8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): March 14, 2013

GSE Holding, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

001-35382	77-0619069
(Commission File Number)	(IRS Employer Identification No.)

19103 Gundle Road, Houston, TX	77073
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (281) 443-8564

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On March 14, 2013, GSE Holding, Inc. issued a press release announcing its fourth quarter and full year 2012 earnings.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference

Item 7.01 Regulation FD Disclosure.

A copy of the supplemental slides, which will be discussed during the Company’s earnings call at 10:30 a.m. Eastern Time on Thursday, March 14, 2013, is attached to this Current Report as Exhibit 99.2 and is incorporated herein by reference.

The information in this Current Report on Form 8-K is being furnished under Item 2.01 and Item 7.01 and shall not deemed to be “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit Number	Description
99.1	Press Release of GSE Holding, Inc., dated March 14, 2013
99.2	Supplemental Materials for GSE Earnings Call on March 14, 2013

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: March 14, 2013

GSE HOLDING, INC.

/s/ Mark A. Whitney                                                      

By:     Mark A. Whitney

Title:  Vice President, General Counsel & Secretary

EX-99.1

Exhibit 99.1

GSE Reports Fourth Quarter and Full Year 2012 Results

Announces Record Revenues and Adjusted EBITDA for Full Year 2012

HOUSTON, TX – March 14, 2013 – 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 full year 2012.

Selected financial highlights for the full year 2012:

·   Sales of $476.6 million vs. $464.5 million in 2011

·   Gross margin of 16.3%  vs. 15.2% in 2011

·   Adjusted EBITDA of $45.7 million vs. $44.5 million in 2011

·   Adjusted net income of $15.5 million and adjusted diluted earnings per share of $0.80 per share

·   Unadjusted net income of $1.1 million and diluted earnings per share of $0.06 per share

Selected financial highlights for the fourth quarter of 2012:

·   Sales of $121.4 million vs. $110.7 million in 4Q 2011

·   Gross margin of 16.3%  vs. 15.9% in 4Q 2011

·   Adjusted EBITDA of $10.0 million vs. $8.8 million in 4Q 2011

Mark Arnold, President and Chief Executive Officer stated that “During 2012 we saw gains across most of our end-markets, and began expanding our worldwide manufacturing capabilities.  Most notably, we recently announced the groundbreaking on our new manufacturing facility in China, which will allow us to more readily service the fast-growing Asian Pacific geography. In addition to this facility, we also have planned capacity additions in 2013 for our existing facilities in Thailand and Egypt, and we have completed the addition of a GCL line to our Kingstree, South Carolina plant. We were recently awarded a contract with an Asian engineering company for a mining application in the region. This contract is one of the largest in our Company’s history and is expected to begin shipping in the second quarter of 2013.  We are confident with our growth strategy and remain focused on expanding our manufacturing capabilities and market development globally”

Fourth Quarter Summary

Total revenue for the fourth quarter was $121.4 million, compared to $110.7 million for the prior year period. Strong sales in Energy, Coal Ash, and Oil and Gas helped offset a decline in our North American Environmental Containment end-market. The decline in revenue from the Environmental Containment end-market reflects the Company’s continued proactive decision to not pursue low margin contracts. Mr. Arnold continued, “The adoption of our innovative products such as our leak location liner system and our high performance geomembrane not only positively impacted our product mix during the quarter, but also reinforced our growth thesis that our customers want a total solution that helps them drive efficiencies to better manage their operations.”

Gross profit increased to $19.7 million in the fourth quarter of 2012 from $17.6 million in the prior year period, resulting in gross margin for the fourth quarter of 2012 improving to 16.3% from 15.9% in the prior year period, highlighting the Company's focus on more profitable end markets and higher value products.

The fourth quarter included an income tax benefit of approximately $2.0 million or $0.10 per share representing the reversal of the beginning of year valuation allowance reserve for U.S. net operating losses, which we believe are more likely than not to be utilized.

Adjusted EBITDA improved to $10.0 million from $8.8 million in the prior year period.  Adjusted Net Income in the fourth quarter was $5.3 million, or $0.26 per fully diluted share compared to a loss of $0.4 million or ($0.04) per fully diluted share in the prior year period.  Unadjusted net income for the quarter was $4.8 million, or $0.24 per fully diluted share, compared to a net loss of $0.9 million, or ($0.09) per fully diluted share in the prior year period.

