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GP Strategies Reports First Quarter 2013 Financial Results

May 2, 2013

ELKRIDGE, Md., May 2, 2013 /PRNewswire/ — Global performance improvement solutions provider GP Strategies Corporation (NYSE: GPX) today reported financial results for the quarter ended March 31, 2013.

Overview of First Quarter 2013 Results:

  • Revenue of $101.4 million for first quarter of 2013 compared to $93.6 million for first quarter of 2012
  • Diluted earnings per share of $0.26 for first quarter of 2013 compared to $0.23 per share for first quarter of 2012
  • EBITDA of $9.5 million for first quarter of 2013 compared to $9.2 million for first quarter of 2012

The Company’s revenue increased $7.8 million or 8.3% during the first quarter of 2013 compared to the first quarter of 2012. The revenue growth is primarily attributable to acquisitions completed during 2012. The Company also reported overall organic growth during the quarter, with notable performance by the Sandy and Performance Readiness Solutions segments which achieved double-digit organic revenue growth in the quarter, offset by revenue declines in the Professional & Technical Services segment due to project completions. Gross profit was $16.2 million, or 16.0% of revenue, for the first quarter of 2013 compared to $15.6 million, or 16.7% of revenue, for the first quarter of 2012. The decline in gross margin is largely due to a $0.9 million increase in medical benefits expense due to higher than usual claims under our self-insured employee medical plan during the first quarter of 2013. Income before income tax expense was $7.5 million for the first quarter of 2013 compared to $7.3 million for the first quarter of 2012. Net income was $4.9 million, or $0.26 per share, for the first quarter of 2013 compared to $4.4 million, or $0.23 per share, for the first quarter of 2012. Net income for the first quarter of 2013 includes a $0.4 million non-recurring income tax benefit.

“GP Strategies continued to show overall improvement of its results in the first quarter of 2013,” commented Scott N. Greenberg, Chief Executive Officer of GP Strategies. “We have developed a unique platform in the training industry through the combination of our organic operations supplemented by strategic acquisitions. In the first quarter, the Company increased its business development efforts to support larger outsourcing opportunities and invested in its proprietary software technology at a greater level than in the past. We are optimistic that these investments will translate into growth in future quarters.”

Balance Sheet and Cash Flow Highlights

As of March 31, 2013, the Company had cash and cash equivalents of $11.0 million compared to $7.8 million as of December 31, 2012. The Company had no short-term borrowings or long-term debt outstanding as of March 31, 2013. Cash provided by operating activities was $5.3 million for the quarter ended March 31, 2013 compared to $7.0 million for the same period in 2012.

Investor Call

The Company has scheduled an investor conference call for 10:00 a.m. ET on May 2, 2013. 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 800-754-1336 or 212-231-2932, using conference ID number 21656158. A telephone replay of the call will also be available beginning at 12:00 p.m. on May 2(nd), until 12:00 p.m. on May 16(th). To listen to the replay, dial 800-633-8284 or 402-977-9140, using conference ID number 21656158.

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 Company’s 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 Company’s operating performance, or 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. 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.

About GP Strategies

GP Strategies Corporation (NYSE: GPX) is a global performance improvement solutions provider of 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

        GP STRATEGIES CORPORATION AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF OPERATIONS

      (Dollars in thousands, except per share data)

                       (Unaudited)

                                           Three months ended

                                              March 31,
                                              ---------

                                               2013      2012
                                               ----      ----

    Revenue                                $101,373   $93,605

    Cost of revenue                          85,192    77,993
                                             ------    ------

    Gross profit                             16,181    15,612

    Selling, general and administrative
     expenses                                 9,089     8,288

    Gain (loss) on change in fair value
     of contingent                              247       (40)

       consideration, net
                                                          ---

    Operating income                          7,339     7,284

    Interest expense                            100        40

    Other income                                229        90
                                                ---

    Income before income tax expense          7,468     7,334

    Income tax expense                        2,543     2,950
                                              -----     -----

    Net income                               $4,925    $4,384
                                             ======    ======

    Basic weighted average shares
     outstanding                             19,060    18,830

    Diluted weighted average shares
     outstanding                             19,296    19,188

    Per common share data:

      Basic earnings per share                $0.26     $0.23

      Diluted earnings per share              $0.26     $0.23

    Other data:

       EBITDA (1)                            $9,526    $9,232

    (1)            The term (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.

