SPAR Group, Inc. (Nasdaq:SGRP), a leading supplier of retail
merchandising, business technology and other marketing services in
10 countries throughout North America, Latin America, Asia Pacific
and Africa, today announced financial results for the third quarter
ended September 30, 2017.
Highlights for the three and nine month periods
ended September 30, 2017, as compared to the same periods in the
prior year include:
- Revenue for the third quarter of 2017 increased $15.3 million,
or 45.8 percent, to $48.8 million. International operations
contributed $11.6 million of the increase, primarily driven by its
2016 acquisition of Brazil, which contributed $9.3 million.
Domestic operations contributed $3.7 million of the year-over-year
revenue growth.
- Revenue for the nine month period ending September 30, 2017
increased $41.6 million, or 46.3 percent, to $131.4 million.
The growth in revenue was directly attributable to international
operations, $33.8 million (primarily due to Brazil, $27.4
million). Domestic operations contributed $7.8 million in
revenue growth year over year.
- Operating income for the third quarter increased $398,000, or
92.6%, to $828,000, compared to $430,000 for the same period last
year.
- Operating income for the nine month period ended September 30,
2017 increased $908,000, or 66%, to $2.3 million, compared to $1.4
million for the same period in 2016.
- Net income attributable to SPAR Group for the third quarter of
2017 was $246,000, or $0.01 per diluted share, compared to a net
loss of ($58,000), or ($0.00) per diluted share, during the third
quarter of 2016.
- Net income attributable to SPAR Group for the nine months ended
September 30, 2017 was $346,000, or $0.02 per diluted share,
compared to a net income of $84,000 or $0.00 per diluted share, for
the same period in 2016.
Financial Results by Geography (in
000's)
|
Three Months Ended September 30, |
% |
|
Nine Months Ended September 30, |
% |
Revenue: |
|
2017 |
|
|
2016 |
Change |
|
2017 |
|
2016 |
Change |
International
|
$ |
33,690 |
|
$ |
22,106 |
52.4 |
% |
|
$ |
91,292 |
|
$ |
57,513 |
58.7 |
% |
Domestic |
|
15,062 |
|
|
11,332 |
32.9 |
% |
|
|
40,069 |
|
|
32,268 |
24.2 |
% |
Total |
$ |
48,752 |
|
$ |
33,438 |
45.8 |
% |
|
$ |
131,361 |
|
$ |
89,781 |
46.3 |
% |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
Net Income (loss): |
|
2017 |
|
|
2016 |
|
|
2017 |
|
2016 |
|
International |
$ |
3 |
|
$ |
(66 |
) |
|
$ |
(186 |
) |
|
$ |
43 |
|
|
Domestic |
|
243 |
|
|
8 |
|
|
|
532 |
|
|
|
41 |
|
|
Total |
$ |
246 |
|
$ |
(58 |
) |
|
$ |
346 |
|
|
$ |
84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Basic and Diluted share: |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.01 |
|
$ |
|
|
0.00 |
|
|
$ |
0.02 |
|
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commenting on third quarter results Chief
Executive Officer, Christiaan Olivier said, “Since taking on the
role as CEO a little more than two months ago, I am very encouraged
by what I’ve seen. SPAR has a great foundation and multiple
opportunities to enhance growth, profitability and shareholder
value. During this past quarter, the Company delivered
significant top-line growth, as well as improved
profitability. Our domestic business was ahead of plan for
the quarter, primarily due to significant project work from new and
existing customers that were looking to position themselves
well-ahead of the holiday season. The incremental
contribution from the acquisition in Brazil, combined with
double-digit organic growth inside Brazil, as well as strong
performance across nearly all our international markets led to 52%
growth in our international business. While gross margin
performance was under pressure from a mix shift in our domestic
operations and continued investment in Brazil, we delivered
significant improvement in dollar terms at both the gross profit
and net income lines.”
“Accelerated timing of project work in the third
quarter and difficult comparisons to strong fourth quarter
performance last year, may make quarterly comparisons in our
domestic business difficult during the fourth quarter.
Nevertheless, we are on track to deliver solid improvement during
the second half of 2017.”
