SPAR Group Reports 2005 Financial Results
SPAR Group Reports 2005 Financial Results
Mar 14, 2006
SPAR Group Reports 2005 Financial Results
TARRYTOWN, N.Y., Mar 14, 2006 -- SPAR Group, Inc. (SGRP: 1.20, +0.11, +10.1%) today reported financial results for the year and fourth quarter ended December 31, 2005.For the full 2005 year, the company recorded net income of $878,000, equal to $0.05 per share, versus a net loss of $12.3 million, or $0.65 per share, for 2004, including approximately $9.4 million of impairment and tax charges for 2004. Net revenues for 2005 amounted to $51.6 million, compared with $51.4 million for the prior year.
Operating income for the twelve months of 2005 increased to $1.1 million, versus an operating loss of $12.0 million in the corresponding period last year. Selling, general and administrative expenses for the year were reduced to $17.6 million from $20.2 million a year ago.
Net income for the final quarter of 2005 increased 50 percent to $733,000, equal to $0.04 per share, from $489,000, or $0.03 per share, a year ago. Net revenues for the 2005 fourth quarter were $13.2 million, compared with $16.0 million in the fourth quarter of 2004.
Operating income for the 2005 fourth quarter was $611,000, compared to $639,000 in the corresponding period last year. Selling, general and administrative expenses for the 2005 fourth quarter were reduced to $4.9 million from $5.7 million for the same period a year ago.
Robert G. Brown, SPAR Group's chairman and chief executive officer, said results for 2005 reflected an increase in international operations as well as the continued impact of cost reduction programs put into place during the second half of 2004 to restructure the company's domestic business. He said net revenues on a comparative basis were impacted by the loss of certain domestic clients, including a major customer that experienced a change in ownership in 2004, and the consolidation of a full year's sales from the company's Japan operation in the 2004 fourth quarter. Brown said that most of the international joint venture companies contributed positively to sales. Brown also said that the company will continue its investment in technology striving to maximize efficiency and achieve further cost reductions.
International revenues for the full 2005 year were $14.9 million compared with $8.2 million for 2004. The international division achieved net profits of $167,000 for 2005, compared with a net loss of $1.3 million for 2004, including approximately $712,000 of impairment and tax charges for 2004. For the fourth quarter of 2005, international revenues totaled $3.9 million versus $3.5 million on a comparative basis, excluding $1.8 million of Japanese revenue related to the first three quarters of 2004. The international division had a net loss of $322,000 for the 2005 fourth quarter versus a net income of $323,000 for the 2004 fourth quarter.
Revenues in the U.S. for the full year and the fourth quarter of 2005 amounted to $36.7 million and $9.3 million, respectively, compared with $43.2 million and $10.7 million in the corresponding periods a year ago. The company's domestic business registered a net profit for the full year of 2005 totaling $711,000 versus a net loss of $11.0 million for 2004, including approximately $8.7 million of impairment and tax charges in 2004. For the fourth quarter of 2005, the domestic business posted a sharply higher profit of $1.1 million versus $166,000 for the same period a year earlier.
"The year 2005 was characterized by continued progress in expanding our international operations, with joint ventures established in Lithuania, Romania and China," Brown said. "Domestically, we successfully implemented and executed strategies to reduce costs throughout the company. As 2006 unfolds, we look forward to increasing our domestic market share and entering new international markets."
With joint venture partners in Japan, Turkey, South Africa, India, Romania, Lithuania and China, 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 and research services throughout the United States and internationally 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. 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, entering new international markets and enhancing the company's domestic 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 Inc.'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 Twelve Months
Ended Ended
----------------- ------------------
December December December December
31, 31, 31, 31,
2005 2004 2005 2004
-------- -------- -------- ---------
Net Revenues $13,205 $15,952 $51,586 $51,370
Cost of revenues 7,525 9,170 31,939 33,644
-------- -------- -------- ---------
Gross profit 5,680 6,782 19,647 17,726
Selling, general and
administrative expenses 4,850 5,748 17,561 20,222
Impairment charges - - - 8,141
Depreciation and amortization 219 395 1,031 1,399
-------- -------- -------- ---------
Operating income (loss) 611 639 1,055 (12,036)
Interest expense 89 91 191 220
Other (income) expense (410) 13 (424) (754)
-------- -------- -------- ---------
Income (loss) before provision for
income taxes and minority
interests 932 535 1,288 (11,502)
Provision for income taxes 198 69 242 853
-------- -------- -------- ---------
Income (loss) before minority
interest 734 466 1,046 (12,355)
Minority interest 1 (23) 168 (87)
-------- -------- -------- ---------
Net income (loss) $733 $489 $878 $(12,268)
======== ======== ======== =========
Basic/diluted net income (loss)
per common share:
-------- ---------
Net income (loss) - basic/diluted $0.04 $0.03 $0.05 $(0.65)
======== ======== ======== =========
-------- ---------
Weighted average common shares --
basic 18,917 18,859 18,904 18,859
======== ======== ======== =========
-------- ---------
Weighted average common shares -
diluted 19,147 18,998 19,360 18,859
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SPAR Group, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
December December
31, 31,
2005 2004
-------- --------
Assets
Current Assets:
Cash and cash equivalents $1,914 $887
Accounts receivable, net 10,656 11,307
Prepaid expenses and other current assets 702 657
-------- --------
Total current assets 13,272 12,851
Property and equipment, net 1,131 1,536
Goodwill 798 798
Other assets 216 636
-------- --------
Total assets $15,417 $15,821
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,597 $2,158
Accrued expenses and other current liabilities 2,639 2,391
Accrued expense due to affiliates 1,190 987
Restructuring charges 99 250
Customer Deposits 1,658 1,147
Lines of credit 2,969 4,956
-------- --------
Total current liabilities 10,152 11,889
Other long-term liabilities 10 12
Minority Interest 405 206
-------- --------
Total liabilities 10,567 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-
18,916,847 - December 31, 2005
18,858,972 - December 31, 2004 189 189
Treasury Stock (1) (108)
Additional paid-in capital 11,059 11,011
Accumulated other comprehensive gain (loss) 17 (86)
Accumulated deficit (6,414) (7,292)
-------- --------
Total stockholders' equity 4,850 3,714
-------- --------
Total liabilities and stockholders' equity $15,417 $15,821
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Contacts: SPAR Group, Inc.
Charles Cimitile
(914) 332-4100
or
PondelWilkinson Inc.
Roger S. Pondel
(310) 279-5980