COLUMBIA, Md., Aug. 7, 2020 /PRNewswire/ -- Global performance
improvement solutions provider GP Strategies
Corporation (NYSE: GPX) today reported financial results
for the quarter ended June 30, 2020.
Overview:
- Cash flow from operations of $22.9
million for second quarter of 2020 compared to cash used in
operations of $3.7 million for second
quarter of 2019
- Reduced long term-debt balance by $25.2
million to $57.7 million as of
June 30, 2020 compared to
$82.9 million as of December 31, 2019
- Revenue of $106.1 million for
second quarter of 2020 compared to $149.4
million for second quarter of 2019
- Gross profit of $15.9 million, or
15.0% of revenue, for second quarter of 2020 compared to
$23.0 million, or 15.4%, for second
quarter of 2019
- Diluted loss per share of $(0.04)
for second quarter of 2020 compared to earnings of $0.19 per share for second quarter of 2019
- Backlog of $327.0 million as of
June 30, 2020 compared to
$330.5 million as of June 30, 2019
"We continue to navigate through these unprecedented times and
have taken swift and strategic actions, reducing leverage and
lowering expenses, establishing a strong foundation to ensure our
long-term success," stated Adam
Stedham, Chief Executive Officer & President of GP
Strategies. "Clearly the second quarter was a challenge, but
we delivered Adjusted EBITDA of $6.0
million, an increase of 75% compared to the first quarter of
2020. We expect our revenue to increase sequentially for the third
and fourth quarters of the year, and Adjusted EBITDA for the second
half of 2020 to improve compared to the first half."
"We are successfully transitioning multiple programs to virtual
modalities. In addition, we are beginning to see face-to-face
training activities reschedule. The rate of marketplace adoption of
virtual learning, remote performance support and e-learning creates
significant opportunities for the Company to increase revenues from
our current levels," concluded Mr. Stedham.
The Company's revenue decreased $43.3
million, or 29.0%, to $106.1
million for the second quarter of 2020 from $149.4 million in the second quarter of 2019.
Revenue in the Workforce Excellence segment decreased $18.1 million, or 21.6%, and revenue in the
Business Transformation Services segment decreased $25.2 million, or 38.4%.
The Company's revenue decline was primarily due to the impact of
COVID-19 as a result of the postponement of certain training events
and other delays in client projects. In addition, our revenue
decreased $4.6 million during the
second quarter of 2020 due to discontinued revenue streams from the
sale of our alternative fuels division on January 1, 2020 and the sale of our tuition
program management business on October 1,
2019. Foreign currency exchange rate changes also resulted
in a total $1.8 million decrease in
U.S. dollar reported revenue during the second quarter of 2020.
The Company had an operating loss of $1.0
million for the second quarter of 2020, a $7.1 million decrease compared to operating
income of $6.1 million for the second
quarter of 2019. The decline is primarily due to a gross profit
decrease of $7.1 million, or 30.8%,
due to the decreased revenues. In addition, the Company incurred
$2.4 million of severance expense
during the second quarter of 2020, of which $2.1 million is included in cost of revenue and
$0.3 million is included in general
and administrative expenses on the condensed consolidated statement
of operations.
Net loss was $0.6 million, or
$(0.04) per share, for the second
quarter of 2020 compared to net income of $3.2 million, or $0.19 per share, for the second quarter of 2019.
After accounting for special items, which are set forth in the
Non-GAAP Reconciliation - Adjusted EPS below, Adjusted EPS was
$0.12 for the second quarter of 2020
compared to $0.22 for the second
quarter of 2019.
Balance Sheet and Cash Flow Highlights
As of June 30, 2020, the Company had cash of $12.1 million compared to $8.2 million as of December 31, 2019. The
Company had $57.7 million of
long-term debt outstanding as of June 30, 2020 under its
revolving credit facility compared to $82.9
million outstanding as of December 31, 2019. Cash
provided by operating activities was $32.8
million for the six months ended June 30, 2020 compared
to cash used in operating activities of $6.3 million for the same period in 2019.
