GP Strategies Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

gpx-20200331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the quarterly period ended March 31, 2020

¨ Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-7234

GP STRATEGIES CORPORATION

(Exact name of Registrant as specified in its charter)


Delaware						52-0845774
(State of Incorporation)						(I.R.S. Employer Identification No.)
70 Corporate Center
11000 Broken Land Parkway, Suite 200, Columbia, MD						21044
(Address of principal executive offices)						(Zip Code)

(443) 367-9600

Registrant’s telephone number, including area code:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer ¨

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act). Yes ¨ No ý

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	GPX	NYSE (New York Stock Exchange)

The number of shares outstanding of the registrant’s common stock as of April 21, 2020 was as follows:


Class						Outstanding
Common Stock, par value $.01 per share						17,173,072

GP STRATEGIES CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS


		Page

Part I.	Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets – March 3 1 , 20 20 and December 31, 2019	1

	Condensed Consolidated Statements of Operations – Three Months Ended March 3 1 , 20 20 and 20 19	2

	Condensed Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended March 3 1 , 20 20 and 20 19	3

	Condensed Consolidated Statements of Stockholders' Equity - Three Months Ended March 3 1 , 20 20 and 20 19	4

	Condensed Consolidated Statements of Cash Flows – Three Months Ended March 3 1 , 20 20 and 20 19	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	27

Item 4.	Controls and Procedures	27

Part II.	Other Information	29

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 6.	Exhibits	32

Signatures			33

Part I. Financial Information

Item 1. Financial Statements

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)


	March 31, 2020 (Unaudited)		December 31, 2019
Assets
Current assets:
Cash	$	9,025	$	8,159
Accounts and other receivables, less allowance for credit losses of $1,500 in 2020 and $1,132 in 2019	104,195		131,852
Unbilled revenue	60,655		57,229

Prepaid expenses and other current assets	21,306		19,115
Total current assets	195,181		216,355
Property, plant and equipment	23,297		23,746
Accumulated depreciation	(17,789)		(17,943)
Property, plant and equipment, net	5,508		5,803
Operating lease right-of-use assets	25,036		27,251
Goodwill	164,812		171,563
Intangible assets, net	14,583		16,344
Other assets	11,474		11,586
	$	416,594	$	448,902
Liabilities and Stockholders’ Equity
Current liabilities:


Accounts payable and accrued expenses	$	75,328	$	92,332
Deferred revenue	25,560		23,234
Current portion of operating lease liabilities	7,739		7,871
Total current liabilities	108,627		123,437
Long-term debt	74,837		82,870

Long-term portion of operating lease liabilities	20,776		22,159
Other noncurrent liabilities	9,862		10,522
Total liabilities	214,102		238,988

Stockholders’ equity:
Common stock, par value $0.01 per share	172		172
Additional paid-in capital	100,650		102,319
Retained earnings	129,934		131,228
Treasury stock at cost	(1,374)		(4,070)
Accumulated other comprehensive loss	(26,890)		(19,735)
Total stockholders’ equity	202,492		209,914
	$	416,594	$	448,902

See accompanying notes to condensed consolidated financial statements.

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)


	Three Months Ended March 31,
	2020		2019
Revenue	$	128,281	$	139,473
Cost of revenue	110,667		118,195
Gross profit	17,614		21,278
General and administrative expenses	17,284		16,127
Sales and marketing expenses	1,839		1,989
Restructuring charges	—		1,119
Gain on change in fair value of contingent consideration, net	—		50
Gain on sale of business	1,064		—
Operating income (loss)	(445)		2,093
Interest expense	978		1,598
Other expense	500		14
Income (loss) before income tax expense	(1,923)		481
Income tax expense (benefit)	(629)		147
Net income (loss)	$	(1,294)	$	334

Basic weighted average shares outstanding	17,082		16,672
Diluted weighted average shares outstanding	17,117		16,703

Per common share data:
Basic earnings (loss) per share	$	(0.08)	$	0.02
Diluted earnings (loss) per share	$	(0.08)	$	0.02

See accompanying notes to condensed consolidated financial statements.

