Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact:
Scott N. Greenberg Cynthia Peffers
Chief Executive Officer VP, Corporate Communications
(410) 379-3640 (703) 934-9400
GP STRATEGIES REPORTS SECOND QUARTER 2005 RESULTS
Quarter highlights:
o Revenue for General Physics core business up 11% versus prior year period
o Operating Income for General Physics core business up 60% versus prior year
period
New York, August 9, 2005 - GP Strategies Corporation (NYSE: GPX) today reported
strong second quarter 2005 operating income of $2.7 million and net income of
$1.2 million, or $0.07 per share, significant increases compared to the second
quarter 2004 operating income of $1.2 million and net income of $0.4 million, or
$0.02 per share. GP Strategies is a global provider of training, e-Learning
solutions, management consulting, engineering and simulation services.
GP Strategies' operations consist of its core business, General Physics
Corporation ("General Physics"), a wholly-owned subsidiary and GSE Systems, Inc.
("GSE"), a majority-owned subsidiary. As previously announced, GP Strategies
completed the spin-off of National Patent Development Corporation ("NPDC") on
November 24, 2004. Subsequent to the spin-off, GP Strategies ceased to have any
ownership interest in NPDC, and the operations of NPDC, which include Five Star
Products, Inc. and MXL Industries, Inc., have been reclassified to discontinued
operations for the quarter and six months ended June 30, 2004.
In the second quarter of 2005, revenue at GP Strategies increased by $3.3
million to $50.4 million, as compared to revenue of $47.1 million in the second
quarter of 2004. For the six months ended June 30, 2005, revenue at GP
Strategies increased by $10.4 million to $100.2 million, as compared to revenue
of $89.8 million for the six months ended June 30, 2004. These increases are
primarily attributable to higher revenue at General Physics, partially offset by
a decline in revenue at GSE.
In the second quarter of 2005, General Physics' revenue increased by $4.2
million or 11% to $43.8 million, as compared to revenue of $39.6 million in the
second quarter of 2004. For the six months ended June 30, 2005, General Physics'
revenue increased by $12.6 million or 17% to $87.5 million, as compared to
revenue of $74.9 million for the six months ended June 30, 2004. New contract
awards and a broader scope of training and business process outsourcing services
to existing customers drove these revenue increases.
For the quarter ended June 30, 2005, income from continuing operations was $1.2
million as compared to $0.3 million for the quarter ended June 30, 2004. The
improvement was primarily due to increased profitability at General Physics and
reduced corporate expenses offset by losses incurred at GSE. Diluted income from
continuing operations per common share was $0.07 for the quarter ended June 30,
2005 as compared to $0.02 for the quarter ended June 30, 2004. Operating profit
before the loss of GSE increased from approximately $0.9 million to
approximately $3.1 million, or an increase of $2.2 million.
1
For the six months ended June 30, 2005, income from continuing operations was
$1.7 million as compared to $0.3 million for the six months ended June 30, 2004.
The improvement was primarily due to increased profitability at General Physics
and reduced corporate expenses offset by losses incurred at GSE. Diluted income
from continuing operations per common share was $0.09 for the six months ended
June 30, 2005 as compared to $0.02 for the six months ended June 30, 2004.
Operating profit before the loss of GSE increased from approximately $1.5
million for the six months ended June 30, 2004 to approximately $5.3 million for
the six months ended June 30, 2005, or an increase of $3.8 million.
"We continue to deliver solid performance in General Physics," said Scott N.
Greenberg, CEO of GP Strategies. "Our second quarter results reflect our
continued success in winning new business and expanding services with existing
customers, which has translated into improved operating margins in our core
business."
As previously announced, GP Strategies plans to spin-off its 57% interest in GSE
through a special dividend to its stockholders. Stockholders will receive in the
spin-off a pro-rata share of GSE common stock based on the number of shares of
GP Strategies common stock or Class B stock held on the record date, which will
be determined on a future date. GSE filed with the Securities and Exchange
Commission a registration statement relating to the shares of GSE to be
distributed in the spin-off. The Company anticipates that the record date will
be set and the spin-off will occur shortly after such registration statement is
declared effective.
The Company has scheduled an investor conference call for 10:00 a.m. ET on
August 9, 2005. In addition to prepared remarks from management, there will be a
question and answer session on the call. The dial-in number for the live
conference call will be 888-412-9257. A telephone replay of the call will also
be available beginning at 1:00 p.m. on August 9, until 11:59 p.m. on August 16.
To listen to the replay, dial 800-642-1687 or 706-645-9291, using conference ID
number 8436118.
About GP Strategies Corporation
GP Strategies, whose operating subsidiaries are General Physics, and GSE, is a
NYSE listed company (GPX). General Physics and GSE are global providers of
training, e-Learning solutions, management consulting, engineering and
simulation services, improving the effectiveness of organizations by customizing
solutions to meet the specific needs of clients. Clients include Fortune 500
companies, manufacturing, process and energy industries, and other commercial
and government customers. Additional information about GP Strategies may be
found at www.gpstrategies.com and about General Physics at www.gpworldwide.com
and GSE Systems at www.gses.com.
