GP Strategies Reports Strong Fourth Quarter and Full Year 2013 Financial Results

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GP Strategies Corporation

Feb 25, 2014, 08:00 ET

COLUMBIA, Md., Feb. 25, 2014 /PRNewswire/ -- Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter and fiscal year ended December 31, 2013.

Overview of Fourth Quarter 2013 Results:

  • Revenue of $117.2 million for fourth quarter of 2013, up $11.2 million or 11% compared to $106.0 million for fourth quarter of 2012
  • Operating income of $12.1 million for fourth quarter of 2013, up $1.9 million or 19% compared to $10.2 million for fourth quarter of 2012
  • EBITDA of $14.7 million, up $2.3 million or 18% for fourth quarter of 2013 compared to $12.4 million for fourth quarter of 2012

The Company's revenue increased 11% or $11.2 million during the fourth quarter of 2013 compared to the fourth quarter of 2012. The revenue growth is primarily attributable to organic growth in the Learning Solutions and Energy Services segments and businesses acquired in 2013. Operating income increased 19% or $1.9 million during the fourth quarter of 2013 and included a $1.2 million gain on the change in fair value of contingent consideration related to previously completed acquisitions.  Income before income taxes was $12.2 million for the fourth quarter of 2013 compared to $10.3 million for the fourth quarter of 2012. Net income was $7.4 million, or $0.38 per diluted share, for the fourth quarter of 2013 compared to $6.1 million, or $0.32 per diluted share, for the fourth quarter of 2012.

The Company recognized revenue of $436.7 million for the year ended December 31, 2013, representing a 9% increase over 2012 revenue of $401.6 million.  Operating income increased $2.7 million or 7% in 2013 to $38.4 million for the year ended December 31, 2013. Net income was $23.8 million, or $1.23 per diluted share, for the year ended December 31, 2013 compared to $22.7 million, or $1.18 per diluted share, for the year ended December 31, 2012.

"I am extremely pleased to report another solid quarter," commented Scott N. Greenberg, Chief Executive Officer of GP Strategies. "We achieved record revenues for both the three months and fiscal year ended December 31, 2013.  These strong financial results were accomplished while expanding infrastructure to enable the Company to continue on its path of growth and international expansion. Our results also include costs associated with implementing the global contract with HSBC, under which local service agreements were signed in September. Our goal continues to be to further establish GP Strategies' brand in the highly fragmented training industry."

Balance Sheet and Cash Flow Highlights
As of December 31, 2013, the Company had cash and cash equivalents of $5.6 million compared to $7.8 million as of December 31, 2012. The Company had no long-term debt, $0.4 of million short-term borrowings outstanding and $48.9 million of available borrowings under its line of credit as of December 31, 2013. Cash provided by operating activities was $16.3 million for the year ended December 31, 2013 compared to $25.3 million for the year ended December 31, 2012. During the quarter and year ended December 31, 2013, the Company repurchased 29,000 and 67,000 shares, respectively, of its common stock in the open market for approximately $0.8 million and $1.7 million, respectively, in cash.

Investor Call
The Company has scheduled an investor conference call for 10:00 a.m. ET on February 25, 2014. 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 855-258-3671 or 804-681-3894, using conference ID number 21709020. A telephone replay of the call will also be available beginning at 12:00 p.m. on February 25th, until 12:00 p.m. on March 11th. To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21709020.

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 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)

Quarter ended

Year ended

December 31,

December 31,




2013

2012

2013

2012



Revenue

$117,220

$105,985

$436,689

$401,572

Cost of revenue

95,592

86,560

360,424

329,601

  Gross profit

21,628

19,425

76,265

71,971

Selling, general and administrative expenses

10,764

9,280

39,589

35,500

Gain (loss) on change in fair value of

contingent consideration, net

1,249

74

1,676

(789)

Operating income

12,113

10,219

38,352

35,682

Interest expense

110

94

366

269

Other income

176

127

502

389

   Income before income taxes

12,179

10,252

38,488

35,802

Income tax expense

4,738

4,115

14,732

13,114

   Net income

$ 7,441

$   6,137

$  23,756

$  22,688



Basic weighted average shares outstanding

19,144

19,083

19,103

18,956

Diluted weighted average shares outstanding

19,416

19,333

19,362

19,275

Per common share data:



