SPAR Group Reports Third Quarter and Nine-Month Results
Income From Continuing Operations up 31% for Nine Months; Board Authorizes Stock Repurchase
TARRYTOWN, N.Y., Nov. 4, 2002 -- SPAR Group, Inc. (Nasdaq:SGRP) today announced results for its third quarter and nine months ended September 30, 2002.
Income from continuing operations for the third quarter increased 17 percent to $1.21 million, or $0.06 per diluted share, from $1.04 million, or $0.06 per diluted share, a year earlier. Net income for the third quarter was $1.21 million, or $0.06 per diluted share, compared with $578,000, or $0.03 per diluted share, last year. Revenues for the quarter were $17.8 million compared with $19.0 million a year ago. Results in the third quarter of 2001 included a loss from discontinued operations of $463,000.
For the nine months ended September 30, 2002, income from continuing operations climbed 31 percent to $2.8 million, or $0.14 per diluted share, from $2.1 million, $0.12 per diluted share, in the same period a year ago. Net income for the nine months was $2.8 million, or $0.14 per diluted share, from $1.6 million, or $0.09 per diluted share, last year. Revenues for the nine months of 2002 were $51.4 million compared with $50.1 million in the comparable 2001 period.
Separately, the company announced that its board of directors has authorized a stock repurchase program of up to 100,000 shares of the company's outstanding common stock. The common stock may be repurchased from time to time in the open market at varying prices depending on market conditions and other factors.
"Despite a less than robust retailing environment, which impacted top-line growth for the quarter, the company's margins remain strong and the business is expected to continue to benefit from customers seeking to increase sales and profit by distinguishing their products in the retail marketplace," said Bob Brown, SPAR Group's chairman and chief executive officer.
He noted that gross margins for the quarter and the nine-month period were approximately 40 percent, reflecting continued management of the company's field cost.
Commenting on the company's stock repurchase program, Brown said, "We believe the current stock price does not adequately represent the value of SPAR Group's shares. The share repurchase program underscores management's confidence in SPAR's long-term prospects and the growth opportunities for the company.
"As we enter the fourth quarter, which is historically SPAR's strongest period, due in part to the holiday season, we remain cautiously optimistic regarding the company's previous estimate of achieving $0.28 per diluted share from continuing operations for 2002," Brown said. "Obviously, given the current economic environment, it is more difficult to gauge sales trends, but our internal forecasts appear to justify current targets," Brown added.
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 two operating divisions. The Merchandising Division provides in-store merchandising, database and research services to general retail, mass market, drug, and grocery chains. SPAR's International Division, through a joint venture with a large Japanese wholesaler, provides in-store merchandising services to the Japanese market.
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 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 Nine Months
Ended Ended
Sept. 30, Sept. 30,
2002 2001 2002 2001
Net revenues $17,775 $19,026 $51,363 $50,058
Cost of revenues 10,760 11,669 31,102 30,277
Gross profit 7,015 7,357 20,261 19,781
Selling, general and administrative
expenses 4,571 4,826 14,212 13,811
Depreciation and amortization 467 692 1,345 2,002
Operating income 1,977 1,839 4,704 3,968
Interest expense 144 126 231 452
Other expense 32 -- 166 --
Income before provision for income
taxes 1,801 1,713 4,307 3,516
Provision for income taxes 588 672 1,544 1,405
Income from continuing operations 1,213 1,041 2,763 2,111
operations, net -- (463) -- (538)
Net Income $1,213 $578 $2,763 $1,573
Basic/diluted net income (loss) per
common share:
Net Income from continuing operations:
- basic $0.06 $0.06 $0.15 $0.12
- diluted $0.06 $0.06 $0.14 $0.12
Loss from discontinued operations, net
- basic/diluted $0.00 $(0.03) $0.00 $(0.03)
Net Income:
- basic $0.06 $0.03 $0.15 $0.09
- diluted $0.06 $0.03 $0.14 $0.09
Weighted average common shares -
basic 18,696 18,272 18,700 18,272
Weighted average common shares -
diluted 19,103 18,391 19,118 18,350
SPAR Group, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except per share data)
September December
30, 31,
2002 2001
Assets
Current Assets:
Cash and cash equivalents $-- $--
Accounts receivable, net 18,370 21,144
Prepaid expenses and other current
assets 705 440
Deferred income taxes 3,241 3,241
Total current assets 22,316 24,825
Property and equipment, net 1,658 2,644
Goodwill and other intangibles, net 8,357 8,357
Deferred income taxes 389 389
Other assets 84 110
Net assets from discontinued operations -- 4,830
Total assets $32,804 $41,155
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,159 $440
Accrued expenses and other current
liabilities 6,678 5,868
Restructuring and other charges, current 1,392 1,597
Due to certain stockholders 2,201 2,655
Current portion of long-term debt -- 57
Net liabilities from discontinued
operations -- 5,732
Total current liabilities 11,430 16,349
Line of credit and long-term liabilities,
net of current portion 4,060 11,287
Long-term debt due to certain
stockholders 2,000 2,000
Restructure and other charges, long-term 515 585
Other long-term liabilities 828 --
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 --
18,807,242 -- September 30, 2002 and
18,585,615 -- December 31, 2001 188 186
Treasury stock (11) --
Additional paid-in capital 10,814 10,531
Retained Earnings 2,980 217
Total stockholders' equity 13,971 10,934
Total liabilities and stockholders'
equity $32,804 $41,155
Contact:
SPAR Group, Inc.
Charles Cimitile, 914/332-4100
or
PondelWilkinson MS&L
Gary S. Maier, 323/866-6060