Margin Profile by Geography
Gross Margin:
|
Three Months Ended September 30, |
Basis Point |
Nine Months Ended September 30, |
Basis Point |
|
2017 |
|
2016 |
Change |
2017 |
|
2016 |
Change |
International |
15.6% |
|
19.3% |
(374) |
16.7% |
|
19.6% |
(293) |
Domestic |
23.5% |
|
26.5% |
(300) |
26.4% |
|
28.5% |
(211) |
Total |
18.0% |
|
21.8% |
(373) |
19.6% |
|
22.8% |
(316) |
Operating Income as a % of
Sales:
|
Three Months Ended September 30, |
Basis Point |
Nine Months Ended September 30, |
Basis Point |
|
2017 |
|
2016 |
Change |
2017 |
|
2016 |
Change |
International |
1.4% |
|
2.8% |
(240) |
1.7% |
|
2.6% |
(206) |
Domestic |
2.3% |
|
(1.6)% |
(690) |
1.8% |
|
(0.4)% |
(423) |
Total |
1.7% |
|
1.3% |
(414) |
1.7% |
|
1.5% |
(337) |
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in international gross margin
relative to the prior periods was primarily due to a mix of higher
cost, dedicated business in Brazil, while other international
subsidiaries remained constant with prior period margins.
The decrease in domestic gross profit margin was
primarily due to an increase in lower margin project work compared
to the same periods last year.
Operating income for the three and nine month
periods ended September 30, 2017 increased 92.6% and 66.0% to
$828,000 and $2.3 million, from $430,000 and $1.4 million,
respectively, compared to the same periods in 2016. The increase in
operating income was primarily driven by the growth in revenue in
both domestic and international operations.
Balance Sheet as of September 30,
2017
At September 30, 2017, cash and cash equivalents
totaled $7.7 million. Working capital was $12.9 million and current
ratio was 1.4 to 1. Total current assets and total assets were
$46.1 million and $58.6 million, respectively. Total
liabilities were $33.2 million and total equity was $25.3 million
at September 30, 2017.
About SPAR Group
SPAR Group, Inc. is a diversified international
merchandising and marketing services Company and provides a broad
array of services worldwide to help companies improve their sales,
operating efficiency and profits at retail locations. The Company
provides merchandising and other marketing services to
manufacturers, distributors and retailers worldwide, primarily in
mass merchandiser, office supply, grocery, drug, dollar,
independent, convenience, toy, home improvement and electronics
stores, as well as providing furniture and other product assembly
services, audit services, in-store events, technology services and
marketing research. The Company has supplied these product services
in the United States since certain of its predecessors were formed
in 1979 and internationally since the Company acquired its first
international subsidiary in Japan in May 2001. Product services
include restocking and adding new products, removing spoiled or
outdated products, resetting categories "on the shelf" in
accordance with client or store schematics, confirming and
replacing shelf tags, setting new sale or promotional product
displays and advertising, replenishing kiosks, demonstrating or
promoting a product, providing in-store event staffing services and
providing assembly services in stores, homes and offices. Audit
services include price audits, point of sale audits, out of stock
audits, intercept surveys and planogram audits. Other merchandising
services include whole store or departmental product sets or resets
(including new store openings), new product launches, in-store
demonstrations, special seasonal or promotional merchandising,
focused product support and product recalls. The Company currently
does business in 10 countries that encompass approximately 50% of
the total world population through its operations in the United
States, Australia, Brazil, Canada, China, India, Japan, Mexico,
South Africa and Turkey. For more information, please visit
the SPAR Group's website at http://www.sparinc.com.
Forward-Looking Statements
This Press Release contains and the above
referenced recorded comments will contain "forward-looking
statements" made by SPAR Group, Inc. ("SGRP", and together with its
subsidiaries, the "SPAR Group" or the "Company"), will be filed
shortly in a Current Report on Form 8-K by SGRP with the Securities
and Exchange Commission (the "SEC"). There also are "forward
looking statements" contained in SGRP's Annual Report on Form 10-K
for the year ended December 31, 2016 (the "Annual Report"), which
was filed by SGRP with the SEC on April 17, 2017, and SGRP's
definitive Proxy Statement respecting its Annual Meeting of
Stockholders to be held on May 18, 2017 (the "Proxy Statement"),
which SGRP filed with the SEC on April 28, 2017, and SGRP's
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
other reports and statements as and when filed with the SEC
(including the Annual Report and the Proxy Statement, each a "SEC
Report"). "Forward-looking statements" are defined in Section 27A
of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and other applicable federal and state
securities laws, rules and regulations, as amended (together with
the Securities Act and Exchange Act, collectively, "Securities
Laws").
