SPAR Group Reports Financial Results for 2006 Third Quarter
SPAR Group Reports Financial Results for 2006 Third Quarter
Nov 03, 2006
SPAR Group Reports Financial Results for 2006 Third Quarter
TARRYTOWN, N.Y., Nov. 3, 2006 -- SPAR Group, Inc. (Nasdaq:SGRP) today reported financial results for the third quarter and nine months ended September 30, 2006.Net revenues for the 2006 third quarter increased 14.9% to $12.7 million from $11.1 million in the corresponding prior year period. SPAR Group registered a net loss of $1.4 million, equal to a loss of $0.07 per share, for the 2006 period, compared with a net loss of $1.1 million, or $0.06 per share, a year ago.
For the first nine months of 2006, net revenues rose 8.1% to $41.5 million from $38.4 million for the comparable prior year period. The company sustained a net loss of $516,000, equal to a net loss of $0.03 per share, for the year-to-date period of 2006, compared with net income of $144,000, or $0.01 per share, last year.
Robert G. Brown, SPAR Group's chairman and chief executive officer, said, "Revenue growth for the third quarter continued to be paced by our international division, with contributions from our newer joint venture operations, particularly Australia and Lithuania, that were not part of the company last year, as well as a strong performance by our partners in Japan. The net loss for the quarter principally reflected weakness in our domestic merchandising business. However, domestically we are encouraged by the start of a significant new customer relationship, as well as other events that occurred in the quarter, which should favorably impact 2007."
Revenues from SPAR Group's international operations for the 2006 third quarter increased to $6.0 million from $3.6 million last year, with a net loss of $84,000, compared with net income of $35,000 a year ago. International revenues for the first nine months of 2006 rose to $16.1 million, compared with $10.9 million last year. Included in the current year revenue was an additional quarter of revenue, totaling approximately $1.3 million, associated with the change to the reporting year of the company's joint venture in Japan, as well as revenue from the company's new joint venture operations in Australia and Lithuania. The division posted a net loss of $366,000 for the year-to-date period, versus net income of $487,000 for the first nine months of 2005.
U.S. revenues for the 2006 third quarter amounted to $6.7 million, compared with $7.5 million a year ago, with a net loss of $1.3 million, versus a net loss of $1.2 million last year. For the 2006 year-to-date period, revenue in the U.S. amounted to $25.4 million including $770,000 from the termination of a customer service agreement during the first quarter, compared with $27.5 million last year. The company posted a U.S. net loss of $150,000, compared with a net loss of $343,000 for the first nine months of 2005. Included in U.S. net income for the nine months of 2006 was $1.3 million resulting from a favorable judgment awarded in a lawsuit, offset by the current year related legal expenses of approximately $1.1 million.
"During the quarter, we were pleased to announce the appointment of C. Manly Molpus to our board of directors," Brown said. "He is currently president, chief executive officer and a director of the Grocery Manufacturers Association. We are delighted to have attracted a director with his breadth of experience and industry knowledge."
With joint venture partners in Japan, Turkey, South Africa, India, Romania, China, Lithuania and Australia, as well as operations in Canada and the United States, 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, electronic store, convenience store and grocery chains, throughout the United States and internationally. For more information, visit the company's Web site, www.sparinc.com.
Certain statements in this news release are forward-looking, including, but not limited to further growth and expansion of the company's international operation and improvement in its domestic merchandising business. 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,
2006 2005 2006 2005
-------- -------- -------- --------
Net revenues $ 12,709 $ 11,060 $ 41,477 $ 38,381
Cost of revenues 8,856 7,595 27,853 24,414
-------- -------- -------- --------
Gross profit 3,853 3,465 13,624 13,967
Selling, general
and
administrative
expenses 4,855 4,015(a) 13,794 12,090(a)
Depreciation and
amortization 170 261 565 812
-------- -------- -------- --------
Operating (loss)
income (1,172) (811) (735) 1,065
Interest expense 65 29 162 102
Other expense
(income) 48 199(a) (542) 608(a)
-------- -------- -------- --------
(Loss) income before
provision for
income taxes
and minority
interests (1,285) (1,039) (355) 355
Provision for
income taxes 73 15 172 45
-------- -------- -------- --------
(Loss) income
before minority
interest (1,358) (1,054) (527) 310
Minority interest 34 88 (11) 166
-------- -------- -------- --------
Net (loss) income $ (1,392) $ (1,142) $ (516) $ 144
======== ======== ======== ========
Basic/diluted net (loss)
income per common share:
Net (loss) income
- basic/diluted $ (0.07) $ (0.06) $ (0.03) $ 0.01
======== ======== ======== ========
Weighted average
common shares -
basic 18,934 18,899 18,929 18,876
======== ======== ======== ========
Weighted average
common shares -
diluted 18,934 18,899 18,929 19,388
======== ======== ======== ========
(a) Certain reclassifications have been made to the prior years'
financial statements to conform to the 2006 presentation.
SPAR Group, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)
September 30, December 31,
2006 2005
-------------------------------
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 1,892 $ 1,914
Accounts receivable, net 11,258 10,656
Prepaid expenses and other
current assets 732 702
-------------------------------
Total current assets 13,882 13,272
Property and equipment, net 929 1,131
Goodwill 798 798
Other assets 206 216
-------------------------------
Total assets $ 15,815 $ 15,417
===============================
Liabilities and stockholders'
equity Current liabilities:
Accounts payable $ 2,726 $ 1,597
Accrued expenses and other
current liabilities 2,207 2,639
Accrued expense due to
affiliates 1,887 1,190
Restructuring charges -- 99
Customer deposits 655 1,658
Lines of credit 3,249 2,969
-------------------------------
Total current liabilities 10,724 10,152
Minority interest and other
long-term liabilities 502 415
-------------------------------
Total liabilities 11,226 10,567
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-
18,933,932 - September 30, 2006
18,916,847 - December 31, 2005 189 189
Treasury stock (1) (1)
Additional paid-in capital 11,367 11,059
Accumulated other
comprehensive loss (36) 17
Accumulated deficit (6,930) (6,414)
-------------------------------
Total stockholders' equity 4,589 4,850
-------------------------------
Total liabilities and
stockholders' equity $ 15,815 $ 15,417
===============================
CONTACT: SPAR Group, Inc.
Charles Cimitile, Chief Financial Officer
(914) 332-4100
PondelWilkinson Inc.
Roger S. Pondel
(310) 279-5980