Engineering utilization has been a major focus in the second half of 2023, and we have seen the results reflected in the improvement. We increased our billable utilization 7.3% in the second half of the year, which is driving the factor of 5.6% margin percentage uptick in the engineering segment from the first half to the second half of 2023. Operating expenses, excluding depreciation and amortization in the fourth quarter, were 3.4 million, a sequential decrease of 22% when compared to the third quarter of 2023, which were 4.4 million. This also compared to 3.9 million in the fourth quarter of 2022. The operating expenses in the quarter were lower due to cost containment and certain costs that are not incurred in the second half of the year, such as audit fees and certain public company costs.
We are confident in the expense reduction measures that were conducted in the past year. The OpEx per quarter should remain at similar levels in the future quarters in the range of 3.5 million to 4 million per quarter. Net loss in the fourth quarter was 2.3 million, or a loss of $0.82 per share, which was slightly lower when compared to the third quarter of 2023, which was a loss of 2 million, or $0.82 per share, compared to a loss of 1.5 million in the fourth quarter of 2022, or a loss of $0.68 per share. Adjusted net loss was 755,000, or $0.28 per share, compared to an adjusted net income of 175,000, or $0.07 per share, in the third quarter of 2023. And compared to an adjusted net loss of 1.1 million, or $0.49 per share, in the fourth quarter of 2022.
Adjusted EBITDA total was negative 98,000 during the fourth quarter, compared to a positive 659,000 in the third quarter of 2023, and compared to a negative 407,000 in the fourth quarter from one year ago. Company’s backlog ended at 34.5 million at the end of the fourth quarter in fiscal year, slightly lower than the prior quarter of 37.6 million, as the company experienced some order slippage into the first quarter of 2024. For example, received 900,000 funding in Q1, which was expected in the fourth quarter of 2023 as part of a major engineering project, expected to total roughly 4.3 million over four years. The majority of the backlog continues to lie within the engineering performance division. Performance engineering segment backlog was approximately 29 million at the end of the fourth quarter, sequentially lower from the 31.4 million at the end of the third quarter of 2023, but improved when compared to the 23.8 million the same period a year ago.
Workforce solutions division was 5.5 million at the end of the fourth quarter of 2023, which was slightly lower than the 6.2 million at the end of the third quarter of 2023. This compared to 9.1 million at the end of the fourth quarter of 2022. Moving our discussion to the company’s balance sheet, we exited the fourth quarter with 2.3 million in cash. The cash levels do not include the restricted cash of 1.5 million, which is to secure four letters of credit with various customers totaling 1.1 million and 400,000 to secure our corporate credit card program. We continue to make payments on our convertible debt secured with Lind. We will be concluding our repayments on the first tranche this May, May of ’24. As of today, we have paid 6 million with just 200,000 remaining on the first convertible note.
This demonstrates great progress and the potential of the company moving forward. In June of this year, we will begin to replay the second tranche of 1.8 million from Lind and anticipate full payment by May of 2025. We continue to review on a monthly basis the determination on whether to repay in cash, stock, or a combination of both. And we will prioritize paying in cash whenever possible. While we are still working in a challenging environment, we continue to examine every expenditure and will reduce costs where we can to preserve our cash position. That said, we have reduced our expenditures by roughly 1 million per quarter as compared to one year ago. And I will reiterate that while there are always some quarterly shifts of costs, lowering our quarterly expenses to around 3.5 to 4 million, we remain optimistic that the company can book additional orders in the coming quarters, which along with our improved utilization will result in improved cash flow.
While there is more work to be done, the company has made significant strides to becoming a leaner operation and is positioned to further improve cash flow and financial results. I’ll now turn the conversation back to Kyle.
Kyle Loudermilk: Thanks very much, Emmett. Summarize 2023 has been a year of improvement for GSE, especially in the second half, as it demonstrates the company has been streamlined and aligned to focus on higher margin businesses and deliver revenue in a more efficient manner. We expect to rate the benefits of these second half improvements for the full year of 2024. It’s a great position to be in. We’re highly focused on winning more business where we can and remain optimistic about the future. The market environment is still somewhat conservative, but we do believe that there are strong tailwinds that for the nuclear industry will result in an improved environment for the long term. Adam, could you please proceed with the question-and-answer session?
Adam Lowensteiner: Thanks, Kyle. Betsy, will you please proceed?
Operator: We will now begin the question-and-answer session. [Operator Instructions]. There are no questions from the phone line at this time. I’d like to hand the Q&A session back over to Adam Loewensteiner.
Adam Lowensteiner: Okay, Betsy. Thank you. I’ll ask Kyle and Emmett a few questions. Kyle, order flow is a bit off in the fourth quarter but seems somewhat streaky. Can you add a little color to that? What does the pipeline look like?
Kyle Loudermilk: Yeah, look. I think as we stated in the call, looking from quarter-to-quarter, it’s always a bit of a solitude diagram. You build up and then there’s lag and you build up. And you look year-over-year, our pipeline has grown significantly. And you look at the second half of the year for orders for engineering, up very significantly over the prior period of time. So, we expect that to continue. And we’ve had some really nice orders that have closed in Q1, for instance. So, we’re looking forward to highlighting the business on Q1’s conference call, an earnings call. So, we remain really positive, especially around this engineering business. We’re just starting to see traction and, as we’ve demonstrated some significant growth in winning business for the engineering side. We expect that to continue. We’re really focused on that. So, we do believe things have turned.
Adam Lowensteiner: And what’s the feedback from the salespeople with regards to the project flow? It seems, although, as you mentioned, lumpy, that the tempo of bidding has improved. Is that correct?
Kyle Loudermilk: Yeah, it sure has. Particularly on our design and, well, really across the board on engineering, design analysis, programs and performance, expecting, and seeing improved bids, which, should yield an improved order flow. Likewise in simulation, particularly with our work for the DOE Labs, which is, an area of long-term investment for the U.S. government, Department of Navy, a significant client of ours. And that’s growing. So, again, we look forward to talking to the details of that. But that’s what we’re hearing from the sales force.
Adam Lowensteiner: You’ve done a great job at right-sizing the company, getting expenses down. Are there any more cost cuts to be had?
Kyle Loudermilk: Emmett, do you want to take that?
Emmett Pepe: I’ll take that, Kyle. Yeah, look, we’re constantly looking at our costs, right? We’re not going to sort of rest on what we’ve done. We’ve got a couple office leases, including the headquarters building, that expired this year. So, I think we’ll look to assess the size and other cost savings on our office leases. Vendor spend is always going to be on the table. I think we went through and did a good job last year. But I do think there’s some combing through with a fine-tooth comb to see if there’s additional savings to be had on the cost side.
Adam Lowensteiner: And, Emmett, can you give us a little bit of an update, a reminder of what the debt is still owed? What’s the timeline on it? And, is the company being coming debt-free a possibility in the future?
Emmett Pepe: Yeah, as I mentioned on the call, we’re coming up on the — completing the first note that we signed in February of ’22. In a couple months, that will be expected to be paid off. And then the second note from a year ago, 1.8 million, we’ll start paying in June. And, yeah, I think under normal payments within a year, May of ’25, we should be debt-free.
Adam Lowensteiner: That’s all the questions I have. Kyle, would you like to conclude?
Kyle Loudermilk: Yeah, thanks, Adam. And I’d like to thank everybody who joined us today for joining us. We appreciate your time and interest in GSE. We’re excited about moving forward in the future here. If you have any questions, please reach out to Adam Lowensteiner from Lytham Partners, and we’d be happy to schedule a follow-up call with management. Again, everybody, thank you so much, and have a great day.
Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