           GP STRATEGIES CORPORATION AND SUBSIDIARIES

               SUPPLEMENTAL FINANCIAL INFORMATION

                     (Dollars in thousands)

                          (Unaudited)

                                                    Quarters ended

                                                    March 31,
                                                    ---------

                                                     2013       2012
                                                     ----       ----

    Revenue by segment:

    Learning Solutions (2)                        $42,734    $35,037

    Professional & Technical Services (2)          18,015     22,265

    Sandy Training & Marketing                     14,998     13,322

    Performance Readiness Solutions                15,500     13,831

    Energy Services (2)                            10,126      9,150
                                                   ------      -----

    Total revenue                                $101,373    $93,605
                                                 ========    =======

    Gross profit by segment:
                                                              $6,466
    Learning Solutions (2)                         $7,171
                                                               3,573
    Professional & Technical Services (2)           2,684

    Sandy Training & Marketing                      1,926      1,542
                                                               1,575
    Performance Readiness Solutions                 1,978
                                                               2,456
    Energy Services (2)                             2,422
                                                    -----
                                                             $15,612
    Total gross profit                            $16,181
                                                  =======

    Operating income by segment:
                                                              $3,395
    Learning Solutions (2)                         $3,212
                                                               1,593
    Professional & Technical Services (2)           1,058
                                                                 303
    Sandy Training & Marketing                        629
                                                                 245
    Performance Readiness Solutions                   579
                                                               1,788
    Energy  Services (2)                            1,614

    Gain (loss) on change in fair value of
     contingent                                       247        (40)

       consideration, net
                                                                 ---
                                                              $7,284
    Total operating income                         $7,339
                                                   ======

    Supplemental Cash Flow Information:

    Net cash provided by operating activities      $5,316     $6,963

    Capital expenditures                             (830)      (925)
                                                     ----       ----

    Free cash flow                                 $4,486     $6,038
                                                   ======     ======

    (2)            Effective January 1, 2013, we made
                   changes to our organizational
                   structure to transfer the
                   management responsibility of
                   certain business units between
                   segments, which resulted in a
                   change in the composition of
                   certain of our operating
                   segments. The changes primarily
                   consisted of: (i) the alternative
                   fuels business unit transferred
                   from Professional & Technical
                   Services to Energy Services; (ii)
                   a business unit which
                   predominantly provides content
                   development services to U.S.
                   government and commercial clients
                   transferred from Learning
                   Solutions to Professional &
                   Technical Services; and (iii) our
                   foreign operations in India and
                   China and a portion of our
                   Canadian operations transferred
                   from Professional & Technical
                   Services to Learning Solutions.
                   The segment financial information
                   above has been reclassified for
                   all prior periods to reflect
                   these changes and conform to the
                   current quarter's presentation.


    GP STRATEGIES CORPORATION AND SUBSIDIARIES

        Non-GAAP Reconciliation -EBITDA (3)

              (Dollars in thousands)

                    (Unaudited)

                                      Three months
                                          ended

                                        March 31,
                                        ---------

                                        2013     2012
                                        ----     ----

    Net income                        $4,925   $4,384

    Interest expense                     100       40

    Income tax expense                 2,543    2,950

    Depreciation and amortization      1,958    1,858

    EBITDA                            $9,526   $9,232
                                      ======   ======

    (3)            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 substitutes
                   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.

                                                    GP STRATEGIES CORPORATION AND SUBSIDIARIES

                                                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                              (Dollars in thousands)

                                                                             March 31,              December 31,

                                                                                               2013                  2012
                                                                                               ----                  ----

                                                                            (Unaudited)

    Current assets:

       Cash and cash equivalents                                                            $11,047                $7,761

       Accounts and other receivables                                                        70,887                83,597

       Costs and estimated earnings in excess of

    billings on uncompleted contracts                                                        20,866                16,979

       Prepaid expenses and other current assets                                             10,330                10,143
                                                                                             ------                ------

          Total current assets                                                              113,130               118,480

    Property, plant and equipment, net                                                        5,640                 5,511

    Goodwill and other intangibles, net                                                     116,176               118,693

    Other assets                                                                              1,526                 1,750
                                                                                              -----                 -----

          Total assets                                                                     $236,472              $244,434
                                                                                           ========              ========

    Current liabilities:

       Accounts payable and accrued expenses                                                $40,329               $47,457

       Billings in excess of costs and estimated

    earnings on uncompleted contracts                                                        18,107                21,877
                                                                                             ------                ------

          Total current liabilities                                                          58,436                69,334

    Other noncurrent liabilities                                                              7,173                 7,763
                                                                                              -----                 -----

          Total liabilities                                                                  65,609                77,097

    Total stockholders' equity                                                              170,863               167,337
                                                                                            -------               -------

          Total liabilities and stockholders' equity                                       $236,472              $244,434
                                                                                           ========              ========

© 2013 GP Strategies Corporation. All rights reserved. GP Strategies and the GP Strategies logo design are trademarks of GP Strategies Corporation.

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