SPAR Group Reports Improved Financial Results for 2005 First Quarter
SPAR Group Reports Improved Financial Results for 2005 First Quarter
May 05, 2005
SPAR Group Reports Improved Financial Results for 2005 First Quarter
TARRYTOWN, N.Y., May 5, 2005 -- SPAR Group, Inc. (SGRP) today reported higher net revenues and a sharp improvement in earnings for the first quarter ended March 31, 2005.Net revenues for the 2005 first quarter rose more than 13.4% to $14.5 million from $12.8 million a year ago. The company posted net income for the 2005 period of $1.2 million, equal to $0.06 per share, compared with a net loss of $790,000, or a loss of $0.04 per share, for the 2004 first quarter.
"The first three months of 2005 marked the third consecutive quarter that the company has achieved profitable operations," said Robert G. Brown, SPAR Group's chairman and chief executive officer. "The turnaround reflects the benefits from our major restructuring program and cost reduction measures in our domestic business, along with significant growth of our international operations. In addition, both domestic and international revenues and profits were favorably impacted by strong project revenues in the quarter."
The gross margin percentage for the 2005 first quarter improved to 40.4% from 32.1% in the corresponding period last year. Selling, general and administrative expenses for the 2005 first quarter were reduced to $4.3 million from $5.0 million a year ago.
Brown said the company announced new joint venture agreements in Romania and China during the first quarter of 2005, and similar pacts were signed last year in South Africa and India. He said the company is now providing merchandising and related marketing services to manufacturers and retailers in each of the foreign markets where it has operations, except in China where the company's joint venture is awaiting government approval. SPAR Group expects operations to begin in China late in the third quarter of 2005.
"Although the general business environment remains challenging, we are continuing to experience international growth, particularly in Canada and Japan where our operations have been established for a longer time. We remain optimistic about the company's long term prospects," Brown added.
For the first quarter, SPAR Group said revenue in the U.S. amounted to $10.8 million, compared with $12.7 million a year ago, with net income of $863,000 in 2005, versus a net loss of $581,000 in 2004. International revenue for the 2005 first quarter rose to $3.7 million from $139,000 last year as result of the consolidation of our Japan joint venture, commencement of operations in South Africa, Turkey and India, as well as an increase in our Canadian business. International net income amounted to $306,000, compared with a net loss of $209,000 in the 2004 first quarter.
SPAR Group, Inc. is a diversified international marketing services company, providing a broad array of services to help companies improve their sales, operating efficiency and profits at retail worldwide. The company provides in-store merchandising, in-store event staffing, RFID and other technology, as well as research, to manufacturers and retailers covering all product classifications and all classes of trade, including mass market, drug store, convenience store and grocery chains, throughout the United States and internationally.
Certain statements in this news release are forward-looking, including, but not limited to, further benefits to be derived from the company's restructuring plan, cost reduction measures, contributions from international expansion efforts, an improving external economic environment and the ability to sustain positive operating results. The company's actual results, performance and trends could differ materially from those indicated or implied by such statements as a result of various factors, including (without limitation) the continued strengthening of SPAR Group's selling and marketing functions, continued customer satisfaction and contract renewal, new product development, continued availability of capable dedicated personnel, continued cost management, the success of its international efforts, success and availability of acquisitions, availability of financing and other factors, as well as by factors applicable to most companies such as general economic, competitive and other business and civil conditions. Information regarding certain of these and other factors that could affect future results, performance or trends are discussed in SPAR Group's annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings made with the Securities and Exchange Commission from time to time.
SPAR Group, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
Three Months Ended
-------------------------
March 31, March 31,
2005 2004
------------ ------------
Net Revenues $ 14,521 $ 12,803
Cost of revenues 8,651 8,694
------------ ------------
Gross profit 5,870 4,109
Selling, general and administrative expenses 4,256 4,967
Depreciation and amortization 279 362
------------ ------------
Operating income (loss) 1,335 (1,220)
Interest expense 40 35
------------ ------------
Income (loss) before provision for income
taxes and minority interest 1,295 (1,255)
Provision (benefit) for income taxes 15 (465)
------------ ------------
Net income (loss) before minority interest 1,280 (790)
Minority interest 111 - ------------ ------------
Net Income (loss) $ 1,169 $ (790)
============ ============
Basic/diluted net income (loss) per common
share:
Net income (loss) - basic/diluted $ 0.06 $ (0.04)
Weighted average common shares - basic 18,859 18,859
============ ============
Weighted average common shares - diluted 19,004 18,859
============ ============
SPAR Group, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
March 31, December 31,
2005 2004
------------ ------------
Assets
Current Assets:
Cash and cash equivalents $ 277 $ 887
Accounts receivable, net 9,851 11,307
Prepaid expenses and other current assets 400 657
------------ ------------
Total current assets 10,528 12,851
Property and equipment, net 1,363 1,536
Goodwill 798 798
Other assets 541 636
------------ ------------
Total assets $ 13,230 $ 15,821
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 1,346 $ 2,158
Accrued expenses and other current
liabilities 2,527 2,391
Accrued expense due to affiliates 1,020 987
Restructuring charges 99 250
Customer deposits 1,029 1,147
Lines of credit 2,124 4,956
------------ ------------
Total current liabilities 8,145 11,889
Other long-term liabilities 15 12
Minority Interest 217 206
------------ ------------
Total liabilities 8,377 12,107
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares-3,000,000
Issued and outstanding shares-none - -
Common stock, $.01 par value:
Authorized shares-47,000,000
Issued and outstanding shares
18,858,972 - March 31, 2005
18,858,972 - December 31, 2004 189 189
Treasury Stock (3) (108)
Accumulated other comprehensive loss (146) (86)
Additional paid-in capital 10,936 11,011
Accumulated deficit (6,123) (7,292)
------------ ------------
Total stockholders' equity 4,853 3,714
------------ ------------
Total liabilities and stockholders' equity $ 13,230 $ 15,821
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Contact: SPAR Group, Inc. Charles Cimitile, 914-332-4100 or PondelWilkinson Inc. Roger S. Pondel, 310- 279-5980