Full Year 2012 Summary

Total revenue for 2012 was $476.6 million, compared to $464.5 million for the prior year. Gross profit increased to $77.7 million from $70.5 million in 2011, resulting in gross margin for the full year 2012 of 16.3%, a 110 basis point improvement from 15.2% in 2011. Adjusted Net Income for 2012 was $15.5  million, or $0.80 per fully diluted share up from $4.9 million or $0.41 per fully diluted share in 2011. Adjusted EBITDA in 2012 improved to $45.7 million from $44.5 million in 2011.  Unadjusted net income for the full year was $1.1 million, or $0.06 per fully diluted share, compared to net income of $1.0 million, or $0.08 per fully diluted share in 2011.

Recent Events

On January 7, 2013 the Company announced the appointment of J. Michael Kirksey as Executive Vice President and Chief Financial Officer.  Mr. Kirksey has over 35 years of finance and accounting experience, and spent the last five years as the CFO of a NYSE-Listed company.  Throughout his career, Mr. Kirksey has served in several executive financial and general management positions and has gained extensive domestic and international experience, including leading many acquisition and divestiture transactions, both in the US and internationally.

Also in January, the Company held a groundbreaking ceremony for its new manufacturing facility in China. Construction of the facility is expected to be completed in late 2013 and add 44 million pounds of new manufacturing capacity. Once completed, the facility will have the ability to manufacture the Company's entire line of geomembrane products and service the growing demand for landfill expansions, industrial waste containment, coal ash containment and oil and gas fracking in the region.

In February, the Company announced the acquisition of SynTec, a manufacturer of geosynthetic drainage and soil reinforcement products. This acquisition provides GSE entry into the civil market and access to new technology for environmental and civil applications.

Conference Call

GSE will hold a conference call today, March 14, 2013 at 9:30 a.m. Central Time to discuss the Company’s strategy and operating results. The conference call can be accessed by dialing 877-616-4476 (domestic) or 402-875-4763 (international). A telephonic replay will be available approximately two hour after the call and can be accessed by dialing 1-855-859-2056, or for international callers, 1-404-537-3406. The passcode for the live call and the replay is 16362470. The telephonic replay will be available until 11:59 pm (Eastern Time) on March 27, 2013.

Interested parties may also listen to a simultaneous webcast of the conference call via the Investor Relations section of GSE’s website at http://ir.gseworld.com.

Use of Non-GAAP Financial Measures (Adjusted EBITDA and Adjusted Net Income)

Adjusted EBITDA represents net income (loss) before interest expense, income tax expense, depreciation, amortization of intangibles, loss (gain) on foreign currency transactions, restructuring expenses, certain professional fees, stock-based compensation expense, public offering related costs, loss on extinguishment of debt and management fees. Adjusted Net Income represents Net Income attributable to GSE Holding, Inc. before public offering related costs and public offering related interest expense, loss on extinguishment of debt, certain professional fees and management fees.   Adjusted EBITDA and Adjusted Net Income are “non-GAAP financial measures,” and are intended as supplemental measures of the Company’s performance that are not required by, or presented in accordance with, GAAP. Adjusted EBITDA and Adjusted Net Income should not be considered as alternatives to net income, income from continuing operations, earnings per share or any other performance measure derived in accordance with GAAP. The presentation of Adjusted EBITDA and Adjusted Net Income should not be construed to imply that future results will be unaffected by unusual or non-recurring items.  Management believes these measures are meaningful to investors to enhance their understanding of the Company’s financial performance.   Management’s calculation of these measures 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”. A reconciliation of Adjusted Net Income to net Income (loss) appears in the section of this press release titled “Reconciliation of Net Income (Loss) to Adjusted Net Income”.

About GSE Holding, Inc.

GSE is a global manufacturer and marketer of geosynthetic lining solutions, products and services used in the containment and management of solids, liquids, and gases for organizations engaged in waste management, mining, water, wastewater, and aquaculture.

GSE has a long history of manufacturing quality geosynthetic lining systems and developing innovative products. The Company's principal products are polyethylene-based geomembranes, geonets, geocomposites, geosynthetic clay liners, concrete protection liners and vertical barriers. GSE manufactures products primarily to line or cap hazardous and non-hazardous waste landfills; contain materials generated in certain mining processes; and contain water, liquid waste and industrial products in ponds, tanks, reservoirs, sewers, and canals. Headquartered in Houston, Texas, USA, GSE maintains sales offices throughout the world and manufacturing facilities in the United States, Chile, Germany, Thailand and Egypt.

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements give management’s current expectations and projections relating to the Company’s financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.  The forward-looking statements are based on the Company’s beliefs, assumptions and expectations of future performance, taking into account the information currently available to management.  Important factors that could cause actual results to differ materially from statements included in this press release can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and other documents filed with the SEC.  These documents are available in the Investor Relations section of the Company’s website at http://www.gseworld.com.