  Basic earnings per share

$    0.39

$    0.32

$     1.24

$     1.20

  Diluted earnings per share

$    0.38

$    0.32

$     1.23

$     1.18



Other data:



EBITDA (1)

$   14,651

$   12,397

$   47,471

$   44,042



(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)

Quarter ended

Year ended

December 31,

December 31,




2013

2012

2013

2012

Revenue by segment:



Learning Solutions

$ 52,676

$ 45,670

$189,899

$158,118

Professional & Technical Services

18,357

18,834

72,577

82,447

Sandy Training & Marketing

18,638

19,160

70,699

70,243

Performance Readiness Solutions

12,391

12,984

53,882

55,794

Energy Services

15,158

9,337

49,632

34,970

Total revenue

$ 117,220

$ 105,985

$436,689

$401,572



Gross profit by segment:



Learning Solutions

$  9,542

$  8,787

$  33,540

$  30,065

Professional & Technical Services

3,126

3,303

12,320

14,279

Sandy Training & Marketing

3,453

3,172

10,748

10,954

Performance Readiness Solutions

1,994

1,724

7,515

7,762

Energy Services

3,513

2,439

12,142

8,911

Total gross profit

$  21,628

$  19,425

$ 76,265

$ 71,971



Operating income by segment:



Learning Solutions

$  4,324

$  4,586

$  15,210

$  15,927

Professional & Technical Services

1,475

1,659

5,810

6,868

Sandy Training & Marketing

1,875

1,611

4,672

4,897

Performance Readiness Solutions

886

541

2,688

2,548

Energy Services

2,304

1,748

8,296

6,231

Gain (loss) on change in fair value of

contingent consideration, net

1,249

74

1,676

(789)

Total operating income

$  12,113

$  10,219

$  38,352

$  35,682



Supplemental Cash Flow Information:



Net cash provided by operating activities

$  6,004

$  8,312

$  16,253

$  25,312

Capital expenditures

(2,106)

(381)

(6,714)

(2,536)

Free cash flow

$  3,898

$  7,931

$ 9,539

$ 22,776

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Non-GAAP Reconciliation – EBITDA (2)

(In thousands)

(Unaudited)

Quarter ended

Year ended

December 31,

December 31,




2013

2012

2013

2012

Net income (3)

$  7,441

$  6,137

$ 23,756

$ 22,688

Interest expense

110

94

366

269

Income tax expense

4,738

4,115

14,732

13,114

Depreciation and amortization

2,362

2,051

8,617

7,971

EBITDA

$  14,651

$  12,397

$ 47,471

$ 44,042

(2)

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.

(3)

Net income includes the following infrequently occurring or acquisition-related amounts:

· Income tax benefits of $1,602,000 in the third quarter of 2012 on the reductions of uncertain tax position liabilities.

· Net gains of $1,249,000 and $1,676,000, on the change in fair value of contingent consideration for the fourth quarter and year ended December 31, 2013, respectively, compared to a net gain of $74,000 and a net loss of $789,000 (for which no income tax benefit was recognized) for the fourth quarter and year ended December 31, 2012, respectively.

GP STRATEGIES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)





December 31,

2013

2012



Current assets:




   Cash and cash equivalents

$       5,647

$       7,761

   Accounts and other receivables

94,662

83,597

   Costs and estimated earnings in excess of

billings on uncompleted contracts

22,706

16,979

   Prepaid expenses and other current assets

13,523

10,143

      Total current assets

136,538

118,480

Property, plant and equipment, net

9,231

5,511

Goodwill and other intangibles, net

132,116

118,693

Other assets

2,271

1,750

      Total assets

$ 280,156

$   244,434






Current liabilities:




   Short-term borrowings

$       407

$              --

Accounts payable and accrued expenses

55,339

47,457

   Billings in excess of costs and estimated

earnings on uncompleted contracts    


22,062

21,877

      Total current liabilities

77,808

69,334

Other noncurrent liabilities

9,321

7,763

      Total liabilities

87,129

77,097

Total stockholders' equity

193,027

167,337

      Total liabilities and stockholders' equity

$ 280,156

$   244,434

© 2014 GP Strategies Corporation. All rights reserved. GP Strategies and the GP Strategies logo design are trademarks of GP Strategies Corporation.

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SOURCE GP Strategies Corporation