GP Strategies Reports Third Quarter 2013 Financial Results

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GP Strategies Corporation

Oct 31, 2013, 08:00 ET

COLUMBIA, Md., Oct. 31, 2013 /PRNewswire/ -- Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter ended September 30, 2013.

Overview of Third Quarter 2013 Results:

  • Revenue of $113.2 million for third quarter of 2013 compared to $99.7 million for third quarter of 2012
  • Operating income of $10.3 million for third quarter of 2013 compared to $8.2 million for third quarter of 2012
  • Diluted earnings per share of $0.32 for third quarters of both 2013 and 2012 (third quarter 2012 includes a $0.08 per share non-recurring income tax benefit)
  • EBITDA of $12.6 million for third quarter of 2013 compared to $10.4 million for third quarter of 2012

The Company's revenue increased $13.5 million or 13.6% during the third quarter of 2013 compared to the third quarter of 2012.  The revenue growth is primarily attributable to strong organic growth in the Energy segment due to a large contract award in its alternative fuels business and acquisitions completed in 2012 and 2013. Operating income increased 25.4% to $10.3 million for the third quarter of 2013. Income before income tax expense was $10.3 million for the third quarter of 2013 compared to $8.2 million for the third quarter of 2012. Net income was $6.1 million, or $0.32 per diluted share, for the third quarter of 2013 compared to $6.2 million, or $0.32 per diluted share, for the third quarter of 2012. The third quarter 2012 results included a $1.6 million, or $0.08 per share, non-recurring income tax benefit due to the reduction of a tax liability.

"The third quarter of 2013 showed a significant increase in revenue and operating profit compared to the corresponding quarter in 2012," commented Scott N. Greenberg, Chief Executive Officer of GP Strategies. "This improvement came while undertaking significant effort devoted to the start-up of our global agreement with HSBC, which we signed in July and then followed with local services agreements in September. We are also pleased with the success we are achieving in our Energy Group and we continue to diversify our business internationally as our global clients look for increased levels of support."

Balance Sheet and Cash Flow Highlights

As of September 30, 2013, the Company had cash and cash equivalents of $4.4 million compared to $7.8 million as of December 31, 2012. The Company had $4.8 million of short-term borrowings outstanding, $45.2 million of available borrowings under its line of credit and no long-term debt as of September 30, 2013. Cash provided by operating activities was $10.2 million for the nine months ended September 30, 2013 compared to $17.0 million for the same period in 2012.

Investor Call

The Company has scheduled an investor conference call for 10:00 a.m. ET on October 31, 2013. 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 800-732-8470 or 212-231-2900, using conference ID number 21682693. A telephone replay of the call will also be available beginning at 12:00 p.m. on October 31st, until 12:00 p.m. on November 14th. To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21682693.

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,




2013

2012

2013

2012



Revenue

$113,197

$99,671

$319,469

$295,587

Cost of revenue

93,136

81,742

264,832

243,041

  Gross profit

20,061

17,929

54,637

52,546

Selling, general and administrative expenses

9,856

8,890

28,825

26,220

Gain on reversal of deferred rent liability

-

-

-

-

Gain (loss) on change in fair value of

contingent consideration, net

135

(792)

427

(863)

Operating income

Interest expense

10,340

90

8,247

75

26,239

256

25,463

175

Other income

4

72

326

262

   Income before income tax expense

10,254

8,244

26,309

25,550

Income tax expense

4,111

2,061

9,994

8,999

   Net income

$   6,143

$   6,183

$  16,315

$  16,551



Basic weighted average shares outstanding

19,125

19,009

19,089

18,912

Diluted weighted average shares outstanding

19,404

19,328

19,344

19,255

Per common share data:



  Basic earnings per share

$    0.32

$    0.33

$     0.85

$     0.88

  Diluted earnings per share

$    0.32

$    0.32

$     0.84

$     0.86



Other data:
EBITDA (1)

$ 12,649

$ 10,433

$ 32,820

$ 31,645



(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,




2013

2012

2013

2012

Revenue by segment:



Learning Solutions

$ 49,304

$ 40,596

$137,223

$112,448

Professional & Technical Services

19,157

20,337

54,220

63,613

Sandy Training & Marketing

16,929

16,878

52,061

51,083

Performance Readiness Group

13,037

13,682

41,491

42,810

Energy Services

14,770

8,178

34,474

25,633

Total revenue

$ 113,197

$ 99,671

$319,469

$295,587



Gross profit by segment:



Learning Solutions

$  8,629

$  7,806

$  23,998

$  21,278

Professional & Technical Services

3,229

3,723

9,194

10,976

Sandy Training & Marketing

2,433

2,588

7,295

7,782

Performance Readiness Group

2,031

1,871

5,521

6,038

Energy Services

3,739

1,941

8,629

6,472

Total gross profit

$  20,061

$  17,929

$ 54,637

$ 52,546



Operating income by segment:



Learning Solutions

$  4,120

$  4,255

$  10,886

$  11,341

Professional & Technical Services

1,530

1,874

4,335

5,209

Sandy Training & Marketing

975

1,078

2,797

3,286

Performance Readiness Group

907

556

1,802

2,007

Energy Services

2,673

1,276

5,992

4,483

Gain (loss) on change in fair value of

contingent consideration, net

135

(792)

427

(863)

Total operating income

$  10,340

$  8,247

$  26,239

$  25,463



Supplemental Cash Flow Information:



Net cash provided by operating activities

$  4,770

$  12,596

$  10,249

$  17,000

Capital expenditures

(2,447)

(688)

(4,608)

(2,155)

Free cash flow

$  2,323

$  11,908

$   5,641

$   14,845


GP STRATEGIES CORPORATION AND SUBSIDIARIES

Non-GAAP Reconciliation – EBITDA (2)

(In thousands)

(Unaudited)


Quarters ended

Nine months ended

September 30,

September 30,




2013

2012

2013

2012

Net income (3)

$  6,143

$  6,183

$ 16,315

$ 16,551

Interest expense

90

75

256

175

Income tax expense

4,111

2,061

9,994

8,999

Depreciation and amortization

2,305

2,114

6,255

5,920

EBITDA

$  12,649

$  10,433

$ 32,820

$ 31,645


(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 a $1,602,000 income tax benefit on the reduction of an uncertain tax position liability during the third quarter of 2012.

GP STRATEGIES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)





September 30,

December 31,

2013

2012

(Unaudited)

Current assets:




   Cash and cash equivalents

$       4,373

$       7,761

   Accounts and other receivables

84,101

83,597

   Costs and estimated earnings in excess of

billings on uncompleted contracts

26,916

16,979

   Prepaid expenses and other current assets

13,385

10,143

      Total current assets

128,775

118,480

Property, plant and equipment, net

8,219

5,511

Goodwill and other intangibles, net

133,194

118,693

Other assets

1,548

1,750

      Total assets

$ 271,736

$   244,434






Current liabilities:




   Short-term borrowings

$       4,820

$              --

Accounts payable and accrued expenses

51,499

47,457

   Billings in excess of costs and estimated

earnings on uncompleted contracts    


21,282

21,877

      Total current liabilities

77,601

69,334

Other noncurrent liabilities

8,817

7,763

      Total liabilities

86,418

77,097

Total stockholders' equity

185,318

167,337

      Total liabilities and stockholders' equity

$ 271,736

$   244,434

© 2013 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