COLUMBIA, Md., March 11, 2021 /PRNewswire/ -- Global workforce transformation solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter ended December 31, 2020.

Overview:

Income Statement Highlights:

  • Revenue of $123.1 million for the fourth quarter of 2020 compared to $115.6 million for the third quarter of 2020 and $155.4 million for the fourth quarter of 2019
  • Gross profit of $23.1 million, or 18.8% of revenue for the fourth quarter of 2020 compared to $20.7 million, or 17.9% of revenue for the third quarter of 2020 and $23.3 million, or 15.0% of revenue, for the fourth quarter of 2019 
  • Diluted earnings per share of $0.47 for the fourth quarter of 2020 compared to $0.03 per share for the third quarter of 2020 and $0.56 per share for the fourth quarter of 2019  (Adjusted EPS of $0.38 for the fourth quarter of 2020 compared to $0.24 per share for the third quarter of 2020 and $0.23 for the fourth quarter of 2019)

Balance Sheet and Cash Flow Highlights:

  • Cash and equivalents of $23.1 million at December 31, 2020 compared to $8.2 million at December 31, 2019
  • Reduced long term-debt balance by $70.2 million to $12.7 million as of December 31, 2020 compared to $82.9 million as of December 31, 2019
  • Cash flow from operations of $13.6 million for the fourth quarter of 2020 compared to $8.8 million for the fourth quarter of 2019
  • Cash flow from operations of $59.0 million for the year ended December 31, 2020 compared to $13.4 million for the year ended December 31, 2019

"We are proud of the accomplishments of the Company in 2020," stated Adam Stedham, Chief Executive Officer and President of GP Strategies. "The fourth quarter and full year results of 2020 clearly demonstrate the success of the proactive strategy we implemented early in 2020 to ensure financial stability and achieve strong operating results despite lower revenue due to the impact of the COVID-19 pandemic.  In the fourth quarter of 2020, the Company delivered a sequential increase in revenue, gross margin, adjusted earnings per share and adjusted EBITDA compared to both the second and third quarters. Additionally, our success in reducing long-term debt, and increasing cash, place the Company in a strong position to capitalize on opportunities that may arise."

The Company's revenue decline when compared to the quarter and year ended December 31, 2019 is primarily due to circumstances related to the macroeconomic impact of COVID-19, specifically the postponement of certain training events and other delays in client projects. In addition, our revenue for the quarter and year ended December 31, 2020 decreased $6.3 million and $19.3 million respectively, compared to revenue for the fourth quarter and year ended December 31, 2019 as the result of business divestitures.  Foreign currency exchange rate changes also resulted in a total $0.5 million decrease in U.S. dollar reported revenue for the year ended December 31, 2020 compared to the year ended December 31, 2019.

The Company had operating income of $12.2 million for the fourth quarter of 2020, a $3.2 million decrease compared to operating income of $15.3 million for the fourth quarter of 2019. The decline in operating income is primarily due to the gain on sale from the Company's Tuition Reimbursement Business that closed in the fourth quarter of 2019 being $7.1 million  greater than the gain on sale from the Company's IC Axon Business that closed in the fourth quarter of 2020, a gross profit decrease of $0.2 million, or 1.0%, partially offset by a $4.1 million decrease in general and administrative expenses. For the fourth quarter of 2020, the company incurred severance expense of $1.9 million which is reflected in cost of revenue on the consolidated statement of operations.

Net income was $8.4 million, or $0.47 per share, for the fourth quarter of 2020 compared to net income of $9.5 million, or $0.56 per share, for the fourth quarter of 2019. After accounting for special items, which are set forth in the Non-GAAP Reconciliation - Adjusted EPS below, Adjusted EPS was $0.38 and $0.23 for the fourth quarter of 2020 and 2019, respectively.  Net income was $7.1 million, or $0.41 per share, for the year ended December 31, 2020 compared to net income of $15.2 million, or $0.90 per share, for 2019. After accounting for special items, which are set forth in the Non-GAAP Reconciliation - Adjusted EPS below, Adjusted EPS was $0.73 and $0.84 for 2020 and 2019, respectively.

Investor Call

The Company has scheduled an investor conference call and webcast for 10:00 a.m. Eastern Time on Thursday, March 11, 2021. 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/gpx210311.html or by calling +1 (833) 535-2204 within the US, or + 1 (412) 902-6747 internationally, and requesting the "GP Strategies Call." 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 https://dpregister.com/sreg/10152663/e33e7cf2b3.

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 10152663.

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 U.S. GAAP equivalents, see the Non-GAAP Reconciliations, along with related footnotes, below.

About GP Strategies

GP Strategies Corporation (NYSE: GPX) is a global workforce transformation solutions provider of 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, automotive, financial services, technology, and other commercial and government customers.

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

Twelve Months Ended

December 31,

December 31,







2020

2019

2020

2019






Revenue

$

123,088


$

155,399


$

473,107


$

583,290


Cost of revenue

100,002


132,090


395,845


494,077


  Gross profit

23,086


23,309


77,262


89,213


General and administrative expenses

13,588


17,723


62,694


64,492


Sales and marketing expenses

1,809


2,150


7,190


7,875


Restructuring charges

532


234


1,387


1,639


Gain on change in fair value of

contingent consideration, net




677


Gain on sale of business

5,000


12,126


6,064


12,126


  Operating income

12,157


15,328


12,055


28,010


Interest expense

909


1,206


2,934


6,058


Other income (expense)

(18)


145


(511)


417


   Income before income tax expense

11,230


14,267


8,610


22,369


Income tax expense

2,783


4,772


1,542


7,180


  Net income

$

8,447


$

9,495


7,068


15,189







Basic weighted average shares outstanding

17,206


16,983


17,131


16,827


Diluted weighted average shares outstanding

17,830


17,020


17,415


16,861


Per common share data:





