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 second
quarter ended June 30, 2018.
Highlights for the three and six-month periods
ended June 30, 2018, as compared to the same periods in the prior
year include:
- Revenue for the second quarter of
2018 increased $16.5 million, or 39 percent, to $59.2
million. International operations contributed to $8.6 million
of the increase. Domestic operations contributed $7.9 million to
year-over-year revenue growth.
- Revenue for the six-month period
ending June 30, 2018 increased $31.2 million, or 38 percent, to
$113.8 million. International operations contributed to $16.3
of the increase. Domestic operations contributed $14.9 million to
year-over-year revenue growth.
- During the second quarter, the
Company recorded one-time charges totaling approximately $2.0
million: $1.3 million for a settlement respecting related party
labor litigation and $675,000 due to the uncertainty of collection
against unsecured advances to related parties.
- Operating loss for the second
quarter was $(1.2 million), a $2.2 million difference versus
operating income of $971,000 during the same period last year.
Excluding these one-time charges, operating income decreased
$192,000 year over year, led by a decrease in profitability from
domestic operations.
- Operating loss for the six-month
period ended June 30, 2018 was $(506,000), a $1.9 million
difference versus operating income of $1.5 million during the same
period of 2017.
- Net loss attributable to SPAR Group
for the second quarter of 2018 was $1.8 million or $(0.09) per
share; compared to net income of $343,000 or $0.02 per diluted
share, during the second quarter of 2017.
- Net loss attributable to SPAR Group
for the six months ended June 30, 2018 was $1.6 million, or $(0.08)
per share; compared to a net income of $99,000, or $0.00 per
diluted share, for the same period in 2017.
|
Financial Results by Geography (in 000's,
except per share data) |
|
|
Three Months Ended June 30, |
% |
|
Six Months Ended June 30, |
|
|
% |
Revenue: |
|
2018 |
|
|
|
2017 |
|
Change |
|
|
2018 |
|
|
|
2017 |
|
|
Change |
International |
$ |
37,668 |
|
|
$ |
29,037 |
|
29.7 |
% |
|
$ |
73,878 |
|
|
$ |
57,602 |
|
|
|
28.3 |
% |
Domestic |
|
21,556 |
|
|
|
13,685 |
|
57.5 |
% |
|
|
39,925 |
|
|
|
25,006 |
|
|
|
59.7 |
% |
Total |
$ |
59,224 |
|
|
$ |
42,722 |
|
38.6 |
% |
|
$ |
113,803 |
|
|
$ |
82,608 |
|
|
|
37.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
% |
|
Six Months Ended June 30, |
|
|
% |
Operating Income: |
|
2018 |
|
|
2017 |
|
Change |
|
|
2018 |
|
|
|
2017 |
|
|
Change |
International |
$ |
663 |
|
|
|
$ |
679 |
|
|
(2.4 |
%) |
|
$ |
1,713 |
|
|
$ |
1,098 |
|
56.0 |
% |
Domestic |
|
(1,900 |
) |
|
|
|
292 |
|
|
|
|
(2,219 |
) |
|
|
357 |
|
|
Total |
$ |
(1,237 |
) |
|
|
$ |
971 |
|
|
|
$ |
(506 |
) |
|
$ |
1,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
Net (loss) income: |
|
2018 |
|
|
2017 |
|
|
|
|
2018 |
|
|
2017 |
|
|
|
International |
$ |
(32 |
) |
|
|
$ |
(205 |
) |
|
|
$ |
355 |
|
|
$ |
(189 |
) |
|
|
Domestic |
|
(1,731 |
) |
|
|
|
548 |
|
|
|
|
(1,993 |
) |
|
|
288 |
|
|
|
Total |
$ |
(1,763 |
) |
|
|
$ |
343 |
|
|
|
$ |
(1,638 |
) |
|
$ |
99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Basic and Diluted
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.09 |
) |
|
|
$ |
0.02 |
|
|
|
$ |
(0.08 |
) |
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We had solid top line growth from both domestic and
international businesses. Domestic growth was driven by the
acquisition of Resource Plus, which has been a solid contributor
and is creating some cross-selling opportunities. In
addition, our international business saw strong organic growth in
all international countries except Australia,” said Chief Executive
Officer, Christiaan Olivier. “We continue to face headwinds
domestically due to store closures of certain retail customers, as
well as cost pressures from a tight labor market. However, we
see opportunities for organic growth both domestically and
internationally, which we expect will help to partially offset
near-term factors affecting profitability.”
