gpx-20210331

000007041512/31falseQ12021Subsequent Event (Possible)On May [•], 2021, GP Strategies Corporation (the “Company”), a Delaware corporation, entered into an asset purchase agreement (the “Purchase Agreement”) with Toshiba America Energy Systems Corporation, a Delaware corporation (“Buyer”), pursuant to which the Company has agreed to sell substantially all of its assets and liabilities related to the EtaPRO business (the “Business”) to Buyer and certain of its affiliates (such contemplated sale, the “Transaction”). The aggregate purchase price for the Transaction is approximately $40 million in cash, subject to certain closing and post-closing purchase price adjustments set forth in the Purchase Agreement and an indemnity escrow of $4 million.00000704152021-01-012021-03-31xbrli:shares00000704152021-04-29iso4217:USD00000704152021-03-3100000704152020-12-31iso4217:USDxbrli:shares00000704152020-01-012020-03-310000070415us-gaap:CommonStockMember2020-12-310000070415us-gaap:AdditionalPaidInCapitalMember2020-12-310000070415us-gaap:RetainedEarningsMember2020-12-310000070415us-gaap:TreasuryStockMember2020-12-310000070415us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000070415us-gaap:RetainedEarningsMember2021-01-012021-03-310000070415us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000070415us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000070415us-gaap:CommonStockMember2021-01-012021-03-310000070415us-gaap:TreasuryStockMember2021-01-012021-03-310000070415us-gaap:CommonStockMember2021-03-310000070415us-gaap:AdditionalPaidInCapitalMember2021-03-310000070415us-gaap:RetainedEarningsMember2021-03-310000070415us-gaap:TreasuryStockMember2021-03-310000070415us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000070415us-gaap:CommonStockMember2019-12-310000070415us-gaap:AdditionalPaidInCapitalMember2019-12-310000070415us-gaap:RetainedEarningsMember2019-12-310000070415us-gaap:TreasuryStockMember2019-12-310000070415us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-3100000704152019-12-310000070415us-gaap:RetainedEarningsMember2020-01-012020-03-310000070415us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000070415us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310000070415us-gaap:TreasuryStockMember2020-01-012020-03-310000070415us-gaap:CommonStockMember2020-03-310000070415us-gaap:AdditionalPaidInCapitalMember2020-03-310000070415us-gaap:RetainedEarningsMember2020-03-310000070415us-gaap:TreasuryStockMember2020-03-310000070415us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-3100000704152020-03-31gpx:segmentxbrli:pure0000070415srt:MinimumMember2021-01-012021-03-310000070415srt:MaximumMember2021-01-012021-03-310000070415us-gaap:SalesRevenueNetMembergpx:AutomotiveIndustryMember2021-01-012021-03-310000070415us-gaap:SalesRevenueNetMembergpx:AutomotiveIndustryMember2020-01-012020-03-310000070415gpx:SingleAutomotiveCustomerMembergpx:AutomotiveIndustryMemberus-gaap:SalesRevenueNetMember2021-01-012021-03-310000070415gpx:SingleAutomotiveCustomerMembergpx:AutomotiveIndustryMemberus-gaap:SalesRevenueNetMember2020-01-012020-03-310000070415gpx:SingleAutomotiveCustomerMember2021-03-310000070415gpx:SingleAutomotiveCustomerMember2021-01-012021-03-310000070415us-gaap:SalesRevenueNetMembergpx:FinancialInsuranceIndustryMember2021-01-012021-03-310000070415us-gaap:SalesRevenueNetMembergpx:FinancialInsuranceIndustryMember2020-01-012020-03-310000070415us-gaap:SalesRevenueNetMembergpx:SingleFinancialServicesCustomerMembergpx:FinancialInsuranceIndustryMember2020-01-012020-03-310000070415us-gaap:SalesRevenueNetMembergpx:SingleFinancialServicesCustomerMembergpx:FinancialInsuranceIndustryMember2021-01-012021-03-310000070415gpx:SingleFinancialServicesCustomerMember2021-03-310000070415gpx:SingleFinancialServicesCustomerMemberus-gaap:AccountsReceivableMember2021-01-012021-03-310000070415us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMembergpx:QuickLaneMember2021-03-310000070415us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMembergpx:EtaPROMember2021-03-310000070415gpx:NorthAmericaSegmentMember2020-12-310000070415gpx:EMEASegmentMember2020-12-310000070415gpx:EmergingMarketsMember2020-12-310000070415gpx:NorthAmericaSegmentMember2021-03-310000070415gpx:EMEASegmentMember2021-03-310000070415gpx:EmergingMarketsMember2021-03-310000070415gpx:NorthAmericaSegmentMember2021-01-012021-03-310000070415gpx:EMEASegmentMember2021-01-012021-03-310000070415gpx:EmergingMarketsMember2021-01-012021-03-310000070415us-gaap:CustomerRelationshipsMember2021-03-310000070415gpx:IntellectualPropertyAndOtherMember2021-03-310000070415us-gaap:CustomerRelationshipsMember2020-12-310000070415gpx:IntellectualPropertyAndOtherMember2020-12-310000070415us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310000070415us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-03-310000070415srt:BoardOfDirectorsChairmanMember2021-01-012021-03-310000070415srt:BoardOfDirectorsChairmanMember2020-01-012020-03-310000070415us-gaap:RevolvingCreditFacilityMembergpx:FinancingSecurityAgreementMemberus-gaap:LineOfCreditMember2018-11-300000070415us-gaap:RevolvingCreditFacilityMembergpx:FinancingSecurityAgreementMemberus-gaap:ForeignLineOfCreditMember2018-11-300000070415us-gaap:RevolvingCreditFacilityMembergpx:FinancingSecurityAgreementMembergpx:AccordionFeatureMember2018-11-300000070415us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMembergpx:FinancingSecurityAgreementMember2018-11-300000070415us-gaap:RevolvingCreditFacilityMembergpx:SwingLineLoanCreditMembergpx:FinancingSecurityAgreementMember2018-11-300000070415gpx:FinancingSecurityAgreementMemberus-gaap:BaseRateMembersrt:MinimumMember2018-11-302018-11-300000070415gpx:FinancingSecurityAgreementMemberus-gaap:BaseRateMembersrt:MaximumMember2018-11-302018-11-300000070415gpx:FinancingSecurityAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMember2018-11-302018-11-300000070415gpx:FinancingSecurityAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MaximumMember2018-11-302018-11-300000070415gpx:OvernightBankFundingRateMembergpx:FinancingSecurityAgreementMember2018-11-302018-11-300000070415gpx:FinancingSecurityAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2018-11-302018-11-300000070415gpx:FiscalQuartersThroughDecember312020Memberus-gaap:RevolvingCreditFacilityMembergpx:FinancingSecurityAgreementMemberus-gaap:LineOfCreditMembersrt:MinimumMember2020-05-070000070415gpx:FiscalQuartersThroughDecember312020Memberus-gaap:RevolvingCreditFacilityMembergpx:FinancingSecurityAgreementMemberus-gaap:LineOfCreditMembersrt:MaximumMember2020-05-070000070415us-gaap:RevolvingCreditFacilityMembergpx:FinancingSecurityAgreementMemberus-gaap:LineOfCreditMembergpx:FiscalQuartersThroughMarch312020Member2020-05-070000070415us-gaap:RevolvingCreditFacilityMembergpx:FinancingSecurityAgreementMemberus-gaap:LineOfCreditMember2020-05-070000070415us-gaap:RevolvingCreditFacilityMembergpx:FinancingSecurityAgreementMemberus-gaap:LineOfCreditMember2021-03-310000070415us-gaap:RevolvingCreditFacilityMember2021-03-310000070415us-gaap:RevolvingCreditFacilityMember2021-01-012021-03-310000070415us-gaap:RevolvingCreditFacilityMember2020-01-012020-03-310000070415us-gaap:AccountsPayableMember2021-03-310000070415us-gaap:AccruedLiabilitiesMember2021-03-310000070415us-gaap:SubsequentEventMembersrt:ScenarioForecastMember2021-04-012021-06-3000000704152020-01-012020-12-310000070415gpx:NorthAmericaSegmentMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310000070415gpx:NorthAmericaSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310000070415us-gaap:OperatingSegmentsMembergpx:EMEASegmentMember2021-01-012021-03-310000070415us-gaap:OperatingSegmentsMembergpx:EMEASegmentMember2020-01-012020-03-310000070415gpx:EmergingMarketsMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310000070415gpx:EmergingMarketsMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310000070415us-gaap:OperatingSegmentsMember2021-01-012021-03-310000070415us-gaap:OperatingSegmentsMember2020-01-012020-03-310000070415gpx:NorthAmericaSegmentMember2020-01-012020-03-310000070415gpx:EMEASegmentMember2020-01-012020-03-310000070415gpx:EmergingMarketsMember2020-01-012020-03-310000070415gpx:NorthAmericaSegmentMembergpx:OrganizationalPerformanceSolutionsMember2021-01-012021-03-310000070415gpx:NorthAmericaSegmentMembergpx:OrganizationalPerformanceSolutionsMember2020-01-012020-03-310000070415gpx:EMEASegmentMembergpx:OrganizationalPerformanceSolutionsMember2021-01-012021-03-310000070415gpx:EMEASegmentMembergpx:OrganizationalPerformanceSolutionsMember2020-01-012020-03-310000070415gpx:EmergingMarketsMembergpx:OrganizationalPerformanceSolutionsMember2021-01-012021-03-310000070415gpx:EmergingMarketsMembergpx:OrganizationalPerformanceSolutionsMember2020-01-012020-03-310000070415gpx:OrganizationalPerformanceSolutionsMember2021-01-012021-03-310000070415gpx:OrganizationalPerformanceSolutionsMember2020-01-012020-03-310000070415gpx:NorthAmericaSegmentMembergpx:TechnicalPerformanceSolutionsMember2021-01-012021-03-310000070415gpx:NorthAmericaSegmentMembergpx:TechnicalPerformanceSolutionsMember2020-01-012020-03-310000070415gpx:EMEASegmentMembergpx:TechnicalPerformanceSolutionsMember2021-01-012021-03-310000070415gpx:EMEASegmentMembergpx:TechnicalPerformanceSolutionsMember2020-01-012020-03-310000070415gpx:EmergingMarketsMembergpx:TechnicalPerformanceSolutionsMember2021-01-012021-03-310000070415gpx:EmergingMarketsMembergpx:TechnicalPerformanceSolutionsMember2020-01-012020-03-310000070415gpx:TechnicalPerformanceSolutionsMember2021-01-012021-03-310000070415gpx:TechnicalPerformanceSolutionsMember2020-01-012020-03-310000070415gpx:NorthAmericaSegmentMembergpx:AutomotivePerformanceSolutionsMember2021-01-012021-03-310000070415gpx:NorthAmericaSegmentMembergpx:AutomotivePerformanceSolutionsMember2020-01-012020-03-310000070415gpx:AutomotivePerformanceSolutionsMembergpx:EMEASegmentMember2021-01-012021-03-310000070415gpx:AutomotivePerformanceSolutionsMembergpx:EMEASegmentMember2020-01-012020-03-310000070415gpx:AutomotivePerformanceSolutionsMembergpx:EmergingMarketsMember2021-01-012021-03-310000070415gpx:AutomotivePerformanceSolutionsMembergpx:EmergingMarketsMember2020-01-012020-03-310000070415gpx:AutomotivePerformanceSolutionsMember2021-01-012021-03-310000070415gpx:AutomotivePerformanceSolutionsMember2020-01-012020-03-310000070415gpx:NorthAmericaSegmentMembergpx:AutomotiveMarketSectorMember2021-01-012021-03-310000070415gpx:NorthAmericaSegmentMembergpx:AutomotiveMarketSectorMember2020-01-012020-03-310000070415gpx:EMEASegmentMembergpx:AutomotiveMarketSectorMember2021-01-012021-03-310000070415gpx:EMEASegmentMembergpx:AutomotiveMarketSectorMember2020-01-012020-03-310000070415gpx:EmergingMarketsMembergpx:AutomotiveMarketSectorMember2021-01-012021-03-310000070415gpx:EmergingMarketsMembergpx:AutomotiveMarketSectorMember2020-01-012020-03-310000070415gpx:AutomotiveMarketSectorMember2021-01-012021-03-310000070415gpx:AutomotiveMarketSectorMember2020-01-012020-03-310000070415gpx:NorthAmericaSegmentMembergpx:FinancialandInsuranceMarketSectorMember2021-01-012021-03-310000070415gpx:NorthAmericaSegmentMembergpx:FinancialandInsuranceMarketSectorMember2020-01-012020-03-310000070415gpx:FinancialandInsuranceMarketSectorMembergpx:EMEASegmentMember2021-01-012021-03-310000070415gpx:FinancialandInsuranceMarketSectorMembergpx:EMEASegmentMember2020-01-012020-03-310000070415gpx:EmergingMarketsMembergpx:FinancialandInsuranceMarketSectorMember2021-01-012021-03-310000070415gpx:EmergingMarketsMembergpx:FinancialandInsuranceMarketSectorMember2020-01-012020-03-310000070415gpx:FinancialandInsuranceMarketSectorMember2021-01-012021-03-310000070415gpx:FinancialandInsuranceMarketSectorMember2020-01-012020-03-310000070415gpx:DefenseAerospaceMarketSectorMembergpx:NorthAmericaSegmentMember2021-01-012021-03-310000070415gpx:DefenseAerospaceMarketSectorMembergpx:NorthAmericaSegmentMember2020-01-012020-03-310000070415gpx:DefenseAerospaceMarketSectorMembergpx:EMEASegmentMember2021-01-012021-03-310000070415gpx:DefenseAerospaceMarketSectorMembergpx:EMEASegmentMember2020-01-012020-03-310000070415gpx:DefenseAerospaceMarketSectorMembergpx:EmergingMarketsMember2021-01-012021-03-310000070415gpx:DefenseAerospaceMarketSectorMembergpx:EmergingMarketsMember2020-01-012020-03-310000070415gpx:DefenseAerospaceMarketSectorMember2021-01-012021-03-310000070415gpx:DefenseAerospaceMarketSectorMember2020-01-012020-03-310000070415gpx:NorthAmericaSegmentMembergpx:TechnologyMarketSectorMember2021-01-012021-03-310000070415gpx:NorthAmericaSegmentMembergpx:TechnologyMarketSectorMember2020-01-012020-03-310000070415gpx:TechnologyMarketSectorMembergpx:EMEASegmentMember2021-01-012021-03-310000070415gpx:TechnologyMarketSectorMembergpx:EMEASegmentMember2020-01-012020-03-310000070415gpx:EmergingMarketsMembergpx:TechnologyMarketSectorMember2021-01-012021-03-310000070415gpx:EmergingMarketsMembergpx:TechnologyMarketSectorMember2020-01-012020-03-310000070415gpx:TechnologyMarketSectorMember2021-01-012021-03-310000070415gpx:TechnologyMarketSectorMember2020-01-012020-03-310000070415gpx:OtherMarketSectorMembergpx:NorthAmericaSegmentMember2021-01-012021-03-310000070415gpx:OtherMarketSectorMembergpx:NorthAmericaSegmentMember2020-01-012020-03-310000070415gpx:OtherMarketSectorMembergpx:EMEASegmentMember2021-01-012021-03-310000070415gpx:OtherMarketSectorMembergpx:EMEASegmentMember2020-01-012020-03-310000070415gpx:OtherMarketSectorMembergpx:EmergingMarketsMember2021-01-012021-03-310000070415gpx:OtherMarketSectorMembergpx:EmergingMarketsMember2020-01-012020-03-310000070415gpx:OtherMarketSectorMember2021-01-012021-03-310000070415gpx:OtherMarketSectorMember2020-01-012020-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐ 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 or other jurisdiction of incorporation or organization )

