GPX - Earnings call transcript Q1 2020

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Operator

Good morning, and welcome to GP Strategies First Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there’ll be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Ann Blank, Vice President of Investor Relations. ahead. go please Ma'am,

Ann Blank

morning earnings welcome calls. Good first GP quarter XXXX everyone you. to and Strategies Thank

Chief On Chief Stedham, Dugan, Executive call Officer; Officer. the today Adam President; are and Scott Greenberg, Financial Mike

would Before forward-looking results the of business were include statements subject COVID-XX based like materially are and we management’s factors and including begin, risks to you our events comments statements, and effects that cause anticipated on there expressed the these different or be and are related statements forward-looking implied operations. remind forward-looking assumptions about pandemic Because will actual today’s uncertainties, of our I by expectations important those to could that these and results statements. from on

encourage file the gpstrategies.com. documents you to complete a website of For read with posted on SEC, we on which Investors are Section at our discussion of risks, the our these

are days website. also A for call. page The replay be earnings our quarterly Investor our on of that of presented webcast releases this the XX Section today’s following on available the being of today website will slides available are

At Greenberg. this like time, call our CEO, turn over the to I’d Scott to

Scott Greenberg

Good to quarter earnings continue That today informative this being our information and call. is separate GP and you, team XXXX at which will morning Strategies. presentation. regular locations analysis this of to for Today a first we quarterly useful our WebEx find Presentation. Thank conference use Hopefully, format, Ann. include welcome in will your said, you'll our

our our Q&A updates COVID-XX. the global a flow first Dugan, will of and Then, summary After and provide President, overview recap financial present Adam, a the results Mike free brief analysis. of impact I Adam's cash a focusing To call, Then key initiatives quarter, presentation, will on give a provide by will I'll CFO, followed initiate the session. our for liquidity. on

cash customers, the generating protecting challenge first and lowering expenses. our supporting COVID-XX of free our flow, the During reducing addressed workforce, by quarter, leverage we

the policies while to have in maximize workplace. and safety promoting We performance, implemented procedures maintaining and

its debt XX, March company and million from March at The approximately December $XXX.X from at at $XX.X approximately to XX, million XXXX, $XX.X XXXX. XXXX reduced XX, million

In the these reductions it with areas we the trying impact have second of deals With ongoing the in costs revenue. as reduced all reduced times. company customer in and our liquidity prioritized addition, during base had further quarter, supporting maintaining

attribute positive company our our stream, in of revenue resulting A is a strong occurring backlog.

have companies currently we addition, approximately global customers. In the as of XXX XXX

we growth content a custom of in believe well-positioned for virtual we As leader our long-term e-learning industry. training, are development and

over to I will turn now the call Adam.

Adam Stedham

Thank you, provide Scott. scale situation our relative business When a in to the forecasting COVID-XX, of and Mike first is difficulty I'd to quarter. of the impact detailed going I for the QX. the of the provide company's understanding like of we pace Because impacts finish, better had global current COVID-XX. to financials on

entered a We and this salesforce and business processes. the team fully capable momentum strong COVID relationships, capable continuity the operations and highly weather We've position storm. company to XXXX and client plan with strong

our with me our confidence business. sheet improved combined these Looking balance strengths forward, give in

QX consistent decline cost-cutting and expect in of cost significant of quarter XXXX, measures compared be beginning our March due but or expect we the adjusted with we quarter, greater Now, to XXXX. quarter XXXX to first the scaling to EBITDA revenues in to second second than

XXXX half or in first return is anticipate COVID-XX addition, the longer is place half lockdowns of will to expected lockdowns second there to of than virus, the remain XXXX. the outperform existing In the unless we a due

business portions key is up ability business and training scale of consider we've are to business deliveries, Now, reduction our face-to-face our One strong experienced growing. face-to-face regarding to training a to the other aspect significant our or remains down. but

like in but situation some and quickly, but can a cost a associated labor reductions, As countries costs, we In COVID-XX timely between legal small labor react these deliveries. costs delay those revenues of training a represent canceled There's and reduce due with requirements drop, we our associated cancellations our very to the revenues, with portion can respond manner. to a GP's countries have ability and limited very profits delivery. few classes

I Now, an mentioned are business aspects of that some experiencing our upturn.