Investor Call
The Company has scheduled an investor conference call and
webcast for 8:30 a.m. Eastern Time on
Friday, August 7, 2020. Prepared remarks regarding the
company's financial and operational results will be followed by a
question and answer period with GP Strategies' executive management
team. The conference call may be accessed via webcast at:
https://services.choruscall.com/links/gpx200807.html or
by calling +1 (833) 535-2204 within the US, or +(412) 902-6747
internationally, and requesting the "GP Strategies Conference." The
presentation slides broadcast via the webcast will also be
available on the Investors section of GP Strategies' website the
morning of the call. Participants must be logged in via telephone
to submit a question to management during the
call. Participants may optionally pre-register for the webcast
at http://dpregister.com/10146928.
The webcast will be archived on the Investors section of GP
Strategies' website and will remain available for 90 days.
Alternatively, a telephonic replay of the conference call will be
available for one week and may be accessed by dialing +1 (877)
344-7529 in the US, or +1 (412) 317-0088 internationally, and
requesting conference number 10146928.
Presentation of Non-GAAP Information
This press release contains non-GAAP financial measures,
including Adjusted EBITDA (earnings before interest, income taxes,
depreciation and amortization), Adjusted Earnings per Diluted Share
(Adjusted EPS), 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 Adjusted EBITDA and Adjusted EPS to the most comparable
GAAP equivalents, see the Non-GAAP Reconciliations, 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,
digital learning 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, including statements about the anticipated
effects of the COVID-19 pandemic and related events on our business
and results of operations. 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,
including the impact of the COVID-19 pandemic and related events
that are beyond our control. 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,
|
|
|
|
|
|
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
Revenue
|
$
|
106,144
|
|
$
|
149,413
|
|
$
|
234,425
|
|
$
|
288,886
|
|
Cost of
revenue
|
90,247
|
|
126,454
|
|
200,914
|
|
244,649
|
|
Gross
profit
|
15,897
|
|
22,959
|
|
33,511
|
|
44,237
|
|
General and
administrative expenses
|
14,180
|
|
15,402
|
|
31,464
|
|
31,529
|
|
Sales and marketing
expenses
|
1,857
|
|
1,906
|
|
3,696
|
|
3,895
|
|
Restructuring
charges
|
855
|
|
182
|
|
855
|
|
1,301
|
|
Gain on change in
fair value of contingent
consideration, net
|
—
|
|
627
|
|
—
|
|
677
|
|
Gain on sale of
business
|
—
|
|
—
|
|
1,064
|
|
—
|
|
Operating income
(loss)
|
(995)
|
|
6,096
|
|
(1,440)
|
|
8,189
|
|
Interest
expense
|
607
|
|
1,679
|
|
1,585
|
|
3,277
|
|
Other income
(expense)
|
(189)
|
|
102
|
|
(689)
|
|
88
|
|
Income
(loss) before income tax expense
|
(1,791)
|
|
4,519
|
|
(3,714)
|
|
5,000
|
|
Income tax expense
(benefit)
|
(1,185)
|
|
1,300
|
|
(1,814)
|
|
1,447
|
|
Net income
(loss)
|
$
|
(606)
|
|
$
|
3,219
|
|
$
|
(1,900)
|
|
$
|
3,553
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
17,144
|
|
16,747
|
|
17,113
|
|
16,710
|
|
Diluted weighted
average shares outstanding
|
17,207
|
|
16,780
|
|
17,162
|
|
16,741
|
|
Per common share
data:
|
|
|
|
|
Basic earnings (loss)
per share
|
$
|
(0.04)
|
|
$
|
0.19
|
|
$
|
(0.11)
|
|
$
|
0.21
|
|
Diluted earnings
(loss) per share
|
$
|
(0.04)
|
|
$
|
0.19
|
|
$
|
(0.11)
|
|
$
|
0.21
|
|
|
|
|
|
|
Other
data:
|
|
|
|
|
Adjusted
EBITDA(1)
|
$
|
5,984
|
|
$
|
10,435
|
|
$
|
9,408
|
|
$
|
19,206
|
|
Adjusted EPS
(1)
|
$
|
0.12
|
|
$
|
0.22
|
|
$
|
0.09
|
|
$
|
0.37
|
|
|
|
(1)
|
The terms Adjusted
EBITDA and Adjusted EPS are non-GAAP financial measures that the
Company believes are useful to investors in evaluating its results.
