GSE Systems, Inc. Acquires True North Consulting, LLC

May 14, 2018

— Strengthens GSEÔÇÖs global leadership in technical engineering
solutions for ASME code —

— Projected to add more than $10 million to GSEÔÇÖs annual revenue —

— Transaction anticipated to be immediately accretive to GSEÔÇÖs adjusted
earnings —

— GSE secures $25 million delayed draw term loan to fund acquisitions —

COLUMBIA, Md.–(BUSINESS WIRE)–GSE Systems, Inc. (ÔÇ£GSEÔÇØ or ÔÇ£the CompanyÔÇØ) (Nasdaq: GVP),
a leader in real-time high-fidelity simulation systems,
training/consulting and technology-enabled engineering solutions to the
power and process industries, today announced that the Company acquired
True North Consulting, LLC (ÔÇ£True NorthÔÇØ), a respected provider of
specialty engineering solutions to the nuclear power industry.

Founded in 1999 in Montrose, Colorado, True North generated revenue of
approximately $11 million, of which over 85% came from the nuclear power
industry, for the year-ended December 31, 2017. True North employs
roughly 60 full-time and part-time professionals with expertise in areas
such as in-service testing for engineering programs focused on ASME OM
code including Appendix J, balance of plant programs, thermal
performance, in-service inspection for specialty engineering including
ASME Section XI, and software solutions.

Kyle Loudermilk, GSEÔÇÖs President and Chief Executive Officer, commented,
ÔÇ£The acquisition of True North Consulting broadens our engineering
services offering, expands our relationships with several of the largest
nuclear energy providers in the United States, and adds a highly
specialized, complimentary talent pool to our employee base. True North
has built a stellar reputation in the industry, particularly in
technical areas such as ASME code expertise, and will expand the
portfolio of services we can provide to our customers. We believe True
North is a powerful strategic fit with GSE, strengthening our position
as the ÔÇÿgo toÔÇÖ solutions provider to the power industry. The addition of
True North advances our strategy to create value for our customers,
employees and shareholders through consolidating a fragmented ecosystem
of vendors serving the nuclear power industry.ÔÇØ

Transaction Details

GSE acquired 100% of the equity interest of True North for $9.75
million, subject to customary pre- and post-closing working capital
adjustments. The transaction closed on May 11, 2018. GSE projects that
True North will generate on an annualized basis revenue of approximately
$10 million, add approximately $4 million to GSEÔÇÖs backlog and, after
identified synergies are implemented, contribute adjusted EBITDA of
approximately $2 million. GSE also projects that the transaction will be
immediately accretive to GSEÔÇÖs adjusted earnings per share. For
reporting purposes, True North will be included in GSEÔÇÖs Performance
Improvement Solutions segment.

Chris Sorrells, GSEÔÇÖs Chief Operating Officer, commented, ÔÇ£Our purchase
of True North is expected to be immediately accretive to GSEÔÇÖs adjusted
earnings per share and will add a stable revenue stream to the GSE
platform with attractive EBITDA margins and strong cash flow potential.
After completion of this transaction, GSEÔÇÖs pro forma Adjusted EBITDA
for the last twelve months approaches $8 million and our pro forma
balance sheet remains strong with approximately $12.4 million in cash
and $10 million in long-term debt. In the last eight months, through our
strategic acquisitions of Absolute Consulting and True North, we project
that we will have added an estimated $40-$50 million in annual revenue
and an increase of $3.5-$4.0 million in annual adjusted EBITDA. We
continue to work diligently to pursue other similar acquisition
opportunities that can enhance shareholder value.ÔÇØ

Amended and Restated Credit and Security Agreement
with Citizens Bank

On May 11, 2018, GSE entered into an amended and restated credit
agreement with Citizens Bank (the ÔÇ£LenderÔÇØ), consisting of a five-year
$5 million revolving line of credit and a five-year $25 million delayed
draw term loan facility to fund acquisitions approved by the Lender. GSE
drew on the term loan facility to fund the acquisition of True North.
Following the transactions associated with the acquisition, GSE will owe
$9.75 million on the term loan facility.

ÔÇ£Providing acquisition financing that supports GSEÔÇÖs growth strategy and
longer-term Vision 2020 objectives is an example of how Citizens
delivers substantial value for our clients,ÔÇØ said Daniel K. Fitzpatrick,
President of Citizens Bank, Mid-Atlantic Region, and Head of National
Industry Verticals Banking. ÔÇ£At Citizens, we try to think about the
needs of our clients from their point of view and offer a range of
solutions.ÔÇØ

ABOUT GSE SYSTEMS, INC.

GSE Systems, Inc. is a leader in real-time high-fidelity simulation
systems, training/consulting and technology-enabled engineering
solutions to the power and process industries. GSEÔÇÖs 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 Sykesville (Baltimore), Maryland, with offices in
Columbia, Maryland, Navarre, Florida, Montrose, Colorado, 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 ÔÇ£expect,ÔÇØ
ÔÇ£intend,ÔÇØ ÔÇ£believe,ÔÇØ ÔÇ£may,ÔÇØ ÔÇ£will,ÔÇØ ÔÇ£should,ÔÇØ ÔÇ£could,ÔÇØ ÔÇ£anticipates,ÔÇØ
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 STATEMENTS

Adjusted EBITDA is not a measure of financial performance under
generally accepted accounting principles (ÔÇ£GAAPÔÇØ). We believe that
Adjusted EBITDA, in addition to operating profit, net income and other
GAAP measures, is useful to investors to evaluate financial results
because it excludes 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 might not be comparable to
similarly-titled measures of other companies. We define EBITDA as
earnings before interest, taxes, depreciation and amortization
(ÔÇ£EBITDAÔÇØ). We define Adjusted EBITDA as EBITDA plus adjustments for
consulting support for finance restructuring, stock-based compensation
expense, restructuring charges, gain/loss from the changes in fair value
of contingent consideration, acquisition-related expense, and bankruptcy
related expenses. We define Adjusted Earnings Per Share as earnings per
share plus adjustments for consulting support for finance restructuring,
stock-based compensation expense, restructuring charges, gain/loss from
the changes in fair value of contingent consideration,
acquisition-related expense, bankruptcy related expenses, and tax reform
impact. With respect to Adjusted EBITDA and Adjusted Earnings Per Share
on a forward-looking basis and as a combined company with True North, a
reconciliation of the difference between this non-GAAP expectation and
the corresponding GAAP measure (expected net income and 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, and 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.