
for Q2 2016 was $0.4 million compared to an EBITDA loss of $1.2 million
in Q2 2015.

Adjusted EBITDA, which excludes the impact of restructuring charges,
loss from the change in fair value of contingent consideration and
stock-based compensation expense, increased to $1.1 million in Q2 2016
from an adjusted EBITDA loss of approximately $0.5 million in Q2 2015.

Backlog at June 30, 2016, increased 48% to $71.1 million from $47.9
million at December 31, 2015. Backlog at June 30, 2016, included $64.7
million of Performance Improvement Solutions backlog and $6.4 million of
Nuclear Industry Training and Consulting backlog.

GSE’s cash position at June 30, 2016, was $14.3 million, including $3.4
million of restricted cash, as compared to $14.6 million, including $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 Q2 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=175198

For those who cannot listen to the live broadcast, an online webcast
replay will be available through November 15, 2016 at www.gses.com
or via the following link:
http://www.investorcalendar.com/IC/CEPage.asp?ID=175198

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;
Huntsville, Alabama; 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
non-GAAP EBITDA and Adjusted EBITDA to the most directly comparable GAAP
measure in accordance with SEC Regulation G follows:

Adjusted Net Income and Adjusted EPS Reconciliation (in
thousands, except per share amounts)

Adjusted Net Income and adjusted earnings (loss) per share (“adjusted
EPS”) are not measures of financial performance under generally accepted
accounting principles (“GAAP”). Management believes adjusted net income
and adjusted EPS, in addition to other GAAP measures, are useful to
investors to evaluate the Company’s results because they exclude 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. 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. A reconciliation of non-GAAP adjusted net income and adjusted EPS
to GAAP net income, the most directly comparable GAAP financial measure,
is as follows:

View source version on businesswire.com: http://www.businesswire.com/news/home/20160815006109/en/

GSE Systems, Inc.
Chris Sorrells, 410-970-7802
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