The Company cannot assure you that it will realize the results or developments it expects or anticipates or, even if substantially realized, that they will result in the consequences or affect the Company or its operations in the way it expects. The forward-looking statements included in this press release are made only as of the date hereof. Management undertakes no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

GSE Holding, Inc.

Consolidated Balance Sheets

(In thousands, except share amounts)

	December 31,
	2012			2011
ASSETS
Current assets:
Cash and cash equivalents	$	18,068		$	9,076
Accounts receivable:
Trade, net of allowance for doubtful accounts of $869 and $1,736		96,987			80,705
Other		3,626			3,054
Inventory, net		64,398			58,109
Deferred income taxes		1,111			935
Prepaid expenses and other		6,681			5,741
Income taxes receivable		1,538			2,447
Total current assets		192,409			160,067
Property, plant and equipment, net		70,172			57,270
Goodwill		58,895			58,895
Intangible assets, net		1,549			2,727
Deferred income taxes		5,858			2,519
Deferred debt issuance costs, net		7,003			8,387
Other assets		212			2,561
TOTAL ASSETS	$	336,098		$	292,426
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	36,632		$	34,848
Accrued liabilities and other		20,198			22,812
Short-term debt		985			2,864
Current portion of long-term debt		3,147			2,709
Income taxes payable		1,691			964
Deferred income taxes		1,156			1,135
Total current liabilities		63,809			65,332
Other liabilities		1,211			1,124
Deferred income taxes		1,078			1,416
Long-term debt, net of current portion		167,282			192,885
Total liabilities		233,380			260,757
Commitments and Contingencies (Note 15)
Stockholders’ equity:
Common stock, $.01 par value, 150,000,000 shares authorized, 19,846,684 and 10,809,987 shares issued and outstanding at December 31, 2012 and 2011, respectively		198			108
Additional paid-in capital		130,617			61,407
Accumulated deficit		(28,372	)		(29,456	)
Accumulated other comprehensive income (loss)		275			(390	)
Total stockholders’ equity		102,718			31,669
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	336,098		$	292,426

GSE Holding, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share amounts)

	Three Months Ended December 31,						Year Ended December 31,
	2012			2011			2012			2011
Net sales	$	121,360		$	110,660		$	476,644		$	464,451
Cost of products		101,626			93,019			398,955			393,944
Gross profit		19,734			17,641			77,689			70,507
Selling, general and administrative expenses		14,642			12,975			49,326			44,474
Public offering related costs		—			—			9,655			—
Amortization of intangibles		290			322			1,182			1,379
Operating income		4,802			4,344			17,526			24,654
Other expenses (income):
Interest expense, net		3,961			5,103			16,797			20,081
Foreign currency transaction (gain) loss		54			(604	)		(459	)		(568	)
Loss on extinguishment of debt		—			—			1,555			2,016
Other income, net		(951	)		(254	)		(2,269	)		(1,182	)
Income from continuing operations before income taxes		1,738			99			1,902			4,307
Income tax (benefit) provision		(3,127	)		1,089			356			3,490
Income (loss) from continuing operations		4,865			(990	)		1,546			817
Income (loss) from discontinued operations, net of tax		(51	)		53			(462	)		136
Net income (loss).		4,814			(937	)		1,084			953
Other comprehensive income (loss):
Foreign currency translation adjustment		684			(1,814	)		665			(2,125	)
Comprehensive income (loss)	$	5,498		$	(2,751	)	$	1,749		$	(1,172	)
Basic net income (loss) per common share:
Continuing operations	$	0.24		$	(0.09	)	$	0.08		$	0.08
Discontinued operations		(0.00	)		0.00			(0.02	)		0.01
	$	0.24		$	(0.09	)	$	0.06		$	0.09
Diluted net income (loss) per common share:
Continuing operations	$	0.24		$	(0.09	)	$	0.08		$	0.07
Discontinued operations		(0.00	)		0.00			(0.02	)		0.01
	$	0.24		$	(0.09	)	$	0.06		$	0.08
Basic weighted-average common shares outstanding		19,683			10,810			18,407			10,810
Diluted weighted-average common shares outstanding		20,440			11,810			19,336			11,841

GSE Holding, Inc.