|
Gross Margin Profile by Geography |
|
|
Three Months Ended June 30, |
BasisPoint |
|
Six Months Ended June 30, |
BasisPoint |
|
2018 |
|
|
2017 |
|
Change |
|
2018 |
|
|
2017 |
|
Change |
International |
14.6 |
% |
|
17.5 |
% |
(289) |
|
14.8 |
% |
|
17.3 |
% |
(249) |
Domestic |
23.0 |
% |
|
28.3 |
% |
(558) |
|
23.1 |
% |
|
28.1 |
% |
(513) |
Total |
17.6 |
% |
|
21.0 |
% |
(342) |
|
17.8 |
% |
|
20.6 |
% |
(290) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income as a % of Sales |
|
|
|
|
|
|
|
Three Months Ended June 30, |
BasisPoint |
|
Six Months Ended June 30, |
BasisPoint |
|
2018 |
|
|
2017 |
|
Change |
|
2018 |
|
|
2017 |
|
Change |
International |
1.8 |
% |
|
2.3 |
% |
(58) |
|
2.3 |
% |
|
1.9 |
% |
41 |
Domestic |
(8.8 |
%) |
|
2.1 |
% |
(1,095) |
|
(5.6 |
%) |
|
1.4 |
% |
(699) |
Total |
(2.1 |
%) |
|
2.3 |
% |
(436) |
|
(0.4 |
%) |
|
1.8 |
% |
(221) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International gross profit margin for the three
and six month periods ended June 30, 2018 were 14.6% and 14.8%,
compared to 17.5% and 17.3%, respectively, for the same periods in
2017. The international subsidiaries have been experiencing
gross margin pressure compared to the same period last year,
primarily in Brazil.
Domestic gross profit margin for the three and
six month periods ended June 30, 2018, were 23.0% and 23.1%,
compared to 28.3% and 28.1%, respectively, for the same periods in
2017. The decrease in total year domestic gross profit margin was
primarily due to an increase in lower margin project work compared
to the same period last year.
Balance Sheet as of June 30,
2018
As of June 30, 2018, cash and cash equivalents
totaled $5.8 million. Working capital was $23.8 million and current
ratio was 1.7 to 1. Total current assets and total assets were
$56.1 million and $70.5 million, respectively. Total current
liabilities and total liabilities were $32.3 million and $44.0
million, and total equity was $26.5 million as of June 30,
2018.
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 and coordinates
the operations through the use of multi-lingual proprietary
technology which drives the logistics, communication and reporting
for global operations and customers. SPAR works primarily in
mass merchandiser, office supply, value, grocery, drug,
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 project and
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
of 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, providing in-store event staffing 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
ten countries that encompass approximately 50% of the total world
population through its operations in the United States, Canada,
Japan, South Africa, India, China, Australia, Mexico, Brazil 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, 2017 (the "Annual Report"), which
was filed by SGRP with the SEC on April 2, 2018, and SGRP's
definitive Proxy Statement respecting its Annual Meeting of
Stockholders to be held on or about May 2, 2017 (the "Proxy
Statement"), which SGRP filed with the SEC on April 18, 2018, 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.
|
SPAR Group, Inc. and
Subsidiaries |
Consolidated Statements of (Loss) Income and
Comprehensive Income (Loss) |
(In thousands, except share and
per share data) |
|
|
Three Months EndedJune
30, |
|
Six Months Ended June
30, |
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
Net revenues |
$ |
59,224 |
|
$ |
42,722 |
|
|
$ |
113,803 |
|
$ |
82,608 |
|
Cost
of revenues |
|
48,759 |
|
|
33,765 |
|
|
|
93,608 |
|
|
65,604 |
|
Gross profit |
|
10,465 |
|
|
8,957 |
|
|
|
20,195 |
|
|
17,004 |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
9,196 |
|
|
7,452 |
|
|
|
17,654 |
|
|
14,510 |
|
Settlement and other charges |
|
1,975 |
|
|
- |
|
|
|
1,975 |
|
|
- |
|
Depreciation and amortization |
|
531 |
|
|
534 |
|
|
|
1,072 |
|
|
1,039 |
|
Operating (loss) income |
|
(1,237 |
) |
|
971 |
|
|
|
(506 |
) |
|
1,455 |
|
|
|
|
|
|
|
Interest expense |
|
354 |
|
|
54 |
|
|
|
