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Form 8-K GP STRATEGIES CORP For: Oct 30

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October 30, 2014 11:02 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
�
FORM 8-K
�
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
�
Date of report (Date of earliest event reported)�October 30, 2014
�
GP Strategies Corporation
(Exact Name of Registrant as Specified in Its Charter)
�
Delaware
(State or Other Jurisdiction of Incorporation)
�
1-7234
�
52-0845774
(Commission File Number)
�
(IRS Employer Identification No.)
�
�
�
70 Corporate Center
11000 Broken Land Parkway, Suite 200,
Columbia, MD
�
21044
(Address of Principal Executive Offices)
�
(Zip Code)
�
(443) 367-9600
(Registrants Telephone Number, Including Area Code)
�
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
�
������������ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
�
������������ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
�
������������ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
�
������������ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
�




Item 2.02 Results of Operations and Financial Condition
�
On October 30, 2014, GP Strategies Corporation announced its results for the quarter ended September 30, 2014. The earnings press release is attached hereto as an exhibit to this Form 8-K.
�
Item 9.01 Financial Statements and Exhibits
�
(d) Exhibits
�
99.1
Press release of GP Strategies Corporation dated October 30, 2014 announcing its results for the quarter ended September 30, 2014.
�


SIGNATURES
�
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
�
�
GP STRATEGIES CORPORATION
�
�
Date: October 30, 2014
/s/ Sharon Esposito-Mayer
�
Sharon Esposito-Mayer
�
Executive Vice President and Chief Financial Officer
�




EXHIBIT INDEX
�
Exhibit�No.
�
Description
�
�
�
99.1

�
Press release of GP Strategies Corporation dated October 30, 2014 announcing its results for the quarter ended September 30, 2014.��
�



Exhibit 99.1


NEWS RELEASE

GP Strategies Reports Third Quarter 2014 Financial Results

Columbia, MD. October 30, 2014. Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter ended September 30, 2014.
Overview of Third Quarter 2014 Results:
"
Revenue of $123.9 million for third quarter of 2014 compared to $113.2 million for third quarter of 2013
"
Diluted earnings per share of $0.37 for third quarter of 2014 compared to $0.32 per share for third quarter of 2013
"
EBITDA of $13.8 million for third quarter of 2014 compared to $12.6 million for third quarter of 2013
"
Completed modified Dutch auction tender offer on October 3, 2014 and repurchased 2.1 million shares, or 11%, of outstanding common stock for $61.7 million

The Companys revenue increased $10.7 million or 9.4% during the third quarter of 2014 compared to the third quarter of 2013. The revenue growth is primarily attributable to strong organic growth in the Learning Solutions segment due to new outsourcing contracts. Gross profit was $22.5 million, or 18.2% of revenue, for the third quarter of 2014 compared to $20.1 million, or 17.7% of revenue, for the third quarter of 2013. SG&A expense increased $2.0 million or 20.4% during the third quarter of 2014 largely due to increased costs associated with the Companys global expansion to support recent outsourcing contracts. Net income was $7.2 million, or $0.37 per diluted share, for the third quarter of 2014 compared to $6.1 million, or $0.32 per diluted share, for the third quarter of 2013.

In the third quarter of 2014, GP Strategies continued on its path of organic revenue and EBITDA growth, commented Scott N. Greenberg, Chief Executive Officer of GP Strategies. We accomplished these improved results while continuing to invest in expanding our infrastructure to support global initiatives. In addition, our successful Dutch auction tender offer, in which we repurchased 2.1 million of our outstanding common shares for $61.7 million, is expected to be accretive to earnings per share for our shareholders in future quarters.

1



Balance Sheet and Cash Flow Highlights
As of September 30, 2014, the Company had cash and cash equivalents of $9.1 million compared to $5.6 million as of December 31, 2013. The Company had $4.9 million of short-term borrowings outstanding and $59.3 million of available borrowings under its line of credit as of September 30, 2014. On October 3, 2014, the Company completed a modified Dutch auction tender offer in which it repurchased 2.1 million shares of its outstanding common stock for $61.7 million, excluding fees and expenses. To fund the share repurchase, the Company used borrowings under an amended credit agreement which included a $40 million term loan, payable over three years, and additional borrowings under its revolving credit facility.

Cash provided by operating activities was $16.7 million for the nine months ended September 30, 2014 compared to $10.2 million for the same period in 2013.

Investor Call
The Company has scheduled an investor conference call for 10:00 a.m. ET on October 30, 2014. 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 800-750-5861 or 212-231-2911, using conference ID number 21737613. A telephone replay of the call will also be available beginning at 12:00 p.m. on October 30th, until 12:00 p.m. on November 13th. To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21737613. 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 this non-GAAP financial measure is useful to investors in evaluating the Companys 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 Companys operating performance, or cash flow, as a measure of the Companys 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 this non-GAAP financial measure to the most comparable GAAP equivalent, see the Non-GAAP Reconciliation  EBITDA, along with related footnotes, below.


