SPAR Group Announces Financial Results for the Second Quarter Ended June 30, 2016
Highlights for the three and six month periods ended
- Revenue for the second quarter of 2016 increased 1 percent to
$29.7 million . Adjusting for the impact of foreign currency translation, revenue for the second quarter of 2016 increased$2.5 million , or 9 percent. - Net income attributable to SPAR Group for the second quarter of 2016 was
$283,000 , or$0.01 per diluted share, compared to$29,000 , or$0.00 per diluted share, during the second quarter of 2015.
Financial Results by Geography (in 000's)
Three Months Ended | % | Six Months Ended | % | ||||||||||||||||||
Revenue: | 2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||||
International | $ | 18,548 | $ | 18,362 | 1 | % | $ | 35,407 | $ | 36,656 | (3 | )% | |||||||||
Domestic | 11,184 | 11,105 | 1 | % | 20,936 | 22,077 | (5 | )% | |||||||||||||
Total | $ | 29,732 | $ | 29,467 | 1 | % | $ | 56,343 | $ | 58,733 | (4 | )% | |||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
Net Income (loss): | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
International | $ | 99 | $ | (263 | ) | $ | 110 | $ | (242 | ) | |||||||||||
Domestic | 184 | 292 | 33 | 196 | |||||||||||||||||
Total | $ | 283 | $ | 29 | $ | 143 | $ | (46 | ) | ||||||||||||
Earnings Per Basic and Diluted share: | |||||||||||||||||||||
$ | 0.01 | $ | 0.00 | $ | 0.01 | $ | (0.00 | ) | |||||||||||||
"We saw solid improvements in both the international and domestic
business units during this past quarter. Excluding the effect of foreign currency translation, our international business delivered double-digit organic revenue growth and a significant year-over-year increase in profitability. Revenue from our domestic business stabilized, showing modest improvement during the second quarter after several quarters of negative comparisons. Operating income comparisons for both the quarter and year-to-date periods showed improvement, driven by reductions in fixed operating expenses in both our international and domestic operations," commented Chief Executive Officer,
Margin Profile by Geography
Gross Margin:
Basis | Basis | ||||||||||||||||||||
Three Months Ended | Point | Six Months Ended | Point | ||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
International | 19.5 | % | 19.9 | % | (44 | ) | 19.8 | % | 19.6 | % | 15 | ||||||||||
Domestic | 30.5 | % | 31.6 | % | (109 | ) | 29.6 | % | 31.2 | % | (161 | ) | |||||||||
Total | 23.6 | % | 24.3 | % | (69 | ) | 23.4 | % | 24.0 | % | (55 | ) | |||||||||
Operating Income as a % of Sales:
Basis | Basis | ||||||||||||||||||||||
Three Months Ended | Point | Six Months Ended | Point | ||||||||||||||||||||
2016 |
2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
International | 2.3 | % | 1.1 | % | 119 | 2.5 | % | 1.7 | % | 81 | |||||||||||||
Domestic | 3.2 | % | 2.9 | % | 38 | 0.3 | % | 1.1 | % | (80 | ) | ||||||||||||
Total | 2.6 | % | 1.7 | % | 88 | 1.7 | % | 1.5 | % | 21 | |||||||||||||
International gross profit margin for the second quarter and six months ended
Domestic gross profit margin for the second quarter and six months ended
Operating income for the second quarter and six months ended
International operating income for the
second quarter and six months ended
Domestic operating income for the second quarter and six months ended
Balance Sheet as of
As of
Recorded Comments Available
Following the issuance of this release, the Company will provide recorded comments that can be accessed on the SPAR Group website under the "Investor Relations" section. http://investors.sparinc.com/releases.cfm
About SPAR Group
Forward-Looking Statements
This Press Release contains and the above referenced recorded comments will contain "forward-looking
statements" made by
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, productivity & efficiency, and earnings per share), building upon the Company's strong foundation, leveraging compatible global opportunities, improving on the value we already deliver to customers, our growing client base, continuing balance sheet strength, customer contract expansion, growing revenues and becoming profitable through organic growth and acquisitions, attracting new business that will increase SPAR Group's revenues, improving product mix, continuing to maintain or reduce costs or consummating any transactions. The Company's forward-looking statements also include, in particular and without limitation, those made in "Business", "Risk Factors" 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" 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 Proxy Statement and the other applicable SEC Reports that could cause the Company's actual performance or condition (including its assets, business, 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.