The forward-looking statements contained herein reflect GP Strategies'
management's current views with respect to future events and financial
performance. We use words such as "expects", "intends" and "anticipates" to
indicate forward-looking statements. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements, all of which are
difficult to predict and many of which are beyond the control of GP Strategies,
including, but not limited to, the ability of GSE to secure additional
financing, our holding company structure, failure to continue to attract and
retain personnel, loss of business from significant customers, failure to keep
pace with technology, changing economic conditions, competition, our ability to
implement procedures that will reduce the likelihood that material weaknesses in
our internal controls will occur in the future, and those other risks and
uncertainties detailed in GP Strategies' periodic reports and registration
statements filed with the Securities and Exchange Commission.
If any one or more of these expectations and assumptions proves incorrect,
actual results will likely differ materially from those contemplated by the
forward-looking statements. Even if all of the foregoing assumptions and
expectations prove correct, actual results may still differ materially from
those expressed in the forward-looking statements as a result of factors we may
not anticipate or that may be beyond our control. While we cannot assess the
future impact that any of these differences could have on our business,
financial condition, results of operations and cash flows or the market price of
shares of our common stock, the differences could be significant. We do not
undertake to update any forward-looking statements made by us.
TABLES FOLLOW
2
The following table summarizes the revenue of GP Strategies Corporation, by
reporting segment, and the consolidated results of their operations for the
three and six months ended June 30, 2005 and 2004. As previously announced, GP
Strategies Corporation ("the Company" or "GP Strategies") completed the spin-off
of National Patent Development Corporation ("NPDC") on November 24, 2004.
Subsequent to the spin-off, the Company's operations consist of General Physics
Corporation ("General Physics") and GSE Systems, Inc. ("GSE") a majority-owned
subsidiary and the Company ceased to have ownership interest in NPDC. The
operations of NPDC, which included Five Star Products, Inc. and MXL Industries,
Inc., have been reclassified to discontinued operations for the three and six
months ended June 30, 2004.
(Unaudited - in thousands, except per share amounts):
Quarters ended Six months ended
June 30, June 30,
---------------------------------- --------------------------------
2005 2004 2005 2004
---- ---- ---- ----
Revenue:
General Physics $43,821 $39,633 $87,548 $74,942
GSE 6,555 7,441 12,681 14,852
----------------- ---------------- ---------------- ---------------
$50,376 $47,074 $100,229 $89,794
================= ================ ================ ===============
Operating profit (loss):
General Physics $3,496 $2,185 $6,472 $3,692
Public company and other general expenses (415) (1,283) (1,220) (2,151)
----------------- ---------------- ---------------- ---------------
Operating profit before GSE 3,081 902 5,252 1,541
GSE (394) 282 (1,437) 454
----------------- ---------------- ---------------- ---------------
Total operating profit 2,687 1,184 3,815 1,995
================= ================ ================ ===============
Interest expense (433) (506) (813) (1,139)
Other income (expense) (91) 95 103 233
----------------- ---------------- ---------------- ---------------
Income from continuing operations
before income taxes and minority interest 2,163 773 3,105 1,089
Income tax expense(1) (1,186) (376) (2,037) (649)
----------------- ---------------- ---------------- ---------------
Income before minority interest 977 397 1,068 440
Minority interest 243 (116) 620 (143)
----------------- ---------------- ---------------- ---------------
Income from continuing operations 1,220 281 1,688 297
Income from discontinued operations,
net of income tax expense - 113 - 228
----------------- ---------------- ---------------- ---------------
Net income $1,220 $394 $1,688 $525
================= ================ ================ ===============
Per common share data:
Basic
Income from continuing operations $ .07 $ .02 $ .09 $ .02
Income from discontinued operations -- -- -- .01
----------------- ---------------- ---------------- ---------------
Net income $ .07 $ .02 $ .09 $ .02
================= ================ ================ ===============
Diluted
Income from continuing operations $ .07 $ .02 $ .09 $ .02
Income from discontinued operations -- -- -- .01
----------------- ---------------- ---------------- ---------------
Net income $ .07 $ .02 $ .09 $ .02
================= ================ ================ ===============
(1) GSE is not consolidated for federal tax purposes, so the Company derives no
tax benefit from their second quarter 2005 loss.
3
The following table summarizes the condensed consolidated balance sheet data of
GP Strategies Corporation, as of June 30, 2005 and December 31, 2004 (in
thousands).
June 30,
2005 December 31,
(Unaudited) 2004
Current assets:
Cash and cash equivalents $6,901 $2,417
Cash held in escrow from arbitration - 13,798
Accounts and other receivables 29,412 31,114
Costs and estimated earnings in excess of billings on uncompleted contracts 19,204 16,834
Prepaid expenses and other current assets 7,098 5,828
---------------- -----------------
Total current assets 62,615 69,991
Property, plant and equipment, net 2,453 2,673
Goodwill and other intangibles, net 63,169 63,404
Deferred tax assets 15,565 16,651
Other assets 2,699 3,316
---------------- -----------------
Total assets $146,501 $156,035
================ =================
Current liabilities:
Current maturities of long-term debt $89 $100
Short-term borrowings 675 6,068
Accounts payable and accrued expenses 24,709 33,219
Billings in excess of costs and estimated earnings on uncompleted contracts 9,807 10,003
---------------- -----------------
35,280 49,390
Long-term debt less current maturities 11,784 10,951
Other non-current liabilities 3,042 1,739
---------------- -----------------
Total liabilities 50,106 62,080
Minority interest 1,715 2,335
Total stockholders' equity 94,680 91,620
---------------- -----------------
$146,501 $156,035
================ =================
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