EX-99.1 2 gpstrategiesearningspressr.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1



NEWS RELEASE
image1a02a12.jpg

GP Strategies Reports Second Quarter 2017 Financial Results

Columbia, MD. July 27, 2017. Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter ended June 30, 2017.
Overview:
•
Revenue of $131.2 million for second quarter of 2017, an increase from $125.5 million for second quarter of 2016
•
Operating income of $9.1 million for second quarter of 2017, an increase from $8.2 million for second quarter of 2016
•
Diluted earnings per share of $0.35 for second quarter of 2017, an increase from $0.29 per share for second quarter of 2016
•
Cash flow from operations of $19.8 million for the six months ended June 30, 2017, an increase from $10.0 million for the same period in 2016

The Company's revenue increased $5.6 million or 4% during the second quarter of 2017 compared to the same quarter in 2016. The revenue growth was primarily attributable to a 22% increase in the Performance Readiness Solutions segment, due to both acquisitions and organic growth, as well as organic growth in both the Learning Solutions and Sandy Training & Marketing segments due to increased training services. Foreign currency exchange rate declines resulted in a total $3.2 million or 3% decrease in U.S. dollar reported revenue during the second quarter of 2017.

Gross profit increased $2.1 million or 10% to $22.4 million or 17% of revenue for the second quarter of 2017 compared to $20.3 million or 16% of revenue for the second quarter of 2016. Operating income increased 12% to $9.1 million for the second quarter of 2017 from $8.2 million for the second quarter of 2016. Income before income taxes was $8.5 million for the second quarter of 2017 compared to $8.0 million for the second quarter of 2016. Income tax expense decreased to $2.6 million, or a 31% effective tax rate, for the second quarter of 2017 compared to $3.1 million or a 38% effective tax rate, for the second quarter of 2016. Net income was $5.9 million, or $0.35 per share, for the second quarter of 2017 compared to $4.9 million, or $0.29 per share, for the second quarter of 2016.

"GP Strategies reported second quarter 2017 EBITDA of $10.8 million compared to $10.0 million for the corresponding quarter in 2016" stated Scott N. Greenberg, Chief Executive Officer. "The Company achieved this 7% increase in EBITDA while incurring approximately $1.1 million of financial system implementation costs during the quarter. In addition, all of our operating segments reported increased gross margins during the second quarter of 2017 compared to the same quarter in 2016. The Company accomplished this solid performance despite a $3.2 million decline in U.S.

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dollar reported revenue from foreign currency fluctuations. GP Strategies continued its acquisition strategy and in April completed the acquisition of Emantras, which is based in India and strengthens our eLearning content development capabilities. We are currently evaluating additional acquisition opportunities.”

Balance Sheet and Cash Flow Highlights
As of June 30, 2017, the Company had cash and cash equivalents of $23.7 million compared to $16.3 million as of December 31, 2016. The Company had $34.0 million of long-term debt outstanding as of June 30, 2017. In addition, the Company had $24.5 million of short-term borrowings outstanding and $70.1 million of available borrowings under its line of credit as of June 30, 2017.

Cash provided by operating activities was $19.8 million for the six months ended June 30, 2017 compared to $10.0 million for the same period in 2016. During the six months ended June 30, 2017 and 2016, the Company repurchased approximately 101,000 and 340,000 shares, respectively, of its common stock in the open market for a total cost of approximately $2.4 million and $8.0 million, respectively. As of June 30, 2017, there was approximately $3.6 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 27, 2017. 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 800-954-0683 or 415-226-5357, using conference ID number 21856255. A telephone replay of the call will also be available beginning at 12:00 p.m. on July 27th, until 12:00 p.m. on August 10th. To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21856255. 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) and free cash flow (cash flow from operating activities less capital expenditures). The Company believes these non-GAAP financial measures are useful to investors in evaluating the Company’s results. These measures 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 these measures 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.