(I.R.S. Employer Identification No.)

70 Corporate Center

11000 Broken Land Parkway, Suite 300,

Columbia

21044

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (443) 367-9600

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)

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 ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “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

The number of shares outstanding of the registrant’s common stock as of April 29, 2021 was as follows:


Class						Outstanding
Common Stock, par value $.01 per share						17,445,756

GP STRATEGIES CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS


		Page

Part I.	Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets – March 31, 2021 and December 31, 2020	1

	Condensed Consolidated Statements of Operations – Three Months Ended March 31, 2021 and 2020	2

	Condensed Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended March 31, 2021 and 2020	3

	Condensed Consolidated Statements of Stockholders' Equity - Three Months Ended March 31, 2021 and 2020	4

	Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2021 and 2020	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	27

Item 4.	Controls and Procedures	27

Part II.	Other Information	28

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 6.	Exhibits	30

Signatures		31

Table of Contents

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, 2021 (Unaudited)		December 31, 2020
Assets
Current assets:
Cash	$	10,758	$	23,076
Accounts and other receivables, less allowance for credit losses of $2,964 in 2021 and $3,086 in 2020	87,230		110,575
Unbilled revenue	40,990		28,100
Prepaid expenses and other current assets	19,504		15,186
Assets held for sale	42,339		42,463
Total current assets	200,821		219,400
Property, plant and equipment	20,485		20,765
Accumulated depreciation	(16,195)		(16,115)
Property, plant and equipment, net	4,290		4,650
Operating lease right-of-use assets	19,025		20,862
Goodwill	120,187		120,589
Intangible assets, net	5,127		5,656
Other assets	9,290		10,619
	$	358,740	$	381,776
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	75,724	$	91,572
Current portion of operating lease liabilities	5,049		5,523
Deferred revenue	19,583		16,509
Liabilities held for sale	7,487		5,868
Total current liabilities	107,843		119,472
Long-term debt	—		12,748
Long-term portion of operating lease liabilities	14,615		16,260
Other liabilities	9,686		9,950
Total liabilities	132,144		158,430

Stockholders’ equity:
Common stock, par value $0.01 per share	174		173
Additional paid-in capital	104,664		103,225
Retained earnings	140,020		138,296
Treasury stock at cost	—		(25)
Accumulated other comprehensive loss	(18,262)		(18,323)
Total stockholders’ equity	226,596		223,346
	$	358,740	$	381,776

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
	2021		2020
Revenue	$	114,551	$	128,281
Cost of revenue	93,110		110,667
Gross profit	21,441		17,614
General and administrative expenses	14,836		17,284
Sales and marketing expenses	2,468		1,839
Restructuring charges	699		—
Loss on change in fair value of contingent consideration	269		—
Gain on sale of business	—		1,064
Operating income (loss)	3,169		(445)
Interest expense	181		978
Other expense	823		500
Income (loss) before income tax expense (benefit)	2,165		(1,923)
Income tax expense (benefit)	441		(629)
Net income (loss)	$	1,724	$	(1,294)

Basic weighted average shares outstanding	17,325		17,082
Diluted weighted average shares outstanding	18,153		17,117

Per common share data:
Basic earnings (loss) per share	$	0.10	$	(0.08)
Diluted earnings (loss) per share	$	0.09	$	(0.08)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2021		2020
Net income (loss)	$	1,724	$	(1,294)
Foreign currency translation adjustments	61		(7,155)


Comprehensive income (loss)	$	1,785	$	(8,449)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2021 and 2020

(In thousands)

(Unaudited)


	Common stock		Additional paid-in capital		Retained earnings		Treasury stock at cost		Accumulated other comprehensive loss		Total stockholders’ equity
Balance at December 31, 2020	173		103,225		138,296		(25)		(18,323)		223,346


Net income	—		—		1,724		—		—		1,724
Foreign currency translation adjustment	—		—		—		—		61		61



Stock-based compensation expense	—		929		—		—		—		929


Issuance of stock for employer contributions to retirement plan	1		737		—		—		—		738
Net issuances of stock pursuant to stock compensation plans and other	—		(227)		—		25		—		(202)
Balance at March 31, 2021	$	174	$	104,664	$	140,020	$	—	$	(18,262)	$	226,596


	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 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

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2021 and 2020

(In thousands)

(Unaudited)


	2021		2020
Cash flows from operating activities:
Net income (loss)	$	1,724	$	(1,294)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Change in fair value of contingent consideration, net	269		—
Gain on sale of business	—		(1,064)
Depreciation and amortization	1,472		2,177
Deferred income taxes	(215)		(414)
Non-cash compensation expense	1,667		1,256
Changes in other operating items:
Accounts and other receivables	23,704		25,290
Unbilled revenue	(12,875)		(5,252)
Prepaid expenses and other assets	(1,211)		(3,602)
Accounts payable, accrued expenses and net change in operating leases	(18,290)		(10,917)
Deferred revenue	3,561		4,429


Other	758		(762)
Net cash provided by operating activities	564		9,847

Cash flows from investing activities:
Additions to property, plant and equipment	(455)		(467)
Proceeds from sale of business	—		3,328
Capitalized software development costs and other	—		(24)
Net cash provided by (used in) investing activities	(455)		2,837

