GP Strategies Corporation
Q4 2014 Earnings Call Transcript

Published: 24 Feb 2015

[Operator:]

Good morning. My name is Carlos and I will be your conference operator today for the GP Strategies Fourth Quarter 2014 Earnings Conference Call. All lines will be placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. Thank you. I would now turn the call over to Ann Blank, Director of Investor Relations. Please go ahead.

[Ann Blank:]

Thank you. Good morning, and welcome to GP Strategies Fourth Quarter 2014 Earnings Call. On the call today are Scott Greenberg, Chief Executive Officer; Douglas Sharp, President; and Sharon Esposito-Mayer, Chief Financial Officer. Before we begin, I would like to remind you that today’s comments will include forward-looking statements, which are subject to certain risks and uncertainties that could cause our actual results to be materially different from expectations. For a complete discussion of these risks, we encourage you to read our documents on file with the SEC, which are posted on the Investors section of our website at gpstrategies.com. A replay of this call will also be available on our website later today. At this time, I would like to turn the call over to Scott.

[Scott Greenberg:]

Thank you, Ann. Good morning. Hopefully, most of you are having warmer temperatures than we have here in frigid Baltimore and welcome to our fourth quarter 2014 conference call. Today, we will follow our usual quarterly format. To initiate the call, I will provide a brief overview of the results of the fourth quarter of 2014, then Sharon will present an in-depth financial analysis, and Doug will give us key updates on our global initiatives, including some major wins. After Doug’s presentation, I will provide a final summary and then we will conclude with a Q&A session. This morning, before the market opened, GP Strategies announced its earnings for the fourth quarter of 2014. In the fourth quarter, the company achieved strong operating results with revenue of approximately $125.2 million and EBITDA of approximately $13.5 million. It should be noted that there has been approximately of $0.5 million of foreign currency and losses on contingent consideration that was deducted from that EBITDA. In addition, we do not add back non-cash compensation, which some companies do which was over $1 million for the quarter. I am proud to report that GP Strategies reached a milestone with over $500 million of annual revenue for the first time in its history, which has been the goal of the company in its 5-year plan and finished the 2014 year with 12% organic growth. The company reported strong financial results for the fourth quarter despite a decline in alternative fuels revenue. In addition, the company maintained an operating margin, while investing heavily in global expansion. These investments have enabled us to deliver comprehensive solutions to our customers on a global basis, which we believe differentiates GP Strategies in the training and performance improvement industry. The successful Dutch auction tender offer, in which we repurchased 2.1 million shares for approximately $62.9 million was accretive to EPS and reduced our diluted weighted shares outstanding from 19.4 million to 17.3 million or approximately 11%. The increase in revenue of $8 million compared to the fourth quarter of 2013 provided us with incremental gross profit of $2.3 million or approximately 29%. This is a strong signal, because it exceeded our long-term objectives. In addition, the quarter included a substantial increase in our Learning Solutions group coming down to segment. We believe the company is truly at an inflection point and our continued investments enabled the company to execute on a global basis. This strategy is becoming a key differentiator of the company in the training and performance industry. We are currently doing business with approximately 25% of the global 500 customers worldwide. Our goal is to continue to establish GP Strategies brand in the highly fragmented industries that we operate in. In the recent quarters we invested heavily in building our global reach and we anticipate of seeing the return of these investments in the years to come. In 2014, we added approximately 13 global offices for the company. EBITDA for the quarter up with $13.5 million and approximately $53.4 million for the year ended December 31, 2014. This was approximately $3.09 per share based on the new share count. On to cash flow, our short-term borrowings and long-term debt totaled $58.6 million at the end of the year. We used $62.9 million of cash to repurchase shares on the Dutch auction including transaction cost. We have also purchased 147,000 shares of GP Strategies’ stock in our buyback program in the open market for approximately $3.7 million during 2014. The company generated approximately $13.9 million of free cash flow in the fourth quarter and for the last 6 months the company generated over $31 million of free cash flow. These developments enabled us this morning to announce an additional buyback of $15 million of GP Strategies stock. We routinely get asked on the market of the domestic trading industry which is now estimated to be over $20 billion domestically. Our largest competitor – excuse $60 billion domestically. Our largest competitor is actually the in-house company is trading upon us. We now withstand we are playing with a highly fragmented industry and we plan on growing this in the future. We believe that the outsourcing of training activities is the way up and our commitment is growing in this area for increased service levels. We believe these service levels have differentiated our strong technical expertise, our global reach and our cost effective solutions. On previous calls we discussed initiatives to expand into financial and insurance service sector, we started performing in this sector in 2001 and in the fourth quarter our revenue approached 23% of our total revenue in this segment and 18% for the year. In 2014, we made an acquisition in the human capital space called Effective People. For the 9 months ended Effective has performed well and is accretive to our earnings per share. With that being said, Sharon would now give a detailed financial presentation for the quarter.

