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sgrp20220815_8k.htm
false 0001004989 0001004989 2022-08-16 2022-08-16
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): August 16, 2022
 
SPAR Group, Inc.

(Exact Name of Registrant as Specified in Charter)
 
Delaware 0-27408   33-0684451
(State or Other Jurisdiction of
Incorporation)
(Commission
File No.)
(IRS Employer
Identification No.)
 
                
 
1910 Opdyke Court, Auburn Hills, MI   48326
(Address of Principal Executive Offices)   (Zip Code)
        
Registrant's telephone number, including area code: (248) 364-7727
 

(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.01 par value
 
SGRP
 
The Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.         ☐
 
 

 
SPAR Group, Inc. ("SGRP" or the "Corporation", and together with its subsidiaries, the "Company" or "SPAR Group") has listed its shares of Common Stock (the "SGRP Shares") for trading through the Nasdaq Stock Market LLC ("Nasdaq") under the trading symbol "SGRP" and periodically files reports with the Securities and Exchange Commission ("SEC").
 
Item 2.02         Results of Operations and Financial Condition.
 
On August 16, 2022, the Company announced financial results for the second quarter ended June 30, 2022. A copy of the press release announcing this event is included in this Form 8-K as Exhibit 99.1.
 
Forward Looking Statements
 
This Current Report contains "forward-looking statements" within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, made by, or respecting, the Company, and this Current Report has been filed by the Corporation with the SEC. "Forward-looking statements" are defined in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and other applicable federal and state securities laws, rules and regulations, as amended (together with the Securities Act and the Exchange Act, "Securities Laws").
 
All statements (other than those that are purely historical) are forward-looking statements. Words such as "may," "will," "expect," "intend," "believe," "estimate," "anticipate," "continue," "plan," "project," or the negative of these terms or other similar expressions also identify forward-looking statements. Forward-looking statements made by the Corporation in this Current Report may include (without limitation) statements regarding: risks, uncertainties, cautions, circumstances and other factors ("Risks") such as (among other things) the impact of adding new directors to the Board, the potential negative effects of any stock issuance and/or payment resulting from such resolution negotiations, the potential negative effects of the novel coronavirus and COVID-19 pandemic on the Company's business, the Corporation's compliance with applicable Nasdaq Audit Committee and director independence rules, the Company's cash flow or financial condition, or the pursuit or achievement of the Company's corporate objectives.
 
You should carefully review and consider the Company's forward-looking statements (including all risk factors and other cautions and uncertainties) and other information made, contained or noted in or incorporated by reference into this Current Report, but you should not place undue reliance on any of them. The results, actions, levels of activity, performance, achievements or condition of the Company (including its affiliates, 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) and other events and circumstances planned, intended, anticipated, estimated or otherwise expected by the Company (collectively, " Expectations"), and our forward-looking statements (including all Risks) and other information reflect the Company's current views about future events and circumstances. Although the Company believes those Expectations and views are reasonable, the results, actions, levels of activity, performance, achievements or condition of the Company or other events and circumstances may differ materially from our Expectations and views, and they cannot be assured or guaranteed by the Company, since they are subject to Risks and other assumptions, changes in circumstances and unpredictable events (many of which are beyond the Company's control). In addition, new Risks 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 it has identified all potential Risks, or that it 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 the Company's common stock.
 
These forward-looking statements reflect the Company's Expectations, views, Risks and assumptions only as of the date of this Current Report, and the Company does not intend, assume any obligation, or promise to publicly update or revise any forward-looking statements (including any Risks or Expectations) or other information (in whole or in part), whether as a result of new information, new or worsening Risks or uncertainties, changed circumstances, future events, recognition, or otherwise.
 
Item 9.01.        Financial Statements and Exhibits.
 
(d)         Exhibits:
 
99.1       Press Release announcing earnings for the Company for the second quarter ended June 30, 2022.
 
104       Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
SPAR Group, Inc.
Date:
August 16, 2022
       
By:
/s/ Fay DeVriese
Fay DeVriese, Chief Financial Officer
Treasurer and Secretary
 
 
 
 
 
         
 
 
 
 
 
 
 
 
 
 
ex_412877.htm

Exhibit 99.1

 

 

https://cdn.kscope.io/14746ea47a1f64a030c64e65dfe33747-spar.jpg
     

 

SPAR Group, Inc. Reports Fiscal 2022 Second Quarter Results

~ Quarterly Net Revenues $68 million

~ Operating Income Up 25%

~ Net Income Up 123%

 

 

AUBURN HILLS, MI, August 16, 2022 SPAR Group, Inc. (NASDAQ: SGRP) (“SPAR”, “SPAR Group” or the “Company”), a leading global provider of merchandising, marketing, and distribution services today reports financial and operating results for the second quarter and six-month period ended June 30, 2022.

