SPAR Group, Inc. Reports Strong First Quarter Fiscal 2023 Results
“The company continues to explore strategic alternatives for SPAR with the goal of maximizing shareholder value. We continue to build a strong balance sheet, expand revenues, improve gross margins, diversify services, and grow long-term relationships with blue chip consumer goods and retail companies. We have nothing to report publicly today regarding the review of strategic alternatives; however, we are committed to growing the business, serving our clients and supporting our employees and joint venture partners,” concluded Matacunas.
First Quarter 2023 Financial Results
Net revenues were
Gross profit was
Selling, general and administrative (SG&A) expenses were
Operating income was
Net income attributable to
Consolidated Adjusted EBITDA (1) in the 2023 quarter was
(1) Adjusted Net income attributable to
Financial Position as of
The Company’s total worldwide liquidity at the end of the first quarter was
About
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 50 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, we provide specialized capabilities across more than nine countries. Our unique combination of scale, merchandising and marketing expertise, combined with our unwavering commitment to excellence, separate us from the competition. For more information, please visit the SPAR Group’s website at http://www.sparinc.com.
Cautionary Note Regarding 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”), filed in a Current Report on Form 10-Q by SGRP with the Securities and Exchange Commission (the “SEC”) on expected to be filed on or about
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 expressed 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.
Investor Relations Contact:
Three
Tel: 214-616-2207 or 817-778-8339
- Financial Statements Follow –
SPAR Group, Inc. and Subsidiaries | ||||||||||
Condensed Consolidated Statements of Operations | ||||||||||
(unaudited) | ||||||||||
(In thousands, except per share amounts) | ||||||||||
Three Months Ended | ||||||||||
2023 | 2022 | |||||||||
Net revenues | $ | 64,380 | $ | 58,994 | ||||||
Related party - cost of revenues | 1,497 | 2,145 | ||||||||
Cost of revenues | 48,745 | 45,018 | ||||||||
Gross profit | 14,138 | 11,831 | ||||||||
Selling, general and administrative expense | 10,456 | 9,254 | ||||||||
Depreciation and amortization | 532 | 510 | ||||||||
Operating income | 3,150 | 2,067 | ||||||||
Interest expense, net | 390 | 149 | ||||||||
Other income, net | (58 | ) | (87 | ) | ||||||
Income before income tax expense | 2,818 | 2,005 | ||||||||
Income tax expense | 1,041 | 551 | ||||||||
Net income | 1,777 | 1,454 | ||||||||
Net income attributable to non-controlling interest | (911 | ) | (780 | ) | ||||||
Net income attributable to |
$ | 866 | $ | 674 | ||||||
Basic and diluted income per common share: | $ | 0.04 | $ | 0.03 | ||||||
Weighted-average common shares outstanding– basic | 23,114 | 21,583 | ||||||||
Weighted-average common shares outstanding – diluted | 23,279 | 21,729 | ||||||||
Condensed Consolidated Balance Sheets | |||||||||
(unaudited) | |||||||||
(In thousands, except share and per share data) | |||||||||
2023 |
2022 |
||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 11,253 | $ | 9,345 | |||||
Accounts receivable, net | 63,645 | 63,714 | |||||||
Prepaid expenses and other current assets | 6,821 | 7,861 | |||||||
Total current assets | 81,719 | 80,920 | |||||||
Property and equipment, net | 3,201 | 3,261 | |||||||
Operating lease right-of-use assets | 1,140 | 969 | |||||||
1,711 | 1,708 | ||||||||
Intangible assets, net | 1,730 | 2,040 | |||||||
Deferred income taxes, net | 4,027 | 3,766 | |||||||
Other assets | 1,816 | 1,934 | |||||||
Total assets | $ | 95,344 | $ | 94,598 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 10,493 | $ | 10,588 | |||||
Accrued expenses and other current liabilities | 19,026 | 20,261 | |||||||
Due to affiliates | 2,855 | 2,964 | |||||||
Customer incentives and deposits | 2,182 | 2,399 | |||||||
Lines of credit and short-term loans | 18,585 | 17,980 | |||||||
Current portion of operating lease liabilities | 457 | 363 | |||||||
Total current liabilities | 53,598 | 54,555 | |||||||
Operating lease liabilities, net of current portion | 683 | 606 | |||||||
Long-term debt and other liabilities | 1,204 | 1,376 | |||||||
Total liabilities | 55,485 | 56,537 | |||||||
Commitments and contingencies | |||||||||
Stockholders' equity: | |||||||||
Series A convertible preferred stock, |
- | - | |||||||
Series B convertible preferred stock, |
7 | 9 | |||||||
Common stock, |
233 | 229 | |||||||
(285 | ) | (285 | ) | ||||||
Additional paid-in capital | 20,884 | 20,708 | |||||||
Accumulated other comprehensive loss | (4,856 | ) | (4,941 | ) | |||||
Retained earnings | 7,573 | 6,707 | |||||||
Total stockholders' equity attributable to |
23,556 | 22,427 | |||||||
Non-controlling interest | 16,303 | 15,634 | |||||||
Total stockholders’ equity | 39,859 | 38,061 | |||||||
Total liabilities and stockholders’ equity | $ | 95,344 | $ | 94,598 | |||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(unaudited) | ||||||||||
(In thousands) | ||||||||||
Three Months Ended |
||||||||||
2023 | 2022 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 1,777 | $ | 1,454 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) provided by operating activities | ||||||||||
Depreciation and amortization | 532 | 510 | ||||||||
Amortization of operating lease right-of-use assets | 133 | 241 | ||||||||
Bad debt expense, net of recoveries | (35 | ) | 34 | |||||||