553 |
|
|
7 |
|
Other
(income), net |
|
(232 |
) |
|
(135 |
) |
|
|
(304 |
) |
|
(197 |
) |
(Loss) income before income tax expense |
|
(1,359 |
) |
|
1,052 |
|
|
|
(755 |
) |
|
1,645 |
|
|
|
|
|
|
|
Income tax expense |
|
(262 |
) |
|
278 |
|
|
|
(84 |
) |
|
697 |
|
Net
(loss) income |
|
(1,097 |
) |
|
774 |
|
|
|
(671 |
) |
|
948 |
|
Net
(loss) income attributable to non-controlling interest |
|
(666 |
) |
|
(431 |
) |
|
|
(967 |
) |
|
(849 |
) |
Net
(loss) income attributable to SPAR Group, Inc. |
$ |
(1,763 |
) |
$ |
343 |
|
|
$ |
(1,638 |
) |
$ |
99 |
|
Basic net (loss) income per common share: |
$ |
(0.09 |
) |
$ |
0.02 |
|
|
$ |
(0.08 |
) |
$ |
0.00 |
|
Diluted net (loss) income per common share: |
$ |
(0.09 |
) |
$ |
0.02 |
|
|
$ |
(0.08 |
) |
$ |
0.00 |
|
|
|
|
|
|
|
Weighted average common shares – basic |
|
20,649 |
|
|
20,647 |
|
|
|
20,649 |
|
|
20,648 |
|
|
|
|
|
|
|
Weighted average common shares – diluted |
|
21,649 |
|
|
21,312 |
|
|
|
21,649 |
|
|
21,336 |
|
|
|
|
|
|
|
Net
(loss) income |
$ |
(1,097 |
) |
$ |
774 |
|
|
$ |
(671 |
) |
$ |
948 |
|
Other
comprehensive income (loss): |
|
|
|
|
|
Foreign currency translation adjustments |
|
(650 |
) |
|
578 |
|
|
|
(680 |
) |
|
742 |
|
Comprehensive income (loss) |
|
(1,747 |
) |
|
1,352 |
|
|
|
(1,351 |
) |
|
1,690 |
|
Comprehensive loss (income) attributable to non-controlling
interest |
|
(391 |
) |
|
(689 |
) |
|
|
(662 |
) |
|
(1,205 |
) |
Comprehensive income (loss) attributable to SPAR Group, Inc. |
$ |
(2,138 |
) |
$ |
633 |
|
|
$ |
(2,013 |
) |
$ |
485 |
|
|
|
|
|
|
|
|
SPAR Group, Inc. and Subsidiaries |
Consolidated Balance Sheets |
(In thousands, except share and per share data) |
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
5,836 |
|
|
$ |
8,827 |
|
Accounts receivable, net |
|
47,546 |
|
|
|
35,964 |
|
Prepaid expenses and other current assets |
|
2,706 |
|
|
|
2,031 |
|
Total
current assets |
|
56,088 |
|
|
|
46,822 |
|
Property and equipment, net |
|
2,894 |
|
|
|
2,712 |
|
Goodwill |
|
3,215 |
|
|
|
1,836 |
|
Intangible assets, net |
|
3,599 |
|
|
|
1,634 |
|
Deferred income taxes |
|
2,960 |
|
|
|
3,055 |
|
Other
assets |
|
1,733 |
|
|
|
1,929 |
|
Total
assets |
$ |
70,489 |
|
|
$ |
57,988 |
|
Liabilities and
equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ |
8,621 |
|
|
$ |
7,341 |
|
Accrued expenses and other current liabilities |
|
14,615 |
|
|
|
13,581 |
|
Due to affiliates |
|
4,811 |
|
|
|
3,026 |
|
Customer incentives and deposits |
|
687 |
|
|
|
1,539 |
|
Lines of credit and short-term loans |
|
3,581 |
|
|
|
6,839 |
|
Total
current liabilities |
|
32,315 |
|
|
|
32,326 |
|
Long-term debt and other liabilities |
|
11,723 |
|
|
|
107 |
|
Total
liabilities |
|
44,038 |
|
|
|
32,433 |
|
|
|
|
Equity: |
|
|
SPAR
Group, Inc. equity |
|
|
Preferred stock, $.01 par value: |
|
|
Authorized and available shares– 2,445,598 |
|
|
Issued and outstanding shares– |
|
|
None – June 30, 2018 and December 31, 2017 |
|
– |
|
|
|
– |
|
Common stock, $.01 par value: |
|
|
Authorized shares – 47,000,000 |
|
|
Issued shares – 20,680,717 – June 30, 2018 and December 31,
2017 |
|
207 |
|
|
|
207 |
|
Treasury stock, at cost |
|
|
|
|
|
|
|
30,013
shares – June 30, 2018 and |
|
|
|
|
|
|
|
104,398
shares – December 31, 2017 |
|
(33 |
) |
|
|
(115 |
) |
Additional paid-in capital |
|
16,253 |
|
|
|
16,271 |
|
Accumulated other comprehensive loss |
|
(2,065 |
) |
|
|
(1,690 |
) |
Retained earnings |
|
3,325 |
|
|
|
4,977 |
|
Total
SPAR Group, Inc. equity |
|
17,687 |
|
|
|
19,650 |
|
Non-controlling interest |
|
8,764 |
|
|
|
5,905 |
|
Total
equity |
|
26,451 |
|
|
|
25,555 |
|
Total
liabilities and equity |
$ |
70,489 |
|
|
$ |
57,988 |
|
Company Contact:
James R. Segreto
Chief Financial Officer
SPAR Group, Inc.
(914) 332-4100
Investor Contact:
Dave Mossberg
Three Part Advisors
(817) 310-0051
Spar (NASDAQ:SGRP)
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From Aug 2024 to Sep 2024
Spar (NASDAQ:SGRP)
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From Sep 2023 to Sep 2024