Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact:
Scott N. Greenberg Sharon Esposito-Mayer Cynthia Peffers
Chief Executive Officer Chief Financial Officer VP, Corporate Communications
(410) 379-3640 (410) 379-3636 (800) 727-6677
GP STRATEGIES REPORTS EARNINGS OF $0.11 PER SHARE FOR THE SECOND QUARTER
OF 2006 COMPARED TO $0.07 PER SHARE FOR THE SECOND QUARTER OF 2005
Elkridge, MD, August 9, 2006 - GP Strategies Corporation (NYSE: GPX), a global
provider of training and e-Learning solutions, management consulting, and
engineering services through its operating subsidiary General Physics
Corporation, today reported strong second quarter 2006 results.
Second Quarter Highlights:
o Revenue of $45.8 million, up 4.9% compared to the second quarter of 2005
o Income from continuing operations before interest expense and income tax
expense of $3.5 million, up 17.5% compared to the second quarter of 2005
o Net income of $1.7 million, up 43.0% compared to $1.2 million for the
second quarter of 2005
o Net cash provided by operations of $6.7 million for the six months ended
June 30, 2006
"I am pleased to report the Company had a strong second quarter ending June 30,
2006," said Scott N. Greenberg, CEO of GP Strategies. "Our Manufacturing & BPO
segment has had strong growth in both revenue and profitability. In addition, we
are making progress in expanding our global footprint, particularly in China and
India. As a total solutions provider, GP offers customers subject matter
expertise, extensive training experience and flexibility. Additionally, our
management team and employees are focused on leveraging these capabilities to
meet our strategic objectives."
Second Quarter 2006 Results
Revenue was $45.8 million for the second quarter of 2006 compared to $43.7
million for the second quarter of 2005. The $2.1 million net increase in revenue
is attributable to a $3.5 million increase in revenue in the Manufacturing & BPO
group, offset by a $1.4 million decrease in revenue in the Process, Energy &
Government group.
During the second quarter of 2006, operating income increased $0.4 million to
$3.3 million, compared to $3.0 million in the second quarter of 2005. The
increase in operating income is attributable to an increase in gross profit of
$0.6 million, primarily due to the net revenue increase, offset by an increase
in selling, general and administrative expenses of $0.2 million during the
second quarter of 2006 compared to the second quarter of 2005.
During the second quarter of 2006, income from continuing operations increased
$0.3 million to $1.7 million, compared to $1.4 million for the second quarter of
2005. The increase is primarily attributable to increased operating income
discussed above.
Six Months ended June 30, 2006 Results
Revenue was $89.3 million for the six months ended June 30, 2006 compared to
$87.2 million for the same period of 2005. The $2.1 million net increase in
revenue is attributable to a $5.3 million increase in the Manufacturing & BPO
group, offset by a $3.2 million decrease in revenue in the Process, Energy &
Government group.
During the six months ended June 30, 2006, operating income increased $0.7
million to $5.7 million, compared to $5.0 million for the same period of 2005.
The increase in operating income is attributable to an increase in gross profit
of $0.8 million, primarily due to the net increase in revenue. Operating income
for the six months ended June 30, 2006 includes severance expense of $0.3
million primarily associated with the decrease in DPETAP contract funding and a
staffing change within the tax department, as well as non-cash stock-based
compensation expense of $0.3 million.
During the six months ended June 30, 2006, income from continuing operations
increased $0.8 million to $3.1 million, compared to $2.3 million for the same
period of 2005. The increase is primarily due to increased operating income
discussed above.
The Company has scheduled an investor conference call for 10:00 a.m. ET on
August 9, 2006. 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 888-633-3324 using conference ID number 3986703. A
telephone replay of the call will also be available beginning at 1:00 p.m. on
August 9th, until 11:59 p.m. on August 23rd. To listen to the replay, dial
800-642-1687 or 706-645-9291, using conference ID number 3986703.
About GP Strategies Corporation
GP Strategies, whose operating subsidiary is General Physics Corporation, is a
NYSE listed company (GPX). General Physics is a global provider of training and
e-Learning solutions, management consulting, and engineering services, improving
the effectiveness of organizations by customizing solutions that enhance an
organization's people, processes or technology. Clients include Fortune 1000
companies and government customers. Additional information about GP Strategies
may be found at www.gpstrategies.com and about General Physics at
www.gpworldwide.com.
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The Private Securities Litigation Reform Act
of 1995 provides a "safe harbor" for forward looking statements. Forward-looking
statements are not statements of historical facts, but rather reflect our
current expectations concerning future events and results. We use words such as
"expects", "intends", "believes", "may", "will" and "anticipates" to indicate
forward-looking statements. Because these forward-looking statements involve
risks and uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by these
forward-looking statements, including, but not limited to, those factors set
forth under Item 1A, Risk Factors, in our 2005 Annual Report on Form 10-K and
those other risks and uncertainties detailed in the Company's periodic reports
and registration statements filed with the Securities and Exchange Commission.
