SPAR Group, Inc. (NASDAQ: SGRP), a leading global provider of
merchandising and marketing services, today reported financial
results for its first quarter ended March 31, 2021.
“This past quarter was our highest first quarter
net income performance in more than 15 years. Despite the lingering
effects of the pandemic-led economic downturn, this also marks the
third consecutive quarter of year-over-year improvements in net
income. With a renewed energy, we have improved total company
profitability, while realizing growth in several of our businesses
such as Canada, Mexico, China and South Africa,” stated Mike
Matacunas, President and Chief Executive Officer. “Overall, 2021 is
off to a solid start driven by new business while maintaining focus
on the safety and well-being of our employees and clients.”
First Quarter Results
Consolidated net revenue was $61.1 million
compared to $61.3 million in the prior year’s first quarter.
Domestic net revenue of $23.7 million increased slightly from the
prior year, while international net revenue decreased 1.7%.
Excluding the effect of foreign currency exchange, international
revenue would have increased by 4.7% and total revenue would have
increased 3.5%.
Gross Profit was $12.3 million compared to $11.8
million during the first quarter a year ago. Gross margin improved
90 basis points to 20.1% versus 19.2% in the prior year’s
quarter. The primary factors driving the improvement in
gross profit were related to a 210-basis point improvement in
international gross profit, which was only partially offset by
continued wage pressure domestically.
Selling, General and Administrative expenses
were 14.7% of revenue versus 15.9% in the prior year’s first
quarter. This 118-basis point improvement in selling, general and
administrative expenses was the result of operating expense
leverage and continued efforts to reduce discretionary
spending.
Operating Income improved 83.8% to $2.7 million
compared to $1.5 million in the prior year’s first quarter, and
operating margin was 4.5% compared to 2.4% in the prior year’s
first quarter.
Net Income attributable to SPAR Group increased
207.7% to $0.9 million, compared to $0.3 million during the prior
year’s first quarter. Earnings per share improved to $0.04,
compared to a $0.01 in the prior year’s quarter.
Company Outlook
Due to expectations of continued volatility and
uncertainty related to the COVID-19 pandemic and other
macroeconomic factors, the Company is not issuing revenue and
earnings guidance at this time.
For 2021, the Company plans to continue to focus
on growth of the core business, expanding internationally,
innovating with technology and introducing new services.
Balance Sheet as of March 31,
2021
At March 31, 2021, cash and cash equivalents
totaled $19.7 million. Working capital was $24.4 million and
current ratio was 1.5 to 1. Total current assets and total assets
were $75.7 million and $92.4 million, respectively. Total
liabilities were $53.8 million and total equity was $38.6 million
at March 31, 2021.
Financial Results by Geography (in 000's)
|
Three
Months Ended March 31, |
% |
|
Revenue: |
|
2021 |
|
|
2020 |
|
Change |
|
International |
$ |
37,422 |
|
$ |
38,059 |
|
(1.7 |
%) |
|
Domestic |
|
23,675 |
|
|
23,289 |
|
1.7 |
% |
|
Total |
$ |
61,097 |
|
$ |
61,348 |
|
(0.4 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
% |
|
Operating
Income: |
|
2021 |
|
|
2020 |
|
Change |
|
International |
$ |
1,961 |
|
$ |