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2020		2019
Net income (loss)	$	(1,294)	$	334
Foreign currency translation adjustments	(7,155)		1,713


Comprehensive income (loss)	$	(8,449)	$	2,047

See accompanying notes to condensed consolidated financial statements.

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2020 and 2019

(Unaudited)

(In thousands)


	Common stock		Additional paid-in capital		Retained earnings		Treasury stock at cost		Accumulated other comprehensive loss		Total stockholders’ equity
Balance at December 31, 2019	172		102,319		131,228		(4,070)		(19,735)		209,914


Net income (loss)	—		—		(1,294)		—		—		(1,294)
Foreign currency translation adjustment	—		—		—		—		(7,155)		(7,155)



Stock-based compensation expense	—		441		—		—		—		441


Issuance of stock for employer contributions to retirement plan	—		(1,062)		—		1,877		—		815
Net issuances of stock pursuant to stock compensation plans and other	—		(1,048)		—		819		—		(229)
Balance at March 31, 2020	$	172	$	100,650	$	129,934	$	(1,374)	$	(26,890)	$	202,492


	Common stock	Additional paid-in capital	Retained earnings	Treasury stock at cost	Accumulated other comprehensive loss	Total stockholders’ equity
Balance at December 31, 2018	172	105,850	116,039	(13,802)	(21,690)	186,569
Net income	—	—	334	—	—	334
Foreign currency translation adjustment	—	—	—	—	1,713	1,713

Stock-based compensation expense	—	354	—	—	—	354


Issuance of stock for employer contributions to retirement plan	—	(421)	—	1,156	—	735
Net issuances of stock pursuant to stock compensation plans and other	—	(874)	—	883	—	9
Balance at March 31, 2019	172	104,909	116,373	(11,763)	(19,977)	189,714

See accompanying notes to condensed consolidated financial statements.

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2020 and 2019

(Unaudited, in thousands)


	2020		2019
Cash flows from operating activities:
Net income (loss)	$	(1,294)	$	334
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Gain on change in fair value of contingent consideration, net	—		(50)
Gain on sale of business	(1,064)		—
Depreciation and amortization	2,177		2,341
Deferred income taxes	(414)		(102)
Non-cash compensation expense	1,256		1,089
Changes in other operating items:
Accounts and other receivables	25,290		6,104
Unbilled revenue	(5,252)		(2,553)
Prepaid expenses and other current assets	(3,602)		(5,600)
Accounts payable, accrued expenses and net change in operating leases	(10,917)		498
Deferred revenue	4,429		(5,589)


Other	(762)		923
Net cash provided by (used in) operating activities	9,847		(2,605)

Cash flows from investing activities:
Additions to property, plant and equipment	(467)		(542)

Proceeds from sale of business	3,328		—
Capitalized software development costs and other	(24)		(226)
Net cash provided by (used in) investing activities	2,837		(768)

Cash flows from financing activities:

Proceeds from long-term debt	62,187		33,038
Repayment of long-term debt	(70,220)		(33,000)

Change in negative cash book balance	(3,701)		(701)





Other financing activities	(8)		(27)
Net cash used in financing activities	(11,742)		(690)

Effect of exchange rate changes on cash and cash equivalents	(76)		(927)
Net increase (decrease) in cash	866		(4,990)
Cash at beginning of period	8,159		13,417
Cash at end of period	$	9,025	$	8,427

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	938	$	1,552
Cash paid during the period for income taxes	570		816

See accompanying notes to condensed consolidated financial statements.

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

(1)Basis of Presentation

GP Strategies Corporation is a global performance improvement solutions provider of training, digital learning solutions, management consulting and engineering services. References in this report to “GP Strategies,” the “Company,” “we” and “our” are to GP Strategies Corporation and its subsidiaries, collectively.

The accompanying condensed consolidated balance sheet as of March 31, 2020, the condensed consolidated statements of operations, comprehensive income (loss) and stockholders' equity for the three months ended March 31, 2020 and 2019, and the condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 have not been audited, but have been prepared in conformity with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019, as presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. In the opinion of management, this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for a fair presentation. The results for the 2020 interim period are not necessarily indicative of results to be expected for the entire year.