the growth business winning is work development XXXX. trends custom GP's very award Our content workforce is one content most of e-learning development in This the custom The is team the capable in well-positioned double-digits benefit marketplace. entire from were of from any approximately largest up and organization industry. XX% to

revenue period same to QX. revenue GP's exceeded in services U.K. XXXX, the last year-over-year year. trend This continue into the QX, apprenticeship expected delivered in is

we that significant COVID program the in believe the related circumstances the due within increased to we apprenticeship unemployment Now, U.K. have especially virus, opportunities the to

apprenticeship the the pay large Regardless of current and government. continue situation, levy credits to with companies training the accrue

statement they'll income Over forward, avoid their in by cost more training effective to be headcount vouchers these companies related cash to of spend. lieu pay need apprenticeship Going training and able build a external these levy may their preserve staff, when up train for expense in apprenticeship to time, utilizing manner. their companies back

strong area measures to in to as from in care need sector. These The to put new to in drive has place addition the government apprenticeship result, Now, this are in by measures due levy new COVID. non- business, workforce apprenticeship this industry, levy the corporate business providing in to up-skill increase and an a U.K. GP's concentration a the we expect and training. recruitment in the has apprenticeships mandatory benefit intended care

are Other Human XXXX, does contact. and parts currently below not require face-to-face their is slightly only maintaining most of maintaining Capital team revenues our work their positions. GP's business of

clients client outsourcing since lost our the although, COVID-XX, business, due outsourcing not to has As crisis cancelled face-to-face for have a began. the single training business

with contracts that allow as outsourcing up multiyear fluctuations down accommodate demand and scale us have clients scale in We our to and required.

e-learning situation. the during future in such We're convert their COVID-XX working and place to to they remain as provide instructor-led live actively used historically training. situation clients virtual to with these COVID-XX contracts and instructor-led after those opportunities training other that for the may expect We modalities, growth

Now during that facing rate. Strategies half is growth XXXX, organic This second QX challenges GP's QX industry impacting for exceeded automotive during year sector the growth and and overall GP of delivered significant the that's revenue automotive XXXX. the

Going -- forward, digital sorry their enable our retail that successful automotive they is model. well-positioned our to about retooled client team transformation -- as

outsourcing call, the COVID-XX. contract In GP enabling is automotive on month, several is can the specifically in the remain type offer of rebounds This we and automotive our announced track QX transformations begin the next the an we long-term digital to demonstrates client. GP at growth million engagement industry industry. with for as This services outsourcing per and automotive dollar within from global earnings year targeted outsourcing multiyear dealerships Strategies it confident opportunities

Overall, XXXX. QX, XXXX, from slightly backlog QX, is up

from at of than down is XXXX. XX% QX, the end Our XXXX, less QX, pipeline sales

So, GP obviously, is situation the current Strategies COVID as well as impacting our clients.

With business as long-term. digital them between transformation the grow the clients, that services relationship confident business clients in of execute outsourcing operate evolve from we're custom key these our a said, procedures. our benefit remain learning. current continue and GP leading ability through we they the and strengthen our to over continuity the provider We way environment to as and help Times such the market their and and e-learning processes

for first Mike, to he'll the and more the provide financial turn I'll detailed call quarter. Now, over review

Mike Dugan

in and reported with gross million slide revenue $XXX.X Adam $XXX.X reported Thanks, down million year. QX on the million, profit everyone. eight. from morning good QX revenue of is last Starting and X% $XX.X of We which revenue or of

revenue QX of or Breaking revenue segment the year. $XX.X is X.X% out which $X.X by in QX $XX.X revenue segment, drivers reported down Workforce the million of of the million, from last Excellence million reported

the offsetting MLS Partially million of primarily $X.X practice $X.X are $X.X the a decrease contracts and e-learning services decrease X net new contributed a the virtual now the disruptions for training divested a related decreases million, to content October a due awarded decrease related million tuition primarily MLS fully due these business, in $X.X segment, was development in and this XXXX. to that COVID-XX business increase, outsourcing up. million instructor-led to million that practice XXXX and increase ramped $X.X was in to Within

