Exclusive Interview With The CEO: GSE Systems, Inc. (GVP) - Jim Eberle

Wall Street Transcript

67 WALL STREET, New York - June 13, 2012 - The Wall Street Transcript has just published its Business and Application Software Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Desktop and Server Virtualization - Cloud Computing, SaaS and PaaS - Advertisement and Carrier Spending - Application Software Consolidation Activity

Companies include: Corporate Executive Board (EXBD); EPIQ Systems (EPIQ); P&G (PG); Robert Half (RHI); ACI Worldwide (ACIW); and many more.

In the following brief excerpt from the Business And Application Software Special Report, expert analysts discuss the outlook for the sector and for investors.

Jim Eberle joined GSE Systems, Inc., in June 2010 and assumed his current position of Chief Executive Officer in November 2010. Prior to joining GSE, he had been the President of MXL Industries, Inc., a provider of optical-quality mold design, tooling, molding and coating of polycarbonate and acrylic parts, from June 2004 to June 2010. From 1990 to May 2004, Mr. Eberle worked at General Physics Corporation, most recently as Vice President of Operations. General Physics is a global performance improvement solutions provider of sales and technical training, e-learning solutions, management consulting and engineering services. Prior to joining General Physics, Mr. Eberle served in the United States Navy and instructed officer and enlisted students in nuclear reactor theory, operations and maintenance.

TWST: Would you begin with a brief overview of the history and evolution of GSE Systems?

Mr. Eberle: We can trace our roots back to the very first flight simulator in 1929 with Link Systems, a predecessor of GSE. In terms of GSE's current focus, we can point to 1971, when we designed and built the first nuclear power plant simulator. During the last 40 years, we have been perfecting our simulation models, taking advantage of advanced computing technology and graphics capabilities to deliver extremely high-fidelity, real time simulation. We have branched out from nuclear simulation and into fossil power, oil and gas, chemical and petrochemical.At the end of Q1 2012, 39% of our total revenues were non-nuclear, up from 32% at year-end 2011. We have also made a concerted effort to provide training and education services in addition to simulation. All of this reflects the ongoing evolution of our business model, which we put into effect shortly after I became CEO in November 2010.Essentially, we are leveraging 40 years of simulation knowledge and know-how in order to provide a portfolio of related products and services. In my first full year as CEO, this approach allowed us to grow the top line, significantly increase profits, make an important acquisition and maintain a very strong balance sheet with no debt.

TWST: What are the key elements in your background that led you to GSE?

Mr. Eberle: I began my career in the United States Navy as a nuclear reactor Operator, and then a Staff Instructor. Toward the end of my service, I was training officers and enlisted personnel in reactor operations, maintenance and theory.When I left the Navy, I joined General Physics Corporation, which is now called GP Strategies, and I spent 14 years there. I started as an entry-level training material designer, developer and instructor in the company's non-nuclear business. I worked on the commercial side in many different market sectors, such as automotive, steel, open-enrollment training centers, semiconductors, telecommunications, pulp and paper, and food and beverage.After General Physics, I moved on to run MXL Industries, a sister company of General Physics, at the request of Mr. Jerry Feldman, who was then the Chairman of the board of the parent company of General Physics. MXL industries is focused on optical plastic manufacturing. Although I did not have a background in that industry, I had been successful in turning around departments and divisions, which in the eyes of the Chairman, made me a good fit. I was in that role from 2004 to 2010.Then in 2010, Mr. Feldman, who is currently the Chairman of the board of GSE Systems (GVP), approached me regarding taking over GSE Systems after John Moran, the previous CEO, had decided to retire. I looked at the company and saw a strong balance sheet, respected and market-entrenched simulation capabilities, a presence in many energy sectors, and an opportunity to expand into training services. So in 2010, I joined GSE Systems and haven't looked back.

TWST: GSE is a global company with operations in the U.S., Europe and Asia. Who makes up some of your customer base?

Mr. Eberle: Our customer base is varied. We have over 1,000 installations worldwide with more than 100 customers in over 50 countries. Many of the major utility companies across the globe are our customers.Some of our other customers receive our products and services through delivery channels such as DCS, digital control systems, companies like Emerson, GE, Westinghouse, ABB, Siemens. We also have some customers in the major energy sectors, like oil and gas, as well as chemical and petrochemicals.

TWST: Would you discuss the type of services the company's customers are requesting? Are they similar requests, or does GSE Systems provide turnkey solutions?

Mr. Eberle: Traditionally, we only offered one service, which would've been simulation itself, and then follow-on services to the simulator - items like software upgrades and hardware upgrades. But today, we are providing a more robust menu of services, such as engineering simulation and training services combined with simulation. Customers today can pick and choose. Some see the value of the additional services and some have stuck with our traditional offerings.In January 2011, we acquired a company called EnVision Systems that provides more off-the-shelf simulation; however, the majority of our revenue comes from custom projects tailored to the client's specifications.

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