1,168 |
|
67.9 |
% |
|
Domestic |
|
757 |
|
|
309 |
|
145.0 |
% |
|
Total |
$ |
2,718 |
|
$ |
1,477 |
|
83.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31, |
% |
Net Income: |
|
2021 |
|
|
2020 |
Change |
International |
$ |
545 |
|
$ |
260 |
|
109.7 |
% |
|
Domestic |
|
372 |
|
|
38 |
|
858.7 |
% |
|
Total |
$ |
917 |
|
$ |
298 |
|
207.7 |
% |
|
|
|
|
|
|
|
|
|
Earnings
Per Basic and Diluted share: |
|
|
|
|
$ |
0.04 |
|
$ |
|
0.01 |
|
|
|
|
|
|
|
|
Margin Profile by Geography Gross
Margin:
|
|
Three Months Ended March 31, |
Basis Point |
|
|
|
2021 |
|
|
2020 |
|
Change |
|
International |
|
18.5 |
% |
|
16.4 |
% |
210 |
|
|
Domestic |
|
22.5 |
% |
|
23.8 |
% |
(130 |
) |
|
Total |
|
20.1 |
% |
|
19.2 |
% |
90 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income as a % of Sales:
|
|
Three Months Ended March 31, |
Basis Point |
|
|
|
2021 |
|
|
2020 |
|
Change |
|
|
International |
|
5.2 |
% |
|
3.1 |
% |
210 |
|
|
Domestic |
|
3.2 |
% |
|
1.3 |
% |
190 |
|
|
Total |
|
4.5 |
% |
|
2.4 |
% |
210 |
|
|
|
|
|
|
|
|
|
|
|
|
About SPAR Group
SPAR Group is a leading global merchandising and
marketing services company, providing a broad range of services to
retailers, manufacturers and distributors around the world.
With more than 40 years of experience, 25,000+ merchandising
specialists around the world, an average of 200,000+ store visits a
week and long-term relationships with some of the world’s leading
manufacturers and retail businesses. SPAR Group provides
specialized capabilities across 9 countries and 4 continents.
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" within the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, made by, or respecting,
SPAR Group, Inc. ("SGRP") and its subsidiaries (together with SGRP,
“SPAR”, "SPAR Group" or the "Company"), to be filed shortly in a
Current Report on Form 10-Q 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
its fiscal year ended December 31, 2020, as filed with the SEC on
March 31, 2021, and SGRP's First Amendment to Annual Report on Form
10-K/A for the year ended December 31, 2020, as filed with the SEC
on April 29, 2021 (as so amended, the "Annual Report"), in
SGRP's definitive Proxy Statement respecting its Annual Meeting of
Stockholders to be held in June of 2021, which SGRP plans to file
with the SEC in May of 2021 (the "Proxy Statement"), and the
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 Quarterly Report, the Annual Report and the Proxy
Statement, the Information Statement, the Second Special Meeting
Proxy/Information 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, the "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. 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 also 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
SubsidiariesConsolidated Statements of Income and
Comprehensive Income (loss) (In thousands, except share
and per share data) (Unaudited)
|
Three Months Ended March 31, |
|
|
2021 |
|
|
|
2020 |
|
Net revenues |
$ |
61,097 |
|
|
$ |
61,348 |
|
Cost of revenues |
|
48,838 |
|
|
|
49,560 |
|
Gross profit |
|
12,259 |
|
|
|
11,788 |
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
9,011 |
|
|
|
9,771 |
|
Depreciation and amortization |
|
530 |
|
|
|
540 |
|
Operating income |
|
2,718 |
|
|
|
1,477 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
147 |
|
|
|
228 |
|
Other (income), net |
|
(75 |
) |
|
|
(8 |
) |
Income before income tax expense |
|
2,646 |
|
|
|
1,257 |