$X.X million disruptions foreign of X and practice decrease XXXX. exchange $X.X to a business in million the LNG experienced segment, January million net changes $X.X decrease divested million in due primarily related COVID-XX in Within a currency was revenue, The related to there revenue due to decrease business, on decrease was to rates. a the this ETS that $X.X

down revenue QX Sales $X.X a segment, reported The XXXX. $XX.X $X.X training Business a $X practice million primarily related the automotive is to million to from in segment of of COVID-XX revenue decrease revenue reported primarily $XX or which to contributed disruptions the Enablement Within this million of in services. X.X% $X.X QX Services of million, business and million, net million decrease decrease sales in due Transformation

a decrease disruptions to consulting exchange strategic a practice net in within U.K. COVID-XX Development revenue million, services, segment, decrease changes million currency apprenticeship primarily Within in foreign of rates. $X.X Partially The decreases in in OD business Organizational revenue a $X.X this training primarily due decrease in these a to million due services. increase to $X.X and decrease $X.X offsetting OD related other was million contributed services. there million a was $X.X

$X pub is the consistent revenue in million, practice of Sales Enablement of which in XXXX. QX recorded XXXX revenue in of QX Publication was the $X with million

was versions. a QX, with revenue million forecasted as the in now result million; of million. the and quarter XXXX, as down five publication of $X $X.X of replace publications have digital follows: been and in scheduled to the be through projected revenue canceled the COVID as approximately compared QX, disruption XXXX, revenue publication $X.X year QX, two The million; For the to year end by a $X by is

In disruption. reporting to terms profit $X.X $XX.X gross of or in to of which of quarter-over-quarter, due for down million QX from profit the the gross Gross profit $XX.X segments the QX COVID-XX down report million, revenue is is of gross related reported XXXX. primarily both million profit. declines XX.X% We

longer on were decline as became our canceling service the services this in more or resume scaling and the or would disruption, be support Then asked situation time in the and weeks, increments starting they Early three the cost a were us once to For more implemented capacity quarter, delaying notifying that us aggressive to period clients our and in out like the it cost-cutting clients in that percent position QX. delivery. to margin short evolved resources we mid-March, drawn they and on two clear maintain some additional measures. was as color our

much that While not income they on impact will cost-cutting margins, for and did to beyond. margins have preserve help QX positive operating measures gross we and these expect QX

during possible landscape revenue this period the is steps gross take our changing and percent restrictions. We the monitor ever preserve objective necessary COVID-XX to to global continue extent depressed margin to of to due to the

XXXX onto primarily QX XXXX transaction, $XX.X administrative expenses General $X.X a a compared was to XXXX. to million $X.X million due increase expenses from legal first or of of on of and that a are million QX aborted million up in lower related labor potential expenses and in of increase fees $X.X XXXX million Sales are nine. transaction QX higher costs. of in SG&A XXXX. Primary to QX and IT is quarter in down $X primarily March due marketing for drivers Moving slide and the expenses other the to for X.X%

fuels on capital Moving sale a which direct with adjusting the few. and costs slide a reported XX, and income to associated value of touch included for upon items gain carrying business, primarily and goodwill. of working net alternative million just the onto $X.X We P&L the recorded deal was after our net was of selling on pretax business, other

impairment in an the is expenses million a the in to rates from $X.X last QX, expense operating asset of two $X.X million borrowings in non-cash and losses a year to QX due facility. on XXXX. $X.X Interest includes And due lease quarter transaction XXXX, down interest increase consolidation QX of credit versus exchange lower and million under facilities other charge foreign

QX from adjusted loss Moving of last for down earnings onto for reported share share After for items, of slide QX $X.X of was $X.XX Adjusted for on EBITDA $X.X of per is reported per year. summary $X.XX QX special in year. versus earnings adjusted adjusting XX. million the the last EBITDA million, we QX which

we expect negatively to quarter in first impact compared as revenues the significantly of the second we look quarter XXXX forward, to of XXXX. more our As COVID-XX

to due cost-cutting than XXXX, second with enacted previously, However, measures XXXX. as mid-March EBITDA mentioned to scaling first XXXX and of quarter expect significant the we be of cost adjusted or in quarter consistent greater

end the you EBITDA, adjusted and appendices this of the EPS to adjusted can on details refer presentation. For at

