Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - SPAR Group, Inc. | spar_8k-080211.htm |
| EX-99.2 - EXHIBIT 99.2 - SPAR Group, Inc. | ex99-2.htm |
Exhibit 99.1
SPAR Group Announces Second Quarter and Year to Date Earnings per Share of $0.02 and $0.04, respectively
TARRYTOWN, NY-- SPAR Group, Inc. (NASDAQ: SGRP) (the "Company" or "SPAR Group"), a leading supplier of retail merchandising and other marketing services throughout the United States and internationally, today announced second quarter revenue of $15.9 million, net income of $509,000 and earnings of per share of $0.02. For the six month period ending June 30, 2011, the Company reported revenue of $32.4 million, net income of $762,000 and earnings per share of $0.04.
“Management is pleased with the Company’s strong 18% increase in earnings and operational success that we have achieved during our typically slower first half of the calendar year,” stated Gary Raymond, Chief Executive Officer of SPAR Group. “Our international division continues to improve its financial performance. We are pleased with our joint venture partnership re-alignments in the high growth markets of India with Krognos Integrated Marketing Services and in China with Shanghai Wedone Marketing Consulting and we are confident in management’s ability to close on several targeted profitable acquisition candidates with hopes of integrating them during this calendar year. Due to our traditionally more favorable seasonal performance in the latter half of the year, and encouraging merchandising activity, we believe that the second half of 2011 will bring improved financial results for the Company. We remain focused on increasing sales, expanding margins and improving overall profitability.”
2011 Company Highlights
|
·
|
Signed new Joint Venture in India that will expand annual revenue and profitability in this important growth market.
|
|
·
|
Revenue for the first six months 2011 increased 13% to $32.4 million compared to $28.7 million in 2010.
|
|
·
|
Gross profit for the first six months 2011 increased 8% to $10.2 million compared to $9.5 million in 2010.
|
|
·
|
Operating income for the first six months 2011 increased 17% to $954,000 compared to $814,000 in 2010.
|
|
·
|
Net income for the first six months 2011 increased 18% to $762,000 or $0.04 per share compared to $648,000 or $0.03 per share for the same period in 2010.
|
Three Month Financial Results for the period ended June 30, 2011
|
Three Months Ended June 30,
(in thousands)
|
|||||||||||||||||
|
2011
|
2010
|
Change
|
|||||||||||||||
|
Net Revenue:
|
$ | % | |||||||||||||||
|
Domestic
|
$ | 9,367 | $ | 9,915 | $ | (548 | ) | (6) | % | ||||||||
|
International
|
6,577 | 5,699 | 878 | 15 | % | ||||||||||||
|
Total
|
$ | 15,944 | $ | 15,614 | $ | 330 | 2 | % | |||||||||
|
Gross Profit:
|
|||||||||||||||||
|
Domestic
|
$ | 2,930 | $ | 3,413 | $ | (483 | ) | (14) | % | ||||||||
|
International
|
2,027 | 1,798 | 229 | 13 | % | ||||||||||||
|
Total
|
$ | 4,957 | $ | 5,211 | $ | (254 | ) | (5) | % | ||||||||
|
Net Income (loss):
|
|||||||||||||||||
|
Domestic
|
$ | 560 | $ | 841 | $ | (281 | ) | (33) | % | ||||||||
|
International
|
(51 | ) | (229 | ) | 178 | 78 | % | ||||||||||
|
Total
|
$ | 509 | $ | 612 | $ | (103 | ) | (17) | % | ||||||||
Revenue for the quarter ended June 30, 2011 totaled $15.9 million, an increase of 2% compared to $15.6 million for the second quarter ended June 30, 2010. Domestic revenue for the second quarter of 2011 was $9.4 million compared to $9.9 million for the same period in 2010. The decrease in domestic revenue was mainly attributable to extraordinary project revenue realized in the second quarter of 2010. International revenue increased 15% to $6.6 million compared to $5.7 million during the same period 2010. The increase in international revenue was due to strong performances in the China and Australian markets.
Gross profit at $5.0 million for the second quarter of 2011, was down slightly when compared to $5.2 million the same period of 2010. Domestically, our gross profit margin was 31.3% for the second quarter 2011 compared to 34.4% in 2010. The decrease in gross profit margin was directly attributable to an unfavorable mix of syndicated and project work compared to last year. Internationally, our gross profit margin was 30.8% for the second quarter of 2011 compared to 31.6% for the same period in 2010. These changes are primarily due to the mix of business predominately in the China market.
Net income for the second quarter of 2011 was $509,000 or $0.02 per share compared to $612,000 or $0.03 per share for the same period of 2010.
Mr. Raymond continued, “While domestic sales were impacted during the second quarter of 2011, we are well positioned to capitalize on numerous opportunities within the expanding retail merchandising markets going forward. Therefore, we expect our U.S. operations to have improved financial results for the remainder of 2011, while our international business continues its impressive resurgence. A key to our future growth is the improvements we have made in our working capital position and current ratio. Having availability under our credit facilities allows SPAR to seek out the best growth opportunities to increase earnings without shareholder dilution. With continued guidance and support from our Board of Directors, SPAR Group’s Management will continue to opportunistically invest our capital for maximum financial gains.”