|
|
|
|
|
|
|
|
|
Income tax expense |
|
865 |
|
|
|
335 |
|
Net income |
|
1,781 |
|
|
|
922 |
|
Net income attributable to non-controlling interest |
|
(864 |
) |
|
|
(624 |
) |
Net income attributable to SPAR Group, Inc. |
$ |
917 |
|
|
$ |
298 |
|
Basic net income per common share: |
$ |
0.04 |
|
|
$ |
0.01 |
|
Diluted net income per common share: |
$ |
0.04 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
Weighted average common shares – basic |
|
21,188 |
|
|
|
21,105 |
|
|
|
|
|
|
|
|
|
Weighted average common shares – diluted |
|
21,581 |
|
|
|
21,228 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
1,781 |
|
|
$ |
922 |
|
Other comprehensive (loss): |
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
(1,835 |
) |
|
|
(3,900 |
) |
Comprehensive income (loss) |
|
(54 |
) |
|
|
(2,978 |
) |
Comprehensive income attributable to non-controlling interest |
|
773 |
|
|
|
1,820 |
|
Comprehensive income (loss) attributable to SPAR Group, Inc. |
$ |
719 |
|
|
$ |
(1,158 |
) |
|
|
|
|
|
|
SPAR Group, Inc. and
SubsidiariesConsolidated Balance
Sheets(In thousands, except share and per share data)
|
March 31, 2021 |
December 31, 2020 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
19,713 |
|
|
$ |
15,972 |
|
Accounts receivable, net |
|
53,025 |
|
|
|
46,914 |
|
Prepaid expenses and other current assets |
|
2,941 |
|
|
|
3,631 |
|
Total current assets |
|
75,679 |
|
|
|
66,517 |
|
Property and equipment, net |
|
2,734 |
|
|
|
2,795 |
|
Operating lease right-of-use
assets |
|
2,479 |
|
|
|
2,900 |
|
Goodwill |
|
3,752 |
|
|
|
3,760 |
|
Intangible assets, net |
|
2,123 |
|
|
|
2,255 |
|
Deferred income taxes |
|
4,142 |
|
|
|
4,201 |
|
Other assets |
|
1,484 |
|
|
|
1,601 |
|
Total assets |
$ |
92,393 |
|
|
$ |
84,029 |
|
Liabilities and
equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
9,232 |
|
|
$ |
7,859 |
|
Accrued expenses and other current liabilities |
|
19,276 |
|
|
|
18,745 |
|
Due to affiliates |
|
4,569 |
|
|
|
3,775 |
|
Customer incentives and deposits |
|
4,295 |
|
|
|
1,799 |
|
Lines of credit and short-term loans |
|
12,940 |
|
|
|
9,329 |
|
Current portion of operating lease liabilities |
|
960 |
|
|
|
1,398 |
|
Total current liabilities |
|
51,272 |
|
|
|
42,905 |
|
Operating lease liabilities, less
current portion |
|
1,519 |
|
|
|
1,502 |
|
Long-term debt and other
liabilities |
|
1,000 |
|
|
|
1,000 |
|
Total liabilities |
|
53,791 |
|
|
|
45,407 |
|
|
|
|
|
|
|
|
|
Equity: |
|
|
SPAR Group, Inc. equity |
|
|
Preferred stock, $.01 par value: |
|
|
Authorized and available shares– 2,445,598 |
|
|
Issued and outstanding shares– |
|
|
None – March 31, 2021, and December 31, 2020 |
|
– |
|
|
|
– |
|
Common stock, $.01 par value: |
|
|
Authorized shares – 47,000,000 |
|
|
Issued shares – 21,253,483 – March 31, 2021, and 21,122,312 –
December 31, 2020 |
|
212 |
|
|
|
211 |
|
Treasury stock, at cost 1,697 shares – March 31, 2021, and December
31, 2020 |
|
(2 |
) |
|
|
(2 |
) |
Additional paid-in capital |
|
16,678 |
|
|
|
16,645 |
|
Accumulated other comprehensive loss |
|
(4,111 |
) |
|
|
(3,913 |
) |
Retained earnings |
|
10,135 |
|
|
|
9,218 |
|
Total SPAR Group, Inc.
equity |
|
22,912 |
|
|
|
22,159 |
|
Non-controlling interest |
|
15,690 |
|
|
|
16,463 |
|
Total equity |
|
38,602 |
|
|
|
38,622 |
|
Total liabilities and equity |
$ |
92,393 |
|
|
$ |
84,209 |
|
|
|
|
|
|
|
|
|
Contact:
Dave Mossberg
(817) 310-0051
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