 

Mike Matacunas, the Companys President and Chief Executive Officer, commented, “I am pleased with our second quarter. All of our financial metrics were improved, gross profit was up 120 basis points, net income up by more than 2X and we grew our core merchandising business by 27%. If it wasn’t for the pandemic lockdown in Shanghai that impacted our China joint venture and our cycling of the labor law change in Mexico in 2021, our net revenues would have grown by more than 10%.

 

“Our Americas segment, which includes the United States, Canada, Mexico and Brazil representing approximately 79% of the total business, increased its top line by 4% and operating profit by 58%. At the same time, the Americas gross profit was up 260 basis points demonstrating the value of our services. The U.S. business achieved a record $31.6 million in revenue resulting in an increase of 16% for the quarter. Our business in Brazil grew by 25% and we have won new business with exciting new clients. In addition, in the U.S., we were recently awarded a multi-year distribution center staffing contract worth several million dollars for one of the largest retailers in the U.S. accelerating our plan to expand into distribution and micro-fulfillment services. Clients are responding to our strategy and looking for us to play a larger role in their business, in stores and online.

 

“The total global pipeline is excellent with a significant number of multi-million-dollar opportunities, our global branding initiative is well under way, our pilot programs for crowd-sourcing and digital merchandising are bringing new ideas and innovation to the marketplace and we are capturing more share from our competitors. This is an exciting time for SPAR and I appreciate how hard all of our associates work every day to create the energy and focus it takes to make a difference for our clients,” concluded Matacunas.

 

Second Quarter 2022 Financial Results

 

Net revenues were $67.8 million, comprised of $53.3 million from Americas (79%) and $9.1 million from EMEA (13%), and $5.4 million from APAC (8%). Compared to the prior year quarter, total net revenue increased by 1%, Americas increased over the prior year by 3.9%, EMEA increased by 7.2%, and APAC decreased by 27.2% from the prior year quarter. The Americas were strengthened by strong U.S. merchandising business, expansion in resets/remodels in Canada, and solid revenues in EMEA. This revenue strength was offset mostly by the impact of the APAC (China) pandemic lockdowns and pressure from changes in certain labor law in the Americas (Mexico) in 2021.

 

Gross profit was $12.9 million, or 19.1% of revenues, compared to $12.0 million, or 17.9% of revenues, in the prior year quarter. Gross profit margins increased by 120 basis points due to strength in the Americas (up 260 basis points) and EMEA (up 120 basis points). Although positive total gross profit margin comparisons quarter over quarter, APAC negatively impacted margins (down 750 basis points) due to the prolonged pandemic lock downs.

 

1

 

Selling, general and administrative (SG&A) expenses were $10.1 million, or 14.9% of revenues, compared to $9.6 million, or 14.3% of revenues, in the prior year quarter. The increase from the prior year quarter was the result of additional expenditures needed to normalize operations following the pandemic versus the same period prior year, as well continued investment in the growth of the business. 

 

Operating income was $2.4 million versus operating income of $1.9 million from the prior year quarter as explained above.

 

Net income attributable to SPAR Group, Inc. was $1.1 million, or $0.05 per share, compared to $514 thousand, or $0.02 per share, in the year ago quarter. Adjusted net income attributable to SPAR Group, Inc. (1) in the quarter was $1.3 million, or $0.06 per share, compared to $714 thousand, or $0.03 per share, in the year ago quarter.

 

Consolidated Adjusted EBITDA (1) in the 2022 quarter was $3.0 million, compared to $2.7 million in the prior year. Adjusted EBITDA attributable to SPAR Group, Inc. (1) in the 2022 quarter was $2.1 million, compared to $1.8 million in the prior year.