We caution that these risk factors may not be exhaustive. We operate in a
continually changing business environment, and new risk factors emerge from time
to time. We cannot predict these new risk factors, nor can we assess the effect,
if any, of the new risk factors on our business or the extent to which any
factor or combination of factors may cause actual results to differ from those
expressed or implied by these forward-looking statements.
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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, whether as a
result of new information, future events or otherwise. You are cautioned not to
unduly rely on such forward-looking statements when evaluating the information
presented in this report.
TABLES FOLLOW
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The following table summarizes the consolidated results of operations of GP
Strategies Corporation ("the Company" or "GP Strategies") for the three and six
months ended June 30, 2006 and 2005. As previously announced, GP Strategies
completed the spin-off of GSE Systems, Inc. (GSE) on September 30, 2005.
Subsequent to the spin-off, the Company's operations consist of General Physics
Corporation ("General Physics") and the Company ceased to have any ownership
interest in GSE. The operations of GSE have been reclassified to discontinued
operations for the prior periods presented.
(Unaudited - in thousands, except per share Three months ended Six months ended
amounts):
------------------------------------------------------------------
June 30, June 30,
---------------------------------- --------------------------------
----------------- ---------------- ---------------- ---------------
2006 2005 2006 2005
---- ---- ---- ----
Revenue $45,779 $43,659 $89,307 $87,219
Cost of revenue 38,822 37,291 76,588 75,307
----------------- ---------------- ---------------- ---------------
Gross profit 6,957 6,368 12,719 11,912
Selling, general and administrative expenses 3,632 3,398 7,004 6,936
----------------- ---------------- ---------------- ---------------
Operating income 3,325 2,970 5,715 4,976
Other income 180 12 584 54
----------------- ---------------- ---------------- ---------------
Income from continuing operations before
interest expense and income tax expense 3,505 2,982 6,299 5,030
Interest expense 443 379 857 742
----------------- ---------------- ---------------- ---------------
Income from continuing operations before
income tax expense 3,062 2,603 5,442 4,288
Income tax expense 1,317 1,162 2,328 2,005
----------------- ---------------- ---------------- ---------------
Income from continuing operations 1,745 1,441 3,114 2,283
Loss from discontinued operations, net
of income taxes - (221) - (595)
----------------- ---------------- ---------------- ---------------
Net income $1,745 $1,220 $3,114 $1,688
================= ================ ================ ===============
Basic weighted average shares outstanding 15,550 18,141 15,889 18,029
Diluted weighted average shares outstanding 16,461 18,761 16,795 18,879
Per common share data:
Basic
Income from continuing operations $ 0.11 $ 0.08 $ 0.20 $ 0.12
Loss from discontinued operations -- (0.01) -- (0.03)
----------------- ---------------- ---------------- ---------------
Net income $ 0.11 $ 0.07 $ 0.20 $ 0.09
================= ================ ================ ===============
Diluted
Income from continuing operations $ 0.11 $ 0.08 $ 0.19 $ 0.12
Loss from discontinued operations -- (0.01) -- (0.03)
----------------- ---------------- ---------------- ---------------
Net income $ 0.11 $ 0.07 $ 0.19 $ 0.09
================= ================ ================ ===============
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The following table summarizes the condensed consolidated balance sheet data of
GP Strategies, as of June 30, 2006 and December 31, 2005 (in thousands).
June 30,
2006 December 31,
(Unaudited) 2005
Current assets:
Cash and cash equivalents (1) $ 2,164 $ 18,118
Accounts and other receivables 23,703 27,079
Costs and estimated earnings in excess of billings on uncompleted contracts 13,109 11,487
Prepaid expenses and other current assets 5,719 5,936
---------------- -----------------
Total current assets 44,695 62,620
---------------- -----------------
Property, plant and equipment, net 1,857 1,857
Goodwill and other intangibles, net 59,181 58,130
Deferred tax assets 7,874 10,391
Other assets 1,613 1,643
---------------- -----------------
Total assets $ 115,220 $ 134,641
================ =================
Current liabilities:
Current maturities of long-term debt $ 58 $ 71
Accounts payable and accrued expenses 19,188 20,315
Billings in excess of costs and estimated earnings on uncompleted contracts 6,438 7,430
---------------- -----------------
Total current liabilities 25,684 27,816
---------------- -----------------
Long-term debt less current maturities 11,558 11,309
Other non-current liabilities 1,193 1,174
---------------- -----------------
Total liabilities 38,435 40,299
Total stockholders' equity (1) 76,785 94,342
---------------- -----------------
Total liabilities and stockholders' equity $ 115,220 $ 134,641
================ =================
(1) On January 19, 2006, the Company completed a restructuring of its capital
stock, which included the repurchase of 2,721,500 shares of its common and
Class B stock, and the exchange of 600,000 shares of its Class B stock into
600,000 shares of common stock, and had the effect of eliminating all
outstanding shares of Class B stock. The repurchase and exchange was
financed with approximately $20.3 million of cash on hand.
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