Training Outsourcing

  

GP Strategies Reports Strong Third Quarter 2012 Financial Results

ELKRIDGE, Md., Nov. 1, 2012 -- Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter ended September 30, 2012.

Overview of Third Quarter 2012 Results:

  • Revenue of $99.7 million for third quarter of 2012 compared to $88.9 million for third quarter of 2011
  • Gross profit of $17.9 million, or 18.0% of revenue, for third quarter of 2012 compared to $14.9 million, or 16.7% of revenue, for third quarter of 2011
  • Diluted earnings per share of $0.32 for third quarter of 2012 compared to $0.24 per share for third quarter of 2011
  • EBITDA of $10.4 million for third quarter of 2012 compared to $9.4 million for third quarter of 2011

The Company's revenue increased 12% or $10.7 million during the third quarter of 2012 compared to the third quarter of 2011.  Revenue grew organically by 9% or $8.0 million during the third quarter, largely driven by growth in the Learning Solutions and Sandy segments due to increased training services for several new and existing customers. Gross profit increased 21% or $3.1 million during the third quarter of 2012 primarily due to organic revenue growth. The third quarter 2012 results include $0.5 million of acquisition-related transaction expenses compared to $0.1 million in the third quarter of 2011. In addition, the Company had a net loss on the change in fair value of contingent consideration of $0.8 million for the third quarter of 2012, for which no income tax benefit will be received, compared to a net gain of $0.3 million during the third quarter of 2011. Operating income increased 24% during the third quarter of 2012, excluding the net gain/loss on change in fair value of contingent consideration in the third quarters of both 2012 and 2011. Net income was $6.2 million, or $0.32 per diluted share, for the third quarter of 2012 compared to $4.6 million, or $0.24 per diluted share, for the third quarter of 2011. The third quarter 2012 results also include a $1.6 million non-recurring income tax benefit due to the reduction of a tax liability.

"GP Strategies continued to achieve strong organic growth in the quarter due to the strengthening and expansion of our platform," commented Scott N. Greenberg, Chief Executive Officer of GP Strategies. "We are seeing increased collaboration across the Company to provide integrated offerings that meet our clients' training and performance improvement needs. In addition, our recent acquisitions demonstrate our continued deployment of operating cash flow to further enhance our platform of services and products.  We are very excited about our acquisition of BlessingWhite which strengthens our ability to deliver comprehensive leadership and professional development services to customers on a global basis."

Balance Sheet and Cash Flow Highlights

As of September 30, 2012, the Company had cash and cash equivalents of $12.6 million compared to $4.2 million as of December 31, 2011. The Company had no short-term borrowings or long-term debt outstanding and had $50 million of available borrowings under its line of credit as of September 30, 2012. Cash provided by operating activities was $17.0 million for the nine months ended September 30, 2012 compared to $10.6 million for the same period in 2011.

Investor Call

The Company has scheduled an investor conference call for 10:00 a.m. ET on November 1, 2012. In addition to prepared remarks from management, there will be a question and answer session on the call. The dial-in numbers for the live conference call are 800-749-1342 or 212-231-2919, using conference ID number 21609594. A telephone replay of the call will also be available beginning at 12:00 p.m. on November 1st, until 12:00 p.m. on November 15th. To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21609594.

Presentation of Non-GAAP Information

This press release contains non-GAAP financial measures, including EBITDA (earnings before interest, income taxes, depreciation and amortization). The Company believes this non-GAAP financial measure is useful to investors in evaluating the Company's results. This measure should be considered in addition to, and not as a replacement for, or superior to, either net income, as an indicator of the Company's operating performance, or cash flow, as a measure of the Company's liquidity. In addition, because EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. For a reconciliation of this non-GAAP financial measure to the most comparable GAAP equivalent, see the Non-GAAP Reconciliation – EBITDA, along with related footnotes, below.

About GP Strategies

GP Strategies Corporation (NYSE: GPX) is a global performance improvement solutions provider of sales and technical training, eLearning solutions, management consulting and engineering services. GP Strategies' solutions improve the effectiveness of organizations by delivering innovative and superior training, consulting and business improvement services, customized to meet the specific needs of its clients. Clients include Fortune 500 companies, manufacturing, process and energy industries, and other commercial and government customers.  Additional information may be found at www.gpstrategies.com.

Forward-Looking Statements

We make statements in this press release that are considered forward-looking statements within the meaning of the Securities Exchange Act of 1934. 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. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

TABLES FOLLOW

GP STRATEGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

Quarters ended

Nine months ended

September 30,

September 30,

2012

2011

2012

2011

Revenue

$99,671

$ 88,948

$295,587

$239,275

Cost of revenue

81,742

74,083

243,041

198,907

  Gross profit

17,929

14,865

52,546

40,368

Selling, general and administrative expenses

8,890

7,601

26,220

22,212

Gain on reversal of deferred rent liability

-

-

-

1,041

Gain (loss) on change in fair value of

contingent consideration, net

(792)

303

(863)

506

Operating income

8,247

7,567

25,463

19,703

Interest expense

75

51

175

149

Other income

72

157

262

498

   Income before income tax expense

8,244

7,673

25,550

20,052

Income tax expense

2,061

3,054

8,999

8,132

   Net income

$   6,183

$   4,619

$  16,551

$ 11,920

 

Basic weighted average shares outstanding

 

19,009

 

18,784

 

18,912

 

18,761

Diluted weighted average shares outstanding

19,328

19,048

19,255

18,996

 

Per common share data:

  Basic earnings per share

$    0.33

$    0.25

$     0.88

$     0.64

  Diluted earnings per share

$    0.32

$    0.24

$     0.86

$     0.63

Other data:

  EBITDA (1)

$   10,433

$   9,439

$   31,645

$   24,530

(1) The term EBITDA (earnings before interest, income taxes, depreciation and amortization) is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results. For a reconciliation of this non-GAAP financial measure to the most comparable GAAP equivalent, see the Non-GAAP Reconciliation – EBITDA, along with related footnotes, below.