[Sharon Esposito-Mayer:]

Thanks Scott and good morning everyone. This morning we reported fourth quarter revenue of $125.2 million, which represented an $8 million increase or 7% growth over the fourth quarter of 2013 revenue of $117.2 million. During the year – I am sorry during the quarter, we achieved organic revenue growth of $5.6 million or 5%. In 2014, we achieved overall annual revenue growth of 15% and organic revenue growth of 12%. In the quarter revenue in the Learning Solutions segment increased by $12.9 million or 25%. The Effective acquisition completed on April 1, contributed $2.4 million of revenue in the quarter. The remaining revenue growth in this segment was due to a $9.9 million net increase in e-learning content development and training outsourcing revenue, and $1.1 million increase in UK government funded skill training revenue. These increases were partially offset by a $500,000 revenue increase due to a decline in exchange rates. Professional & Technical Services revenue increased $2.3 million or 13% due to a $1.5 million increase in training and technical services for oil and gas clients and an $800,000 net increase in revenue from U.S. government clients primarily related to projects completion bonuses. Revenue in the Energy segment decrease by $4 million or 26% largely due to a $4.9 million decline in alternative fuel revenue due to the completion of projects which was partially offset by $900,000 increase in training revenues. Performance Readiness Solutions revenue decreased by $1.9 million or 16% over the fourth quarter of 2013 due to a net decrease in system implementations, training and various consulting services. Sandy’s revenue decreased $1.3 million or 7% primarily due to the completion of certain projects in 2013. Sandy’s fourth quarter results included $3.1 million of publication revenue. We are projecting $300,000 of publication revenue in the first quarter of 2015. The financial and insurance sector is now our largest market sector and comprised 18% of revenue in 2014, up from 11% in 2013. The automotive sector is now our second largest sector and comprised 14% of revenue, down from 16% in 2013. Revenue earned from our operations outside the United States represented 24% of our 2014 revenue, up from 20% in 2013. We reported $23.9 million or 19.1% of gross profit in the quarter, up from $21.6 million or 18.5% in the fourth quarter of 2013. This represented a $2.3 million or 11% increase on the 7% revenue growth in the quarter. The effective acquisition contributed $600,000 of the increase in gross profit in the quarter and the remaining $1.7 million increase was primarily due to the revenue growth in the Learning Solutions segment. We also had a $1.3 million increase in gross margins in our Professional & Technical Services segment, which included $800,000 of margin related to project completion bonuses. These gross margin increases were partially offset by margin declines in our other segment. SG&A increased in the quarter by $1.4 million or 13%. The main drivers for the increase in SG&A are a $700,000 increases in labor, benefits and other expenses to support international expansion; a $200,000 increase in the expenses associated with the establishment of new foreign entities; a $200,000 increase in IT infrastructure; and a $300,000 increase in bad debt expense. During the quarter, we recognized a $100,000 loss related to a change in the estimated earn-out payments and associated fair value of contingent consideration accrued for certain acquisitions comparing it to a $1.2 million gain recorded in the fourth quarter of 2013. Operating income decreased by $500,000 in the quarter. However, excluding the change in fair value of contingent consideration, operating income increased $900,000 or 8% due to the changes discussed. Interest expense increased $300,000 over the fourth quarter of 2013 due to an increase in borrowings primarily related to the Dutch tender offer completed on October 3, 2014. Other income decreased $600,000 to see the unfavorable changes in exchange rates. Tax expense was $3.4 million in the quarter or a rate of 31.2% compared to $4.7 million or 38.9% in the fourth quarter of 2013. There was an increase in foreign income in the jurisdictions with lower tax rate as well as the utilization of certain foreign losses offset for an income that primarily resulted in a lower tax rate during the quarter. The 2014 tax rate was 36.7%, which included a benefit of the U.S. domestic production deduction that was previously not planned on prior year’s tax return. Excluding this and other adjustments, the 2014 tax rate was 38.1%. We are currently projecting a tax rate for 2015 of 39.5%. Fourth quarter net income was flat over the fourth quarter of 2013 at $7.4 million. Excluding the decrease in contingent consideration adjustment compared to the fourth quarter of 2013, 2014 fourth quarter net income increased by $1.4 million over the fourth quarter of 2013 and fourth quarter 2014 earnings per share were $0.43 compared to $0.38 in the fourth quarter of 2013. The Dutch tender offer resulted in a $2.1 million decline in diluted shares outstanding in the quarter. Moving on to some balance sheet highlights. Our cash balances were $14.5 million at December 31, 2014 compared to the $5.6 million on hand at the end of 2013. In 2014, we spent $2 million on contingent consideration payments for acquisitions previously completed and $3.7 million on share repurchases in the open market, which excludes the $61.7 million stock to repurchase 2.1 million shares in the Dutch tender offer. Also, we completed the acquisition of Effective-Learning and Effective-People on April 1 for a purchase price of $9 million. We had total borrowings outstanding at December 31 of $58.6 million compared to $400,000 at December 31, 2013 with the increase primarily due to completion of the Dutch tender offer. In 2014, total cash provided by operating activities was $31 million compared to $16.3 million in 2013. Cash generated in 2014 was comprised of year-to-date income of $27.1 million plus non-cash add-back to net income, including depreciation and amortization of $9.8 million, non-cash compensation expense of $4.8 million, which was offset by non-cash taxes of $100,000 and a $1.4 million gain on contingent consideration. In addition, there was a $9.2 million decrease in cash from changes in other operating items primarily due to an increase in unbilled receivables and accounts receivables primarily related to revenue growth. Fixed asset additions were $2.8 million in 2014 compared to $6.7 million in 2013. We generated $28.2 million of free cash flow in 2014 compared to $9.5 million in 2013. At the end of 2014, backlog was $234 million compared to $239 million at the end of 2013. The decline in backlog is primarily due to the completion of numerous LNG projects that occurred during 2014. Approximately 95% of the backlog will be recognized as revenue within the next 12 months. And that concludes the financial overview. So, at this time, I will turn the call over to Doug who will discuss some operational highlights.

