GP STRATEGIES CORPORATION COLUMBIA, Md., Oct. 29, 2015 /PRNewswire/ -- Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter ended September 30, 2015.
Overview:
-- Revenue of $122.9 million for third quarter of 2015 compared to $123.9
million for third quarter of 2014; foreign exchange adversely impacted
revenue by $2.8 million in the third quarter of 2015
-- Diluted earnings per share of $0.22 for third quarter of 2015, inclusive
of $0.04 per share of restructuring charges and $0.04 per share of
foreign currency losses and negative foreign currency translation
impact, compared to $0.37 per share for third quarter of 2014
-- Successfully implementing cost reduction plan; estimated to result in
approximately $10 million of annualized cost savings, net of additional
investments in key initiatives
The Company's revenue decreased $0.9 million or 1% during the third quarter of 2015 compared to the third quarter of 2014. The revenue decline is largely attributable to a $4.5 million decrease in the Company's non-core alternative fuels business due to project completions in 2014 and a $2.8 million negative effect of foreign currency exchange rate changes on U.S. dollar reported revenue during the third quarter of 2015 compared to the third quarter in 2014. Excluding both of these items, the Company's revenue increased 5% or $6.3 million. The Sandy Training & Marketing segment reported 39% revenue growth and the Learning Solutions segment reported 9% revenue growth excluding the negative effect of foreign exchange rates in the third quarter. This growth was partially offset by a $3.6 million or 16% revenue decline in the Performance Readiness Solutions segment.
Operating income declined $4.4 million to $6.9 million for the third quarter of 2015 from $11.3 million for the third quarter of 2014. The decrease in operating income is primarily due to a $2.1 million decline in gross profit during the quarter, largely due to the completion of alternative fuels projects in 2014, and $1.2 million of restructuring charges, primarily consisting of severance expense in connection with the implementation of a cost savings initiative to better align costs with revenues and improve operating margins. The Company estimates that its cost savings initiative will result in approximately $10 million of annualized cost reductions, net of additional investments in key initiatives. Also contributing to a decline in operating income was a $0.8 million increase in medical benefits expense during the third quarter. Operating income for the third quarter of 2015 also includes a $0.1 million loss on the change in fair value of contingent consideration for previously completed acquisitions compared to a gain of $0.7 million for the third quarter of 2014. Income before income taxes was $5.9 million for the third quarter of 2015 compared to $11.1 million for the third quarter of 2014. Foreign currency rate fluctuations adversely impacted pre-tax income by $1.1 million and earnings by $0.04 per share during the third quarter of 2015. Net income was $3.7 million, or $0.22 per diluted share, for the third quarter of 2015 compared to $7.2 million, or $0.37 per diluted share, for the third quarter of 2014.
"Our third quarter results reflect both successes and challenges," commented Scott N. Greenberg, Chief Executive Officer of GP Strategies. "GP Strategies continued to achieve organic growth in its core business, including a significant increase in profit margin in the Learning Solutions segment. We accomplished this despite the continued negative impact of foreign currency fluctuations on our reported results and lower revenue in our non-core alternative fuels business. In addition, we are effectively implementing our previously announced cost cutting initiative which we anticipate will contribute positively to our operating results beginning in the fourth quarter. We continue to be optimistic about the future and are starting to see some opportunities from our past investments in global initiatives. We are also hiring new business leaders to further grow our international operations, and are looking for acquisitions, returning to a strategy which has contributed positively to GP Strategies' growth over the years."
Balance Sheet and Cash Flow Highlights
As of September 30, 2015, the Company had cash and cash equivalents of $13.6 million compared to $14.5 million as of December 31, 2014. The Company had $27.8 million of long-term debt outstanding as of September 30, 2015. In addition, the Company had $32.9 million of short-term borrowings outstanding and $31.5 million of available borrowings under its line of credit as of September 30, 2015.
Cash provided by operating activities was $9.5 million for the nine months ended September 30, 2015 compared to $16.7 million for the same period in 2014. During the three and nine months ended September 30, 2015, the Company repurchased approximately 222,000 and 255,000 shares, respectively, of its common stock in the open market for a total cost of approximately $5.5 million and $6.6 million, respectively. As of September 30, 2015, there was approximately $8.4 million available for future repurchases under the buyback program.