 

GP STRATEGIES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands)
(Unaudited)

Quarters ended

Nine months ended

September 30,

September 30,

2012

2011

2012

2011

Revenue by segment:

Learning Solutions

$ 41,897

$  33,230

$115,336

$  94,663

Professional & Technical Services

20,938

22,289

67,891

61,530

Sandy Training & Marketing

16,878

13,163

51,083

39,301

Performance Readiness Group (2)

13,682

14,884

42,810

26,896

Energy Services

6,276

5,382

18,467

16,885

Total revenue

$ 99,671

$  88,948

$295,587

$239,275

Gross profit by segment:

Learning Solutions

$  8,390

$  5,774

$  22,453

$  15,697

Professional & Technical Services

2,829

4,055

10,036

10,405

Sandy Training & Marketing

2,588

1,770

7,782

5,571

Performance Readiness Group (2)

1,871

1,570

6,038

3,464

Energy Services

2,251

1,696

6,237

5,231

Total gross profit

$  17,929

$  14,865

$ 52,546

$ 40,368

Operating income by segment:

Learning Solutions

$  4,611

$  2,660

$  11,949

$  6,309

Professional & Technical Services

993

2,551

4,181

5,482

Sandy Training & Marketing

1,078

644

3,286

1,805

Performance Readiness Group (2)

556

70

2,007

652

Energy Services

1,801

1,339

4,903

3,908

Gain on reversal of deferred rent liability

-

-

-

1,041

Gain (loss) on change in fair value of

contingent consideration, net

 

(792)

 

303

 

(863)

 

506

Total operating income

$  8,247

$  7,567

$  25,463

$  19,703

Supplemental Cash Flow Information:

Net cash provided by operating activities

$  12,596

$  5,767

$  17,000

$  10,561

Capital expenditures

(688)

(866)

(2,155)

(2,397)

Free cash flow

$  11,908

$  4,901

$   14,845

$   8,164

(2) Formerly called the RWD segment.

 

GP STRATEGIES CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliation – EBITDA
(3)
(In thousands)
(Unaudited)

Quarters ended

Nine months ended

September 30,

September 30,

2012

2011

2012

2011

Net income (4)

$  6,183

$  4,619

$ 16,551

$   11,920

Interest expense

75

51

175

149

Income tax expense

2,061

3,054

8,999

8,132

Depreciation and amortization

2,114

1,715

5,920

4,329

EBITDA

$  10,433

$  9,439

$ 31,645

$ 24,530

(3)    Earnings before interest, income taxes, depreciation and amortization (EBITDA) is a widely used non-GAAP financial measure of operating performance. It is presented as supplemental information that the Company believes is useful to investors to evaluate its results because it excludes certain items that are not directly related to the Company's core operating performance. EBITDA is calculated by adding back to net income interest expense, income tax expense, depreciation and amortization. EBITDA should not be considered as substitutes either for net income, as an indicator of the Company's operating performance, or for cash flow, as a measure of the Company's liquidity. In addition, because EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies.

(4)    Net income includes the following non-recurring or acquisition-related amounts:

  • A $1,602,000 income tax benefit on the reduction of an uncertain tax position liability during the third quarter of 2012.
  • Net losses of $792,000 and $863,000, on the change in fair value of contingent consideration for the third quarter and nine months ended September 30, 2012, respectively, for which no income tax benefit is recognized, compared to net gains of $303,000 and $506,000 for the third quarter and nine months ended September 30, 2011, respectively.

 

GP STRATEGIES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

September 30,

December 31,

2012

2011

(Unaudited)

Current assets:

   Cash and cash equivalents

$     12,599

$       4,151

   Accounts and other receivables

69,381

67,134

   Costs and estimated earnings in excess of

billings on uncompleted contracts

22,063

15,576

   Prepaid expenses and other current assets

11,010

8,863

      Total current assets

115,053

95,724

Property, plant and equipment, net

5,660

5,562

Goodwill and other intangibles, net

110,317

108,460

Other assets

1,978

1,830

      Total assets

$ 233,008

$   211,576

Current liabilities:

   Accounts payable and accrued expenses

$   45,107

$   42,500

   Billings in excess of costs and estimated

earnings on uncompleted contracts    

17,848

17,266

      Total current liabilities

62,955

59,766

Other noncurrent liabilities

7,148

8,416

      Total liabilities

70,103

68,182

Total stockholders' equity

162,905

143,394

      Total liabilities and stockholders' equity

$ 233,008

$   211,576

© 2012 GP Strategies Corporation. All rights reserved. GP Strategies and the GP Strategies logo design are trademarks of GP Strategies Corporation.