SPAR Group Announces Financial Results for the Third Quarter Ended September 30, 2016
Highlights for the third quarter and nine-month period ended
- Revenue for the third quarter of 2016 increased 18% to
$33.4 million . Adjusting for the negative impact of foreign currency translation, third quarter revenue increased 22% year over year. - For the nine months ended
September 30, 2016 , revenue increased 3% to$89.8 million . Adjusting for the negative impact of foreign currency translation, revenue for the nine-month period increased 11% year over year. - Net loss attributable to SPAR Group for the third quarter of 2016 was (
$58,000 ), or ($0.00 ) per diluted share, compared to a net loss of ($92,000 ), or ($0.00 ) per diluted share, during the third quarter of 2015. - For the nine months ended
September 30, 2016 , net income was$84,000 , or$0.00 per diluted share, compared to a net loss of$(137,000) , or ($0.01 ) per diluted share for the same period in 2015. - In mid-September, the Company established SPAR Brazil by acquiring a majority ownership position of New Momentum and New Momentum Services from The Interpublic Group in
Brazil . For the short period inSeptember 2016 , SPAR Brazil contributed approximately$1.9 million to the Company's revenue and$(43,000) to its net loss.
Financial Results by Geography (in 000's)
Three Months Ended | % | Nine Months Ended | % | ||||||||||||||||||
Revenue: | 2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||||
International | $ | 22,106 | $ | 17,563 | 26 | % | $ | 57,513 | $ | 54,219 | 6 | % | |||||||||
Domestic | 11,332 | 10,706 | 6 | % | 32,268 | 32,783 | (2 | )% | |||||||||||||
Total | $ | 33,438 | $ | 28,269 | 18 | % | $ | 89,781 | $ | 87,002 | 3 | % | |||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
Net Income (loss): | 2016 | 2015 | 2016 | 2015 | |||||||||||
International | $ | (66 | ) | $ | (131 | ) | $ | 43 | $ | (372 | ) | ||||
Domestic | 8 | 39 | 41 | 235 | |||||||||||
Total | $ | (58 | ) | $ | (92 | ) | $ | 84 | $ | (137 | ) | ||||
Earnings Per Basic and Diluted share: | |||||||||||||||
$ | (0.00 | ) | $ | (0.00 | ) | $ | 0.00 | $ | (0.01 | ) | |||||
"We saw solid improvement in revenue and profitability in our international business, which unfortunately, was partially offset by weak performance in our domestic operations. SPAR Group has
great people and systems, but our operational and financial performance has been inconsistent. With a little realignment, I think we can make significant improvements," commented Chief Executive Officer,
Margin Profile by Geography
Gross Margin:
Basis | Basis | |||||||||||||||||
Three Months Ended | Point | Nine Months Ended | Point | |||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||
International | 19.3 | % | 19.7 | % | (43 | ) | 19.6 | % | 19.7 | % | (7 | ) | ||||||
Domestic | 26.5 | % | 30.3 | % | (380 | ) | 28.5 | % | 30.9 | % | (240 | ) | ||||||
Total | 21.8 | % | 23.8 | % | (199 | ) | 22.8 | % | 23.9 | % | (110 | ) | ||||||
Operating Income as a % of Sales:
Three Months Ended | Nine Months Ended | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
International | 2.8 | % | 1.0 | % | 2.6 | % | 1.5 | % | ||||||||
Domestic | (1.6 | )% | 0.6 | % | (0.4 | )% | 0.9 | % | ||||||||
Total | 1.3 | % | 0.8 | % | 1.5 | % | 1.3 | % | ||||||||
International gross profit margin for the third quarter and nine months ended
Domestic gross profit margin for the third quarter and nine months ended
Operating income for the third quarter and nine months ended
International operating income for the third quarter and nine months ended