[Douglas Sharp:]

Thank you, Sharon and good morning everyone. As Scott and Sharon mentioned, we are pleased to report a strong fourth quarter and a solid performance through 2014. This was accomplished due to the hard and creative work of our employees, the confidence and trust of our clients and the support of our stakeholders. On the last call, I spent a few minutes on how GP Strategies is received in the industry. I mentioned the impact we are having on the training industry as a recognition that served upon us by associations and research organizations. This included GP listed as the top provider in 8 different categories like training industry and corporate agencies and 5 brands in other words for learning content development. I am pleased to report that after our last call and just before the holidays, we were recognized by Elearning! Magazine as the best outsourced learning services provider, not only the best, but the best. They also went on to say our customers use GP Strategies’ full array of business and services for their global expansion, strategies alignment, competitive agility and cost reduction and more. They went on discuss our benefits which I will spare you, building customer growth, I like the best day since the experts of GP are truly experts obviously the [indiscernible] source. Again as Sharon mentioned, we continue to invest on our global operations, including serving up subsidiaries in over a dozen countries since 2013. Our objective is straightforward to be a global learning services provider supporting the enterprise revenue of large global organizations and we are having success. International revenue was now 24% of our business compared to 20% in the year before and in 2014, we provided services to 120 of the 500 world’s largest companies, up from 109 of the global 500 companies. We will continue to grow our capabilities and global reach, while keeping the focus on quality and our reputation from having the positive impact on our customers business. Before I close let me generally discuss a few of the opportunities there now concerning about the future. First, we are having great success retaining our clients through their internal processes and the required new competition. For example, we have recently been awarded a multi-year new competition with one of our largest financial set of customers with our first contract declined and also awarded two new contracts to two other providers. The idea – their idea was to divide and work along with different business lines in the bank. However, only GP Strategies was selected to go forward following the new competition. Other existing clients are looking at new ways as well. We are currently in discussions with two of our larger customers, one in automotive and one in the financial sector, while further consolidating renewals to GP Strategies. This is to expand their global reach in the sales and learning organizations. Recently as recently as one hour ago we had been notified by one of our automotive customers as we were in fact success with other negotiations [indiscernible] Sharon mentioned more about that in slightly more detail, which is a breaking news there. And finally, we are on the final negotiations with the global companies for technical learning, petrochemical training to their sales channel and we are in final negotiations with the domestic electric utility for any different product in supporting their engineering services needs around performance engineering. These opportunities, along with others in the pipeline, indicates to us that the demand for knowledge-based services remain strong. With that, I will turn it back to Scott.