Moving of onto down reduction XXXX, some was from and revenue collections. $XX.X million is from XX. $X.X million. reported lower for primarily due as improvement million is continued balance in which $X.X for QX sheet $XX.X X/XX/XX, highlights Operating cash to year-end the flow on debt million A/R the slide $XX.X of Net million a XX/XX/XX. was

has our this continued downward trend. As of net debt X/XX,

The credit XXXX QX, lower our company's leverage consistent of full a ratio XXXX. ratio X.X, six which leverage facility under X.X is leverage ratio as as XXXX turn defined than of was with the the months ago at QX, end is reported just a and QX,

the time that maximum through company in allowed form the additional our the partnership banks, the May on credit Lastly, need of XXXX year. facility should of filing with to we this provide end the in period. have in in during increase disclosed our X, leverage This XX-Q we it an liquidity comes our amended

compliance of QX, are borrowings, borrowings while these our was to million. not of million. million our to the by expected this credit Under existing $XX.X would $XX.X amendment, as the increase available $XX.X we reach XXXX With terms facility, available currently levels,

was QX in is $XXX.X million divested related the fuels is Finally, page for or backlog backlog as turning backlog After to that up $XX.X the million, tuition backlog X.X% $XXX.X XX. to X.X%. and million removing million of $X.X compared was Alt which increase QX, approximately XXXX LNG the or to Backlog XXXX businesses, the on of XXXX. reported

back This turn concludes call update. financial now Scott. I the will the to

Scott Greenberg

you, Thank Mike.

lessons. but highly it. the we've impact We common had long-term COVID-XX, dealing common the theme. on a cost was with heard the balance side, was our theme company only not believe the And a liquidity, on proactive this COVID-XX today, that structure. improving opportunities very after liquidity variable you sheet And of focusing will on As protecting provide

outlook. So, we're very long-term optimistic the in

said, the With will Moderator? turn session. I Q&A to over that being it

Operator

time Ladies and gentlemen, at this the question-and-answer session. begin we'll [Operator Instructions]

Jeff go your comes first from Martin from Please question. Our ROTH Capital. today question ahead with

Jeff Martin

Thanks. Good guys. morning,

Scott Greenberg

Good staying morning, Hope, safe. Jeff. you're

Jeff Martin

get so, I base you that and to that well. you. kind families in-person what Wanted hope a stable or point Same and And training? if your reached stabilization sense is instructor-led of -- level? Thank has revenue a the of are of to you. is where

Scott Greenberg

lot revenue a Well, of is face-to-face blended in different our that's areas.

an we that, estimate have So, of Jeff.

in to XXXX. Our XX% of estimate overall of approximately total is our face-to-face XX% training revenue

it's the Looking that downturn the well that the is of QX why the we're at most of our area area as in projecting results, that hit was discussed. QX and we

to would Adam, you like add anything to that?

Adam Stedham

No.

That seeing a group then the a you our at I face-to-face, parts various consists One people. some different seeing world a where back, of in that pulling face-to-face think, we're And in group business coming of locations of particular, have paces. to two resurgence people together components. and yet. you to the class with you're of portion deliver not customer with actually areas go work different of you business, We're is clients. a

out a compliance of tied learning. related point would to lot is I But that business

modalities up solutions identifying deliver their they now that shifting, to are deadlines we with to around employees. and alternative right working not to compliance with the other employees, clients learning because train to have are come their So,

Jeff Martin

then base Okay. tied virtual to of you out terms of of question that's to was to And XX% in a that what foresee that XX% of converting face-to-face? percentage and kind e-learning do

Scott Greenberg

Adam?

Adam Stedham

can now. we think so, -- don't determine I I Well, that right

a for best virtual appetite helping trying face-to-face that develop to think, versus the success have we feel But now, We're a the virtual we having the a for balance clients ramp training. I ultimately of face right training amount practices that out. for in to down live out. final in is going really seeing instructor-led figure everybody's the for virtual we're And don't -- instructor-led where tremendous their see instructor-led. appetite instructor-led, significant as ramp-up with

Jeff Martin

been companies Okay. And in discuss April has are then you trends, trajectory of April? lot have information at can that -- what giving revenue look do the and a you

Scott Greenberg

Mike?