The condensed consolidated financial statements include the operations of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated.

Certain prior year amounts have been reclassified to conform with the current year presentation.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires us to employ estimates and make assumptions that affect the reported amounts of certain assets and liabilities, the revenues and expenses reported for the periods covered by the accompanying consolidated financial statements, and certain amounts disclosed in these Notes to the Condensed Consolidated Financial Statements. Although such estimates and assumptions are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience including considerations for potential impacts of the coronavirus (COVID-19) pandemic, actual results could differ significantly from those estimates and assumptions. Our estimates, judgments, and assumptions are evaluated periodically and adjusted accordingly.

Please refer to Note 1- Significant Accounting Policies of the Notes to Consolidated Financial Statements included in our 2019 Form 10-K for a discussion of other significant estimates and assumptions affecting our consolidated financial statements.

(2)Recent Accounting Standards

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326), which requires companies to record an allowance for expected credit losses over the contractual term of financial assets, including short-term trade receivables and contract assets, and expands disclosure requirements for credit quality of financial assets. We adopted the standard on January 1, 2020 and began recognizing an allowance for credit losses based on the estimated lifetime expected credit loss related to our financial assets, which primarily includes accounts receivable and unbilled revenue. The adoption of Topic 326 did not have a material impact on our consolidated results of operations or financial condition. During the three months ended March 31, 2020, we incorporated the forecasted impact of future economic conditions into our allowance for credit losses measurement process including the expected adverse impact of COVID-19 on the global economy.

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements. The guidance promotes a framework to help improve the effectiveness of disclosures in the notes and is effective for annual and interim periods beginning after December 15, 2019, although early adoption is permitted. We adopted the standard on January 1, 2020. The new standard did not impact our consolidated results of operations or financial condition.

Accounting Standards Not Yet Adopted

For a discussion of other accounting standards that have been issued by the FASB but are not yet effective, refer to the Recent Accounting Standards section in our Annual Report on Form 10-K for the year ended December 31, 2019. These standards are not expected to have a material impact on our results of operations, financial condition or cash flows.

(3)Revenue

Significant Accounting Policy

We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606). Revenue is measured based on the consideration specified in a contract with a customer. Most of our contracts with customers contain transaction prices with fixed consideration, however, some contracts may contain variable consideration in the form of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties and other similar items. When a contract includes variable consideration, we evaluate the estimate of variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. This can result in recognition of revenue over time as we perform services or at a point in time when the deliverable is transferred to the customer, depending on an evaluation of the criteria for over time recognition in ASC Topic 606. Further details regarding our revenue recognition for various revenue streams are discussed below.

Nature of goods and services

Over 90% of our revenue is derived from services provided to our customers for training, consulting, technical, engineering and other services. Less than 10% of our revenue is derived from various other offerings including custom magazine publications and assembly of glovebox portfolios for automotive manufacturers, licenses of software and other intellectual property, and software as a service (SaaS) arrangements.

Our primary contract vehicles are time-and-materials, fixed price (including fixed-fee per transaction) and cost-reimbursable contracts. Each contract has different terms based on the scope, deliverables and complexity of the engagement, requiring us to make judgments and estimates about recognizing revenue.

Under time-and-materials and cost-reimbursable contracts, the contractual billing schedules are based on the specified level of resources we are obligated to provide. Revenue under these contract types are recognized over time as services are performed as the client simultaneously receives and consumes the benefits provided by our performance throughout the engagement. The time and materials incurred for the period is the measure of performance and, therefore, revenue is recognized in that amount.