Cash flows from financing activities:

Proceeds from long-term debt	43,700		62,187
Repayment of long-term debt	(56,446)		(70,220)

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





Other financing activities	(203)		(8)
Net cash used in financing activities	(12,949)		(11,742)

Effect of exchange rate changes on cash and cash equivalents	522		(76)
Net increase (decrease) in cash	(12,318)		866
Cash at beginning of period	23,076		8,159
Cash at end of period	$	10,758	$	9,025

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	192	$	938
Cash paid during the period for income taxes	405		570

See accompanying notes to condensed consolidated financial statements.

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

(1)Basis of Presentation

GP Strategies is a leading workforce transformation partner. 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, 2021, the condensed consolidated statements of operations, comprehensive income (loss) and stockholders' equity for the three months ended March 31, 2021 and 2020, and the condensed consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 have not been audited, but have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) 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, 2020, as presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. 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 2021 interim period are not necessarily indicative of results to be expected for the entire year.

Effective July 1, 2020, we began managing our business under a new organizational structure on a regional basis through our three geographic markets, North America, Europe Middle East Africa (EMEA) and Emerging Markets (Latin America and Asia Pacific countries). These became our reportable segments in the third quarter of 2020. Prior to this change, our reportable segments consisted of two global practices, Workforce Excellence and Business Transformation Services, which focused on providing similar and/or complementary products and services across our diverse customer base within target markets. Effective January 1, 2021 as a result of a change in management, we transferred one of our businesses from our North America segment to our EMEA segment. In addition, we realigned some of our businesses between our North America Organizational Performance Solutions (OPS) and North America Technical Performance Solutions (TPS) solutions to more accurately align with their focus industries. We have reclassified the segment financial information herein for the prior year periods to reflect the changes in our segment reporting and conform to the current year's presentation.

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 2020 Form 10-K for a discussion of other significant estimates and assumptions affecting our consolidated financial statements.

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

(2)Recent Accounting Standards

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes. The guidance issued in this update simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition for deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. We adopted the standard on January 1, 2021. The new standard did not impact our financial statements.

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, 2020. 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, 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 costs incurred input 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 progress to depict the transfer of control to the customer since performance primarily involves personnel costs and services provided to the customer throughout the course of the

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

projects through regular communications of progress toward completion and other project deliverables. In addition, the customer is required to pay 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 costs incurred input 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. Revenue recognized in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods on our fixed price contracts in the aggregate resulted in a net increase (decrease) to revenue of $0.5 million and $(0.1) million for the three months ended March 31, 2021 and 2020, respectively.

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, 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, as the overtime revenue recognition criteria are not met.

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, 2021, we had $338.8 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, 2021 were not materially impacted by any other factors.

Revenue recognized for the three months ended March 31, 2021 and 2020, that was included in the contract liability balance at the beginning of the year was $4.4 million and $8.2 million, respectively, and primarily represented revenue from services performed during the current period for which we received advance payment from clients in a prior period.

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Disaggregation of Revenue

See Note 13 (Business Segments) to these Condensed Consolidated Financial Statements for our disaggregated revenues.

(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 23% and 25% of our consolidated revenue for the three months ended March 31, 2021 and 2020, respectively. In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 13% and 14% of our consolidated revenue for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, accounts receivable from a single automotive customer totaled $12.5 million, or 14%, of our consolidated accounts receivable balance.

Revenue from the financial & insurance sector accounted for approximately 17% and 16% of our consolidated revenue for the three months ended March 31, 2021 and 2020, respectively. In addition, we have a concentration of revenue from a single financial services customer, which accounted for approximately 9% of our consolidated revenue for the three months ended March 31, 2021 and 2020. As of March 31, 2021, billed and unbilled accounts receivable from a single financial services customer totaled $10.4 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, 2021 or 2020 or consolidated accounts receivable balance as of March 31, 2021.

(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,
	2021	2020
	(In thousands)
Non-dilutive instruments	—	36

Dilutive common stock equivalents	828	35

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

(6)Business Held for Sale

As of March 31, 2021, we began the process to sell a business outside of our focus industries and as a result we have classified all of this business' assets and liabilities to held for sale. The sale is expected to occur within 12 months. The related assets held for sale are primarily composed of $1.1 million of operating lease right-of-use assets, $0.3 million of fixed asset and $0.1 million of goodwill. The related liabilities held for sale are primarily composed of $1.2 million of operating lease liabilities. This business is part of the EMEA segment.