Six Months Financial Results for Period Ended June 30, 2011
|
Six Months Ended June 30,
(in thousands)
|
|||||||||||||||||
|
2011
|
2010
|
Change
|
|||||||||||||||
|
Net Revenue:
|
$ | % | |||||||||||||||
|
Domestic
|
$ | 18,889 | $ | 17,461 | $ | 1,428 | 8 | % | |||||||||
|
International
|
13,474 | 11,281 | 2,193 | 19 | % | ||||||||||||
|
Total
|
$ | 32,363 | $ | 28,742 | $ | 3,621 | 13 | % | |||||||||
|
Gross Profit:
|
|||||||||||||||||
|
Domestic
|
$ | 6,208 | $ | 6,168 | $ | 40 | 1 | % | |||||||||
|
International
|
3,985 | 3,313 | 672 | 20 | % | ||||||||||||
|
Total
|
$ | 10,193 | $ | 9,481 | $ | 712 | 8 | % | |||||||||
|
Net Income (loss):
|
|||||||||||||||||
|
Domestic
|
$ | 1,059 | $ | 979 | $ | 80 | 8 | % | |||||||||
|
International
|
(297 | ) | (331 | ) | 34 | 10 | % | ||||||||||
|
Total
|
$ | 762 | $ | 648 | $ | 114 | 18 | % | |||||||||
Revenue for the first six months 2011 increased 13% to $32.4 million compared to $28.7 million in 2010. Domestic revenue for the six month period ended June 30, 2011 was $18.9 million compared to $17.5 million during the same period 2010. Domestic net revenues increased by $1.4 million primarily attributable to continued growth from the Company’s syndicated services as well as growth in our assembly services. Internationally, revenue for the six month period ended June 30, 2011 was $13.5 compared to $11.3 during the same period 2010. This increase is due to strong performance from China, Australia and Canada.
Gross profit for the first six months 2011 increased 8% to $10.2 million compared to $9.5 million for the same period in 2010. Domestic margins for the first half of 2011 were 32.9% compared to 35.3% during the same period 2010. The changes in domestic gross profit margins are related to an unfavorable mix of syndicated and project work compared to last year. Internationally, gross profit margins for the six month period ended June 30, 2011 were 29.6% compared to 29.4% in the previous year.
Net income for the first six months of 2011 totaled $762,000 or $0.04 per share compared to net income of $648,000 or $0.03 per share, for the same period in the prior year. Domestically, net income for the six month period ended June 30, 2011 totaled $1.1 million compared to net income of $979,000 for the same period in 2010. Internationally, a net loss for the first half of 2011 totaled $297,000 compared to a net loss of $331,000 for the same period in 2010.
Balance Sheet as of June 30, 2011
As of June 30, 2011 working capital improved to $5.9 million and its current ratio increased to 1.7 to 1. Total current assets and total assets were $14.2 million and $17.0 million, respectively and cash and cash equivalents totaled $1.3 million at June 30, 2011. Total current liabilities and total liabilities were $8.3 million and $8.7 million, respectively and total equity was $7.8 million at June 30, 2011.
The Company intends to file the Form 10-Q with the Securities and Exchange Commission on or before August 5, 2011 and host a shareholder conference call on August 9, 2011 at 2:00 pm eastern daylight time. We will provide conference call detail in a later press release.
About SPAR Group
SPAR Group, Inc. is a diversified international merchandising and marketing services company and provides a broad array of services worldwide to help companies improve their sales, operating efficiency and profits at retail locations. The Company provides merchandising and other marketing services to manufacturers, distributors and retailers worldwide, primarily in mass merchandisers, office supply, grocery and drug store chains, independent, convenience and electronics stores, as well as providing furniture and other product assembly services, in-store events, radio frequency identification ("RFID") and related technology services and marketing research. The Company has supplied these project and product services in the United States since certain of its predecessors were formed in 1979 and internationally since the Company acquired its first international subsidiary in Japan in May of 2001. Product services include product additions; placement, reordering, replenishment, labeling, evaluation and deletions, and project services include seasonal and special product promotions, product recalls and complete setups of departments and stores. The Company operates throughout the United States and internationally in 8 of the most populated countries, including China and India. For more information, visit the SPAR Group's Web site at http://www.sparinc.com/.
Certain statements in this news release and such conference call are forward-looking, including (without limitation) growing revenues and profits through organic growth and acquisitions, attracting new business that will increase SPAR Group's revenues, continuing to maintain costs and consummating any transactions. Undue reliance should not be placed on such forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond the Company's control. 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 those and other risk factors and cautionary statements that could affect future results, performance or trends are discussed in SPAR Group's most recent 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. All of the Company's forward-looking statements are expressly qualified by all such risk factors and other cautionary statements.