Mike Dugan

yeah. Well,

or looking and provide to What expect is more we've discussed able the significant providing in not on to decline QX specifics a revenue QX. do we're So, compared we not in forward. guidance

of between what significant And QX significant shutdown globally most XX where is -- about say and impact. that in-person the happened face-to-face going to be had would somewhere discussed -- business is Scott that heard is on that interaction. the XX% period You I or XX% our based most

QX. factors can what the for we specific projection are we is -- that specifically what results those So, is are time, at discuss our on but this have or specifics this the don't April or what

Scott Greenberg

to what very But the that or adjusted EBITDA Jeff, we're based the say for of revenue, profit at whole will to have above And business. because of first we with we variable or that, projecting QX is even did levels. add that reductions the quarter cost be quarter that a

I then quickly the variable do have of the ramping So, think, costs one the way when well. elements other ramp-up of up, is starts the we ability company to positive in adjust could we as the and downturn it

go you a If -- then basis variable the to was and while a but ago in the able ramp-up a happened the if downturn margin on in -- back what you XXXX, had the and years. this following automotive is percentage the with world and its company maintain in to significant back gross go

the situations. So, stressful the has company of that's type been under model

Adam Stedham

you thing April other since specifically this Adam. -- add I The asked about would is

wide saw face-to-face. cancellations scale So, April, we for

June. the that's Based We are some sitting things also like face-to-face -- continue current running be current looks more virtual that it seen of that's assuming the scheduled, on instructor-led the track, upon returns We've in May so middle had in May. scheduled converted of of those. now May, schedule, here the in we instructor-led will

have indicates May. from would we everything and be that we're that month. an we're improvement now, May, right of right an improvement seeing the insights seeing lowest June there as the now upon based is from So, April

-- So, looks us. for May the month be bottom was it out to

Jeff Martin

you. in Thank circle I'll back queue. the

Scott Greenberg

Okay. Jeff. Thank you,

Operator

Instructions] [Operator

from your next Cummins go Our is with from Please question. question Riley FBR. ahead Zach B.

Zach Cummins

were can many taking everyone. of engagements canceled in I morning, I here? for question. this, what something most then the in same face-to-face of dive being building these a it Thanks in COVID-XX, my mean, terms the bit seems terms a questions. impacted little versus But maybe by to sectors how have on just a later been And a Good that areas Hi. of the lot guess, date? of like take you Jeff deeper pushed most just has were impacted of business

Adam Stedham

answer Scott, that. I can

Scott Greenberg

Okay.

Adam Stedham

the for thanks So, Zach. questions,

to -- automotive automotive during a very been we this. said As travel there leisure, And strong hit than as harder I tried of outside earlier to few allude that for is have industry industries and us. are

far, hardest has by been So, for the us. automotive hit

look business, you If intact. it's at government our

we're defense at and aerospace we're impact doing is automotive you really If our where significant some that actually some with But on business. well, the is, look that. services, on There's seeing financial our, lifesciences. to impact most impact happy business

thing we're that them. And with where our automotive probably with said, side we business longest working that's have is on relationships. deepest actively The the the about great

positioned And automotive So, biggest we're recover that some the as the mentioned But the our bankruptcy. grew Scott them. earlier, companies that's business GP's hearing remind hit. XXXX/XXXX, GP automotive this, automotive where continued taking of we're as after that. And through filed to significantly everyone and recover concentrations definitely with world largest from they in of would I

Mike Dugan

your a government do developed, Zach, add the to and we of was regulatory look part financial you When lot In that, we've is the question. If sales we do it training. services, revenue compliance. stream just initiatives, of I could at

they'll why we you're delayed I -- they're being of that our looking services pushed been believe backlog has believe So, despite back, was just at So, strong that's end and decline. the currently. when that our that's all backlog to that's continue our again, why I developed, long-term so And QX, need, at that revenue right? services the the backlog,

Zach Cummins

training. I it. deadlines of I transition And engagements you you're later curious to some that to these versus just format. there do need training of I Adam, waiting to this was face-to-face helpful. actively was Got Got a to it. met. know to mentioned reschedule you know That's more virtual just willingness of some mentioned be compliance that the day client's a trying