For fixed price contracts which typically involve a discrete project, such as development of training content and materials, design of training processes, software implementation, or engineering projects, the contractual billing schedules are not necessarily based on the specified level of resources we are obligated to provide. These discrete projects generally do not contain milestones or other measures of performance. The majority of our fixed price contracts meet the criteria in ASC Topic 606 for over time revenue recognition. For these contracts, revenue is recognized using a percentage-of-completion method based on the relationship of costs incurred to total estimated costs expected to be incurred over the term of the contract. We believe this methodology is a reasonable measure of proportional performance since performance primarily involves personnel costs and services provided to the customer throughout the course of the projects through regular communications of progress toward completion and other project deliverables. In addition, the customer is required to pay

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

us for the proportionate amount of our fees in the event of contract termination. A small portion of our fixed price contracts do not meet the criteria in ASC Topic 606 for over time revenue recognition. For these projects, we defer revenue recognition until the performance obligation is satisfied, which is generally when the final deliverable is provided to the client. The direct costs related to these projects are capitalized and then recognized as cost of revenue when the performance obligation is satisfied.

For fixed price contracts, when total direct cost estimates exceed revenues, the estimated losses are recognized immediately. The use of the percentage-of-completion method requires significant judgment relative to estimating total contract costs, including assumptions relative to the length of time to complete the project, the nature and complexity of the work to be performed, and anticipated changes in estimated salaries and other costs. Estimates of total contract costs are continuously monitored during the term of the contract, and recorded revenues and costs are subject to revision as the contract progresses. When revisions in estimated contract revenues and costs are determined, such adjustments are recorded in the period in which they are first identified. Adjustments to our fixed price contracts in the aggregate resulted in a net decrease to revenue of $0.1 million for the three months ended March 31, 2020 and a net increase to revenue of $1.1 million for the three months ended March 31, 2019.

For certain fixed-fee per transaction contracts, such as delivering training courses or conducting workshops, revenue is recognized during the period in which services are delivered in accordance with the pricing outlined in the contracts.

For certain fixed-fee per transaction and fixed price contracts in which the output of the arrangement is measurable, such as for the shipping of publications and print materials, revenue is recognized at the point in time at which control is transferred which is upon delivery.

Taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue-producing transaction, that we collect from a customer, are excluded from revenue.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. As of March 31, 2020, we had $341.2 million of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 85 percent of our remaining performance obligations as revenue within the next twelve months.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled revenue (contract assets), and deferred revenue (contract liabilities) on the condensed consolidated balance sheet. Amounts charged to our clients become billable according to the contract terms, which usually consider the passage of time, achievement of milestones or completion of the project. When billings occur after the work has been performed, such unbilled amounts will generally be billed and collected within 60 to 120 days but typically no longer than over the next twelve months. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within the next twelve months. These assets and liabilities are reported on the condensed consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the three-month period ended March 31, 2020 were not materially impacted by any other factors.

We recognized revenue of $8.2 million and $11.1 million for the three months ended March 31, 2020 and 2019, respectively, that was included in the contract liability balance at the beginning of the year and primarily represented revenue from services performed during the current period for which we received advance payment from clients in a prior period.

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

Revenue by Category

The following series of tables presents our revenue disaggregated by various categories (dollars in thousands).


	Three Months Ended March 31,
	Workforce Excellence						Business Transformation Services						Consolidated
	2020		2019		2020		2019		2020		2019
Revenue by type of service:
Managed learning services	$	42,498	$	44,642	$	—	$	—	$	42,498	$	44,642
Engineering & technical services	31,880		36,836		—		—		31,880		36,836
Sales enablement	—		—		32,488		35,551		32,488		35,551
Organizational development	—		—		21,415		22,444		21,415		22,444
	$	74,378	$	81,478	$	53,903	$	57,995	$	128,281	$	139,473

Revenue by geographic region:
Americas	$	56,563	$	59,664	$	36,849	$	40,620	$	93,412	$	100,284
Europe Middle East Africa	17,672		19,278		16,161		15,017		33,833		34,295
Asia Pacific	5,445		6,142		4,739		5,134		10,184		11,276
Eliminations	(5,302)		(3,606)		(3,846)		(2,776)		(9,148)		(6,382)
	$	74,378	$	81,478	$	53,903	$	57,995	$	128,281	$	139,473