Tables Follow
SPAR Group, Inc.
Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
Net revenues
|
$ | 15,944 | $ | 15,614 | $ | 32,363 | $ | 28,742 | ||||||||
|
Cost of revenues
|
10,987 | 10,403 | 22,170 | 19,261 | ||||||||||||
|
Gross profit
|
4,957 | 5,211 | 10,193 | 9,481 | ||||||||||||
|
Selling, general, and administrative expenses
|
4,137 | 4,199 | 8,711 | 8,171 | ||||||||||||
|
Depreciation and amortization
|
265 | 237 | 528 | 496 | ||||||||||||
|
Operating income
|
555 | 775 | 954 | 814 | ||||||||||||
|
Interest expense
|
24 | 67 | 106 | 102 | ||||||||||||
|
Other (income) expense
|
(2 | ) | 88 | 7 | 91 | |||||||||||
|
Income before provision for income taxes
|
533 | 620 | 841 | 621 | ||||||||||||
|
Provision for income taxes
|
29 | 17 | 53 | 34 | ||||||||||||
|
Net income
|
504 | 603 | 788 | 587 | ||||||||||||
|
Net (income) loss attributable to the non-controlling interest
|
(5 | ) | (9 | ) | 26 | (61 | ) | |||||||||
|
Net income attributable to SPAR Group, Inc.
|
$ | 509 | $ | 612 | $ | 762 | $ | 648 | ||||||||
|
Basic/diluted net income per common share:
|
||||||||||||||||
|
Net income - basic
|
$ | 0.03 | $ | 0.03 | $ | 0.04 | $ | 0.03 | ||||||||
|
Net income - diluted
|
$ | 0.02 | $ | 0.03 | $ | 0.04 | $ | 0.03 | ||||||||
|
Weighted average common shares - basic
|
20,012 | 19,139 | 19,826 | 19,139 | ||||||||||||
|
Weighted average common shares - diluted
|
21,656 | 20,411 | 21,387 | 20,359 | ||||||||||||
SPAR Group, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
|
June 30,
2011 |
December 31,
2010 |
|||||||
|
(unaudited)
|
(note)
|
|||||||
|
Assets
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 1,264 | $ | 923 | ||||
|
Accounts receivable, net
|
11,985 | 13,999 | ||||||
|
Prepaid expenses and other current assets
|
928 | 1,283 | ||||||
|
Total current assets
|
14,177 | 16,205 | ||||||
|
Property and equipment, net
|
1,489 | 1,452 | ||||||
|
Goodwill
|
848 | 848 | ||||||
|
Intangibles
|
333 | 362 | ||||||
|
Other assets
|
164 | 226 | ||||||
|
Total assets
|
$ | 17,011 | $ | 19,093 | ||||
|
Liabilities and equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | 1,779 | $ | 1,804 | ||||
|
Accrued expenses and other current liabilities
|
1,713 | 2,733 | ||||||
|
Accrued expense due to affiliates
|
1,306 | 1,575 | ||||||
|
Customer deposits
|
294 | 471 | ||||||
|
Lines of credit and other debt
|
3,196 | 5,263 | ||||||
|
Total current liabilities
|
8,288 | 11,846 | ||||||
|
Other long-term liabilities
|
413 | - | ||||||
|
Total liabilities
|
8,701 | 11,846 | ||||||
|
Equity:
|
||||||||
|
SPAR Group, Inc. equity
|
||||||||
|
Preferred stock, $.01 par value: Authorized and available shares – 2,445,598 Issued and outstanding shares – None - June 30, 2011 554,402 - December 31, 2010
|
- | 6 | ||||||
|
Common stock, $.01 par value: Authorized shares - 47,000,000 Issued and outstanding shares – 20,062,033 – June 30, 2011 and 19,314,306 - December 31, 2010
|
201 | 193 | ||||||
|
Treasury stock
|
- | (1 | ) | |||||
|
Additional paid-in capital
|
13,796 | 13,549 | ||||||
|
Accumulated other comprehensive loss
|
(117 | ) | (142 | ) | ||||
|
Accumulated deficit
|
(6,046 | ) | (6,808 | ) | ||||
|
Total SPAR Group, Inc. equity
|
7,834 | 6,797 | ||||||
|
Non-controlling interest
|
476 | 450 | ||||||
|
Total liabilities and equity
|
$ | 17,011 | $ | 19,093 | ||||
|
The Balance Sheet at December 31, 2010, is excerpted from the consolidated audited financial statements as of that date but does not include certain information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
|
Contact:
James R. Segreto
Chief Financial Officer
SPAR Group, Inc.
(914) 332-4100
Investors:
Alan Sheinwald
Alliance Advisors, LLC
(212) 398-3486
Email Contact
Or
Chris Camarra
Alliance Advisors, LLC
(212) 398-3487
Email Contact