 

 

(1)

Adjusted Net income attributable to SPAR Group, Inc. and Adjusted Diluted earnings per share attributable to SPAR Group, Inc., and Adjusted EBITDA are non-GAAP financial measure as defined and reconciled below.

 

First Six Months 2022 Financial Results

 

Net revenues were $126.8 million, comprised of $96.3 million from Americas (76%) and $18.3 million from EMEA (14%), and $12.2 million from APAC (10%). Compared to the prior first half, total net revenue decreased by 1%, the Americas revenues were flat compared to the prior year first half, EMEA increased by 13%, and APAC decreased by 22% from the prior year first half.

 

Gross profit was $24.8 million, or 19.5% of revenues, compared to $24.3 million, or 18.9% of revenues, in the prior year quarter. Gross profit margins increased by 60 basis points, due to strength in the Americas (up 120 basis points) and EMEA (up 210 basis points). Although positive total gross profit margin comparisons period over period, APAC negatively impacted margins by 380 basis points due to the prolonged pandemic lock downs.

 

Selling, general and administrative (SG&A) expenses were $19.3 million, or 15.3% of revenues, compared to $18.6 million, or 14.5% of revenues, in the prior year period. The increase from the prior year quarter was the result of additional expenditures needed to normalize operations following the pandemic versus the same period prior year, as well continued investment in the growth of the business. 

 

Operating income was $4.4 million versus operating income of $4.6 million from the prior year first half as explained above.

 

Net income attributable to SPAR Group, Inc. was $1.8 million, or $0.08 per share, compared to $1.4 million, or $0.07 per share, in the six months of 2021. Adjusted net income attributable to SPAR Group, Inc. (1) in the first half was $1.8 million, or $0.08 per share, compared to $1.8 million, or $0.08 per share, in the year ago period.

 

Consolidated Adjusted EBITDA (1) in the 2022 first half was $5.4 million, compared to $6.2 million in the prior year period. Adjusted EBITDA attributable to SPAR Group, Inc. (1) in the 2022 first half was $3.6 million, compared to $4.2 million in the prior year period.

 

 

(1)

Adjusted Net income attributable to SPAR Group, Inc. and Adjusted Diluted earnings per share attributable to SPAR Group, Inc., and Adjusted EBITDA are non-GAAP financial measure as defined and reconciled below.

 

Financial Position as of June 30, 2022

 

The Company’s total worldwide liquidity at the end of the second quarter was $16 million, with $12.4 million in cash, cash equivalents and restricted cash and $3.3 million of unused availability as of June 30, 2022. For the six months ended June 30, 2022, net cash used in operating activities was $3.5 million and capital expenditures, including capitalized software, was $794 thousand. The Company ended the period with positive net working capital of $22.9 million at June 30, 2022.

 

2

 

Conference Call

 

The Company will conduct a conference call today at 10:00 a.m. Eastern Time to discuss financial and operating results for the second quarter and six months ended June 30, 2022. To access the call, live by phone, dial (877) 270-2148 (Domestic), (412)-902-6510 (International) and ask for the SPAR Group call at least 10 minutes prior to the start time. A telephonic replay will be available through August 26, 2022, by calling (877) 344-7529 using passcode ID 4857233#. A webcast of the call will also be available live and for later replay on the Company’s Investor Relations website at https://investors.sparinc.com/events-and-presentations.

 

About SPAR Group, Inc.

 

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 November 15, 2021. There also are forward-looking statements contained in SGRPs Annual Report on Form 10-K for its fiscal year ended December 31, 2021, as filed with the SEC on April 15, 2022, and SGRPs First Amendment to Annual Report on Form 10-K/A for the year ended December 31, 2020, as filed with the SEC on May 2, 2022 (as so amended, the Annual Report), in SGRPs amended definitive Proxy Statement respecting its Annual Meeting of Stockholders held on August 12, 2021, which SGRP filed with the SEC on July 20, 2021 (the Proxy Statement), and the SGRPs Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and statements as and when filed with the SEC (including the Quarterly Report, the Annual Report and the Proxy Statement, the Information Statement, the Second Special Meeting Proxy/Information Statement, each a SEC Report). Forward-looking statements are defined in Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and other applicable federal and state securities laws, rules and regulations, as amended (together with the Securities Act and Exchange Act, the Securities Laws).