Revenue by client market sector:
Automotive	$	2,453	$	3,598	$	29,702	$	34,176	$	32,155	$	37,774
Financial & Insurance	19,156		19,206		1,471		1,915		20,627		21,121
Manufacturing	9,158		9,270		2,958		5,018		12,116		14,288
Energy / Oil & Gas	6,275		11,530		1,173		1,028		7,448		12,558
U.S. Government	11,206		9,795		1,582		1,729		12,788		11,524
U.K. Government	—		—		5,267		4,043		5,267		4,043
Information & Communication	4,115		5,306		629		459		4,744		5,765
Aerospace	8,296		7,510		1,017		103		9,313		7,613
Electronics Semiconductor	2,623		4,130		217		246		2,840		4,376
Life Sciences	5,108		4,894		1,214		1,933		6,322		6,827
Other	5,988		6,239		8,673		7,345		14,661		13,584
	$	74,378	$	81,478	$	53,903	$	57,995	$	128,281	$	139,473

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

(4)Significant Customers & Concentration of Credit Risk

We have a market concentration of revenue in both the automotive sector and financial & insurance sector. Revenue from the automotive sector accounted for approximately 25% and 27% of our consolidated revenue for the three months ended March 31, 2020 and 2019, respectively. In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 14% and 13% of our consolidated revenue for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, accounts receivable from a single automotive customer totaled $13.6 million, or 13%, of our consolidated accounts receivable balance.

Revenue from the financial & insurance sector accounted for approximately 16% and 15% of our consolidated revenue for the three months ended March 31, 2020 and 2019, respectively. In addition, we have a concentration of revenue from a single financial services customer, which accounted for approximately 9% and 11% of our consolidated revenue for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, billed and unbilled accounts receivable from a single financial services customer totaled $12.4 million, or 8%, of our consolidated accounts receivable and unbilled revenue balances.

No other single customer accounted for more than 10% of our consolidated revenue for the three months ended March 31, 2020 or 2019 or consolidated accounts receivable balance as of March 31, 2020.

(5)Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

Our dilutive common stock equivalent shares consist of restricted stock units computed under the treasury stock method, using the average market price during the period. Performance-based restricted stock unit awards are included in the computation of diluted shares based on the probable outcome of the underlying performance conditions being achieved.

The following table presents instruments which were not dilutive and were excluded from the computation of diluted EPS in each period, as well as the dilutive common stock equivalent shares which were included in the computation of diluted EPS:


	Three Months Ended March 31,
	2020	2019
	(In thousands)
Non-dilutive instruments	36	51

Dilutive common stock equivalents	35	31

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

(6)Divestiture

Sale of Alternative Fuels Division

Effective January 1, 2020, we sold our Alternative Fuels Division pursuant to an Asset Purchase Agreement with Cryogenic Industries, LLC. The upfront cash purchase price was $4.8 million, which consisted of an advance payment of $1.5 million received on December 31, 2019 and $3.5 million received on January 2, 2020, offset by a $0.2 million cash payment to the buyer in March 2020 in settlement of the final net working capital as defined in the asset purchase agreement. In addition, up to $0.5 million of the purchase price is subject to the achievement of certain milestones under an assigned contract through the period December 31, 2021. We recognized a pre-tax gain of $1.1 million, net of $1.3 million direct selling costs, on the sale of the business. The gain represents the difference between the purchase price and the carrying value of the business, which primarily included net working capital of $0.1 million and goodwill of $2.6 million. The Alternative Fuels Division was part of the Workforce Excellence segment.

