FOR IMMEDIATE RELEASE
Contact:
Scott N. Greenberg Cynthia Peffers
Chief Executive Officer VP, Corporate Communications
(410) 379-3640 (703) 934-9400
GP STRATEGIES REPORTS THIRD QUARTER AND NINE MONTHS 2005 PRE-TAX
CONTINUING OPERATING RESULTS
Quarter highlights:
o Operating income for General Physics core business up 27.0% versus third
quarter of 2004
o Operating income as a percentage of revenue for General Physics increases
from 6.6% in the third quarter of 2004 to 8.5% in the third quarter of 2005
New York, November 8, 2005 - GP Strategies Corporation (NYSE: GPX) today
reported income from continuing operations before income tax expense of $2.3
million for the third quarter of 2005 as compared to $1.1 million for the third
quarter of 2004. The significant increase for the quarter was due to improving
General Physics' operating income from $2.9 million, or 6.6%, for the quarter
ended September 30, 2004 to $3.7 million, or 8.5%, for the quarter ended
September 30, 2005, as well as reducing other corporate overhead expenses.
Included in the third quarter of 2005 was approximately $0.5 million of legal
expense primarily related to the Company's legal proceedings against EDS. The
Company is currently finalizing the tax accounting treatment for its dividend to
its stockholders of GSE Systems.
As of September 30, 2005, GP Strategies' operations consist of its core
business, General Physics Corporation ("General Physics"). General Physics is a
global provider of training, e-Learning solutions, management consulting, and
engineering services. As previously announced, GP Strategies completed the
spin-off of its 57% ownership interest in GSE Systems, Inc. ("GSE") on September
30, 2005 through a dividend to its stockholders. Stockholders received in the
spin-off 0.283075 shares of GSE common stock for each share of GP Strategies
common stock or Class B stock held on the record date of September 19, 2005.
Subsequent to the spin-off, GP Strategies ceased to have any ownership interest
in GSE. The operations of GSE have been removed from the continuing operations
presented in the table that follows for the quarter and nine months ended
September 30, 2005 and 2004. The results of operations of National Patent
Development Corporation ("NPDC"), which were spun off on November 24, 2004, are
also excluded from continuing operations for the quarter and nine months ended
September 30, 2004.
In the third quarter of 2005, General Physics' revenue decreased slightly by
$0.1 million to $44.1 million, as compared to revenue of $44.2 million in the
third quarter of 2004. Excluding revenue of approximately $2.2 million from post
disaster relief services in the aftermath of the hurricanes in Florida during
the third quarter of 2004, revenue at General Physics increased by approximately
5.3%. For the nine months ended September 30, 2005, General Physics' revenue
increased by $12.5 million or 10.5% to $131.3 million, as compared to revenue of
$118.8 million for the nine months ended September 30, 2004. These improvements
were due to new contract awards and a broader scope of training and business
process outsourcing services to existing customers.
For the nine months ended September 30, 2005, income from continuing operations
before income tax expense was $6.6 million as compared to $1.6 million for the
nine months ended September 30, 2004. The improvement was primarily due to
increased profitability at General Physics and reduced other corporate overhead
expenses.
"We continue to deliver increased profitability in General Physics and reduced
corporate overhead expenses," said Scott N. Greenberg, CEO of GP Strategies.
"Our third quarter results reflect our continued success in improving
profitability and the spin-off of GSE Systems will enable management to focus on
its core operations."
The Company has scheduled an investor conference call for 10:00 a.m. ET on
November 8, 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 11:00 a.m. on November 8, until 11:59 p.m. on November
15. To listen to the replay, dial 800-642-1687 or 706-645-9291, using conference
ID number 2270166.
About GP Strategies Corporation
GP Strategies, whose core operating subsidiary is General Physics, is a NYSE
listed company (GPX). General Physics is a global provider of training,
e-Learning solutions, management consulting, and engineering 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.
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, 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.
TABLE FOLLOWS
The following table summarizes the pre-tax continuing operating results of GP
Strategies Corporation ("the Company" or "GP Strategies"), and the consolidated
pre-tax results of their operations for the three and nine months ended
September 30, 2005 and 2004. As previously announced, GP Strategies completed
the spin-offs of GSE on September 30, 2005 and NPDC on November 24, 2004.
Subsequent to these spin-offs, the Company's operations consist of General
Physics Corporation ("General Physics") and the Company ceased to have any
ownership interest in GSE and NPDC. The operations of GSE for the quarter and
nine months ended September 30, 2005 and 2004 and the operations of NPDC, which
included Five Star Products, Inc. and MXL Industries, Inc., for the quarter and
nine months ended September 30, 2004 have been excluded from the results below.
(Unaudited - in thousands, except per share amounts): Quarters ended Nine months ended
September 30, September 30,
-------------------------------- --------------------------------
2005 2004 2005 2004
---- ---- ---- ----
Revenue:
General Physics $44,255 $44,322 $131,803 $119,264
Less: Intercompany revenue from GSE (196) (144) (525) (450)
---------------- --------------- ---------------- ---------------
Total consolidated revenue $44,059 $44,178 $131,278 $118,814
================ =============== ================ ===============
Operating income:
General Physics $3,744 $2,947 $10,216 $6,640
Less: Intercompany from GSE (196) (144) (525) (450)
Other corporate overhead expenses (920) (1,271) (2,087) (3,423)
---------------- --------------- ---------------- ---------------
Total operating income 2,628 1,532 7,604 2,767
Other income 87 104 141 321
---------------- --------------- ---------------- ---------------
Income from continuing operations
before interest expense and income taxes 2,715 1,636 7,745 3,088
Interest expense (387) (490) (1,129) (1,470)
---------------- --------------- ---------------- ---------------
Income from continuing operations
before income taxes $2,328 $1,146 $6,616 $1,618
================ =============== ================ ===============
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