Deferred income tax (benefit) | (129 | ) | - | |||||||
Share-based compensation expense | 173 | 150 | ||||||||
Majority stockholders change in control agreement | - | (420 | ) | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | 607 | (5,780 | ) | |||||||
Prepaid expenses and other current assets | 1,301 | (1,716 | ) | |||||||
Accounts payable | (325 | ) | (145 | ) | ||||||
Operating lease liabilities | (133 | ) | (242 | ) | ||||||
Accrued expenses, other current liabilities, due to affiliates and customer incentives and deposits | (965 | ) | 2,916 | |||||||
Net cash provided by (used in) operating activities | 2,936 | (2,998 | ) | |||||||
Cash flows from investing activities | ||||||||||
Purchases of property and equipment | (343 | ) | (478 | ) | ||||||
Net cash used in investing activities | (343 | ) | (478 | ) | ||||||
Cash flows from financing activities | ||||||||||
Borrowings under line of credit | 26,659 | 19,271 | ||||||||
Repayments under line of credit | (26,577 | ) | (14,446 | ) | ||||||
Proceeds from term debt | 445 | - | ||||||||
Payments on term debt | (124 | ) | - | |||||||
Payments on capital lease obligations | (5 | ) | - | |||||||
Payments of notes to seller | (722 | ) | - | |||||||
Dividend on noncontrolling interest | (304 | ) | - | |||||||
Net cash provided by (used in) financing activities | (628 | ) | 4,825 | |||||||
Effect of foreign exchange rate changes on cash | (57 | ) | 13,473 | |||||||
Net change in cash, cash equivalents and restricted cash | 1,908 | 14,061 | ||||||||
Cash, cash equivalents at beginning of period | 9,345 | - | ||||||||
Cash, cash equivalents at end of period | $ | 11,253 | $ | 14,061 | ||||||
Segment Information | ||||||||||
(unaudited) | ||||||||||
(In thousands) | ||||||||||
Three Months Ended | ||||||||||
2023 | 2022 | |||||||||
Net Revenues: | ||||||||||
$ | 48,578 | $ | 42,978 | |||||||
APAC | 6,100 | 6,818 | ||||||||
EMEA | 9,702 | 9,198 | ||||||||
Total net revenues | $ | 64,380 | $ | 58,994 | ||||||
Operating income: | ||||||||||
$ | 2,521 | $ | 1,780 | |||||||
APAC | (192 | ) | (441 | ) | ||||||
EMEA | 821 | 728 | ||||||||
Total operating income | $ | 3,150 | $ | 2,067 | ||||||
Reconciliation of GAAP to Non-GAAP Financial Measures
Adjusted net income attributable to SPAR Group and related per share amounts represents net income attributable to SPAR Group adjusted for the removal of a one-time positive adjustment. Adjusted EBITDA represents net income before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation and amortization of long-lived assets, (iv) share based compensation expense, (v) review of strategic alternatives, (vi) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures have limitations as analytical tools and should not be considered in isolation or as an alternative to performance measure derived in accordance with GAAP as an indicator of our operating performance. We present Adjusted net income attributable to SPAR Group and per share amounts, and Adjusted EBITDA because management uses these measures as key performance indicators, and we believe that securities analysts, investors and others use these measures to evaluate companies in our industry. Our calculation of these measures may not be comparable to similarly named measures reported by other companies. The following tables present a reconciliation of net income, the most directly comparable measure calculated in accordance with GAAP, to these measures for the periods presented:
Net Income attributable to |
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Adjusted Net Income attributable to |
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Diluted Net Income per common share attributable to |
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Adjusted Diluted Net Income per common share attributable to |
|||||||||
Three Months Ended |
|||||||||
(in thousands) | 2023 | 2022 | |||||||
Net Income attributable to |
$ | 866 | $ | 674 | |||||
Add-back one-time impact (net of taxes) | 387 | (172 | ) | ||||||
Adjusted Net income attributable to |
$ | 1,253 | $ | 502 | |||||
Diluted Net Income per common share attributable to |
$ | 0.04 | $ | 0.03 | |||||
Add-back one-time impact (net of taxes) | $ | 0.02 | $ | (0.01 | ) | ||||
Adjusted Diluted Net Income per common share attributable to |
$ | 0.06 | $ | 0.02 | |||||
Net Income to Consolidated Adjusted EBITDA to | |||||||||
Adjusted EBITDA attributable to |
|||||||||
Three Months Ended |
|||||||||
(in thousands) | 2023 | 2022 | |||||||
Consolidated Net Income | $ | 1,777 | $ | 1,454 | |||||
Depreciation and amortization | 532 | 510 | |||||||
Interest expense | 390 | 149 | |||||||
Income Tax expense | 1,041 | 551 | |||||||
Other income | (58 | ) | (87 | ) | |||||
Consolidated EBITDA | 3,682 | 2,577 | |||||||
Share based compensation | 173 | 150 | |||||||
Review of Strategic Alternatives | 317 | - | |||||||
Legal Costs / Settlements - non recurring | - | (368 | ) | ||||||
Consolidated Adjusted EBITDA | 4,172 | 2,359 | |||||||
Adjusted EBITDA attributable to non controlling interest | (1,276 | ) | (878 | ) | |||||
Adjusted EBITDA attributable to |
$ | 2,896 | $ | 1,481 |
Note: We report non‑GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled "Statement Regarding Use of Non‑GAAP Financial Measures" for an explanation of non‑GAAP measures, and the table entitled "GAAP to Non‑GAAP Reconciliation" for a reconciliation of GAAP to non‑GAAP measures.
![](https://ml.globenewswire.com/media/NTRkYzMzNjgtMDM0Yi00YzMxLWJkMWYtNjQwNmM3MWIzMzQ4LTEwODE4MjQ=/tiny/SPAR-Group-Inc-.png)
Source: SPAR Group, Inc.