SPAR Group Reports Sharply Improved Financial Results for 2008 Third Quarter, Nine-Months
SPAR Group Reports Sharply Improved Financial Results for 2008 Third Quarter, Nine-Months
Oct 30, 2008
SPAR Group Reports Sharply Improved Financial Results for 2008 Third Quarter, Nine-Months
International and Domestic Operations Continue to Contribute to Improved Performance
TARRYTOWN, N.Y., Oct. 30, 2008 -- SPAR Group, Inc. (Nasdaq:SGRP) today reported improved financial results for the third quarter and nine months ended September 30, 2008. Net revenues for the third quarter rose 20.2% to $17.3 million from $14.4 million a year ago. Gross profit for the 2008 third quarter increased 29.7% to $5.0 million from $3.9 million for the same quarter in 2007. SPAR Group achieved operating income of $418,000 for the quarter, compared with an operating loss of $1.4 million in the same period last year. The company reported that its net loss for the 2008 three months ended September 30, 2008, declined to $117,000, or $0.01 per share, which included a non-recurring expense concession of $400,000 from an affiliate. In the corresponding quarter last year, the company reported a net loss of $1.7 million, or $0.09 per share. Selling, general and administrative expenses for the 2008 third quarter decreased 13.7% to $4.4 million from $5.1 million a year ago.International revenue for SPAR Group's 2008 third quarter rose 24.0% to $10.8 million from $8.7 million last year. The division posted a net income of $137,000, compared with a net loss of $111,000 for the 2007 third quarter.
Revenue in the U.S. for the 2008 third quarter increased 14.3% to $6.5 million from $5.6 million a year ago. SPAR Group's U.S. operations reduced its net loss significantly to $254,000 for the 2008 third quarter from a net loss of $1.6 million last year.
"The company's third quarter performance reflects a combination of new business opportunities and implementation of stringent cost controls throughout the company," said Gary Raymond, president and chief executive officer. "We are gratified that positive momentum is being achieved in both our international and domestic operations. Our entire team is working diligently, and successfully, to counter the effects of the challenging economic environment and help manufacturers and retailers achieve their sales objectives with SPAR Group's innovative, technology-driven products and services."
For the nine months ended September 30, 2008, revenues advanced 26.8% to $53.6 million from $42.3 million last year. Gross profit for the 2008 nine month period increased 21.1% to $15.2 million from $12.5 million a year ago. SPAR Group reported operating income of $982,000 for the 2008 year-to-date period, compared with an operating loss of $3.2 million for the same period in 2007. The company's net loss for the first nine months of 2008 decreased to $364,000, equal to $0.02 per share, which included $458,000 in non-recurring litigation costs, a non-recurring expense concession of $500,000 from an affiliate, and $170,000 in tax benefits. The company posted a net loss of $4.0 million, or $0.21 per share, for the comparable 2007 period. Selling, general and administrative expenses for the 2008 year-to-date period decreased 11.0% to $13.5 million from $15.2 million a year ago.
International revenue for the nine months ended September 30, 2008, rose 38.3% to $30.9 million from $22.3 million last year. Net income for the international operations was $394,000 for the first nine months of 2008, compared with a net loss of $619,000 in the same period of 2007.
Revenue in the U.S. for the first nine months increased 14.0% to $22.8 million from $20.0 million in the same period a year ago. The U.S. operation reduced its net loss to $758,000 for the 2008 year-to-date period from a net loss of $3.4 million for the first nine months of 2007.
About SPAR Group
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. The company operates throughout the United States and internationally in Japan, Canada, Turkey, South Africa, India, Romania, China, Lithuania, Latvia, Estonia, Australia and New Zealand. For more information, visit SPAR Group's Web site, www.sparinc.com.
Certain statements in this news release are forward-looking, including, but not limited to, attracting increasing numbers of customers for the company's products and services and further benefits to be derived from the continued efforts to grow revenues and control costs. 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 Nine Months Ended
------------------ ------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2007 2008 2007
------------------ ------------------
Net revenues $17,271 $14,365 $53,635 $42,284
Cost of revenues 12,237 10,483 38,440 29,738
------------------ ------------------
Gross profit 5,034 3,882 15,195 12,546
Selling, general and
administrative expenses 4,377 5,074 13,545 15,218
Depreciation and
amortization 239 180 668 571
------------------ ------------------
Operating income (loss) 418 (1,372) 982 (3,243)
Interest expense 92 66 254 247
Other expense 301 111 865 149
------------------ ------------------
Income (loss) before
provision for income taxes
and minority interest 25 (1,549) (137) (3,639)
Provision for income taxes 25 79 4 220
------------------ ------------------
Income (loss) before
minority interest -- (1,628) (141) (3,859)
Minority interest 117 119 223 135
------------------ ------------------
Net loss $ (117) $(1,747) $ (364) $(3,994)
================== ==================
Basic/diluted net loss per
common share:
Net loss - basic/diluted $ (0.01) $ (0.09) $ (0.02) $ (0.21)
================== ==================
Weighted average common
shares - basic/diluted 19,138 19,012 19,127 18,973
================== ==================
Note: Certain reclassifications have been made to the prior period
financials to conform to the current period presentation.
SPAR Group, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
Sept. 30, Dec. 31,
2008 2007
------------------
Assets (unaudited) (audited)
Current assets:
Cash and cash equivalents $ 1,897 $ 1,246
Accounts receivable, net 13,968 13,748
Prepaid expenses and other current assets 939 975
------------------
Total current assets 16,804 15,969
Property and equipment, net 1,950 1,528
Goodwill 798 798
Other assets 1,758 1,648
------------------
Total assets $21,310 $19,943
==================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 6,026 $ 3,631
Accrued expenses and other current liabilities 5,429 3,981
Accrued expenses due to affiliates 997 2,107
Customer deposits 414 580
Lines of credit 4,731 6,119
------------------
Total current liabilities 17,597 16,418
Other long-term liabilities 130 299
Minority interest 1,025 676
------------------
Total liabilities 18,752 17,393
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares -- 3,000,000
Issued and outstanding shares --
554,402 -- September 30, 2008 6 --
Common stock, $.01 par value:
Authorized shares -- 47,000,000
Issued and outstanding shares --
19,139,365 -- September 30, 2008
19,089,177 -- December 31, 2007 190 191
Treasury stock (1) (1)
Additional paid-in capital 12,692 11,982
Accumulated other comprehensive loss (386) (43)
Accumulated deficit (9,943) (9,579)
------------------
Total stockholders' equity 2,558 2,550
------------------
Total liabilities and stockholders' equity $21,310 $19,943
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CONTACT: SPAR Group, Inc.
James R. Segreto, Chief Financial Officer
(914) 332-4100
PondelWilkinson Inc.
Roger S. Pondel
(310) 279-5980