Consolidated Statements of Cash Flows

(In thousands)

	Year Ended December 31,
	2012			2011			2010
Cash flows from operating activities:
Net income (loss)	$	1,084		$	953		$	(16,772	)
(Income) loss from discontinued operations		462			(136	)		4,428
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		13,114			11,419			10,416
Amortization of debt issuance costs		2,418			2,025			1,844
Amortization of intangible assets		1,182			1,379			2,284
Amortization of premium/discount on senior notes		935			744			(40	)
Loss on extinguishment of debt		1,555			2,016			—
Deferred income tax (benefit) provision		(3,862	)		683			(1,854	)
Stock-based compensation		4,666			75			67
Revaluation of non-dollar denominated debt		340			(815	)		345
Other		176			75			116
Change in cash from operating assets and liabilities:
Accounts receivable		(16,757	)		(16,498	)		(24,539	)
Inventory		(6,288	)		(7,463	)		(19,561	)
Prepaid expenses and other		(1,781	)		550			(6,837	)
Accounts payable		1,878			395			12,827
Accrued liabilities		(1,398	)		741			8,164
Income taxes (receivable) payable		1,235			(1,243	)		2,615
Other assets and liabilities		(489	)		977			(44	)
Net cash used in operating activities – continuing operations		(1,530	)		(4,123	)		(26,541	)
Net cash provided by (used in) operating activities – discontinued operations		(142	)		5,010			(3,219	)
Net cash provided by (used in) operating activities		(1,672	)		887			(29,760	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(26,137	)		(11,694	)		(3,337	)
Proceeds from the sale of assets		33			32			–
Net cash used in investing activities – continuing operations		(26,104	)		(11,662	)		(3,337	)
Net cash provided by investing activities – discontinued operations		–			–			2,284
Net cash used in investing activities		(26,104	)		(11,662	)		(1,053	)
Cash flows from financing activities:
Proceeds from lines of credit		100,635			86,948			137,865
Repayments of lines of credit		(110,490	)		(90,667	)		(109,918	)
Proceeds from long-term debt		25,674			173,083			—
Repayments of long-term debt		(44,318	)		(153,172	)		(2,256	)
Net proceeds from initial public offering		65,927			—			—
Payments for debt issuance costs		(1,748	)		(9,179	)		—
Payments for public offering costs		—			(2,311	)		—
Proceeds from the exercise of stock options		1,018			—			—
Net cash provided by financing activities – continuing operations		36,698			4,702			25,691
Net cash used in financing activities – discontinued operations		—			(650	)		—
Net cash provided by financing activities		36,698			4,052			25,691
Effect of exchange rate changes on cash – continuing operations		27			611			(228	)
Effect of exchange rate changes on cash – discontinued operations		43			4			(280	)
Net increase (decrease) in cash and cash equivalents		8,992			(6,108	)		(5,630	)
Cash and cash equivalents at beginning of year		9,076			15,184			20,814
Cash and cash equivalents at end of year	$	18,068		$	9,076		$	15,184
Supplemental cash flow disclosure:
Cash paid for interest	$	15,840		$	15,626		$	16,341
Cash paid for income taxes	$	1,375		$	2,643		$	22

GSE Holding, Inc.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

(unaudited)

	Three Months Ended December 31,						Year Ended  December 31,
	2012			2011			2012			2011
Net Income (loss)	$	4,814		$	(937	)	$	1,084		$	953
(Income) loss from discontinued operations, net of income tax		51			(53	)		462			(136	)
Interest expense		3,961			5,105			16,797			20,088
Income tax (benefit) expense		(3,127	)		1,089			356			3,490
Depreciation and amortization expense		3,611			3,458			14,296			12,798
Foreign exchange (gain) loss		53			(604	)		(459	)		(568	)
Loss on extinguishment of debt		—			—			1,555			2,016
Restructuring expense		—			569			93			950
Professional fees		460			(431	)		1,056			2,712
Stock-based compensation expense		213			—			360			75
Public offering costs		—			—			9,655			—
Management fees		—			554			229			2,074
Other		—			76			188			84
Adjusted EBITDA	$	10,036		$	8,826		$	45,672		$	44,536

GSE Holding, Inc.

Reconciliation of Net Income (Loss) to Adjusted Net Income

(in thousands)

(unaudited)

	Three Months Ended December 31,					Year Ended  December 31,
	2012		2011			2012		2011
Net Income (loss)	$	4,814	$	(937	)	$	1,084	$	953
(Income) loss from discontinued operations, net of income tax		51		(53	)		462		(136	)
Professional fees		460		—			1,056		—
Management fees		—		554			229		2,074
Loss on extinguishment of debt		—		—			1,555		2,016
Public offering costs		—		—			9,655		—
Public offering interest related expense		—		—			1,470		—
Adjusted net income (loss)	$	5,325	$	(436	)	$	15,511	$	4,907
Diluted weighted-average common shares outstanding		20,440		10,810			19,336		11,841
Adjusted earnings (loss) per share	$	0.26	$	(0.04	)	$	0.80	$	0.41

EX-99.2

Exhibit 99.2