The forward-looking statements made by the
Company in this Press Release may include (without limitation) any
expectations, guidance or other information respecting the pursuit
or achievement of the Company's corporate strategic objectives
(growth, customer value, employee development, greater productivity
& efficiency, and earnings per share), building upon the
Company's strong foundation, leveraging compatible global
opportunities, growing the Company’s client base and contacts,
continuing to strengthen the Company’s balance sheet, growing
revenues and improving profitability through organic growth, new
business developments and strategic acquisitions, and continuing to
control costs. The Company's forward-looking statements also
include, in particular and without limitation, those made in
"Business", "Risk Factors", "Legal Proceedings", and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Annual Report. You can identify forward-looking
statements in such information by the Company's use of terms such
as "may", "will", "expect", "intend", "believe", "estimate",
"anticipate", "continue", "plan", "project" or similar words or
variations or negatives of those words. You should carefully
consider (and not place undue reliance on) the Company's
forward-looking statements, risk factors and the other risks,
cautions and information made, contained or noted in or
incorporated by reference into this Press Release, the Annual
Report, the Proxy Statement and the other applicable SEC Reports
that could cause the Company's actual performance or condition
(including its assets, business, clients, capital, cash flow,
credit, expenses, financial condition, income, liabilities,
liquidity, locations, marketing, operations, performance,
prospects, sales, strategies, taxation or other achievement,
results, risks, trends or condition) to differ materially from the
performance or condition planned, intended, anticipated, estimated
or otherwise expected by the Company (collectively, "expectations")
and described in the information in the Company's forward-looking
and other statements, whether express or implied. Although the
Company believes them to be reasonable, those expectations involve
known and unknown risks, uncertainties and other unpredictable
factors (many of which are beyond the Company's control) that could
cause those expectations to fail to occur or be realized or such
actual performance or condition to be materially and adversely
different from the Company's expectations. In addition, new risks
and uncertainties arise from time to time, and it is impossible for
the Company to predict these matters or how they may arise or
affect the Company. Accordingly, the Company cannot assure you that
its expectations will be achieved in whole or in part, that the
Company has identified all potential risks, or that the Company can
successfully avoid or mitigate such risks in whole or in part, any
of which could be significant and materially adverse to the Company
and the value of your investment in SGRP's Common Stock.
You should carefully review the risk factors
described in the Annual Report (See Item 1A – Risk Factors) and any
other risks, cautions or information made, contained or noted in or
incorporated by reference into the Annual Report, the Proxy
Statement or other applicable SEC Report. All forward-looking and
other statements or information attributable to the Company or
persons acting on its behalf are expressly subject to and qualified
by all such risk factors and other risks, cautions and
information.
The Company does not intend or promise, and the
Company expressly disclaims any obligation, to publicly update or
revise any forward-looking statements, risk factors or other risks,
cautions or information (in whole or in part), whether as a result
of new information, risks or uncertainties, future events or
recognition or otherwise, except as and to the extent required by
applicable law.
Company Contact:James R.
SegretoChief Financial OfficerSPAR Group, Inc.(914) 332-4100
Investor Contact: Dave
MossbergThree Part Advisors(817) 310-0051
SPAR Group, Inc. and
SubsidiariesCondensed Consolidated Statements of
Comprehensive Income (Loss) (In
thousands, except share and per share data)
(Unaudited) |
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
