GP Strategies Reports Fourth Quarter and Full Year 2014 Financial Results

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 24th, until 12:00 p.m. on March 10th. 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
   
contingent consideration, net

(121)

1,249

1,392

1,676

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

 

Basic weighted average shares outstanding

17,166

19,144

18,641

19,103

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
      
contingent consideration, net

(121)

1,249

1,392

1,676

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
          
billings on uncompleted contracts

30,211

22,706

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
            
earnings on uncompleted contracts

23,670

22,062

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.

GP Strategies Corporation logo

Logo – http://photos.prnewswire.com/prnh/20130502/PH05881LOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gp-strategies-reports-fourth-quarter-and-full-year-2014-financial-results-300040092.html

SOURCE GP Strategies Corporation

For further information: Scott N. Greenberg, Chief Executive Officer, 443-367-9640, or Sharon Esposito-Mayer, Chief Financial Officer, 443-367-9636, or Ann M. Blank, Investor Relations, 443-367-9925

GPS Want to Learn More Widget

Want to Learn More?

GPS Connect With Us Widget