For a reconciliation of these non-GAAP financial measures to the
most comparable GAAP equivalent, see the Non-GAAP Reconciliations,
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,
|
|
|
|
|
|
|
2020
|
2019
|
2020
|
2019
|
Revenue by segment
(2):
|
|
|
|
|
Workforce
Excellence
|
$
|
65,811
|
|
$
|
83,903
|
|
$
|
140,189
|
|
$
|
165,381
|
|
Business
Transformation Services
|
40,333
|
|
65,510
|
|
94,236
|
|
123,505
|
|
Total
revenue
|
$
|
106,144
|
|
$
|
149,413
|
|
$
|
234,425
|
|
$
|
288,886
|
|
Gross profit by
segment (2):
|
|
|
|
|
Workforce
Excellence
|
$
|
11,402
|
|
$
|
13,763
|
|
$
|
22,895
|
|
$
|
27,218
|
|
Business
Transformation Services
|
4,495
|
|
9,196
|
|
10,616
|
|
17,019
|
|
Total gross
profit
|
$
|
15,897
|
|
$
|
22,959
|
|
$
|
33,511
|
|
$
|
44,237
|
|
Supplemental Cash
Flow Information:
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$
|
22,918
|
|
$
|
(3,698)
|
|
$
|
32,765
|
|
$
|
(6,303)
|
|
Capital
expenditures
|
(579)
|
|
(485)
|
|
(1,046)
|
|
(1,027)
|
|
Free cash
flow
|
$
|
22,339
|
|
$
|
(4,183)
|
|
$
|
31,719
|
|
$
|
(7,330)
|
|
|
|
(2)
|
Effective January 1,
2020, we transferred the management responsibility of certain
business units between the two operating segments, primarily the
management of the Company's UK apprenticeship training business to
the Business Transformation Services segment, and the management of
the platform adoption services business to the Workforce Excellence
segment. We have reclassified the segment financial information
herein for the prior year periods to reflect the changes in our
segment reporting and conform to the current year's
presentation.
|
GP STRATEGIES
CORPORATION AND SUBSIDIARIES
|
Non-GAAP
Reconciliation – Adjusted EBITDA (3)
|
(In
thousands)
|
(Unaudited)
|
|
|
Quarters
ended
|
Six Months
Ended
|
June 30,
|
June 30,
|
|
|
|
|
|
|
2020
|
2019
|
2020
|
2019
|
Net income
(loss)
|
$
|
(606)
|
|
$
|
3,219
|
|
$
|
(1,900)
|
|
$
|
3,553
|
|
Interest
expense
|
607
|
|
1,679
|
|
1,585
|
|
3,277
|
|
Income tax expense
(benefit)
|
(1,185)
|
|
1,300
|
|
(1,814)
|
|
1,447
|
|
Depreciation and
amortization
|
2,077
|
|
2,316
|
|
4,254
|
|
4,657
|
|
EBITDA
|
893
|
|
8,514
|
|
2,125
|
|
12,934
|
|
Adjustments:
|
|
|
|
|
Non-cash stock
compensation expense
|
1,536
|
|
1,330
|
|
2,792
|
|
2,419
|
|
Restructuring
charges
|
855
|
|
182
|
|
855
|
|
1,301
|
|
Severance
expense
|
2,354
|
|
—
|
|
2,565
|
|
1,011
|
|
Gain on change in
fair value of contingent consideration, net
|
—
|
|
(627)
|
|
—
|
|
(677)
|
|
ERP implementation
costs
|
—
|
|
464
|
|
—
|
|
1,148
|
|
Foreign currency
transaction losses
|
346
|
|
207
|
|
842
|
|
552
|
|
Legal acquisition and
transaction costs
|
—
|
|
365
|
|
1,038
|
|
518
|
|
Impairment of
operating lease right-of-use asset
|
—
|
|
—
|
|
255
|
|
—
|
|
Gain on sale of
business
|
—
|
|
—
|
|
(1,064)
|
|
—
|
|
Adjusted
EBITDA
|
$
|
5,984
|
|
$
|
10,435
|
|
$
|
9,408
|
|
$
|
19,206
|
|
|
|
(3)
|
Adjusted earnings
before interest, income taxes, depreciation and amortization
(Adjusted 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.