[Scott Greenberg:]

Thank you, Doug. Doug talked about some of the expansions with our current customers and as we mentioned, it was always part of our overall strategic plan that as we build out globally, we could capture more revenue with current customers. One of the customers that Doug mentioned today, which was a large customer, with GP Strategies just as global expansion represents in excess of $7 million. So, it’s pretty significant as we grow up. Again, the goal has been to take these 120 million plus customers and capture more of a global reach with their training needs and we are starting to see that occur particularly in the last few weeks and that’s really good news. The next thing I would like to talk about is GP Strategies has done a slight reorganization to improve its efficiency and improve its performance. We will go down by one reporting segment with the Energy segment being combined with our training and technical services sector. There are other changes made. So, for example, without getting into all the details, leadership training will now be part of our performance and readiness group and we consolidated that. So, the restarting change is made at the end of the first quarter for reporting, but the major change is that the energy segment is now combined with an area that we are already doing petrochem work and other types of work in oil and gas industry. We talked about the buyback, but in addition to the buyback, we will start looking at certain smaller strategic acquisitions. We have taken some time off for HSBC, the only acquisition we did was Effective People in 2014, but we could see ourselves doing an acquisition in 2015 and resuming on the process that has made us successful over the years. Sharing the details over the cash flow obviously very strong second half of the year generating over $30 million of cash flow for the year and that was pretty impressive, collected a lot of our receivables from the first half of the year. Before I turn it over to questions, I just want to let everybody know that we will probably see most of you know in the next coming month or two, because this is our busy season for conferences. Tomorrow, we will be at the R.W. Baird Conference in New York, then in the next few weeks we will be at the ROTH Conference hopefully considering where we are in front of you, California and then we go on to the B. Riley Conference and the Barrington Conference in May. So, again, thanks for your support. And now, moderator, we will turn it over to the Q&A session.

[Operator:]

Alright. Thank you very much. [Operator Instructions] Our first question comes from the line of Alex Paris with Barrington Research. Please go ahead, sir.

[Joe Janssen:]

Yes, good morning, Scott and Sharon. This is Joe filling in for Alex.

[Scott Greenberg:]

Hi, Joe.

[Joe Janssen:]

Hey, good morning. Congratulations on a solid 2014 very impressive results. Let me on the organic growth side, up on the quarter 5%, 12% for the full year and I believe that reflects lot of the LNG business, if you exclude that large contract, what was organic growth in the quarter?

[Scott Greenberg:]

Well, looking at our business and that’s a great question to start off. If you exclude the downturn in LNG from the mix, our growth was 12% for the quarter and/or we did have one acquisition. So, it was slightly low, but the growth overall excluding the LNG business was about 12% in Q4.

[Joe Janssen:]

And what would have that been for the full year roughly?

[Scott Greenberg:]

Well, the LNG is up for the full year. So, I don’t know if we have…

[Sharon Esposito-Mayer:]

Joe, you are asking if we exclude the revenue associated with the large LNG contract, what would the organic growth have been?

[Joe Janssen:]

Yes. I am just trying to get an idea, we are doing 12%.

[Sharon Esposito-Mayer:]

What we are seeing is that, overall it was 12%, it would have probably been about half of that.

[Joe Janssen:]

Okay. And then the reported revenue in the quarter of $125.2 million, what was the currency impact on revenue in the quarter?