Investor Call
The Company has scheduled an investor conference call for 10:00 a.m. EDT on October 29, 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 888-222-1517 or 303-223-2683, using conference ID number 21783582. A telephone replay of the call will also be available beginning at 12:00 p.m. on October 29(th), until 12:00 p.m. on November 12(th). To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21783582. 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 that EBITDA 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 EBITDA 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,
------------- -------------
2015 2014 2015 2014
---- ---- ---- ----
Revenue $122,931 $123,869 $363,849 $376,667
Cost of revenue 102,562 101,351 304,269 311,027
------- ------- ------- -------
Gross profit 20,369 22,518 59,580 65,640
Selling, general and administrative expenses 12,253 11,863 35,859 34,914
Restructuring charges 1,195 - 1,195 -
Gain (loss) on change in fair value of (56) 655 (314) 1,513
contingent consideration, net
Operating income 6,865 11,310 22,212 32,239
Interest expense 340 117 1,011 399
Other income (expense) (606) (72) (1,141) 185
Income before income tax expense 5,919 11,121 20,060 32,025
Income tax expense 2,203 3,877 7,523 12,351
Net income $3,716 $7,244 $12,537 $19,674
====== ====== ======= =======
17,117 19,131 17,151 19,138
Basic weighted average shares outstanding
Diluted weighted average shares outstanding 17,272 19,391 17,313 19,409
Per common share data:
Basic earnings per share $0.22 $0.38 $0.73 $1.03
Diluted earnings per share $0.22 $0.37 $0.72 $1.01
Other data:
EBITDA(1) $8,221 $13,764 $27,085 $39,901
(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,
------------- -------------
2015 2014 2015 2014
---- ---- ---- ----
Revenue by segment:
Learning Solutions (2) $51,879 $49,638 $154,463 $143,578
Professional & Technical Services (2) 30,354 36,138 90,317 118,364
Sandy Training & Marketing 22,115 15,883 62,043 50,364
Performance Readiness Solutions (2) 18,583 22,210 57,026 64,361
Total revenue $122,931 $123,869 $363,849 $376,667
======== ======== ======== ========
Gross profit by segment:
Learning Solutions (2) $9,808 $8,384 $26,542 $22,214
Professional & Technical Services (2) 5,527 7,384 17,769 26,099
Sandy Training & Marketing 2,470 2,519 7,873 7,727
Performance Readiness Solutions (2) 2,564 4,231 7,396 9,600
Total gross profit $20,369 $22,518 $59,580 $65,640
======= ======= ======= =======
Operating income by segment:
Learning Solutions (2) $4,815 $3,300 $11,637 $8,049
Professional & Technical Services (2) 2,731 4,426 9,716 16,577
Sandy Training & Marketing 150 1,023 1,481 3,204
Performance Readiness Solutions (2) 420 1,906 887 2,896
Restructuring charges 1,195 - 1,195 -
Gain (loss) on change in fair value of (56) 655 (314) 1,513
contingent consideration, net
---
Total operating income $6,865 $11,310 $22,212 $32,239
====== ======= ======= =======
Supplemental Cash Flow Information:
Net cash provided by operating activities $6,403 $18,581 $9,528 16,664
Capital expenditures (481) (871) (1,831) (2,315)
---- ---- ------ ------
Free cash flow $5,922 $17,710 $7,697 14,349
====== ======= ====== ======
(2) Effective January 1, 2015, the
Company made changes to its
organizational structure and
transferred the management
responsibility of certain
business units between segments,
which changed the composition of
certain of its operating
segments. The changes primarily
consisted of: (i) the Energy
Services group became part of the
Professional & Technical Services
segment; (ii) certain business
units providing leadership
development offerings were
transferred from the Learning
Solutions segment to the
Performance Readiness Solutions
segment, (iii) a business unit
which predominantly provides
content development services to
U.S. government and commercial
clients transferred from the
Professional & Technical Services
segment to the Performance
Readiness solutions segment; and
(iv) two business units providing
engineering and technical
services in Europe were
transferred from the Learning
Solutions segment to the
Professional & Technical Services
segment. The Company
reclassified the segment
financial information above for
the prior year period to reflect
these changes and conform to the
current year's presentation.
GP STRATEGIES CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliation - EBITDA (3)
(In thousands)
(Unaudited)
Nine months ended
Quarters ended
September 30, September 30,
------------- -------------
2015 2014 2015 2014
---- ---- ---- ----
Net income $3,716 $7,244 $12,537 $19,674
Interest expense 340 117 1,011 399
Income tax expense 2,203 3,877 7,523 12,351
Depreciation and
amortization 1,962 2,526 6,014 7,477
EBITDA $8,221 $13,764 $27,085 $39,901
====== ======= ======= =======
(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 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.
GP STRATEGIES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
2015 2014
---- ----
(Unaudited)
Current assets:
Cash and cash equivalents $13,631 $14,541
Accounts and other receivables 99,516 99,638
Costs and estimated earnings in excess
of 39,301 30,211
billings on uncompleted contracts
Prepaid expenses and other current
assets 16,308 15,967
------ ------
Total current assets 168,756 160,357
Property, plant and equipment, net 6,751 7,864
Goodwill and other intangibles, net 130,375 136,292
Other assets 1,039 939
----- ---
Total assets $306,921 $305,452
======== ========
Current liabilities:
Short-term borrowings $32,907 $20,799
Current portion of long-term debt 13,333 13,333
Accounts payable and accrued expenses 60,746 59,018
Billings in excess of costs and
estimated 16,476 23,670
earnings on uncompleted contracts
Total current liabilities 123,462 116,820
Long term debt 14,444 24,444
Other noncurrent liabilities 10,778 12,463
------ ------
Total liabilities 148,684 153,727
Total stockholders' equity 158,237 151,725
------- -------
Total liabilities and stockholders'
equity $306,921 $305,452
======== ========
© 2015 GP Strategies Corporation. All rights reserved. GP Strategies and the GP Strategies logo design are trademarks of GP Strategies Corporation.
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