Basic earnings per share

$

0.49


$

0.56


$

0.41


$

0.90


Diluted earnings per share

$

0.47


$

0.56


$

0.41


$

0.90







Other data:





Adjusted EBITDA(1)

$

13,603


$

10,959


$

33,125


$

40,923


Adjusted EPS (1)

$

0.38


$

0.23


$

0.73


$

0.84




(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 U.S. 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

Twelve Months Ended

December 31,

December 31,







2020

2019

2020

2019

Revenue by segment (2):





North America

$

80,081


$

103,481


$

317,735


$

395,603


Europe Middle East Africa

28,556


33,745


107,203


125,118


Emerging Markets

14,451


18,173


48,169


62,569


Total revenue

$

123,088


$

155,399


$

473,107


$

583,290


Gross profit by segment (2):





North America

$

16,853


$

15,103


$

59,258


$

64,343


Europe Middle East Africa

4,002


4,634


11,532


14,916


Emerging Markets

2,231


3,572


6,472


9,954


Total gross profit

$

23,086


$

23,309


$

77,262


$

89,213


Supplemental Cash Flow Information:





Net cash provided by operating activities

$

13,623


$

8,849


$

58,992


$

13,400


Capital expenditures

(346)


(410)


(1,630)


(2,315)


Free cash flow

$

13,277


$

8,439


$

57,362


$

11,085




(2)

Effective July 1, 2020, we began managing our business under a new organizational structure on a regional basis through our three geographic markets, North America, EMEA (Europe Middle East Africa) and Emerging Markets.  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

Twelve Months Ended

December 31,

December 31,







2020

2019

2020

2019

Net income

$

8,447


$

9,495


$

7,068


$

15,189


Interest expense

909


1,206


2,934


6,058


Income tax expense

2,783


4,772


1,542


7,180


Depreciation and amortization

1,675


2,490


7,879


9,482


EBITDA

13,814


17,963


19,423


37,909


Adjustments:





Non-cash stock compensation expense

1,846


1,656


6,256


5,595


Stock compensation related to severance



1,721



Restructuring charges

532


234


1,387


1,639


Severance expense

1,870


206


9,372


2,232


Change in paid time off policy



(1,894)



Gain on change in fair value of contingent consideration, net




(677)


ERP implementation costs


585



2,188


Foreign currency transaction (gains) losses

25


(334)


747


718


Legal acquisition/divestiture  and transaction costs

516


621


1,922


1,291


Impairment of operating lease right-of-use asset



255



Gain on sale of business

(5,000)


(12,126)


(6,064)


(12,126)


Loss on settlement with foreign oil & gas client


2,154



2,154


Adjusted EBITDA

$

13,603


$

10,959


$

33,125


$

40,923




(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 (benefit), depreciation and amortization, non-cash stock compensation expense, and other unusual or infrequently occurring items. For the periods presented, these other items are stock compensation related to severance, restructuring charges, severance expense, change in paid time off policy, gain on change in fair value of contingent consideration, net, ERP implementation costs, foreign currency transaction (gains) losses, legal acquisition and transaction costs, impairment of operating lease right-of-use asset, gain on sale of business and loss on settlement with foreign oil and gas client. 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

Twelve Months Ended

December 31,

December 31,







2020

2019

2020

2019

Diluted earnings per share

$

0.47


$

0.56


$

0.41


$

0.90


Stock compensation severance expense



0.07



Restructuring charges

0.02


0.01


0.06


0.07


Severance expense

0.08


0.01


0.40


0.09


Change in paid time off policy



(0.08)



Gain on change in fair value of contingent consideration, net




(0.03)


ERP implementation costs


0.02


0.09


Foreign currency transaction (gain) losses


(0.01)


0.03


0.03


Legal acquisition/divestiture and transaction costs

0.02


0.02


0.07


0.05


Impairment of operating lease right-of-use asset



0.01



Settlement of contingent consideration in shares


0.01


0.02


0.03


Gain on sale of business

(0.21)


(0.48)


(0.26)


(0.48)


Loss on settlement with foreign oil & gas client


0.09



0.09


Adjusted EPS

$

0.38


$

0.23


$

0.73


$

0.84




(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 U.S. 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

(In thousands)





December 31,


December 31,


2020


2019


(Unaudited)



Current assets:




Cash

$

23,076



$

8,159


Accounts and other receivables

110,575



131,852


   Unbilled revenue

28,100



57,229


Prepaid expenses and other current assets

15,186



19,115


Assets held for sale

42,463




Total current assets

219,400



216,355


Property, plant and equipment, net

4,650



5,803


Operating lease right-of-use assets

20,862



27,251


Goodwill and intangible assets, net

126,245



187,907


Deferred tax assets

1,425



1,121


Other assets

9,194



10,465


Total assets

$

381,776



$

448,902






Current liabilities:




Accounts payable and accrued expenses

$

91,572



$

92,332


Deferred revenue

16,509



23,234


Current portion of operating lease liabilities

5,523



7,871


Liabilities held for sale

5,868




Total current liabilities

119,472



123,437


Long-term debt

12,748



82,870


Long-term portion of operating lease liabilities

16,260



22,159


Deferred tax liabilities

4,028



7,439


Other noncurrent liabilities

5,922



3,083


Total liabilities

158,430



238,988


Total stockholders' equity

223,346



209,914


Total liabilities and stockholders' equity

$

381,776



$

448,902


© 2020 GP Strategies Corporation. All rights reserved. GP Strategies and GP Strategies with logo design are registered trademarks of GP Strategies Corporation.

GP Strategies Corporation logo. (PRNewsFoto/GP Strategies Corporation)

 

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SOURCE GP Strategies Corporation

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