[Scott Greenberg:]

Yes. I mean, there are two ways to look at this as the currency impact if you include quarter versus the quarter in the prior year it was about $0.5 million. However if you compare it to the third quarter where there was a major swing in the currency numbers and it would have been more than that. And the dollar went from about $1.65, that’s our largest currency denominated revenue was in British pounds other than U.S. and the dollar went from about $1.65 and the high in the third quarter to about $1.50, $1.51, its back up a little to about the $1.54 mark. So it was a much more impact sequentially from the third quarter to the fourth quarter than the first quarter to the first quarter of the prior year.

[Joe Janssen:]

Okay. Thanks. And one last question, I will jump back in queue. Scott last quarter was kind of focus on organic growth acquisitions kind of put aside this quarter, it sounds like obviously focus on organic maybe some small acquisitions you mentioned in your prepared remarks, which has attributed to lot of the success you have had in terms of top line growth. Are we – should we expect maybe tuck-ins or $10 million, $20 million you said small, I am just trying to quantify it?

[Scott Greenberg:]

Yes. I would say that most of – in the old days we did acquisitions that were small, but I would say that unless it was very strategic it would be in the $5 million to $20 million revenue range. So one area that I will go around that is in the skills funding area, the skills funding as Sharon mentioned started raising our contracted churn and we had strong revenue in the fourth quarter and that’s been a very profitable area for GP Strategies and a very good area for smaller tuck-ins. So, I would say the only area I would see a smaller tuck-in would be in the skills funding area otherwise again $5 million to $20 million of revenue, but that’s not something that would put the company’s cash at risk or put any type of stringent demands on the company’s capital.

[Joe Janssen:]

Okay. And can you maybe just talk about pricing dynamics out there and on the old days you were looking at 4 to 6 times is on a EBITDA basis just kind of curious what you are seeing there in terms of pricing?

[Scott Greenberg:]

Well, like the most of the world without getting into our strategy we see prices going up and in the training industry as people are getting aware of the opportunity. So I think that you saw the pricing aren’t at the level that it was 3 or 4 years ago. On the Effective People job acquisition they have done very well and to get the full earn out they have to be going forward 2 years would be a little over 7 times.

[Joe Janssen:]

Okay, great. Thank you for taking my questions.

[Scott Greenberg:]

Thank you.

[Operator:]

[Operator Instructions] Our next question comes from the line of Kevin Liu with B. Riley & Company. Please go ahead.

[Kevin Liu:]

Okay. First question just with respect to the strong finish to learning solutions for the year, of that $10 million increase year-over-year from the content development how much of that was HSBC?

[Scott Greenberg:]

Can you repeat that, Kevin? We had a little bit of static line on the phone.

[Kevin Liu:]

Just wondering about the learning solutions growth within the quarter how much of kind of $10 million increase from the content development work that you guys talked about was attributable to HSBC?

[Scott Greenberg:]

Yes. I will say Kevin it was a substantial amount. So again ballpark was probably over $5 million was attributed to HSBC, so for a ballpark it was over a half.

[Kevin Liu:]

Got it. And maybe just in terms of kind of the run rate where you guys sit today what should we would be thinking about for fiscal ’15 and have you already expanded beyond on what you originally targeted?

[Scott Greenberg:]

Yes. We typically don’t give individual information on specific customers but we mentioned that HSBC would be our largest customer and they achieved that goal in 2014.

[Kevin Liu:]

Got it. And then on the equipment in the job skills work that you are doing, I think it was up over $1 million year-over-year, do you see that increasing even further as you make your way through the next few quarters and how much visibility do you have into those revenues at this point?

[Scott Greenberg:]

Well, we have a client short with job skills and basically our contract a year ago was job skills was £11 million. So, related to that right now, we are probably in the neighborhood of £14 million. And we are hoping by the next renewal, not right now, but by the next renewal, we will be back up over £16 million of revenue.

[Kevin Liu:]

Got it. And then jut for the performance readiness solutions, the decline in the fourth quarter, what was – was there any sort of deferral of work that goes into kind of future periods, was it just a function of projects completed in earlier quarters, any color there would be helpful?