As of December 31, 2020, we began the process to sell a business outside of our focus industries and as a result we have classified all of this business' assets and liabilities to held for sale. The sale is expected to occur within 12 months. As of March 31, 2021, the related assets held for sale are primarily composed of $35.9 million of goodwill, $2.8 million of unbilled revenue, and $1.9 million of accounts receivables. The related liabilities held for sale are primarily composed of $5.7 million of deferred revenue and $0.6 million of accounts payable and accrued expense. This business is part of the North America segment.

(7)Intangible Assets

Goodwill

Goodwill represents costs in excess of values assigned to the underlying net assets of acquired businesses. Intangible assets acquired are recorded at estimated fair value. Goodwill is deemed to have an indefinite life and is not amortized, but is tested for impairment annually during the fourth quarter, and at any time when events suggest an impairment more likely than not has occurred. We test goodwill at the reporting unit level.

ASC Topic 350, Intangibles - Goodwill and Other (ASC Topic 350), permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. Under ASC Topic 350, an entity is not required to perform a quantitative goodwill impairment test for a reporting unit if it is more likely than not that its fair value is greater than its carrying amount. A reporting unit is an operating segment, or one level below an operating segment, as defined by U.S. GAAP. Our North America operating segment is comprised of three reporting units based on our primary solution sets. The remaining three reporting units are our EMEA, Latin America and Asia Pacific operating segments. Effective January 1, 2021 as a result of a change in management, we transferred one of our businesses from our North America segment to our EMEA segment. In addition, we realigned some of our businesses between our North America OPS and North America TPS reporting units to more accurately align with their focus industries. As a result of these changes, we determined a triggering event occurred and performed a quantitative goodwill impairment test. For the goodwill impairment test as of January 1, 2021, we concluded that the fair values of each of our reporting units exceeded their respective carrying values.

In the quantitative impairment test, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we record an impairment loss equal to the difference, however, the loss recognized would not exceed the total amount of goodwill allocated to the reporting unit. We concluded that each of our reporting units had excess fair values greater than their respective carrying values and that there was no indication of impairment.

We determine the fair value of our reporting units using a market approach. Under the market approach, we perform a comparable public company analysis and apply revenue and earnings multiples from the identified set of companies to the reporting unit’s actual and forecasted financial performance to determine the fair value of each reporting unit. We evaluate the reasonableness of the fair value calculations of our reporting units by reconciling the total of the fair values of all of our reporting units to our total market capitalization, and adjusting for an appropriate control premium. In addition, we made certain judgments in allocating shared assets and liabilities to determine the carrying values for each of our reporting units.

Table of Contents

GP STRATEGIES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. In addition, we make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units. The timing and frequency of our goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. We will continue to monitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators are present.

Changes in the carrying amount of goodwill by reportable business segment for the three months ended March 31, 2021 were as follows (in thousands):


	North America		EMEA		Emerging Markets		Total
Balance as of December 31, 2020	$	83,828	$	28,223	$	8,538	$	120,589
Assets held for sale	—		(98)		—		(98)


Foreign currency translation	(255)		(53)		5		(304)
Balance as of March 31, 2021	$	83,573	$	28,072	$	8,543	$	120,187

Intangible Assets Subject to Amortization

Our intangible assets include amounts recognized in connection with acquisitions, including customer relationships, tradenames, technology and intellectual property. Intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset. Amortization is recognized on a straight-line basis over the estimated useful life of the intangible assets. Intangible assets with definite lives are reviewed for impairment if indicators of impairment arise. Except for goodwill, we do not have any intangible assets with indefinite useful lives.

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, 2021
Customer relationships	$	9,467	$	(4,851)	$	4,616

Intellectual property and other	3,104		(2,593)		511
	$	12,571	$	(7,444)	$	5,127

December 31, 2020
Customer relationships	$	9,447	$	(4,457)	$	4,990

Intellectual property and other	3,104		(2,438)		666
	$

SEC Form 10-Q filed by GP Strategies Corporation