 

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 Companys corporate strategic objectives. The Companys forward-looking statements also include, in particular and without limitation, those made in Business, Risk Factors, Legal Proceedings, and Managements 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 SGRPs Common Stock.

 

3

 

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.

 

 

Company Contact:

SPAR Group, Inc.

Fay DeVriese, Chief Financial Officer

Tel: 248-364-8450

 

Investor Relations Contact:

Three Part Advisors, LLC

Sandy Martin / Phillip Kupper

Tel: 214-616-2207

 

 

 

 

- Financial Statements Follow

 

4

 

SPAR Group, Inc.

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except per share data)

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

2022

   

2021

   

2022

   

2021

 
                                 

Net revenues

  $ 67,799     $ 67,176     $ 126,794     $ 128,273  

Related Party - Cost of revenues

    2,521       1,979       4,666       3,843  

Cost of revenues

    52,330       53,191       97,348       100,165  

Gross profit

    12,948       12,006       24,780       24,265  

Selling, general and administrative expense

    10,084       9,585       19,338       18,595  

Depreciation and amortization

    507       534       1,017       1,064  

Operating income

    2,357       1,887       4,425       4,606  

Interest expense

    178       129       328       277  

Other expense (income), net

    (149

)

    5       (237

)

    (70

)

Income before income tax expense

    2,328       1,753       4,334       4,399  
                                 

Income tax expense

    715       621       1,266       1,486  

Net income

    1,613       1,132       3,068       2,913  

Net (income) attributable to non-controlling interest

    (464

)

    (618

)

    (1,247

)

    (1,482

)

Net income attributable to SPAR Group, Inc.

  $ 1,149     $ 514     $ 1,821     $ 1,431  

Basic and diluted income per common share:

  $ 0.05     $ 0.02     $ 0.08     $ 0.07  

Weighted average common shares – basic

    21,808       21,262       21,696       21,225  

Weighted average common shares – diluted

    21,935       21,617       21,831       21,600  

 

5

 

SPAR Group, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 
   

(Unaudited)

         

Assets

               

Current assets:

               

Cash, cash equivalents and restricted cash

  $ 12,402     $ 13,473  

Accounts receivable, net

    63,636       54,171  

Prepaid expenses and other current assets

    5,769       4,382  

Total current assets

    81,807       72,026  

Property and equipment, net

    2,923       2,929  

Operating lease right-of-use assets

    1,297       1,781  

Goodwill

    4,171       4,166  

Intangible assets, net

    2,289       2,295  

Deferred income taxes

    5,803       4,468  

Other assets

    1,927       1,351  

Total assets

  $ 100,217     $ 89,016  

Liabilities and equity

               

Current liabilities:

               

Accounts payable

  $ 10,345     $ 8,943  

Accrued expenses and other current liabilities

    23,547       22,031  

Due to affiliates

    3,024       3,270  

Customer incentives and deposits

    2,880       3,901  

Lines of credit and short-term loans

    18,481       11,042  

Current portion of operating lease liabilities

    655       1,019  

Total current liabilities

    58,932       50,206  

Operating lease liabilities, less current portion

    643       762  

Long-term debt and other liabilities

    700       700  

Total liabilities

    60,275       51,668  

Commitments and contingencies

               

Equity:

               

SPAR Group, Inc. equity

               

Preferred stock - Series B

    17       -  

Common stock

    218       213  

Treasury stock

    (193

)

    (104

)

Additional paid-in capital

    20,760       17,231  

Accumulated other comprehensive loss

    (5,663

)

    (5,028

)

Retained earnings

    9,260       7,439  

Total SPAR Group, Inc. equity

    24,399       19,751  

Non-controlling interest

    15,543       17,597  

Total equity

    39,942       37,348  

Total liabilities and equity

  $ 100,217     $ 89,016  

 

6

 

SPAR Group, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

   

Six Months Ended June 30,

 
   

2022

   

2021

 

Operating activities

               

Net income

  $ 3,068     $ 2,913  

Adjustments to reconcile net income to net cash provided by (used in) operating activities

               

Depreciation and amortization

    1,017       1,064  

Non-cash lease expense

    483       782  

Bad debt expense, net of recoveries

    53       139  

Share-based compensation

    280       282  

Majority stockholders change in control agreement

    (420

)

    -  

Changes in operating assets and liabilities:

               

Accounts receivable

    (9,438

)

    (10,377

)

