Global Power Reports Third Quarter 2017 Financial Results

IRVING, Texas–(BUSINESS WIRE)–Global
Power Equipment Group Inc. (OTC: GLPW) (“Global Power” or the
“Company”) today reported its financial results for the three and nine
months ended September 30, 2017. The delay in reporting the Company’s
financial results for the first nine months of 2017 was due to the time
it took to prepare and audit the Company’s Annual Report on Form 10-K
for the year ended December 31, 2015, which included the restatement of
certain prior period financial results and was filed on March 15, 2017
and the Annual Report on Form 10-K for the year ended December 31, 2016,
which was filed on September 12, 2017, and to prepare and review the
Quarterly Reports on Form 10-Q for the first and second quarters of 2017
which were filed on December 19, 2017.

As previously reported, during the third quarter of 2017, the Company
sold substantially all of the operating assets and liabilities of its
Mechanical Solutions segment, as well as its manufacturing facility and
remaining production equipment in Mexico. These sales were completed in
October 2017. Accordingly, this segment has been presented as a
discontinued operation for all periods presented.

Craig Holmes and Tracy Pagliara, Co-Presidents and Co-CEOs of Global
Power, commented, “Our Services segment continues to be our best
performing business unit. The future is starting to look more promising
as we are active on the Plant Vogtle Units 3 & 4 nuclear expansion
project, and are pursuing additional opportunities that capitalize on
our service capabilities while diversifying our revenue.”

They added, “In addition, our strategic initiatives continue with a
sense of urgency, including the review of strategic alternatives for the
Electrical Solutions segment. While the Koontz-Wagner Houston operation
experienced a challenging 2017, we believe 2018 is positioned to be a
better year overall.”

Consolidated Results for the Three Months ended
September 30, 2017 (compared with the corresponding period
in 2016 unless noted otherwise)

• Revenue from continuing operations was $50.6 million compared with
  $66.0 million, a $15.4 million decline. As discussed below, Services’
  revenue declined $8.3 million and Electrical Solutions’ declined $7.1
  million.
• Cost reductions and expense management helped to drive a $0.8 million
  net decline in operating expenses. These cost reductions resulted in
  $2.1 million of improvements, or 14.9%, which were partially offset by
  $1.3 million of incremental severance expense.
• Interest expense increased $1.9 million, resulting from a weighted
  average interest rate of 20.3% compared with 9.2% for the 2016 quarter.
• Loss from continuing operations was $18.4 million, or $(1.04) per
  share. Net loss was $17.0 million, or $(0.96) per share.
• At the end of the period, backlog was $173.2 million, of which $118.3
  million, or 68.3%, was related to the Services segment.

Business Segment Review for the Three Months
Ended September 30, 2017 (compared with the corresponding
period in 2016 unless noted otherwise)

Services segment:

• Services revenue of $39.0 million was down $8.3 million due primarily
  to the divestiture of Hetsco, Inc., a wholly owned subsidiary
  (“Hetsco”), in January 2017, which accounted for $6.3 million of the
  decline. Also, timing of the completion of several fixed-price nuclear
  projects resulted in a $2.7 million decrease in revenue.
• Gross profit of $4.8 million declined $1.9 million, essentially all of
  which was due to the Hetsco divestiture. Gross margin was 12.2%
  compared with 14.1% for the 2016 quarter. The 2017 period includes
  $5.1 million of zero margin revenue associated with estimated loss
  contracts which decreased the gross margin by 180 basis points.
• Services operating income was $1.4 million, a $0.2 million decrease.
  Substantially offsetting the lower gross profit was a $1.1 million
  decrease in operating expenses due to the Hetsco divestiture and a
  $0.7
  million decrease in operating expenses resulting from a reorganization
  within the Services segment.

Electrical Solutions segment:

• Revenue for the segment was down $7.1 million to $11.6 million, mostly
  resulting from the closure of the Company’s Chattanooga facility,
  which led to the loss of a major customer.
• Gross profit declined $8.5 million to a $5.9 million loss. In addition
  to the impact of lower revenue, the segment recorded $7.4 million for
  estimated losses on certain contracts in the third quarter of 2017, of
  which $7.2 million was attributed to our Houston, Texas facility,
  compared with $1.0 million for similar losses in the comparable 2016
  quarter.
• Electrical Solutions operating loss increased $8.8 million to $8.6
  million due primarily to the decrease in gross profit.

Consolidated Results for the Nine Months ended
September 30, 2017 (compared with the corresponding period in
2016 unless noted otherwise)

Revenue from continuing operations was $173.9 million compared with
$230.4 million, a $56.5 million decline. Gross profit from continuing
operations decreased $30.3 million to a loss of $4.0 million. Operating
loss from continuing operations was $41.8 million, a $13.1 million
decline; however, operating expenses of $37.8 million declined $17.2
million, or 31.3%. Interest expense increased $1.2 million, resulting
from a weighted average interest rate of 18.7% compared with 10.5% in
the 2016 corresponding period. Loss from continuing operations was $48.2
million, or $(2.74) per share. Net loss was $48.7 million, or $(2.77)
per share.

Liquidity Update

As of January 26, 2018, the Company had $17.1 million in cash and
equivalents on-hand, including $11.6 million in restricted cash, and had
an outstanding gross debt balance of approximately $25.4 million.

For the nine months ended September 30, 2017, the Company consumed $19.0
million of cash in operations, including discontinued operations. Since
June 2017, the Company’s liquidity has remained very constrained as a
result of continued losses, inconsistent cash flows from operations and
the inability to borrow additional amounts for short-term working
capital needs or issue additional standby letters of credit.

