GSE Holding, Inc. (the "Company" or "GSE") (NYSE: GSE), a leading global provider of highly engineered geosynthetic containment solutions for environmental protection and confinement applications, today reported its financial results for the Company's fourth quarter and year ended December 31, 2011. Net income was $1.0 million, or $0.08 per fully diluted share, compared to a net loss of $(16.7) million, or $(1.55) per fully diluted share Mark Arnold, President & Chief Executive Officer, stated, "The Company set a record for Adjusted EBITDA in 2011 driven by aggressive management of prices and operations, secular growth trends, environmental awareness and regulatory reform. We are executing well and are optimistic about our future." Fourth Quarter Summary Sales for the quarter increased $21.0 million, or 23.3%, to $110.7 million, compared to $89.7 million in the fourth quarter of 2010. Additional volume contributed $7.4 million to the Company's increase in sales for the quarter. Price increases, primarily driven by resin cost passed on to customers, drove an additional increase of $13.6 million in sales. Gross profit increased $4.0 million, or 28.9%. $2.6 million of the increase was due to additional volume and $1.4 million was due to higher selling prices and a favorable change in product mix. Selling, General and Administrative (SG&A) expense for the quarter was $13.0 million compared to $9.0 million in the fourth quarter of 2010, an increase of $4.0 million. The SG&A expense increase was primarily due to the global expansion of the sales force, build out of the management team, commissions and bonuses associated with the growth and profitability of the Company, partially offset by lower consulting and professional fees. SG&A expense adjusted for non-recurring costs such as restructuring expense and management fees was $11.6 million compared to $7.8 million for the same prior year period. Adjusted EBITDA for the quarter was $8.8 million compared to $8.9 million in the same prior year period. The slight decrease was driven by the increase in gross profit offset by the increase in SG&A expense. Net loss for the quarter was $(0.9) million, or $(0.09) per fully diluted share, compared to net income of $2.1 million, or $0.18 per fully diluted share, in the same prior year period. Full Year Summary Sales for the year increased $121.7 million, or 35.5%, to $464.5 million, compared to $342.8 million for the same prior year period. Additional volume contributed $56.9 million to the Company's increase in sales for the year. An increase in selling prices and improvement in product mix contributed $56.0 million. The price increases were mostly driven by increases in resin costs that were passed on to customers. Sales were also positively affected by approximately $8.8 million from changes in foreign currency exchange rates, principally the Euro. Gross profit increased $26.6 million, or 60.7%. $9.6 million of the increase was due to additional volume and $16.2 million was due to increased sales prices and a favorable change in product mix. Changes in foreign currency exchange rates, principally the Euro, positively affected gross profit by $0.8 million. SG&A expense for the year was $44.5 million compared to $40.1 million for the same prior year period, an increase of 11.0%. SG&A expense decreased to 9.6% of sales in 2011, compared to 11.7% in 2010. SG&A expense increased $4.4 million from the same prior year period primarily due to the global expansion of the sales force, build out of the management team, commissions and bonuses associated with the growth and profitability of the Company, partially offset by lower consulting and professional fees. SG&A expense adjusted for non-recurring costs such as restructuring expense and management fees, was $38.8 million compared to $26.6 million for the same prior year period. Adjusted EBITDA for the year was $44.5 million, an increase of 58.7%, or $16.4 million, compared to $28.1 million in the same prior year period. The $16.4 million increase in Adjusted EBITDA was driven by a $29.6 million increase in gross profit, excluding incremental depreciation of $3.0 million, partially offset by the $12.2 million increase in SG&A expense after adjusting for non-recurring costs. Additionally, the Company had a decrease in the year over year amount of net other income of $1.0 million, primarily related to early pay vendor discounts. Net income for the year was $1.0 million, or $0.08 per fully diluted share, compared to a net loss of $(16.7) million, or $(1.55) per fully diluted share, in the same prior year period. At December 31, 2011, the Company's availability under its revolving credit facility totaled $11.0 million, and the Company was in compliance with all of its financial covenants. GSE will hold a conference call today, March 30, 2012, at 9:30 a.m. Central Time to discuss fourth quarter and year-end operating results. Interested parties should use the following phone numbers: Toll-free: (877) 644-1284; International: (707) 287-9355; Conference ID # 64669505. Approximately two hours after the call concludes, a replay will be available. This audio replay will be available until April 13, 2012. Interested parties should use the following replay phone numbers: Toll-free: (800) 585-8367; International: (404) 537-3406; Conference ID # 64669505. Adjusted EBITDA represents net income or loss before interest expense, income tax expense, depreciation and amortization of intangibles, change in the fair value of derivatives, loss (gain) on foreign currency transactions, restructuring expenses, extraordinary and non-recurring professional fees, stockbased compensation expense, loss (gain) on asset sales and management fees paid to CHS Capital LLC. Adjusted EBITDA is a "non-GAAP financial measure," as defined under the rules of the Securities and Exchange Commission (the "SEC"), and is intended as a supplemental measure of the Company's performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to net income, income from continuing operations or any other performance measure derived in accordance with GAAP. The presentation of Adjusted EBITDA should not be construed to imply that future results will be unaffected by unusual or non-recurring items. Management believes this measure is meaningful to investors to enhance their understanding of the Company's financial performance. Although Adjusted EBITDA is not necessarily a measure of the Company's ability to fund cash needs, management understands that it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare the Company's performance with the performance of other companies that report Adjusted EBITDA. Adjusted EBITDA should be considered in addition to, not as a substitute for, net income, income from continuing operations and other measures of financial performance reported in accordance with GAAP. Management's calculation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. A reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP measure, appears in the section of this press release titled "Reconciliation of Net Income (Loss) to Adjusted EBITDA."
