GP STRATEGIES CORPORATION COLUMBIA, Md., Feb. 24, 2015 /PRNewswire/ -- Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter and fiscal year ended December 31, 2014.
Overview of Fourth Quarter 2014 Results:
-- Revenue of $125.2 million for fourth quarter of 2014 compared to $117.2
million for fourth quarter of 2013, and record revenue for full year
2014 surpassing $500 million
-- Gross profit of $23.9 million, or 19.1% of revenue, for the fourth
quarter of 2014 compared to $21.6 million, or 18.5% of revenue, for the
fourth quarter of 2013
-- Diluted earnings per share of $0.43 for fourth quarter of 2014 compared
to $0.38 per share for fourth quarter of 2013
-- Cash flow from operations of $14.3 million for fourth quarter of 2014
compared to $6.0 million in 2013
The Company's revenue increased $8.0 million or 6.8% during the fourth quarter of 2014 compared to the fourth quarter of 2013. The revenue growth is largely attributable to organic growth due to increased e-Learning content development and managed learning services under outsourcing contracts. Operating income was $11.6 million for the fourth quarter of 2014 compared to $12.1 million for the fourth quarter of 2013. Included in operating income is a net loss on the change in fair value of contingent consideration of $0.1 million in the fourth quarter of 2014 compared to a net gain of $1.2 million in the fourth quarter of 2013. Excluding the net gain (loss) on contingent consideration in both quarters, operating income increased 8.1% or $0.9 million during the fourth quarter of 2014. The improved operating income was a result of a $2.3 million or 10.7% increase in gross profit which was partially offset by a $1.4 million or 13.3% increase in SG&A expenses during the fourth quarter of 2014 primarily due to increased costs associated with the Company's global expansion to support outsourcing contracts. Net income was $7.4 million, or $0.43 per diluted share, for the fourth quarter of 2014 compared to $7.4 million, or $0.38 per diluted share, for the fourth quarter of 2013.
The Company reported revenue of $501.9 million for the year ended December 31, 2014, representing a 14.9% increase over 2013 revenue of $436.7 million. Operating income increased $5.5 million or 14.4% in 2014 to $43.9 million for the year ended December 31, 2014. Net income was $27.1 million, or $1.43 per diluted share, for the year ended December 31, 2014 compared to $23.8 million, or $1.23 per diluted share, for the year ended December 31, 2013.
"I am proud to report that GP Strategies reached a milestone of over $500 million of annual revenue for the first time in its history and finished the 2014 year with 12% organic growth," commented Scott N. Greenberg, Chief Executive Officer of GP Strategies. "The Company reported strong financial results for the fourth quarter despite a decline in alternative fuels revenues. In addition, the Company maintained its operating margins in 2014 while investing heavily in global expansion. These investments have enabled us to deliver comprehensive solutions to our customers on a global basis, which we believe differentiates GP Strategies in the training and performance improvement industry."
Balance Sheet and Cash Flow Highlights
As of December 31, 2014, the Company had cash and cash equivalents of $14.5 million compared to $5.6 million as of December 31, 2013. Cash provided by operating activities was $31.0 million for the year ended December 31, 2014 compared to $16.3 million for the year ended December 31, 2013.
On October 3, 2014, the Company completed a modified "Dutch auction" tender offer in which it repurchased 2.1 million shares of its outstanding common stock for $61.7 million, excluding fees and expenses. To fund the share repurchase, the Company used borrowings under an amended credit agreement which included a $40 million term loan, payable over three years, and additional borrowings under its revolving credit facility. As of December 31, 2014, the Company had long-term debt outstanding of $37.8 million. In addition, there were $20.8 million of short-term borrowings outstanding and $43.3 million of available borrowings under a revolving credit facility as of December 31, 2014.
Investor Call
The Company has scheduled an investor conference call for 10:00 a.m. ET on February 24, 2015. 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 800-750-5861 or 212-231-2911, using conference ID number 21762010. A telephone replay of the call will also be available beginning at 12:00 p.m. on February 24(th), until 12:00 p.m. on March 10(th). To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21762010. A replay will also be available on GP Strategies' website shortly after the conclusion of the call.
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.
