GP Strategies Reports Second Quarter 2016 Financial Results

COLUMBIA, Md., July 28, 2016 /PRNewswire/ — Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter ended June 30, 2016.

Overview:

  • Revenue of $125.5 million for second quarter of 2016 compared to $125.7 million for second quarter of 2015
  • Gross profit of $20.3 million, or 16.2% of revenue, for second quarter of 2016 (which includes $0.5 million of severance costs) compared to $20.1 million, or 16.0% of revenue, for second quarter of 2015
  • Diluted earnings per share of $0.29 for second quarter of 2016 compared to $0.27 per share for second quarter of 2015
  • Cash flow from operations of $10.0 million for first half of 2016 compared to $3.1 million for first half of 2015

While the Company’s reported revenue was flat in the second quarter of 2016 compared to the second quarter of 2015, it achieved 9% revenue growth in its Sandy Training & Marketing segment and 4% revenue growth in its Learning Solutions segment during the second quarter due to an increase in training services with new and existing customers. The growth in those segments was offset by a continued downturn in the Professional & Technical Services segment and a $1.9 million decline in U.S. dollar reported revenue due to changes in foreign currency exchange rates.

Operating income increased to $8.2 million for the second quarter of 2016 from $8.0 million for the second quarter of 2015. Operating income for the second quarter of 2016 included $0.5 million, or $0.02 per share, of severance costs related to continued cost cutting measures. Income before income taxes was $8.0 million for the second quarter of 2016 compared to $7.4 million for the second quarter of 2015. Net income was $4.9 million, or $0.29 per share, for the second quarter of 2016 compared to $4.7 million, or $0.27 per share, for the second quarter of 2015.

“The second quarter of 2016 showed improved operating results compared to last year, despite the continued softness in the Professional & Technical Services segment,” stated Scott N. Greenberg, Chief Executive Officer. “Increased gross profit in the Learning Solutions segment, combined with both revenue and gross profit increases in the Sandy Training & Marketing segment, were the highlights of the quarter.  In addition, we are seeing more opportunities being generated from our global initiatives. We have also resumed our acquisition strategy and are currently evaluating  several opportunities. The continued development of our global platform positions GP Strategies as a leader in the global training and performance improvement industry.”

Balance Sheet and Cash Flow Highlights

As of June 30, 2016, the Company had cash and cash equivalents of $14.9 million compared to $21.0 million as of December 31, 2015. The Company had $17.8 million of long-term debt outstanding as of June 30, 2016.  In addition, the Company had $42.5 million of short-term borrowings outstanding and $20.0 million of available borrowings under its line of credit as of June 30, 2016.

Cash provided by operating activities was $10.0 million for the six months ended June 30, 2016 compared to $3.1 million for the same period in 2015. During the six months ended June 30, 2016 and 2015, the Company repurchased approximately 340,000 and 33,000 shares, respectively, of its common stock in the open market for a total cost of approximately $8.0 million and $1.1 million, respectively. As of June 30, 2016, there was approximately $6.1 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 July 28, 2016. 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 800-771-6759 or 212-231-2931, using conference ID number 21815530. A telephone replay of the call will also be available beginning at 12:00 p.m. on July 28th, until 12:00 p.m. on August 11th. To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21815530. 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

Six months ended

June 30,

June 30,

2016

2015

2016

2015

Revenue

$

125,542

$

125,665

$

241,298

$

240,918

Cost of revenue

105,198

105,589

203,027

201,707

Gross profit

20,344

20,076

38,271

39,211

Selling, general and administrative expenses

12,279

12,007

24,249

23,606

Gain (loss) on change in fair value of contingent consideration, net

88

(55)

(71)

(258)

Operating income

8,153

8,014

13,951

15,347

Interest expense

359

306

604

671

Other income (expense)

175

(310)

629

(535)

   Income before income tax expense

7,969

7,398

13,976

14,141

Income tax expense

3,056

2,684

5,263

5,320

Net income

$

4,913

$

4,714

$

8,713

$

8,821

Basic weighted average shares outstanding

16,677

17,178

16,718

17,169

Diluted weighted average shares outstanding

16,768

17,354

16,799

17,334

Per common share data:

Basic earnings per share

$

0.29

$

0.27

$

0.52

$

0.51

Diluted earnings per share

$

0.29

$

0.27

$

0.52

$

0.51

Other data:

EBITDA(1)

$

10,038

$

9,688

$

18,055

$

18,864

(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

Six months ended

June 30,

June 30,

2016

2015

2016

2015

Revenue by segment:

Learning Solutions

$

52,706

$

50,755

$

102,612

$

102,584

Professional & Technical Services

26,024

30,066

51,853

59,963

Sandy Training & Marketing

27,374

25,199

49,198

39,928

Performance Readiness Solutions

19,438

19,645

37,635

38,443

Total revenue

$

125,542

$

125,665

$

241,298

$

240,918

Gross profit by segment:

Learning Solutions

$

9,572

$

8,387

$

19,276

$

16,734

Professional & Technical Services

4,106

5,829

7,990

12,242

Sandy Training & Marketing

3,830

3,427

6,281

5,403

Performance Readiness Solutions

2,836

2,433

4,724

4,832

Total gross profit

$

20,344

$

20,076

$

38,271

$

39,211

Supplemental Cash Flow Information:

Net cash provided by operating activities

$

1,419

$

3,197

$

9,982

3,125

Capital expenditures

(347)

(600)

(922)

(1,350)

Free cash flow

$

1,072

$

2,597

$

9,060

1,775

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Non-GAAP Reconciliation – EBITDA (2)

(In thousands)

(Unaudited)

Quarters ended

Six months ended

June 30,

June 30,

2016

2015

2016

2015

Net income

$

4,913

$

4,714

$

8,713

$

8,821

Interest expense

359

306

604

671

Income tax expense

3,056

2,684

5,263

5,320

Depreciation and amortization

1,710

1,984

3,475

4,052

EBITDA

$

10,038

$

9,688

$

18,055

$

18,864

(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.



GP STRATEGIES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

June 30,

December 31,

2016

2015

(Unaudited)

Current assets:

Cash and cash equivalents

$

14,860

$

21,030

Accounts and other receivables

88,803

90,912

   Costs and estimated earnings in excess of
          billings on uncompleted contracts

45,621

46,061

Prepaid expenses and other current assets

10,163

9,173

Total current assets

159,447

167,176

Property, plant and equipment, net

5,401

6,245

Goodwill and other intangible assets, net

128,109

128,196

Other assets

2,913

733

Total assets

$

295,870

$

302,350

Current liabilities:

Short-term borrowings

$

42,482

$

34,084

 Current portion of long-term debt

13,333

13,333

Accounts payable and accrued expenses

55,444

61,071

   Billings in excess of costs and estimated
earnings on uncompleted contracts

15,901

18,366

Total current liabilities

127,160

126,854

Long-term debt

4,444

11,111

Other noncurrent liabilities

6,368

6,041

Total liabilities

137,972

144,006

Total stockholders’ equity

157,898

158,344

Total liabilities and stockholders’ equity

$

295,870

$

302,350

© 2016 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

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

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