[Scott Greenberg:]

Yes. It has to do in twofold, one is they had – one is they have large ongoing contracts that they had, had a downturn in the fourth quarter. So, I don’t think it’s delays, I think it’s just a matter of – they had some contracts are completed, they weren’t replaced that and it was compounded by one of their large accounts that they have continued this relationship with that they just did more training in Q4.

[Kevin Liu:]

I understood. And then lastly, with kind of the….

[Scott Greenberg:]

Less training in Q4, I apologize.

[Kevin Liu:]

Okay. And then just with respect to the recap of results that will start kind of in Q1, how much of the leadership business, well I guess, how big is leadership business today that we should factor into the performance readiness group and where does that come out of?

[Scott Greenberg:]

Yes, it’s going to be a little more complicated, because there are a lot of other movements. The biggest part of the leadership now is BlessingWhite out of New Jersey and that is the new candidate. So, my overall guess with the total leadership training is probably in the range of $15 million.

[Kevin Liu:]

Okay. And most of that today sits in the learning solutions group?

[Scott Greenberg:]

No, I think it’s a little bigger than that, Kevin, so but figure about $18 million.

[Kevin Liu:]

Alright. Thanks for taking the questions.

[Scott Greenberg:]

Yes.

[Sharon Esposito-Mayer:]

Yes. And Kevin, the leadership revenue, the $18 million approximate of the annual leadership revenue is actually coming out of the Learning Solutions segment in 2015.

[Scott Greenberg:]

Our next question, moderator?

[Operator:]

Our next question comes from the line of Jeff Martin with Roth Capital Partners. Please go ahead.

[Jeff Martin:]

Thanks. Good morning, Scott and Sharon.

[Scott Greenberg:]

Hi, Jeff.

[Jeff Martin:]

Hi. Could you revisit out as well it’s tough to hear Doug’s comments about new customer contracts and expanded contracts of existing customers, could you just go over that again and maybe elaborate a bit on it?

[Scott Greenberg:]

Okay. I will make Doug talk a little loud out at it.

[Douglas Sharp:]

Yes, [indiscernible] from the phone, sorry about that, but so I talked a little bit about – can you hear us?

[Jeff Martin:]

Yes.

[Douglas Sharp:]

Yes, sorry about that, we are trying to move the phone and we have a [indiscernible].

[Jeff Martin:]

I appreciate it.

[Douglas Sharp:]

So, we talked a little bit about new client wins. We talked with our recompetes we are having some success here. We have a large bank customer that we won a contract 2 years ago. We went through their normal internal processes of re-competition and we won that. In fact, we drop off a couple of other suppliers who have been doing in moving the work in our direction. So, that was positive. We have our global reach and the capabilities that we are building around the world right now is attracting the attention some of our large global customers that are already in our mix. And so they are looking ahead of us to expand the work in their operations, more around the sales training some of the leadership and soft skills training and that seems to be entering administration. So, those conversations are going really well. In fact, one of our larger automotive clients has just announced – or just called us today that we are going forward to GP Strategies on a large global centralization for increased e-learning sales turning into their distributor, their global distributor.

[Jeff Martin:]

And that’s the incremental $7 million, is that correct?

[Douglas Sharp:]

That’s the incremental revenue that Scott referred to, it was correct.

[Jeff Martin:]

Okay.

[Douglas Sharp:]

Okay, so, that – again, that’s breaking news there in the business and other work that they are adding to our plot. And then I am going to see there is another client I think I mentioned and that was only in the banking industry, the finance industry as well, we are in discussions a little further right in the automotive client around global outsourcing of their administration work. We are doing a significant amount of work from already content development. So, those kinds of conversations are going on. We have as you might have expected a number of things in the pipeline in various areas of proposal development. There are a couple ones and has – they are in final negotiations, because I don’t want to upset the negotiations part of it. Did you understand that? What I was pointing in the technology field it’s callable they are looking at us to – they have announced that we are the leader in the pack and we are in the final turns of finishing off the few things and the negotiation cost items. But that would be for technical training around the globe for their engineers and for their supply chain as well. So getting their technology training out to their supply chain so that they can better support their customer base which is a really cool opportunity for us. And again that’s multi-million dollars over 5 years. And then I think I mentioned one other one in April, the domestic utility here on the East Coast and they have given us a verbal order and final negotiations on closing that deal for putting the [indiscernible] during the process. So, does that help, Jeff?

