PR Newswire | Mar 11, 2021 06:45AM EST

03/11 05:45 CST

GP Strategies Reports Strong Fourth Quarter 2020 Financial Results COLUMBIA, Md., March 11, 2021

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.htmlor 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 expenses13,588 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 - - - 677 contingent consideration, net

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 expense11,230 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 17,206 16,983 17,131 16,827 outstanding

Diluted weighted average shares 17,830 17,020 17,415 16,861 outstanding

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

The terms Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures that the Company believes are useful to investors in evaluating its(1) 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 $13,623 $8,849 $58,992 $13,400 activities

Capital expenditures (346) (410) (1,630) (2,315)

Free cash flow $13,277 $8,439 $57,362 $11,085

Effective July 1, 2020, we began managing our business under a new organizational structure on a regional basis through our three geographic(2) 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 - - 1,721 - severance

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 - - - (677) contingent consideration, net

ERP implementation costs - 585 - 2,188

Foreign currency transaction (gains) 25 (334) 747 718 losses

Legal acquisition/divestiture and 516 621 1,922 1,291 transaction costs

Impairment of operating lease - - 255 - right-of-use asset

Gain on sale of business (5,000) (12,126)(6,064) (12,126)

Loss on settlement with foreign oil &- 2,154 - 2,154 gas client

Adjusted EBITDA $13,603$10,959$33,125$40,923

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,(3) 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 - - - (0.03)consideration, net

ERP implementation costs - 0.02 - 0.09

Foreign currency transaction (gain) losses - (0.01)0.03 0.03

Legal acquisition/divestiture and transaction0.02 0.02 0.07 0.05 costs

Impairment of operating lease right-of-use - - 0.01 - asset

Settlement of contingent consideration in - 0.01 0.02 0.03 shares

Gain on sale of business (0.21)(0.48)(0.26)(0.48)

Loss on settlement with foreign oil & gas - 0.09 - 0.09 client

Adjusted EPS $0.38$0.23$0.73$0.84

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(4) 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 liabilities16,260 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

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

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SOURCE GP Strategies Corporation