Spar Group Reports Third Quarter Results -- Net Income Up More Than Five Fold
EPS Triples
TARRYTOWN, N.Y., Oct 31, 2001 -- SPAR Group Inc. (Nasdaq:SGRP) today announced results for its third quarter ended September 30, 2001, with net income climbing more than five fold, earnings per share tripling and revenues increasing 22.6 percent over last year.
For the third quarter of 2001, SPAR reported net income of $583,000, or $0.03 per diluted share, compared with net income of $100,000, or $0.01 per diluted share, a year ago. Revenues for the third quarter of 2001 were $27.4 million compared with $22.3 million in the third quarter a year ago.
For the nine months ended September 30, 2001, net income increased 150 percent to $1.6 million, or $0.09 per diluted share, compared with net income of $630,000, or $0.03 per diluted share. Revenues for the same period of 2001 were $78.6 million compared with $83.1 million in the comparable 2000 period. Revenues for the 2001 nine-month period reflect discontinued in-store merchandising programs previously contracted with PIA Merchandising Co. Inc., a subsidiary of PIA Merchandising Services Inc., which SPAR Group acquired in July 1999 and completed integrating in the third quarter of 2000.
"Our strong results for the third quarter reflect increased revenues from new and existing customers in both the company's merchandising and incentive divisions," said Bob Brown, SPAR Group's chairman and chief executive officer.
He noted that while a number of retailers and manufacturers have been impacted by the economic slowdown and the effect of the September 11th terrorist attacks, SPAR's Internet-based information management technology continues to attract manufacturers, retailers and other clients who seek efficient and cost-effective marketing services.
"Given the economic environment, our clients appreciate the importance of being competitive, improving retailing efficiency and utilizing innovative incentive marketing programs. Our goal is to continue to leverage SPAR's technology and capitalize on the numerous opportunities within the broad marketing and retailing business segments," Brown said.
He indicated the company remains optimistic regarding its targets of $0.14 per share earnings from operations for the year 2001 and $0.28 per share in 2002.
SPAR Group Inc., a diversified marketing services company, provides a broad array of productivity enhancing products and services to help Fortune 1000 companies improve their sales, operating efficiency and profits. SPAR is organized into four operating divisions. SPAR's Merchandising Division provides in-store merchandising, database and research services to general retail, mass market, drug, and grocery chains. SPAR's Incentive Division provides a wide variety of consulting, creative program administration, travel and merchandising fulfillment services to companies seeking to retain, train, and motivate employees to higher levels of productivity. SPAR's Internet Division offers a series of Internet-based productivity improvement applications designed to help clients increase operating efficiencies and train employees in remote locations. SPAR's International Division, through a joint venture with a large Japanese wholesaler, is poised to provide in-store merchandising, database and research services in general retail, mass market, drug, and grocery chains in the Far East.
Certain statements in this news release are forward-looking and involve a number of risks and uncertainties. The Company's actual results could differ materially from those indicated by such statements as a result of various factors, including the continued building of sales momentum, the success of marketing its Internet application software products and other factors discussed in SPAR Group's Form 10-K, Form 10-Q, and other filings made with the SEC from time to time.
SPAR Group Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Net revenues $ 27,379 $ 22,332 $ 78,566 $ 83,068
Cost of revenues 18,958 14,105 53,773 56,249
Gross profit 8,421 8,227 24,793 26,819
Selling, general and
administrative
expenses 6,196 6,721 18,267 22,560
Depreciation and
amortization 982 808 2,871 2,447
Operating income 1,243 698 3,655 1,812
Interest expense 315 467 1,035 1,418
Other (income) expense -- -- -- (786)
Income before provision
for income taxes 928 231 2,620 1,180
Provision for income
taxes 345 131 1,044 550
Net income $ 583 $ 100 $ 1,576 $ 630
Actual basic earnings
per share $ 0.03 $ 0.01 $ 0.09 $ 0.03
Actual basic weighted
average common
shares 18,272 18,176 18,272 18,165
Actual diluted
earnings per
share $ 0.03 $ 0.01 $ 0.09 $ 0.03
Actual diluted
weighted average
common shares 18,391 18,297 18,350 18,290
SPAR Group Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
September 30, December 31,
2001 2000
ASSETS (unaudited) (audited)
Current assets:
Cash and cash equivalents $ -- $ --
Accounts receivable, net 23,340 23,207
Prepaid expenses and other
current assets 1,349 880
Prepaid program costs 2,424 3,542
Deferred Income Taxes 1,718 1,718
Total current assets 28,831 29,347
Property and equipment, net 3,120 3,561
Goodwill and other intangibles, net 19,962 21,485
Deferred income taxes 1,082 1,082
Other assets 223 143
Total assets $53,218 $55,618
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,108 $ 5,849
Accrued expenses and other
current liabilities 10,116 10,178
Deferred revenue 4,684 8,581
Restructuring and other charges,
current 1,739 2,205
Due to certain stockholders,
current 3,062 3,505
Current portion of long-term debt 380 1,211
Total current liabilities 23,089 31,529
Line of credit and long-term
liabilities, net of current
portion 13,503 8,093
Long-term debt due to certain
stockholders 2,059 2,160
Restructuring and other charges,
long-term 751 1,596
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
-- 18,272,330 as of
September 30, 2001 and
December 31, 2000 182 182
Additional paid-in capital 10,127 10,127
Retained earnings 3,507 1,931
Total stockholders' equity 13,816 12,240
Total liabilities and
stockholders' equity $53,218 $55,618
Contacts:
Charles Cimitile, 914/332-4100
or
PondelWilkinson MS&L
Gary S. Maier, 310/207-9300