[Jeff Martin:]

That’s very helpful.

[Scott Greenberg:]

If I could add to that Jeff, if you add and then we won some additional work in qualification works with a major customer as well. So if you add that all together since the New Year it adds up to over $30 million of revenue if we close all these accounts of new business. The only thing – the only negative part about it is it begins in Q2. We don’t think it’s negative because it’s ongoing business or you glimpsed but this is like HSBC this work will begin in Q2 that is at $30 million plus a year run-rate. And other than 8 a pro it’s all ongoing type of revenue.

[Jeff Martin:]

Okay. That leads to my next question you typically targeted double-digit growth driven half by organic and half by acquisition it sounds like organic may be a little bit below that this year just mainly due to timing of system of these new contracts and then acquisitions maybe around that level but based on timing and is that a fair assessment?

[Scott Greenberg:]

Yes. I mean the only thing that makes it differ is that we are comparing it with a huge LNG project we had last year. Sharon gave the numbers on that today. So if you look at our ongoing business outside of LNG, the fourth quarter was actually a very strong quarter for organic growth, but the LNG business tempered it. So assuming LNG and the mix Jeff you make a valid point because we were doing a lot of work on the LNG stations. But that being said, the core business, the training grew at a very strong fourth quarter and with the wins Doug talked about today we are obviously optimistic going into 2015 while your point is well taken due to the downturn in the LNG work which isn’t training related.

[Jeff Martin:]

Okay. What – do you have off top of your head what the gross margin and the gross profit dollars were in 2014 from LNG I would think if you had a little bit of margin benefit?

[Scott Greenberg:]

Since it was mainly from one customer, we are really not on liberty, it’s included in the energy group and we are really not ready to break it out. But you can look at the overall energy margins and see it was a high margin group. But unfortunately we don’t break out individual customers’ margin.

[Jeff Martin:]

Got it, okay. And then with your $15 million of additional buyback do you have any minimum cash thresholds that you look to maintain or do you have the freedom to be completely optimistic on that practice provided to buyback the stock?

[Scott Greenberg:]

We are able to borrow under our revolving credit facility to buyback stock, so we don’t have to have the cash of sitting in the bank. Obviously, if you look at from where we were in June pro forma and get for the buyback, our market situation improved dramatically in the second half of the year with $30 million that we generated, but the answer is we don’t have to say we have to have a certain amount of cash in the bank and the certain debt level. We have three under our various agreements to buy shares at our discretion.

[Jeff Martin:]

Okay, great. Thanks for your time guys.

[Scott Greenberg:]

Thank you.

[Operator:]

Our next question comes from the line of Gary Bragar with NelsonHall. Please go ahead.

[Gary Bragar:]

Yes, hi everybody and congratulations on a nice fourth quarter and a very good year. The question I have I think it’s been asked in part but let me ask maybe the additional part which can be covered, but really the whole question was I think in prior quarters we are able to provide an estimate for how much HSBC would contribute in terms of revenue. I guess my question to however you hit it, how much did HSBC contribute through ‘14, but that’s my second part to that, is it now completely 100% ramped up? And if you could just review what the major geographies that were deployed in 2014 was?

[Scott Greenberg:]

Yes. I mean, again, I hate to not answer a question, but we do not give that type of detailed information on individual customers in the recent calls other than the ramp-up. We do believe that in the financial service sector, HSBC has become our largest customer and we have explored against the major ramp up. And they are excited about the progress we made. And just like all our customers we believe that’s a lot of room for expansion and to provide addition of services. So, what I could tell you is they are currently GP Strategies’ largest customer. They ramped up in 2014. We do expect additional opportunities in 2015. The overall group of Learning Solutions had a very strong year, but we are not going to give margin profiles of individual contracts or accounts.

[Gary Bragar:]

Right, thank you very much.

[Operator:]

And we have no further questions on the phone line.

[Scott Greenberg:]

Alright. So, I would like to thank everybody for participating on the call. Hopefully, we will see you at some of the investor conferences right in the next 30 days. If not, we are always around for additional questions, so please feel free to call us and thank you very much.

[Operator:]

Ladies and gentlemen, that does conclude the call for today. We thank you for your participation and ask you to please disconnect your lines.