SPAR Group Announces Financial Results for the Fourth Quarter Ended December 31, 2018
Highlights for the three and twelve-month periods ended
- Revenue for the three-month period ending
December 31, 2018 increased$7.0 million , or 14 percent, to$57 million . International operations contributed to$1.5 million of the increase. Domestic operations contributed$5.5 million to year-over-year revenue growth with Resource Plus contributing$4.4 million of the increase in Domestic revenue for the period. - Revenue for the twelve-month period ending
December 31, 2018 increased$47.8 million , or 26 percent, to$229.2 million . International operations contributed to$20 million of the increase. Domestic operations contributed$27.8 million to year-over-year revenue growth. Resource Plus contributed$24.3 million to the increase in Domestic revenue year over year. - Operating income for the fourth quarter increased
$106,000 to $1.9 million compared to$1.8 million during the same period last year. The increase in operating income in the fourth quarter was attributable to increased contribution from international operations, which was partially offset by a decrease in domestic profitability. During the fourth quarter, there were$1.4 million of one-time legal and related party charges negatively impacting domestic operations. - Operating income for the twelve months ended
December 31, 2018 decreased$300,000 , or 8.8 percent, to$3.7 million compared to$4.1 million during the same period of 2017. Adjusting for one-time settlement, legal, related party and other expenses, operations would have delivered$7.5 million in operating income. - Net loss attributable to
SPAR Group for the fourth quarter of 2018 was$(534,000) , or$(0.03) per share; compared to a net loss of$(1.3) million , or$(0.06) per diluted share, during the fourth quarter of 2017. - Net loss attributable to
SPAR Group for the twelve months endedDecember 31, 2018 was($1.6) million , or$(0.07) per share; compared to a net loss of($923,000) , or$(0.04) per diluted share, for the same period during 2017. - As highlighted in the GAAP reconciliation table below, the Company incurred significant non-cash and one-time charges during 2018 and 2017;
-
- Excluding these non-cash and one-time charges, non-GAAP net income attributable to
SPAR Group during the fourth quarter of 2018 was approximately$535,000 , or$0.03 per diluted share, compared with$572,000 , or$0.03 per diluted share during the same period of the prior year. - Excluding non-cash and one-time charges, non-GAAP net income attributable to
SPAR Group during the 2018 was approximately$1.3 million or$0.06 per diluted share, compared with$918,000 , or$0.04 per diluted share during 2017.
- Excluding these non-cash and one-time charges, non-GAAP net income attributable to
Financial Results by Geography (in 000's, except per share data)
Three Months Ended December 31, |
% | Twelve Months Ended December 31, |
% | ||||||||||||
Revenue: | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||
International | $ | 39,289 | $ | 37,816 | 3.9% | $ | 149,142 | $ | 129,108 | 15.5% | |||||
Domestic | 17,712 | 12,204 | 45.1% | 80,049 | 52,273 | 53.1% | |||||||||
Total | $ | 57,000 | $ | 50,020 | 14.0% | $ | 229,191 | $ | 181,381 | 26.4% |
Three Months Ended December 31, |
% | Twelve Months Ended December 31, |
% | ||||||||||||
Operating Income: | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||
International | $ | 3,321 | $ | 1,899 | 74.9% | $ | 6,272 | $ | 3,481 | 99.1% | |||||
Domestic | (1,408) | (93) | nmf | (2,542) | 609 | nmf | |||||||||