GP STRATEGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Quarter ended Year ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Revenue $125,200 $117,220 $501,867 $436,689
Cost of revenue 101,265 95,592 412,292 360,424
------- ------ ------- -------
Gross profit 23,935 21,628 89,575 76,265
Selling, general and administrative expenses 12,194 10,764 47,108 39,589
Gain (loss) on change in fair value of (121) 1,249 1,392 1,676
contingent consideration, net
Operating income 11,620 12,113 43,859 38,352
Interest expense 434 110 833 366
Other income (expense) (388) 176 (203) 502
----
Income before income tax expense 10,798 12,179 42,823 38,488
Income tax expense 3,374 4,738 15,725 14,732
----- -----
Net income $7,424 $7,441 $27,098 $23,756
====== ====== ======= =======
17,166 19,144 18,641 19,103
Basic weighted average shares outstanding
Diluted weighted average shares outstanding 17,336 19,416 18,887 19,362
Per common share data:
Basic earnings per share $0.43 $0.39 $1.45 $1.24
Diluted earnings per share $0.43 $0.38 $1.43 $1.23
Other data:
EBITDA(1) $13,513 $14,651 $53,414 $47,471
(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,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Revenue by segment:
Learning Solutions $65,596 $52,676 $241,344 $189,899
Professional & Technical Services 20,649 18,357 79,574 72,577
Sandy Training & Marketing 17,330 18,638 67,694 70,699
Performance Readiness Solutions 10,470 12,391 50,924 53,882
Energy Services 11,155 15,158 62,331 49,632
------ ------ ------ ------
Total revenue $125,200 $117,220 $501,867 $436,689
======== ======== ======== ========
Gross profit by segment:
Learning Solutions $11,807 $9,542 $36,605 $33,540
Professional & Technical Services 4,400 3,126 16,041 12,320
Sandy Training & Marketing 3,176 3,453 10,903 10,748
Performance Readiness Solutions 1,359 1,994 8,054 7,515
Energy Services 3,193 3,513 17,972 12,142
----- ----- ------ ------
Total gross profit $23,935 $21,628 $89,575 $76,265
======= ======= ======= =======
Operating income by segment:
Learning Solutions $5,365 $4,324 $12,721 $15,210
Professional & Technical Services 2,521 1,475 8,905 5,810
Sandy Training & Marketing 1,525 1875 4,729 4,672
Performance Readiness Solutions 111 886 3,064 2,688
Energy Services 2,219 2,304 13,048 8,296
Gain (loss) on change in fair value of (121) 1,249 1,392 1,676
contingent consideration, net
Total operating income $11,620 $12,113 $43,859 $38,352
======= ======= ======= =======
Supplemental Cash Flow Information:
Net cash provided by operating activities $14,334 $6,004 $30,998 $16,253
Capital expenditures (442) (2,106) (2,757) (6,714)
---- ------ ------ ------
Free cash flow $13,892 $3,898 $28,241 $9,539
======= ====== ======= ======
GP STRATEGIES CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliation - EBITDA (2)
(In thousands)
(Unaudited)
Quarter ended Year ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Net income $7,424 $7,441 $27,098 $23,756
Interest expense 434 110 833 366
Income tax expense (3) 3,374 4,738 15,725 14,732
Depreciation and amortization 2,281 2,362 9,758 8,617
EBITDA $13,513 $14,651 $53,414 $47,471
======= ======= ======= =======
(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 a substitute 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) Income tax expense includes a $0.3 million benefit in the fourth quarter and $0.9 million benefit for the year ended December 31, 2014 resulting from a claim for a deduction under Internal Revenue Code
Section 199 for the Domestic Production Deduction on the Company's 2013 U.S. federal income tax return which was not taken in previous years, and similar claims it expects to make for tax years 2011 and
2012.
GP STRATEGIES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31, December 31,
2014 2013
---- ----
(Unaudited)
Current assets:
Cash and cash equivalents $14,541 $5,647
Accounts and other receivables 99,638 94,662
Costs and estimated earnings in excess of 30,211 22,706
billings on uncompleted contracts
Prepaid expenses and other current assets 15,967 13,523
------ ------
Total current assets 160,357 136,538
Property, plant and equipment, net 7,864 9,231
Goodwill and other intangibles, net 136,292 132,116
Other assets 939 2,271
--- -----
Total assets $305,452 $280,156
======== ========
Current liabilities:
Short-term borrowings $20,799 $407
Current portion of long-term debt 13,333 -
Accounts payable and accrued expenses 59,018 55,339
Billings in excess of costs and estimated 23,670 22,062
earnings on uncompleted contracts
Total current liabilities 116,820 77,808
Long-term debt 24,444 -
Other noncurrent liabilities 12,463 9,321
------ -----
Total liabilities 153,727 87,129
Total stockholders' equity 151,725 193,027
------- -------
Total liabilities and stockholders' equity $305,452 $280,156
======== ========
© 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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