Prepaid expenses and other assets

    (1,971

)

    (867

)

Accounts payable

    1,413       3,269  

Operating lease liabilities

    (483

)

    (782

)

Accrued expenses, other current liabilities and customer incentives and deposits

    2,470       4,586  

Net cash (used in) provided by operating activities

    (3,528

)

    1,009  
                 

Investing activities

               

Purchases of property and equipment and capitalized software

    (794

)

    (890

)

Partners' investment in subsidiary

    -       4  

Net cash (used in) investing activities

    (794

)

    (886

)

                 

Financing activities

               

Borrowings under line of credit

    21,885       35,298  

Repayments under line of credit

    (14,446

)

    (33,205

)

Payments from stock options exercised

    -       (68

)

Net cash provided by financing activities

    7,439       2,025  
                 

Effect of foreign exchange rate changes on cash

    (4,188

)

    (1,419

)

Net change in cash and cash equivalents

    (1,071

)

    729  

Cash, cash equivalents and restricted cash at beginning of period

    13,473       15,972  

Cash, cash equivalents and restricted cash at end of period

  $ 12,402     $ 16,701  

 

7

 

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 related to the majority stockholders change of control agreement accrued in 2021 and realized in January of 2022. 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) 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:

 

 

SPAR Group, Inc.

Net Income (Loss) attributable to SPAR Group, Inc. to

Adjusted Net Income (Loss) attributable to SPAR Group, Inc. Reconciliation

Diluted earnings per share attributable to SPAR Group, Inc. to

Adjusted Diluted earnings per share attributable to SPAR Group, Inc. Reconciliation

Fiscal Three and Six Months Ended June 30, 2022 and 2021

 

 

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 

(in thousands)

 

2022

   

2021

   

2022

   

2021

 
                                 

Net Income (Loss) attributable to SPAR Group Inc.

    1,149       514       1,821       1,431  

Add-back one-time impact (net of taxes)

    103       200       (70 )     391  

Adjusted Net Income (Loss) attributable to SPAR Group, Inc.

    1,252       714       1,751       1,822  
                                 

Diluted earnings per share attributable to SPAR Group, Inc.

  $ 0.05     $ 0.02     $ 0.08     $ 0.07  

Add-back one-time impact (net of taxes)

  $ 0.00     $ 0.01     $ (0.00 )   $ 0.02  

Adjusted Diluted earnings per share attributable to SPAR Group, Inc.

  $ 0.06     $ 0.03     $ 0.08     $ 0.08  

 

8

 

SPAR Group, Inc.

Net Income (Loss) to Consolidated Adjusted EBITDA to

Adjusted EBITDA attributable to SPAR Group, Inc. Reconciliation

Fiscal Three and Six Months Ended June 30, 2022 and 2021

 

   

3 Months Ended

June 30,

   

6 Months Ended

June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Consolidated Net Income

  $ 1,613     $ 1,132     $ 3,068     $ 2,913  

Depreciation and amortization

    507       534       1,017       1,064  

Interest expense

    178       129       328       277  

Income Tax expense

    715       621       1,266       1,486  

Other income

    (149 )     5       (237 )     (70 )

Consolidated EBITDA

    2,864       2,421       5,443       5,669  

Share based compensation

    130       183       280       282  

Legal costs / Settlements - non-recurring

    0       70       (368 )     213  

Board-related one off costs, e.g. retirement costs

    0       0       0       0  

Acquisition-related expenses

    0       0       0       0  

Restructuring expenses

    0       0       0       0  

Consolidated Adjusted EBITDA

  $ 2,994     $ 2,673     $ 5,355     $ 6,164  

Adjusted EBITDA attributable to non controlling interest

    (861 )     (856 )     (1,740 )     (2,013 )

Adjusted EBITDA attributable to SPAR Group, Inc.

  $ 2,133     $ 1,817     $ 3,615     $ 4,151  
                                 

Ratios:

                               

Net Income % of Consolidated Revenues

    2.4 %     1.7 %     2.4 %     2.3 %

Consolidated Adjusted EBITDA % of Consolidated Revenues

    4.4 %     4.0 %     4.2 %     4.8 %

Adjusted EBITDA attributable to SPAR % of Consolidated Revenues

    3.1 %     2.7 %     2.9 %     3.2 %

 

9