Condensed Consolidated Statements of Comprehensive Income (Loss) | |||||||||||||
(In thousands, except share and per share data) | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Net revenues | $ | 29,732 | $ | 29,467 | $ | 56,343 | $ | 58,733 | |||||
Cost of revenues | 22,705 | 22,299 | 43,147 | 44,652 | |||||||||
Gross profit | 7,027 | 7,168 | 13,196 | 14,081 | |||||||||
Selling, general and administrative expenses | 5,763 | 6,179 | 11,277 | 12,275 | |||||||||
Depreciation and amortization | 484 | 476 | 972 | 944 | |||||||||
Operating income | 780 | 513 | 947 | 862 | |||||||||
Interest expense | 31 | 82 | 60 | 140 | |||||||||
Other (income), net | (80 | ) | (33 | ) | (105 | ) | (60 | ) | |||||
Income before income tax expense | 829 | 464 | 992 | 782 | |||||||||
Income tax expense | 226 | 200 | 231 | 351 | |||||||||
Net income | 603 | 264 | 761 | 431 | |||||||||
Net income attributable to non-controlling interest | (320 | ) | (235 | ) | (618 | ) | (477 | ) | |||||
Net income (loss) attributable to | $ | 283 | $ | 29 | $ | 143 | $ | (46 | ) | ||||
Basic and diluted income per common share: | $ | 0.01 | $ | 0.00 | $ | 0.01 | $ | 0.00 | |||||
Weighted average common shares - basic | 20,569 | 20,568 | 20,566 | 20,565 | |||||||||
Weighted average common shares - diluted | 21,328 | 21,572 | 21,331 | 20,565 | |||||||||
Net income | $ | 603 | $ | 264 | $ | 761 | $ | 431 | |||||
Other comprehensive loss: | |||||||||||||
Foreign currency translation adjustments | (213 | ) | (86 | ) | (701 | ) | (750 | ) | |||||
Comprehensive income (loss) | 390 | 178 | 60 | (319 | ) | ||||||||
Comprehensive (income) attributable to non-controlling interest | (320 | ) | (235 | ) | (618 | ) | (477 | ) | |||||
Comprehensive income (loss) attributable to | $ | 70 | $ | (57 | ) | $ | (558 | ) | $ | (796 | ) | ||
Condensed Consolidated Balance Sheets | |||||||
(In thousands, except share and per share data) | |||||||
2016 | 2015 | ||||||
Assets | (Unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 5,027 | $ | 5,718 | |||
Accounts receivable, net | 23,786 | 23,203 | |||||
Deferred income taxes | 491 | 529 | |||||
Prepaid expenses and other current assets | 861 | 661 | |||||
Total current assets | 30,165 | 30,111 | |||||
Property and equipment, net | 2,468 | 2,443 | |||||
1,800 | 1,800 | ||||||
Intangible assets, net | 2,286 | 2,551 | |||||
Deferred income taxes | 6,513 | 5,890 | |||||
Other assets | 1,871 | 611 | |||||
Total assets | $ | 45,103 | $ | 43,406 | |||
Liabilities and equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 3,401 | $ | 2,984 | |||
Accrued expenses and other current liabilities | 6,780 | 7,082 | |||||
Accrued expenses due to affiliates | 491 | 78 | |||||
Deferred income taxes | 2,566 | 2,154 | |||||
Customer deposits | 679 | 503 | |||||
Lines of credit and short-term loans | 506 | 476 | |||||
Total current liabilities | 14,423 | 13,277 | |||||
Long-term debt and other liabilities | 6,322 | 5,731 | |||||
Total liabilities | 20,745 | 19,008 | |||||
Equity: | |||||||
Preferred stock, | |||||||
Authorized and available shares- 2,445,598 | |||||||
Issued and outstanding shares- | |||||||
None - | - | - | |||||
Common stock, | |||||||
Authorized shares - 47,000,000 | |||||||
Issued shares - | |||||||
20,680,717 - | 207 | 207 | |||||
106,248 shares - | |||||||
119,695 shares - | (149 | ) | (169 | ) | |||
Additional paid-in capital | 16,037 | 15,871 | |||||
Accumulated other comprehensive loss | (3,570 | ) | (2,869 | ) | |||
Retained earnings | 5,805 | 5,662 | |||||
Total | 18,330 | 18,702 | |||||
Non-controlling interest | 6,028 | 5,696 | |||||
Total equity | 24,358 | 24,398 | |||||
Total liabilities and equity | $ | 45,103 | $ | 43,406 | |||
Company Contact:Source: SPAR GroupJames R. Segreto Chief Financial OfficerSPAR Group, Inc. (914) 332-4100 Investor Contact:Dave Mossberg Three Part Advisors (817) 310-0051
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