Net revenues |
$ |
48,752 |
|
$ |
33,438 |
|
|
$ |
131,361 |
|
$ |
89,781 |
|
Cost
of revenues |
|
39,960 |
|
|
26,162 |
|
|
|
105,563 |
|
|
69,309 |
|
Gross
profit |
|
8,792 |
|
|
7,276 |
|
|
|
25,798 |
|
|
20,472 |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
7,477 |
|
|
6,360 |
|
|
|
21,988 |
|
|
17,637 |
|
Depreciation and amortization |
|
487 |
|
|
486 |
|
|
|
1,526 |
|
|
1,459 |
|
Operating income |
|
828 |
|
|
430 |
|
|
|
2,284 |
|
|
1,376 |
|
|
|
|
|
|
|
Interest expense |
|
110 |
|
|
51 |
|
|
|
117 |
|
|
111 |
|
Other
(income), net |
|
(78 |
) |
|
(78 |
) |
|
|
(275 |
) |
|
(183 |
) |
Income before income tax expense |
|
796 |
|
|
457 |
|
|
|
2,442 |
|
|
1,448 |
|
|
|
|
|
|
|
Income tax expense |
|
210 |
|
|
(31 |
) |
|
|
907 |
|
|
200 |
|
Net
income |
|
586 |
|
|
488 |
|
|
|
1,535 |
|
|
1,248 |
|
Net
income attributable to non-controlling interest |
|
(340 |
) |
|
(546 |
) |
|
|
(1,189 |
) |
|
(1,164 |
) |
Net
income (loss) attributable to SPAR Group, Inc. |
$ |
246 |
|
$ |
(58 |
) |
|
$ |
346 |
|
$ |
84 |
|
Basic net income per common share: |
$ |
0.01 |
|
$ |
0.00 |
|
|
$ |
0.02 |
|
$ |
0.00 |
|
Diluted net income per common share: |
$ |
0.01 |
|
$ |
0.00 |
|
|
$ |
0.02 |
|
$ |
0.00 |
|
|
|
|
|
|
|
Weighted average common shares – basic |
|
20,602 |
|
|
20,607 |
|
|
|
20,633 |
|
|
20,580 |
|
|
|
|
|
|
|
Weighted average common shares – diluted |
|
21,320 |
|
|
20,607 |
|
|
|
21,331 |
|
|
21,299 |
|
|
|
|
|
|
|
Net
income |
$ |
586 |
|
$ |
488 |
|
|
$ |
1,535 |
|
$ |
1,248 |
|
Other
comprehensive income (loss): |
|
|
|
|
|
Foreign currency translation adjustments |
|
(61 |
) |
|
206 |
|
|
|
681 |
|
|
(495 |
) |
Comprehensive income |
|
525 |
|
|
694 |
|
|
|
2,216 |
|
|
753 |
|
Comprehensive (income) attributable to non-controlling
interest |
|
(318 |
) |
|
(651 |
) |
|
|
(1,523 |
) |
|
(807 |
) |
Comprehensive income (loss) attributable to SPAR Group, Inc. |
$ |
207 |
|
$ |
43 |
|
|
$ |
693 |
|
$ |
(54 |
) |
|
|
|
|
|
|
SPAR Group, Inc. and
SubsidiariesCondensed Consolidated Balance Sheets(In
thousands, except share and per share data) |
|
September 30,
2017 |
|
December 31, 2016 |
Assets |
(Unaudited) |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
7,662 |
|
|
$ |
7,324 |
|
Accounts receivable, net |
|
36,824 |
|
|
|
33,669 |
|
Prepaid expenses and other current assets |
|
1,629 |
|
|
|
1,299 |
|
Total
current assets |
|
46,115 |
|
|
|
42,292 |
|
Property and equipment, net |
|
2,551 |
|
|
|
2,536 |
|
Goodwill |
|
1,841 |
|
|
|
1,847 |
|
Intangible assets, net |
|
1,900 |
|
|
|
2,340 |
|
Deferred income taxes |
|
4,468 |
|
|
|
4,694 |
|
Other
assets |
|
1,683 |
|
|
|
1,142 |
|
Total
assets |
$ |
58,558 |
|
|
$ |
54,851 |
|
Liabilities and
equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ |
7,783 |
|
|
$ |
5,567 |
|
Accrued expenses and other current liabilities |
|
13,598 |
|
|
|
9,766 |
|
Due to affiliates |
|
4,008 |
|
|
|
3,349 |
|
Customer incentives and deposits |
|
1,587 |
|
|
|
1,305 |
|
Lines of credit and short-term loans |
|
6,222 |
|
|
|
9,778 |
|
Total
current liabilities |
|
33,198 |
|
|
|
29,765 |
|
Long-term debt and other liabilities |
|
33 |
|
|
|
4 |
|
Total
liabilities |
|
33,231 |
|
|
|
29,769 |
|
|
|
|
Equity: |
|
|
SPAR
Group, Inc. equity |
|
|
Preferred stock, $.01 par value: |
|
|
Authorized and available shares– 2,445,598 |
|
|
Issued and outstanding shares– |
|
|
None – September 30, 2017, and December 31, 2016 |
|
– |
|
|
|
– |
|
Common stock, $.01 par value: |
|
|
Authorized shares – 47,000,000 |
|
|
Issued shares – 20,680,717 – September 30, 2017, and December
31, 2016 |
|
207 |
|
|
|
207 |
|
Treasury stock, at cost |
|
|
|
|
|
|
|
115,123
shares – September 30, 2017, and37,877 shares –
December 31, 2016 |
|
(127 |
) |
|
|
(51 |
) |
Additional paid-in capital |
|
16,234 |
|
|
|
16,093 |
|
Accumulated other comprehensive loss |
|
(2,060 |
) |
|
|
(2,407 |
) |
Retained earnings |
|
6,246 |
|
|
|
5,835 |
|
Total
SPAR Group, Inc. equity |
|
20,500 |
|
|
|
19,677 |
|
Non-controlling interest |
|
4,827 |
|
|
|
5,405 |
|
Total
equity |
|
25,327 |
|
|
|
25,082 |
|
Total
liabilities and equity |
$ |
58,558 |
|
|
$ |
54,851 |
|
Spar (NASDAQ:SGRP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Spar (NASDAQ:SGRP)
Historical Stock Chart
From Apr 2023 to Apr 2024