Domestic operating loss for the third quarter and nine 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 | Nine Months Ended | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net revenues | $ | 33,438 | $ | 28,269 | $ | 89,781 | $ | 87,002 | ||||||||
Cost of revenues | 26,162 | 21,555 | 69,309 | 66,206 | ||||||||||||
Gross profit | 7,276 | 6,714 | 20,472 | 20,796 | ||||||||||||
Selling, general and administrative expenses | 6,360 | 6,014 | 17,637 | 18,289 | ||||||||||||
Depreciation and amortization | 486 | 471 | 1,459 | 1,414 | ||||||||||||
Operating income | 430 | 229 | 1,376 | 1,093 | ||||||||||||
Interest expense | 51 | 47 | 111 | 187 | ||||||||||||
Other (income), net | (78 | ) | (8 | ) | (183 | ) | (68 | ) | ||||||||
Income before income tax expense | 457 | 190 | 1,448 | 974 | ||||||||||||
Income tax expense | (31 | ) | 83 | 200 | 435 | |||||||||||
Net income | 488 | 107 | 1,248 | 539 | ||||||||||||
Net income attributable to non-controlling interest | (546 | ) | (199 | ) | (1,164 | ) | (676 | ) | ||||||||
Net (loss) income attributable to | $ | (58 | ) | $ | (92 | ) | $ | 84 | $ | (137 | ) | |||||
Basic and diluted loss per common share: | $ | - | $ | - | $ | - | $ | (0.01 | ) | |||||||
Weighted average common shares - basic | 20,607 | 20,556 | 20,580 | 20,562 | ||||||||||||
Weighted average common shares - diluted | 20,607 | 20,556 | 21,299 | 20,562 | ||||||||||||
Net income | $ | 488 | $ | 107 | $ | 1,248 | $ | 539 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustments | 206 | (663 | ) | (495 | ) | (1,413 | ) | |||||||||
Comprehensive income (loss) | 694 | (556 | ) | 753 | (874 | ) | ||||||||||
Comprehensive (income) attributable to non-controlling interest | (546 | ) | (199 | ) | (1,164 | ) | (676 | ) | ||||||||
Comprehensive income (loss) attributable to | $ | 148 | $ | (755 | ) | $ | (411 | ) | $ | (1,550 | ) | |||||
Condensed Consolidated Balance Sheets | ||||||||
(In thousands, except share and per share data) | ||||||||
2016 | 2015 | |||||||
Assets | (Unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 7,502 | $ | 5,718 | ||||
Accounts receivable, net | 30,782 | 23,203 | ||||||
Deferred income taxes | 532 | 529 | ||||||
Prepaid expenses and other current assets | 898 | 661 | ||||||
Total current assets | 39,714 | 30,111 | ||||||
Property and equipment, net | 2,556 | 2,443 | ||||||
2,257 | 1,800 | |||||||
Intangible assets, net | 2,154 | 2,551 | ||||||
Deferred income taxes | 6,513 | 5,890 | ||||||
Other assets | 2,290 | 611 | ||||||
Total assets | $ | 55,484 | $ | 43,406 | ||||
Liabilities and equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 5,007 | $ | 2,984 | ||||
Accrued expenses and other current liabilities | 12,628 | 7,082 | ||||||
Accrued expenses due to affiliates | 989 | 78 | ||||||
Deferred income taxes | 2,566 | 2,154 | ||||||
Customer deposits | 955 | 503 | ||||||
Lines of credit and short-term loans | 8,181 | 476 | ||||||
Total current liabilities | 30,326 | 13,277 | ||||||
Long-term debt and other liabilities | 12 | 5,731 | ||||||
Total liabilities | 30,338 | 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 | ||||||
42,177 shares - | ||||||||
119,695 shares - | (58 | ) | (169 | ) | ||||
Additional paid-in capital | 16,041 | 15,871 | ||||||
Accumulated other comprehensive loss | (3,364 | ) | (2,869 | ) | ||||
Retained earnings | 5,746 | 5,662 | ||||||
18,572 | 18,702 | |||||||
Non-controlling interest | 6,574 | 5,696 | ||||||
Total equity | 25,146 | 24,398 | ||||||
Total liabilities and equity | $ | 55,484 | $ | 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
News Provided by Acquire Media