GP STRATEGIES CORPORATION COLUMBIA, Md., Oct. 30, 2014 /PRNewswire/ -- Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter ended September 30, 2014.
Overview of Third Quarter 2014 Results:
-- Revenue of $123.9 million for third quarter of 2014 compared to $113.2
million for third quarter of 2013
-- Diluted earnings per share of $0.37 for third quarter of 2014 compared
to $0.32 per share for third quarter of 2013
-- EBITDA of $13.8 million for third quarter of 2014 compared to $12.6
million for third quarter of 2013
-- Completed modified "Dutch auction" tender offer on October 3, 2014 and
repurchased 2.1 million shares, or 11%, of outstanding common stock for
$61.7 million
The Company's revenue increased $10.7 million or 9.4% during the third quarter of 2014 compared to the third quarter of 2013. The revenue growth is primarily attributable to strong organic growth in the Learning Solutions segment due to new outsourcing contracts. Gross profit was $22.5 million, or 18.2% of revenue, for the third quarter of 2014 compared to $20.1 million, or 17.7% of revenue, for the third quarter of 2013. SG&A expense increased $2.0 million or 20.4% during the third quarter of 2014 largely due to increased costs associated with the Company's global expansion to support recent outsourcing contracts. Net income was $7.2 million, or $0.37 per diluted share, for the third quarter of 2014 compared to $6.1 million, or $0.32 per diluted share, for the third quarter of 2013.
"In the third quarter of 2014, GP Strategies continued on its path of organic revenue and EBITDA growth," commented Scott N. Greenberg, Chief Executive Officer of GP Strategies. "We accomplished these improved results while continuing to invest in expanding our infrastructure to support global initiatives. In addition, our successful Dutch auction tender offer, in which we repurchased 2.1 million of our outstanding common shares for $61.7 million, is expected to be accretive to earnings per share for our shareholders in future quarters."
Balance Sheet and Cash Flow Highlights
As of September 30, 2014, the Company had cash and cash equivalents of $9.1 million compared to $5.6 million as of December 31, 2013. The Company had $4.9 million of short-term borrowings outstanding and $59.3 million of available borrowings under its line of credit as of September 30, 2014. 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.
Cash provided by operating activities was $16.7 million for the nine months ended September 30, 2014 compared to $10.2 million for the same period in 2013.
Investor Call
The Company has scheduled an investor conference call for 10:00 a.m. ET on October 30, 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 800-750-5861 or 212-231-2911, using conference ID number 21737613. A telephone replay of the call will also be available beginning at 12:00 p.m. on October 30(th), until 12:00 p.m. on November 13(th). To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21737613. 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.
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,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Revenue $123,869 $113,197 $376,667 $319,469
Cost of
revenue 101,351 93,136 311,027 264,832
------- ------ ------- -------
Gross profit 22,518 20,061 65,640 54,637
Selling,
general and
administrative
expenses 11,863 9,856 34,914 28,825
Gain on change in fair
value of
contingent consideration,
net
655 135 1,513 427
--- --- ----- ---
Operating
income 11,310 10,340 32,239 26,239
Interest
expense 117 90 399 256
Other income
(expense) (72) 4 185 326
--- --- --- ---
Income before
income tax
expense 11,121 10,254 32,025 26,309
Income tax
expense 3,877 4,111 12,351 9,994
----- ----- ------ -----
Net income $7,244 $6,143 $19,674 $16,315
====== ====== ======= =======
19,125 19,089
Basic weighted average
shares outstanding
19,131 19,138
Diluted
weighted
average
shares
outstanding 19,391 19,404 19,409 19,344
Per common share data:
Basic
earnings per
share $0.38 $0.32 $1.03 $0.85
Diluted
earnings per
share $0.37 $0.32 $1.01 $0.84
Other data:
EBITDA (1) $13,764 $12,649 $39,901 $32,820
(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,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Revenue by segment:
Learning
Solutions $60,811 $49,304 $175,748 $137,223
Professional &
Technical
Services 20,226 19,157 58,925 54,220
Sandy Training &
Marketing 15,883 16,929 50,364 52,061
Performance
Readiness
Solutions 13,315 13,037 40,454 41,491
Energy Services 13,634 14,770 51,176 34,474
------ ------ ------ ------
Total revenue $123,869 $113,197 $376,667 $319,469
======== ======== ======== ========
Gross profit by segment:
Learning
Solutions $9,338 $8,629 $24,798 $23,998
Professional &
Technical
Services 4,207 3,229 11,641 9,194
Sandy Training &
Marketing 2,519 2,433 7,727 7,295
Performance
Readiness
Solutions 2,640 2,031 6,695 5,521
Energy Services 3,814 3,739 14,779 8,629
----- ----- ------ -----
Total gross
profit $22,518 $20,061 $65,640 $54,637
======= ======= ======= =======
Operating income by segment:
Learning
Solutions $3,045 $4,120 $7,356 $10,886
Professional &
Technical
Services 2,383 1,530 6,384 4,335
Sandy Training &
Marketing 1,023 975 3,204 2,797
Performance
Readiness
Solutions 1,354 907 2,953 1,802
Energy Services 2,850 2,673 10,829 5,992
Gain on change in fair
value of
contingent consideration,
net
655 135 1,513 427
--- --- ----- ---
Total operating
income $11,310 $10,340 $32,239 $26,239
======= ======= ======= =======
Supplemental Cash Flow Information:
Net cash
provided by
operating
activities $18,581 $4,770 $16,664 $10,249
Capital
expenditures (871) (2,447) (2,315) (4,608)
---- ------ ------ ------
Free cash flow $17,710 $2,323 $14,349 $5,641
======= ====== ======= ======
GP STRATEGIES CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliation - EBITDA (2)
(In thousands)
(Unaudited)
Quarters ended Nine months ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Net income $7,244 $6,143 $19,674 $16,315
Interest expense 117 90 399 256
Income tax expense
(3) 3,877 4,111 12,351 9,994
Depreciation and
amortization 2,526 2,305 7,477 6,255
EBITDA $13,764 $12,649 $39,901 $32,820
======= ======= ======= =======
(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 for the third
quarter of 2014 includes a $0.6
million income tax benefit
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. The
Company is currently evaluating
whether a deduction is available
for prior years in which the
statute of limitations is open
and may recognize an income tax
benefit in future periods.
GP STRATEGIES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2014 2013
---- ----
(Unaudited)
Current assets:
Cash and cash equivalents $9,118 $5,647
Accounts and other
receivables 89,064 94,662
Costs and estimated
earnings in excess of
billings on uncompleted
contracts
38,425 22,706
Prepaid expenses and
other current assets 16,313 13,523
------ ------
Total current assets 152,920 136,538
Property, plant and
equipment, net 8,403 9,231
Goodwill and other
intangibles, net 139,675 132,116
Other assets 1,686 2,271
----- -----
Total assets $302,684 $280,156
======== ========
Current liabilities:
Short-term borrowings $4,880 $407
Accounts payable and
accrued expenses 55,881 55,339
Billings in excess of
costs and estimated
earnings on uncompleted
contracts
18,931 22,062
------ ------
Total current liabilities 79,692 77,808
Other noncurrent
liabilities 12,640 9,321
------ -----
Total liabilities 92,332 87,129
Total stockholders'
equity 210,352 193,027
------- -------
Total liabilities and
stockholders' equity $302,684 $280,156
======== ========
(C) 2014 GP Strategies Corporation. All rights reserved. GP Strategies and the GP Strategies logo
design are trademarks of GP Strategies Corporation.
SOURCE GP Strategies Corporation
