GP Strategies Reports First Quarter 2006 Results.ELKRIDGE, Md. -- GP Strategies Corporation (NYSE NYSE See: New York Stock Exchange : GPX GPX - Early system on UNIVAC II. Listed in CACM 2(5):16 (May 1959). ), a global provider of training, e-Learning solutions, management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects , and engineering services through its core operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. General Physics Corporation, today reported first quarter 2006 results. First Quarter Highlights: --Operating income of $2.4 million, up 19.1% compared to the first quarter of 2005 --Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before interest expense and income tax expense of $2.8 million, up 36.4% compared to the first quarter of 2005 --Income from continuing operations of $1.4 million, or $0.08 per share, up 62.6% compared to the first quarter of 2005 --Completed capital stock restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , eliminating all Class B super voting stock Voting stock The shares in a corporation that entitle the shareholder to vote. voting stock Stock for which the holder has the right to vote in the election of directors, in the appointment of auditors, or in other matters brought up at the "I am proud to report the Company had a solid first quarter," said Scott N. Greenberg, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of GP Strategies. "We continue to achieve strong operating results and remain well positioned to benefit from training outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. trends. As a total solutions provider, GP offers customers subject matter expertise, extensive training experience and flexibility, and our management team and employees are focused on leveraging these capabilities to meet our strategic objectives including, cross-selling into our diverse client base, competing for new customers, pursuing accretive acquisitions Accretive Acquisition An acquisition that will increase the acquiring company's EPS. Notes: As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. and expanding our global footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. ." First Quarter Results Revenue was $43.5 million for the first quarter of 2006 compared to $43.6 million for the first quarter of 2005. While revenue was flat year over year, there were several offsetting increases and decreases during the first quarter of 2006 as follows: --Net increases of $2.3 million in revenue for e-Learning, lean manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. and other technical services as a result of increased contract scopes and new contract awards with several new and existing customers --Decrease of $3.2 million in revenue due to a decline in government funding for the Domestic Preparedness pre·par·ed·ness n. The state of being prepared, especially military readiness for combat. Noun 1. preparedness - the state of having been made ready or prepared for use or action (especially military action); "putting them Equipment Technical Assistance Program (DPETAP DPETAP Domestic Preparedness Equipment Technical Assistance Program ) --Net increase of $1.3 million in revenue from hurricane recovery services --Net increase of $0.8 million in revenue from our international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. --Decrease in revenue of $1.3 million due to a change in contract scopes with a business process outsourcing Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in customer during the third quarter of 2005 During the first quarter of 2006, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased $0.4 million, to $2.4 million from $2.0 million in the first quarter of 2005. The increase in operating income is attributable to an increase in gross profit of $0.2 million and a decrease in selling, general and administrative expenses of $0.2 million, primarily due to a reduction in the provision for doubtful accounts and a decrease in legal expenses compared to the first quarter of 2005. Operating income includes severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when 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 compensation expense of $0.2 million. During the first quarter of 2006, income from continuing operations increased $0.5 million to $1.4 million, compared to $0.8 million for the first quarter of 2005. The increase is primarily due to increased operating income discussed above and an increase in other income attributable to higher interest and investment income, offset by an increase in income tax expense due to higher income from continuing operations before income tax expense. Capital Stock Restructuring On January 19, 2006, GP Strategies (the "Company") completed a restructuring of its capital stock, which included the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. 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. Prior to the restructuring, the 1,200,000 outstanding shares of Class B stock collectively represented approximately 41% of the aggregate voting power of the Company since the Class B stock has ten votes per share. In connection with the repurchase and exchange transactions, the Company authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the repurchase of up to $5 million of additional common shares from time to time in the open market, subject to prevailing business and market conditions and other factors. Through April 2006, the Company repurchased a total of 224,300 shares of its common stock in the open market for a total cost of approximately $1.6 million. The Company has scheduled an investor conference call for 10:00 a.m. ET on May 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 888-412-9257 using conference ID number 8806995. A telephone replay of the call will also be available beginning at 11:00 a.m. on May 9th, until 11:59 p.m. on May 23rd. To listen to the replay, dial 800-642-1687 or 706-645-9291, using conference ID number 8806995. About GP Strategies Corporation GP Strategies, whose core operating subsidiary is General Physics Corporation, is a NYSE listed company listed company n → compañía cotizable listed company n → société cotée en Bourse listed company list n → (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. This report contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " 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 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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. 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. TABLES FOLLOW The following table summarizes the consolidated results of operations of GP Strategies Corporation ("the Company" or "GP Strategies") for the quarters ended March 31, 2006 and 2005. As previously announced, GP Strategies completed the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of GSE GSE general somatic efferent system. 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 Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. for the prior period presented.
(Unaudited - in thousands, except per share Quarters ended
amounts) March 31,
---------------------
2006* 2005
---------------------
Revenue $ 43,528 $ 43,560
Cost of revenue 37,766 38,016
---------------------
Gross profit 5,762 5,544
Selling, general and administrative expenses 3,372 3,538
---------------------
Operating income 2,390 2,006
Other income 404 42
---------------------
Income from continuing operations before
interest expense and income tax expense 2,794 2,048
Interest expense 414 363
---------------------
Income from continuing operations before
income tax expense 2,380 1,685
Income tax expense 1,011 843
---------------------
Income from continuing operations 1,369 842
Loss from discontinued operations, net of
income taxes -- (374)
---------------------
Net income $ 1,369 $ 468
=====================
Per common share data:
Basic:
Income from continuing operations $ 0.08 $ 0.05
Loss from discontinued operations -- (0.02)
---------------------
Net income $ 0.08 $ 0.03
=====================
Diluted:
Income from continuing operations $ 0.08 $ 0.04
Loss from discontinued operations -- (0.02)
---------------------
Net income $ 0.08 $ 0.02
=====================
* Operating income for the first quarter of 2006 includes $0.3 million
of one-time severance charges, primarily associated with a decrease
in government funding for the Domestic Preparedness Equipment
Technical Assistance Program, and a staffing change within the
Company's tax organization.
The following table summarizes the condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. data of GP Strategies, as of March 31, 2006 and December 31, 2005.
(Unaudited - in thousands)
March 31, December 31,
2006 2005
------------------------
Current assets:
Cash and cash equivalents $ 1,074 $ 18,118
Accounts and other receivables 23,862 27,079
Costs and estimated earnings in excess of
billings on uncompleted contracts 13,024 11,487
Prepaid expenses and other current assets 5,273 5,936
------------------------
Total current assets 43,233 62,620
Property, plant and equipment, net 1,833 1,857
Goodwill and other intangibles, net 59,161 58,130
Deferred tax assets 10,181 10,391
Other assets 2,085 1,643
------------------------
Total assets $ 116,493 $ 134,641
========================
Current liabilities:
Current maturities of long-term debt $ 79 $ 71
Short-term borrowings 1,732 -
Accounts payable and accrued expenses 20,337 20,315
Billings in excess of costs and estimated
earnings on uncompleted contracts 6,077 7,430
------------------------
Total current liabilities 28,225 27,816
Long-term debt less current maturities 11,444 11,309
Other non-current liabilities 1,179 1,174
------------------------
Total liabilities 40,848 40,299
Total stockholders' equity 75,645 94,342
------------------------
Total liabilities and stockholders'
equity $ 116,493 $ 134,641
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