Adjusted EBITDA is calculated by adding back to net income interest
expense, income tax expense, depreciation and amortization,
non-cash stock compensation expense, gain or loss on the change in
fair value of contingent consideration and other unusual or
infrequently occurring items. For the periods presented, these
other items are restructuring charges, severance expense, ERP
implementation costs, foreign currency transaction losses, legal
acquisition and transaction costs, impairment of operating lease
right-of-use asset, and gain on sale of business. Adjusted 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
Adjusted 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
|
Non-GAAP
Reconciliation – Adjusted EPS (4)
|
(Unaudited)
|
|
|
Quarters
ended
|
Six Months
Ended
|
June 30,
|
June 30,
|
|
|
|
|
|
|
2020
|
2019
|
2020
|
2019
|
Diluted earnings per
share
|
$
|
(0.04)
|
|
$
|
0.19
|
|
$
|
(0.11)
|
|
$
|
0.21
|
|
Restructuring
charges
|
0.04
|
|
0.01
|
|
0.04
|
|
0.06
|
|
Severance
expense
|
0.10
|
|
—
|
|
0.11
|
|
0.04
|
|
Gain on change in
fair value of contingent consideration, net
|
—
|
|
(0.03)
|
|
—
|
|
(0.03)
|
|
ERP implementation
costs
|
—
|
|
0.02
|
|
—
|
|
0.05
|
|
Foreign currency
transaction losses
|
0.01
|
|
0.01
|
|
0.03
|
|
0.02
|
|
Legal acquisition and
transaction costs
|
—
|
|
0.02
|
|
0.04
|
|
0.02
|
|
Impairment of
operating lease right-of-use asset
|
—
|
|
—
|
|
0.01
|
|
—
|
|
Settlement of
contingent consideration in shares
|
0.01
|
|
—
|
|
0.01
|
|
—
|
|
Gain on sale of
business
|
—
|
|
—
|
|
(0.04)
|
|
—
|
|
Adjusted
EPS
|
$
|
0.12
|
|
$
|
0.22
|
|
$
|
0.09
|
|
$
|
0.37
|
|
|
|
(4)
|
Adjusted Earnings per
Diluted Share ("Adjusted EPS"), which is a non-GAAP financial
measure, is defined as earnings per diluted share excluding the
gain or loss on the change in fair value of acquisition-related
contingent consideration and special charges, such as
restructuring, and other unusual or infrequently occurring items of
income or expense. Management uses Adjusted EPS to assess total
Company operating performance on a consistent basis. We believe
that this non-GAAP financial measure, which excludes the gain on
change in fair value of acquisition-related contingent
consideration and other special charges, when considered together
with our GAAP financial results, provides management and investors
with an additional understanding of our business operating results,
including underlying trends.
|
GP STRATEGIES
CORPORATION AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2020
|
|
2019
|
|
|
(Unaudited)
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
12,097
|
|
|
$
|
8,159
|
|
|
Accounts and other
receivables
|
|
99,828
|
|
|
131,852
|
|
|
Unbilled
revenue
|
|
40,029
|
|
|
57,229
|
|
|
Prepaid expenses and
other current assets
|
|
21,272
|
|
|
19,115
|
|
|
Total current
assets
|
|
173,226
|
|
|
216,355
|
|
|
Property, plant and
equipment, net
|
|
5,393
|
|
|
5,803
|
|
|
Operating lease
right-of-use assets
|
|
23,591
|
|
|
27,251
|
|
|
Goodwill and other
intangible assets, net
|
|
179,830
|
|
|
187,907
|
|
|
Other
assets
|
|
11,670
|
|
|
11,586
|
|
|
Total
assets
|
|
$
|
393,710
|
|
|
$
|
448,902
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
72,519
|
|
|
$
|
92,332
|
|
|
Deferred
revenue
|
|
21,529
|
|
|
23,234
|
|
|
Current portion of
operating lease liabilities
|
|
6,707
|
|
|
7,871
|
|
|
Total current
liabilities
|
|
100,755
|
|
|
123,437
|
|
|
Long-term
debt
|
|
57,650
|
|
|
82,870
|
|
|
Long-term portion of
operating lease liabilities
|
|
19,824
|
|
|
22,159
|
|
|
Other noncurrent
liabilities
|
|
12,740
|
|
|
10,522
|
|
|
Total
liabilities
|
|
190,969
|
|
|
238,988
|
|
|
Total stockholders'
equity
|
|
202,741
|
|
|
209,914
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
393,710
|
|
|
$
|
448,902
|
|
|
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