Total | $ | 1,912 | $ | 1,806 | 5.9% | $ | 3,729 | $ | 4,090 | 8.8% |
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||||||||||
Net income (loss): | 2018 |
2017 |
2018 |
2017 |
|||||||||||
International | $ | 821 | $ | 939 | (12.6%) | $ | 1,529 | $ | 752 | 103.3% | |||||
Domestic | (1,355) | (2,208) | nmf | (3,080) | (1,675) | nmf | |||||||||
Total | $ | (534) | $ | (1,269) | nmf | $ | (1,551) | $ | (923) | nmf | |||||
Earnings Per Basic and Diluted share: | |||||||||||||||
$ | (0.03) | $ | (0.06) | $ | (0.07) | $ | (0.04) | ||||||||
(nmf = no meaningful value) |
“During 2018 we made significant progress in addressing structural issues within our domestic operations, realigning our sales and marketing efforts and improving our technologies. These changes are making a difference and have resulted in improving financial operating results net of one-time charges. On the top line, our team delivered double-digit top-line growth during 2018, with organic growth both domestically and internationally plus the recent acquisition of Resource Plus. While improvements in profitability during 2018 were clouded by one-time charges, we made foundational improvements in our ability to deliver profitable growth,” said Chief Executive Officer,
Gross Margin Profile by Geography
Three Months Ended December 31, | Basis Point | Twelve Months Ended December 31, | Basis Point | ||||||||
2018 |
2017 |
Change | 2018 |
2017 |
Change | ||||||
International | 22.4% | 19.6% | 275 | 17.1% | 17.5% | (44) | |||||
Domestic | 19.6% | 29.2% | (966) | 23.5% | 27.1% | (356) | |||||
Total | 21.5% | 22.0% | (46) | 19.3% | 20.3% | (95) |
Operating Income as a % of Sales
Three Months Ended December 31, | Basis Point | Twelve Months Ended December 31, | Basis Point | ||||||||
2018 |
2017 |
Change | 2018 |
2017 |
Change | ||||||
International | 8.5% | 5.0% | 343 | 4.2% | 2.7% | 151 | |||||
Domestic | (8.0%) | (0.76%) | (719) | (3.2%) | 1.2% | (434) | |||||
Total | 3.4% | 3.6% | (26) | 1.6% | 2.3% | (63) |
International gross profit margin for the fourth quarter and twelve months ended
Domestic gross profit margin for the fourth quarter and twelve months ended
Balance Sheet as of
As of
About
Forward-Looking Statements
This Press Release contains and the above referenced recorded comments will contain "forward-looking statements" made by
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 and Comprehensive (Loss) Income | ||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||
2018 |
2017 |
2018 | 2017 | |||||||||||
Net revenues |
$ | 57,000 | $ | 50,020 | $ | 229,191 |
$ | 181,381 | ||||||
Cost of revenues | 44,750 | 39,038 | 184,904 | 144,601 | ||||||||||
Gross profit | 12,250 | 10,982 | 44,287 | 36,780 | ||||||||||
Selling, general and administrative expenses | 8,879 | 8,576 | 34,188 | 30,564 | ||||||||||
Settlement and other charges | 945 | - | 4,261 | - | ||||||||||
Depreciation and amortization | 514 | 600 | 2,109 | 2,126 | ||||||||||
Operating income | 1,912 | 1,806 | 3,729 | 4,090 | ||||||||||
Interest expense | 209 | 220 | 1,095 | 337 | ||||||||||
Other loss (income), net | 8 | (125 | ) | (406 | ) | (401 | ) | |||||||
Income before income tax expense | 1,695 | 1,711 | 3,040 | 4,154 | ||||||||||
Income tax expense | 1,067 | 2,069 | 1,402 | 2,977 | ||||||||||
Net income (loss) | 628 | (358 | ) | 1,638 | 1,177 | |||||||||
Net loss attributable to non-controlling interest | (1,162 | ) | (911 | ) | (3,189 | ) | (2,100 | ) | ||||||
Net loss attributable to SPAR Group, Inc. | $ | (534 | ) | $ | (1,269 | ) | $ | (1,551 | ) | $ | (923 | ) | ||
Basic net loss per common share: | $ | (0.03 | ) | $ | (0.06 | ) | $ | (0.07 | ) | $ | (0.04 | ) | ||