2



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

3



GP STRATEGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

�
Quarters ended
Nine months ended
September 30,
September 30,
�
�
�
�
�
�
2014
2013
2014
2013
�
�
�
�
�
Revenue
$
123,869

$
113,197

$
376,667

$
319,469

Cost of revenue
101,351

93,136

311,027

264,832

Gross profit
22,518

20,061

65,640

54,637

Selling, general and administrative expenses
11,863

9,856

34,914

28,825

Gain on change in fair value of
contingent consideration, net

655


135


1,513


427

Operating income
Interest expense
11,310
117

10,340
90

32,239
399

26,239
256

Other income (expense)
(72)

4

185

326

���Income before income tax expense
11,121

10,254

32,025

26,309

Income tax expense
3,877

4,111

12,351

9,994

Net income
$
7,244

$
6,143

$
19,674

$
16,315

�
�
�
�
�

Basic weighted average shares outstanding

19,131


19,125


19,138


19,089

Diluted weighted average shares outstanding
19,391

19,404

19,409

19,344


Per common share data:
�
�
�
�
Basic earnings per share
$
0.38

$
0.32

$
1.03

$
0.85

Diluted earnings per share
$
0.37

$
0.32

$
1.01

$
0.84

�
�
�
�
�
Other data:
�
�
�
�
EBITDA(1)
$
13,764

$
12,649

$
39,901

$
32,820



(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.

4



GP STRATEGIES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands)
(Unaudited)

�
Quarters ended
Nine months ended
September 30,
September 30,
�
�
�
�
�
�
2014
2013
2014
2013
Revenue by segment:
�
�
�
�
Learning Solutions
$
60,811

$
49,304

$
175,748

$
137,223

Professional & Technical Services
20,226

19,157

58,925

54,220

Sandy Training & Marketing
15,883

16,929

50,364

52,061

Performance Readiness Solutions
13,315

13,037

40,454

41,491

Energy Services
13,634

14,770

51,176

34,474

Total revenue
$
123,869

$
113,197

$
376,667

$
319,469


Gross profit by segment:
�
�
�
�
Learning Solutions
$
9,338

$
8,629

$
24,798

$
23,998

Professional & Technical Services
4,207

3,229

11,641

9,194

Sandy Training & Marketing
2,519

2,433

7,727

7,295

Performance Readiness Solutions
2,640

2,031

6,695

5,521

Energy Services
3,814

3,739

14,779

8,629

Total gross profit
$
22,518

$
20,061

$
65,640

$
54,637


Operating income by segment:
�
�
�
�
Learning Solutions
$
3,045

$
4,120

$
7,356

$
10,886

Professional & Technical Services
2,383

1,530

6,384

4,335

Sandy Training & Marketing
1,023

975

3,204

2,797

Performance Readiness Solutions
1,354

907

2,953

1,802

Energy Services
2,850

2,673

10,829

5,992

Gain on change in fair value of
contingent consideration, net
655

135

1,513

427

Total operating income
$
11,310

$
10,340

$
32,239

$
26,239


Supplemental Cash Flow Information:
�
�
�
�
Net cash provided by operating activities
$
18,581

$
4,770

$
16,664

$
10,249

Capital expenditures
(871)

(2,447)

(2,315)

(4,608)

Free cash flow
$
17,710

$
2,323

$
14,349

$
5,641



5



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



Quarters ended

Nine months ended
September 30,
September 30,
�
�
�
�
�
�
2014
2013
2014
2013
Net income
$
7,244

$
6,143

$
19,674

$
16,315

Interest expense
117

90

399

256

Income tax expense (3)
3,877

4,111

12,351

9,994

Depreciation and amortization
2,526

2,305

7,477

6,255

EBITDA
$
13,764

$
12,649

$
39,901

$
32,820


(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 Companys 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 Companys operating performance, or for cash flow, as a measure of the Companys 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.

(3)
Income tax expense for the third quarter of 2014 includes a $0.6 million income tax benefit resulting from a claim for a deduction under Internal Revenue Code Section 199 for the Domestic Production Deduction on the Companys 2013 U.S. federal income tax return which was not taken in previous years. The Company is currently evaluating whether a deduction is available for prior years in which the statute of limitations is open and may recognize an income tax benefit in future periods.




�


6



GP STRATEGIES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
�
�
�
�
�
�
�
September 30,
�
December 31,
�
�
2014
�
2013
�
�
(Unaudited)
�
�
Current assets:
�
�
�
�
�
Cash and cash equivalents
�
$
9,118

�
$
5,647

�
Accounts and other receivables
�
89,064

�
94,662

�
���Costs and estimated earnings in excess of
billings on uncompleted contracts
�

38,425

�

22,706

�
Prepaid expenses and other current assets
�
16,313

�
13,523

�
Total current assets
�
152,920

�
136,538

�
Property, plant and equipment, net
�
8,403

�
9,231

�
Goodwill and other intangibles, net
�
139,675

�
132,116

�
Other assets
�
1,686

�
2,271

�
Total assets
�
$
302,684

�
$
280,156

�
�
�
�
�
�
�
Current liabilities:
�
�
�
�
�
Short-term borrowings
�
$
4,880

�
$
407

�
Accounts payable and accrued expenses
�
55,881

�
55,339

�
���Billings in excess of costs and estimated
earnings on uncompleted contracts
�

18,931

�

22,062

�
Total current liabilities
�
79,692

�
77,808

�
Other noncurrent liabilities
�
12,640

�
9,321

�
Total liabilities
�
92,332

�
87,129

�
Total stockholders equity
�
210,352

�
193,027

�
Total liabilities and stockholders equity
�
$
302,684

�
$
280,156

�




� 2014 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


7


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