Adam Stedham

about Zach, that's the it's are that of we interesting, things I trends when a actually, great positive us. talk question. for some And think

significant we've appetite to to like biggest of actually itself. new technology try type is impediment proponent instructor-led obviously of a modality that appetite willingness not a the change. years. number and for increased very So, change the for has things. for and the It's of virtual situation And significantly the training willingness of everyone's the been customer COVID-XX A typically,

bit quite of adoption. So, we're seeing actually a

whether it for teach we're And of the GP training for -- instructor-led virtually, around a teaching the business do able once live we're to Strategies not somewhere better negative conversion to our instructor effectively classes virtual wasting not teach And if to is revenue training to Because we're or travel people utilization time. us. again, outlook. live is class from instructor-led can have and flying it actually, a or it time the virtually same flying eliminate if we we're

would I there's around that and optimistic but that us. to -- could been reluctance where say very go, we're it's adoption positive be upbeat change very know where it going change don't the for we historically, to and potentially and of So,

Zach Cummins

then final mean, credit. that impressive improvements the know to the with environment. you're the believe of you going draw line quarters? thinking here here balance a about environment do within coming need And But the options in in forward? as I your a the in how capacity Got to sheets we expanding I there's are guess you that And upon be helpful. Or move was borrowing down the see the actually into sheet. question QX for me. sheet, That's I it. early latest it balance balance

Mike Dugan

Zack, positive cash so flow. continue free we flow QX, being for Well, cash generating far, and

at always capital deferrals. very our this especially while think, very small itself, cash generator, strong flow have have you we look -- a flow strong we flexibility, So, appropriations company been small have we in these and I When times.

customers the in not assets a by services investment in Basically for So, and company. the fixed our do are prepared. there's we not of paid lot

it's won't have we need. have flexibility So, bank. we hopefully, to the do But the from something

Zach Cummins

you Understood. and of Thank move you here QX. as best in forward for taking luck my questions

Mike Dugan

you, Zach. Thank

Operator

And question follow-up Jeff ahead a our your from question. go Martin. with next is Please

Jeff Martin

sense has But get to Wanted that observing everyone of impacts to I you. international and approaches. mean, and your are you're return back in world different a observations probably Thank of of just starting come a sense some of of Various how terms work. your to parts for markets want get seeing what the to the business.

Scott Greenberg

Adam?

Adam Stedham

Yeah.

So, in other we because China, [technical reschedule bit there. difficulty] things we're little in starting were hit see are on business in are -- China early starting in recover In as to China. actually the some companies U.K. to who We're see a

Scott Greenberg

we I I'm double think lost just just checking. Adam.

And is can hear me? Scott. you This

Operator

we Yes, can.

Scott Greenberg

Okay.

Adam's So, with go let on question. me

wanted discuss expand regarding thing I liquidity. Zach, just off, one we didn't to on First that

One do is rules. taxes things FICA that we under of to new have the that the we tax defer payments, U.S. get certain

May late in $X approximately start a that the QX first -- is that million in quarter where basically XXXX. is payment would So,

we get our tax flow certain well upcoming do and quarters. furloughs, the that U.K. increase will and cash as So, which benefits the in in some the benefit from

back Going …

Adam Stedham

I'm and unless Adam. happened. was finish I ahead on. answer. back I dropped, Scott, back. what know I'll finish, you this When don't is I'm go so answering you

Scott Greenberg

a back second, liquidity not. did to for I went I Adam. No.

your you go So, back could answer. to

Adam Stedham

Okay.

of sort U.K. started this U.K. come the much. don't the know just realizes started extended everyone not business, that if back So, business canceled has have back. to to were not that its I morning. U.K. The as scheme furlough the come parts

training training. people figure of on So, furlough the that a impact at the and clients They're and employee of plan -- out looking the lot balancing our being trying government together. compliance to versus are furlough also

on And them so, we're working that. with

U.S. believe the will start so We're in May. the April. June the actually, then than current more to be come active will seeing in more shows said then I hit. be than hardest the May has been schedule May. back industry And -- We And we're automotive actually things

was automotive the May June than the the we've then U.S. So, quarter lowest April big be and today. the the seen best where for will downturn,

what Sorry, I'm happened dropped Does that answer the sure I question? not there. when

I Sorry But did your question? for the disconnect. answer

Jeff Martin

and parts just that the That's U.S., I but some world your Thanks. starting early you reopening observations mean, I of it's was helpful. helps. the for the to Thank on what Yes. looking have in other perspective been. -- for that. so

does to unemployment wanted head lot of, of to commentary. impact paid And then revenue? looking basis sense XX%-plus, on qualitatively for get that And these a have quantify per in but you Are how you if that, some reaches a -- don't contracts?