Diluted net loss per common share: | $ | (0.03 | ) | $ | (0.06 | ) | $ | (0.07 | ) | $ | (0.04 | ) | ||
Weighted average common shares – basic | 21,160 | 20,571 | 20,684 | 20,617 | ||||||||||
Weighted average common shares – diluted | 21,160 | 21,571 | 20,684 | 21,617 | ||||||||||
Net income (loss) | $ | 628 | $ | (358 | ) | $ | 1,638 | $ | 1,177 | |||||
Other comprehensive income (loss): | ||||||||||||||
Foreign currency translation adjustments | 178 | 366 | (3,284 | ) | 1,315 | |||||||||
Comprehensive income (loss) | 806 | 8 | (1,646 | ) | 2,492 | |||||||||
Comprehensive (loss) income attributable to non-controlling interest | (1,444 | ) | 966 | (1,837 | ) | (2,698 | ) | |||||||
Comprehensive (loss) income attributable to SPAR Group, Inc. | $ | (638 | ) | $ | 974 | $ | (3,283 | ) | $ | (206 | ) | |||
SPAR Group, Inc. and Subsidiaries | ||||||
Consolidated Balance Sheets | ||||||
(In thousands, except share and per share data) | ||||||
December 31, 2018 |
December 31, 2017 |
|||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 7,111 | $ | 8,827 | ||
Accounts receivable, net | 46,162 | 35,964 | ||||
Prepaid expenses and other current assets | 1,879 | 2,031 | ||||
Total current assets | 55,132 | 46,822 | ||||
Property and equipment, net |
2,950 | 2,712 | ||||
Goodwill | 3,788 | 1,836 | ||||
Intangible assets, net | 3,332 | 1,634 | ||||
Deferred income taxes | 2,568 | 3,055 | ||||
Other assets | 1,325 | 1,929 | ||||
Total assets | $ | 69,095 | $ | 57,988 | ||
Liabilities and equity |
||||||
Current liabilities: | ||||||
Accounts payable | $ | 8,668 | $ | 7,341 | ||
Accrued expenses and other current liabilities | 18,168 | 13,581 | ||||
Due to affiliates | 4,645 | 3,026 | ||||
Customer incentives and deposits | 620 | 1,539 | ||||
Lines of credit and short-term loans | 10,414 | 6,839 | ||||
Total current liabilities | 42,515 | 32,326 | ||||
Long-term debt and other liabilities | 1,806 | 107 | ||||
Total liabilities | 44,321 | 32,433 | ||||
Equity: | ||||||
SPAR Group, Inc. equity | ||||||
Preferred stock, $.01 par value: | ||||||
Authorized and available shares– 2,445,598 | ||||||
Issued and outstanding shares– | ||||||
None – September 30, 2018 and December 31, 2017 | – | – | ||||
Common stock, $.01 par value: | ||||||
Authorized shares – 47,000,000 | ||||||
Issued shares – 20,784,483 – December 31, 2018 and 20,680,717 December 31, 2017 |
208 | 207 | ||||
Treasury stock, at cost | ||||||
7,895 shares – December 31, 2018 and 104,398 shares – December 31, 2017 |
(8 | ) | (115 | ) | ||
Additional paid-in capital | 16,304 | 16,271 | ||||
Accumulated other comprehensive loss | (3,638 | ) | (1,690 | ) | ||
Retained earnings | 3,432 | 4,977 | ||||
Total SPAR Group, Inc. equity | 16,298 | 19,650 | ||||
Non-controlling interest | 8,476 | 5,905 | ||||
Total equity | 24,774 | 25,555 | ||||
Total liabilities and equity | $ | 69,095 | $ | 57,988 | ||
GAAP to Non-GAAP Reconciliation | |||||||
Three Months Ended |
Three Months Ended |
Twelve Months Ended |
Twelve Months Ended |
||||
Net (loss) income: | 31-Dec-18 | 31-Dec-17 | 31-Dec-18 | 31-Dec-17 | |||
GAAP net loss | (534) | (1,269) | (1,551) | (923) | |||
One Time Charges | 1,369 | - | 3,780 | - | |||
Tax Provision impact | (300) | 1,841 | (900) | 1,841 | |||
Total non-GAAP net income | 535 | 572 | 1,329 | 918 | |||
Non-GAAP Earnings Per Basic and Diluted share: |
$0.03 | $0.03 | $0.06 | $0.04 |
Company Contact:James R. Segreto Chief Financial OfficerSPAR Group, Inc. (248) 364-8410 Investor Contact:Dave Mossberg Three Part Advisors (817) 310-0051
Source: SPAR Group