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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

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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,
 
 
 
 
 
 
2017
2016
2017
2016
 
 
 
 
 
Revenue
$
131,161

$
125,542

$
253,608

$
241,298

Cost of revenue
108,726

105,198

211,785

203,027

Gross profit
22,435

20,344

41,823

38,271

Selling, general and administrative expenses
13,238

12,279

26,232

24,249

Gain (loss) on change in fair value of
contingent consideration, net
(96
)
88

101

(71
)
Operating income
9,101

8,153

15,692

13,951

Interest expense
534

359

972

604

Other income (expense)
(107
)
175

(182
)
629

   Income before income tax expense
8,460

7,969

14,538

13,976

Income tax expense
2,597

3,056

4,589

5,263

Net income
$
5,863

$
4,913

$
9,949

$
8,713

 
 
 
 
 

Basic weighted average shares outstanding
16,717

16,677

16,729

16,718

Diluted weighted average shares outstanding
16,833

16,768

16,837

16,799


Per common share data:
 
 
 
 
Basic earnings per share
$
0.35

$
0.29

$
0.59

$
0.52

Diluted earnings per share
$
0.35

$
0.29

$
0.59

$
0.52

 
 
 
 
 
Other data:
 
 
 
 
EBITDA(1)
$
10,757

$
10,038

$
18,716

$
18,055


(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.

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GP STRATEGIES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands)
(Unaudited)
 
Quarters ended
Six months ended
June 30,
June 30,
 
 
 
 
 
 
2017
2016
2017
2016
Revenue by segment:
 
 
 
 
Learning Solutions
$
53,403

$
52,706

$
103,149

$
102,612

Professional & Technical Services
25,652

26,024

50,961

51,853

Sandy Training & Marketing
28,363

27,374

52,964

49,198

Performance Readiness Solutions
23,743

19,438

46,534

37,635

Total revenue
$
131,161

$
125,542

$
253,608

$
241,298

Gross profit by segment:
 
 
 
 
Learning Solutions
$
10,108

$
9,572

$
18,864

$
19,276

Professional & Technical Services
4,137

4,106

8,736

7,990

Sandy Training & Marketing
4,075

3,830

6,951

6,281

Performance Readiness Solutions
4,115

2,836

7,272

4,724

Total gross profit
$
22,435

$
20,344

$
41,823

$
38,271

Supplemental Cash Flow Information:
 
 
 
 
Net cash provided by operating activities
$
15,640

$
1,419

$
19,758

9,982

Capital expenditures
(1,244
)
(347
)
(1,769)

(922)

Free cash flow
$
14,396

$
1,072

$
17,989

9,060




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GP STRATEGIES CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliation – EBITDA (2) 
(In thousands)
(Unaudited)



Quarters ended
Six months ended
June 30,
June 30,
 
 
 
 
 
 
2017
2016
2017
2016
Net income
$
5,863

$
4,913

$
9,949

$
8,713

Interest expense
534

359

972

604

Income tax expense
2,597

3,056

4,589

5,263

Depreciation and amortization
1,763

1,710

3,206

3,475

EBITDA
$
10,757

$
10,038

$
18,716

$
18,055


(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.




 


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GP STRATEGIES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
 
 
 
 
 
 
June 30,
 
December 31,
 
 
2017
 
2016
 
 
(Unaudited)
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
 
$
23,714

 
$
16,346

 
Accounts and other receivables
 
99,588

 
105,549

 
   Costs and estimated earnings in excess of
billings on uncompleted contracts
 
45,513

 
39,318

 
Prepaid expenses and other current assets
 
13,325

 
11,481

 
Total current assets
 
182,140

 
172,694

 
Property, plant and equipment, net
 
5,354

 
4,547

 
Goodwill and other intangible assets, net
 
147,090

 
133,597

 
Other assets
 
6,905

 
4,763

 
Total assets
 
$
341,489

 
$
315,601

 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Short-term borrowings
 
$
24,483

 
$
17,694

 
 Current portion of long-term debt
 
12,000

 
12,000

 
Accounts payable and accrued expenses
 
72,260

 
64,596

 
   Billings in excess of costs and estimated
earnings on uncompleted contracts
 
18,605

 
18,545

 
Total current liabilities
 
127,348

 
112,835

 
Long-term debt
 
22,000

 
28,000

 
Other noncurrent liabilities
 
9,614

 
7,270

 
Total liabilities
 
158,962

 
148,105

 
Total stockholders’ equity
 
182,527

 
167,496

 
Total liabilities and stockholders’ equity
 
$
341,489

 
$
315,601

 



© 2017 GP Strategies Corporation. All rights reserved. GP Strategies and the GP Strategies logo design are trademarks of GP Strategies Corporation.

# # # #

C O N T A C T S:
    
Scott N. Greenberg
 
Sharon Esposito-Mayer
 
Ann M. Blank
Chief Executive Officer
 
Chief Financial Officer
 
Investor Relations
443-367-9640
 
443-367-9636
 
443-367-9925


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