Adam Stedham

by is let's What is reason I you amount unemployment your of to can correlate -- XX% say necessarily because training unemployment and of exactly. doesn't which the of And the the go you XX say, -- then historically, and let increases have XX%. them, train increases people

based upon we the instead And our revenue You still is of going whether to It's have people XX deliver not. actually people. train XX just training's basis event the to for or be held XX.

event in as deliver we people the same. people long So, as it, deliver the XX it's it then whether XX it, or we with in

and that understand correlation might training oversimplification -- a deliveries that of our it same gross the that's Now unemployment between you but hopefully think. there's not as really helps business, you

Scott Greenberg

of And diminished, In is people to of -- if to just have that. trained. need types cases regulatory certain Jeff, inserting training. adding the different that these new as They workforce be different well, or people positions bring in cross type in

lessening So, there's new sometimes as a us there demand more opportunities which actually of is of when a well. gives for training, cross workforce, the

Jeff Martin

commentary and general for acquisition some approach. your that. would is you'll that imagine was kin as outlook I But and things of around strategy around and question final stabilize, just looking look visibility improves And to that. resume

Scott Greenberg

on that our now that acquisitions us business Well, the model on improvement leverage for -- those and acquisitions have them we've of assembled. working made integration to period. of significant is sheet, right continue our The and in well, XXXX the focus during we balance

I is that predict can't the right short-term not the and same all on future we opportunities liquidity long-term have. So, acquisitive now, improving focus the be while future time to continue at generating to

Jeff Martin

your Make sense. and for well. Thanks time be

Scott Greenberg

safe. Thank you, Stay Jeff.

Operator

Paris Alex from ahead with Barrington from comes question next Please question. your our And go Research.

Alex Paris

just Hi, couple have questions. guys. of follow-up I a

noted XX% business? break your what that hit. Can instructor-led been that's of you other e-learning overall business revenue and you similarly, or virtual XX% then of face-to-face the of is the hardest percentage like rest down business to segments and First, the the is

Scott Greenberg

then Adam. over to Mike I'll start and hand it and I'll

our type But a was do then from of I think, we and government. what I of I management. looking it industry of give mean, I of well. about type very About and it's difficult if as say, the in our services then at lot U.S. the XX% those is more everything that do business is typically numbers. with do we blended to you're U.K. total, by revenue virtual could will to training we do we X% do. pharmaceutical the

So, have are both different well. instructors services delivered that and virtual of by it's standup delivered lot a as we

But that what being give. said, turn see we I clarification but firm he Adam to that, figures have could it I to on over don't think could

Adam Stedham

XX% Yeah. We of and our all don't the looked to are somewhere of track What XX% content at employees development is, it in dedicated that would to we've I say way, content our development. Alex.

business. an you side the revenue the gives upon account employee track but don't of we work that So, stream, for the that based

we other you if parts provide and infrastructure. business business their amount look Then our the outsourcing works, at large outsourcing way that the of a our of

about a we Scott revenue of as So, I assigned jobs have those our mean, to those -- and we part is contracts. have permanently significant to that multiyear talked XX% people very of -- and are

actually XX% significant the where a we've of infrastructure. multiyear that's is of revenue -- very that the taken over part So, contracts

basis. they their a manage on a So, and of team all people their and daily we infrastructure who go development and of have there learning their

large very that a in XX% percentage of there. So fits that --

look more the the the is in instructor face-to-face delivery, So, that of we wins typically we -- way that's at terms if provide some win that less the in it but revenue. the you single by particular we than versus of which of is way year, every contracts infrastructure to have look multiyear the where XX%

Mike Dugan

is this Alex, And Mike.

we that e-learning throughout offer. development Just it's content our or of clarity, to the development, content modalities are bit more whether development, a virtual all little give services those instructor-led content

you workforce, XX% dedicated development at our to our to it's probably look about just of Adam, effort, content of XX% XX% our XX% revenue. If talking

workforce that outsourced areas. of our Some in cost lower is

on an the on the So, that's dedicated -- I development we're those and services. of demand as increase just content that's the the in for teams call, service dedicated activities. -- types And seeing where mentioned lines that's

give you of magnitude just So, to there. a rough order

Scott Greenberg

Excuse me, Alex.