Management continues to assess and implement steps in its liquidity plan
and is working with lenders to establish a new asset-based revolving
line of credit. The additional lending facility, if obtained, will be
used to release cash currently restricted as collateral for letters of
credit which will be used to reduce long-term debt and provide
additional liquidity for operations.

Update on Financial Reporting for 2017

The Company expects to file its annual report on Form 10-K for the year
ended December 31, 2017 by the April 2, 2018 filing deadline.

Webcast and Teleconference

The Company will host a conference call on Thursday, February 1, 2018,
at 10:00 a.m. Eastern time (9:00 a.m. Central). A webcast of the call
and an accompanying slide presentation will be available at www.globalpower.com.
To access the conference call by telephone, listeners should dial
201-493-6780.

An audio replay of the call will be available from 1:00 p.m. Eastern
time (12:00 p.m. Central) on the day of the teleconference until the end
of day on February 15, 2018. To listen to the audio replay, dial
412-317-6671 and enter conference ID number 13675703. Alternatively, you
may access the webcast replay at http://ir.globalpower.com/,
where a transcript will be posted once available.

About Global Power

Global Power is a design, engineering and manufacturing firm providing a
broad array of equipment and services to the global power
infrastructure, energy and process industries.

Additional information about Global Power can be found on its website: www.globalpower.com.

Forward-looking Statement Disclaimer

This press release contains “forward-looking statements” within the
meaning of the term set forth in the Private Securities Litigation
Reform Act of 1995. The forward-looking statements include statements or
expectations regarding the Company’s ability to comply with the terms of
its debt instruments, the timing and the Company’s ability to file its
Annual Report on Form 10-K for its 2017 fiscal year and regain SEC
reporting compliance, if at all, the timing or outcome of its strategic
alternative initiatives for its Electrical Solutions segment, the
expected timing of shipments and other related matters. These statements
reflect our current views of future events and financial performance and
are subject to a number of risks and uncertainties, including our
ability to comply with the terms of our credit facility and enter into
new lending facilities and access letters of credit and to remain as a
publicly reporting entity pursuant to Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Our actual results, performance or
achievements may differ materially from those expressed or implied in
the forward-looking statements. Additional risks and uncertainties that
could cause or contribute to such material differences include, but are
not limited to, decreased demand for new gas turbine power plants,
reduced demand for, or increased regulation of, nuclear power, loss of
any of our major customers, whether pursuant to the loss of pending or
future bids for either new business or an extension of existing
business, termination of customer or vendor relationships, cost
increases and project cost overruns, unforeseen schedule delays, poor
performance by our subcontractors, cancellation of projects, competition
for the sale of our products and services, including competitors being
awarded business by our customers that we previously provided, shortages
in, or increases in prices for, energy and materials such as steel that
we use to manufacture our products, damage to our reputation, warranty
or product liability claims, increased exposure to environmental or
other liabilities, failure to comply with various laws and regulations,
failure to attract and retain highly-qualified personnel, loss of
customer relationships with critical personnel, effective integration of
acquisitions, volatility of our stock price, deterioration or
uncertainty of credit markets, changes in the economic and social and
political conditions in the United States and other countries in which
we operate, including fluctuations in foreign currency exchange rates,
the banking environment or monetary policy, and any suspension of our
continued reporting obligations under the Exchange Act.

Other important factors that may cause actual results to differ
materially from those expressed in the forward-looking statements are
discussed in our filings with the SEC, including the section of the
Annual Report on Form 10-K for its 2016 fiscal year titled “Risk
Factors.” Any forward-looking statement speaks only as of the date of
this press release. Except as may be required by applicable law, we
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, and we caution you not to rely upon them unduly.

Financial Tables Follow.

• Services backlog as of September 30, 2017 decreased $20.2 million from
  December 31, 2016 due primarily to the completion of the spring outage
  work related to a maintenance and modification contract. It also
  decreased as a result of completing several non-recurring fixed-price
  nuclear projects and performing services on a one-time non-nuclear
  industrial project. These declines were partially offset by additional
  volume related to a nuclear coatings contract for construction
  activities at Plant Vogtle Units 3 and 4.

GLOBAL POWER EQUIPMENT GROUP INC.
NON-GAAP FINANCIAL
MEASURE (UNAUDITED)

This press release contains financial measures not derived in accordance
with accounting principles generally accepted in the United States
(“GAAP”). A reconciliation to the most comparable GAAP measure is
provided below.

Adjusted EBITDA is not calculated through the application of GAAP and is
not the required form of disclosure by the U.S. Securities and Exchange
Commission. Adjusted EBITDA is the sum of our net loss before interest
expense, net and income tax (benefit) expense and unusual gains or
charges. It also excludes non-cash charges such as depreciation and
amortization. The Company’s management believes adjusted EBITDA is an
important measure of operating performance because it allows management,
investors and others to evaluate and compare the performance of its core
operations from period to period by removing the impact of the capital
structure (interest), tangible and intangible asset base (depreciation
and amortization), taxes and unusual gains or charges (foreign currency
gain, stock-based compensation, restatement expenses, asset disposition
costs, loss on sale of business and net assets held for sale, bank
restructuring costs and severance costs), which are not always
commensurate with the reporting period in which such items are included.
Global Power’s credit facility also contains ratios based on EBITDA.
Adjusted EBITDA should not be considered an alternative to net income or
as a better measure of liquidity than net cash flows from operating
activities, as determined by GAAP, and therefore, should not be used in
isolation from, but in conjunction with, the GAAP measures. The use of
any non-GAAP measure may produce results that vary from the GAAP measure
and may not be comparable to a similarly defined non-GAAP measure used
by other companies.

Contacts

Investor Relations:
Kei Advisors LLC
Deborah K.
Pawlowski, 716-843-3908
[email protected]