(7)Intangible Assets

Goodwill

Changes in the carrying amount of goodwill by reportable business segment for the three months ended March 31, 2020 were as follows (in thousands):


	Workforce Excellence		Business Transformation Services		Total
Balance as of December 31, 2019	$	119,311	$	52,252	$	171,563


Divestiture	(2,594)		—		(2,594)
Foreign currency translation	(2,921)		(1,236)		(4,157)
Balance as of March 31, 2020	$	113,796	$	51,016	$	164,812

Intangible Assets Subject to Amortization

Intangible assets with finite lives are subject to amortization over their estimated useful lives. The primary assets included in this category and their respective balances were as follows (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
March 31, 2020
Customer relationships	$	20,071	$	(6,733)	$	13,338

Intellectual property and other	3,467		(2,222)		1,245
	$	23,538	$	(8,955)	$	14,583

December 31, 2019
Customer relationships	$	22,348	$	(7,473)	$	14,875

Price	13.41	EPS	0
Shares	17	P/E	37
MCap	227	P/FCF	50
Net Debt	105	EBIT	14
TEV	333	TEV/EBIT	24
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-11
10-K	2019-12-31	Filed 2020-03-10
10-Q	2019-09-30	Filed 2019-11-07
10-Q	2019-06-30	Filed 2019-08-02
10-Q	2019-03-31	Filed 2019-05-10
10-K	2018-12-31	Filed 2019-04-01
10-Q	2018-09-30	Filed 2018-11-06
10-Q	2018-06-30	Filed 2018-08-01
10-Q	2018-03-31	Filed 2018-05-03
10-K	2017-12-31	Filed 2018-03-01
10-Q	2017-09-30	Filed 2017-11-02
10-Q	2017-06-30	Filed 2017-07-27
10-Q	2017-03-31	Filed 2017-05-02
10-K	2016-12-31	Filed 2017-02-28
10-Q	2016-09-30	Filed 2016-11-01
10-Q	2016-06-30	Filed 2016-07-28
10-Q	2016-03-31	Filed 2016-04-28
10-K	2015-12-31	Filed 2016-02-25
10-Q	2015-09-30	Filed 2015-10-29
10-Q	2015-06-30	Filed 2015-07-30
10-Q	2015-03-31	Filed 2015-05-05
10-K	2014-12-31	Filed 2015-02-24
10-Q	2014-09-30	Filed 2014-10-30
10-Q	2014-06-30	Filed 2014-07-31
10-Q	2014-03-31	Filed 2014-05-01
10-K	2013-12-31	Filed 2014-02-28
10-Q	2013-09-30	Filed 2013-10-31
10-Q	2013-06-30	Filed 2013-08-01
10-Q	2013-03-31	Filed 2013-05-02
10-K	2012-12-31	Filed 2013-02-26
10-Q	2012-09-30	Filed 2012-11-01
10-Q	2012-06-30	Filed 2012-08-02
10-Q	2012-03-31	Filed 2012-05-03
10-Q	2011-09-30	Filed 2011-11-03
10-Q	2011-06-30	Filed 2011-08-04
10-Q	2011-03-31	Filed 2011-05-05
10-K	2010-12-31	Filed 2011-03-03
10-Q	2010-09-30	Filed 2010-11-04
10-Q	2010-06-30	Filed 2010-08-05
10-Q	2010-03-31	Filed 2010-05-06
10-K	2009-12-31	Filed 2010-03-04

8-K	2020-07-17	Officers
8-K	2020-07-07	Officers
8-K	2020-07-01	Officers, Exhibits
8-K	2020-06-09
8-K	2020-05-11
8-K	2020-05-07
8-K	2020-03-26
8-K	2020-03-10
8-K	2020-01-10
8-K	2020-01-08
8-K	2019-11-07
8-K	2019-10-31
8-K	2019-08-07
8-K	2019-08-01
8-K	2019-05-15
8-K	2019-05-10
8-K	2019-03-18
8-K	2019-03-15
8-K	2018-11-30
8-K	2018-11-06
8-K	2018-11-06
8-K	2018-08-08
8-K	2018-08-08
8-K	2018-08-02
8-K	2018-07-31
8-K	2018-06-29
8-K	2018-06-20
8-K	2018-05-03
8-K	2018-04-20
8-K	2018-03-06
8-K	2018-03-01

EX-31.1	exhibit311-gpx33120.htm
EX-31.2	exhibit312-gpx33120.htm
EX-32.1	exhibit321-gpx33120.htm

GPX 10Q Quarterly Report

GP Strategies Earnings 2020-03-31