that Just many we to summarize. deal have difficult us -- would one it's modalities. mean, customer, when is I the within a we reason typically with customer for

company, it's combination look companies every of you face-to-face. and large at in customers, when automobile our service large pretty a the So, our much customer financial

the higher modalities As outsourcing, which us give different development, one some most many percentage many with Adam service of in we're dealing in believe have mentioned, customers, and to going we of managed as service, is to been areas them we've opportunity, a with content because different But opposed another. we modality areas. working

Alex Paris

that have travel really is the say terms virtual given more costs? in only instructor-led the you training Is don't than profitable instructor-led or equal you Would training, difference? face-to-face profitability of

Scott Greenberg

the your so, is instructor labor training utilization. profitability for key to the of the If a business. higher, really but relatively theoretically to probably as better driving of delivery same, scales, profitability learning instructor-led a utilization virtual business And which drive improve is would is trainers the the you is profitability training day ability -- of your on

Alex Paris

last I I talked recall GP. Is that disasters, business about a business had give That's real a question there helpful. on current is, this have in other at from I readiness big crisis emergency before think, Thank you guess, release and environment? us natural and you this in can you color you. my press And preparedness any then,

Adam Stedham

Go Go Scott. ahead, ahead.

Scott Greenberg

doing like events Well, things history well. you a biological have and basically, look pandemics do programs GP's exercise as for Alex, history, preparedness at if we

the do we with of We work. some So, work state Indiana.

We are does exercise programs that service it. is area. starting Typically to market educates what happens future and in prepares and for the off

revenue. crisis hoping want that's that prepare develop people our once then obviously that beyond the we're So, future, how initial get and we and to we organizations the for

jobs getting will fact now, normalized. the are it's become after impact but when we the really So, some occur more

wasn't that at was preparing until there we in a revenue generated If back afterwards a people focusing look type stream. when future it you started of case X/XX, year on event there

Adam Stedham

right? this we've that We the preparedness, a in done mean, the phase, us vehicles specific would we work. allow different bird So, actually the preparedness move to training And of scope government Yeah. flu place Scott's Indiana type did pandemic point, contracted. of had we of for state I be to work. in people have as to

no moved to one's Just that next yet. phase

Alex Paris

Great. point last Thank clarification. you. And just then, one I guess, of

more compared a impact Are the second a the versus that sequential decline decline percentage the revenues said release dollar a quarter. first quarter the you as or press in you year-over-year decline, the significantly to You dollars talking about to QX? expect COVID-XX year-over-year in negatively in

Mike Dugan

this is Alex, Mike. So,

revenue to comparison that our XXXX. a we XXXX, that further the would So QX decline of decline in And we do compared EBITDA, was XXXX of but reported -- to expect with QX be due of expect delay, in cost enactment improved even with our QX. the QX cost-cutting, consistent that EBITDA the be to with and cost-cutting QX late scaling should from the the for just mid-March and or of

Alex Paris

just just clear, million. revenue be be revenue. in you $XXX QX expect than QX So, million number, that than $XXX you lower to lower reported to

Mike Dugan

It's a be dollars. -- larger It's going in net to impact yes.

So, to we we the in million is than to $XX QX in QX. COVID down million that going The down impact were more significant COVID. $XX were be related

Alex Paris

well Gotcha. that. And declines absolutely. that experience revenue say then expect yeah, you revenue you then second for you -- half And did the and -- year-over-year? as to QX QX Thank

Mike Dugan

half versus half the of But in yes. the first half. second second improvement XXXX Year-over-year,

Alex Paris

that. good. for Thank Very you

Mike Dugan

Yeah.

Operator

any additional would Mr. closing gentlemen, and time for Greenberg over no I like ladies at to showing I turn to conference back remarks. questions. And call this the am

Scott Greenberg

today will model. to you and informative. Strategies on Thank continue reducing our business you. work then Hopefully, maximizing GP liquidity, cost, reestablish found

So, stay again and out there. should thanks safe everybody

Operator

that thank presentation. today's and today's gentlemen, for Ladies with call. joining conclude you conference We we'll

now may You disconnect your lines.

GP Strategies (GPX) 12 May 202020 Q1 Earnings call transcript