SPAR Group Reports Record Results for 2002 Fourth Quarter and Year; Income From Continuing Operations Up 28 Percent in 2002
TARRYTOWN, N.Y., Feb. 28, 2003--SPAR Group, Inc. (NASDAQ:SGRP) today announced financial results for its fourth quarter and year ended December 31, 2002.
Income from continuing operations for the fourth quarter of 2002 increased 24 percent to $2.5 million, or $0.13 per diluted share, compared to $2.0 million, or $0.11 per diluted share, in the same period a year earlier. Net income for the fourth quarter was $2.5 million compared to a net loss of $3.3 million in the 2001 fourth quarter. The 2001 loss included a non-cash charge for the impairment of goodwill related to the divestiture of SPAR's Incentive Marketing Division that was subsequently sold to employees through an employee stock ownership plan, effective June 30, 2002. Revenues for the fourth quarter were $18.2 million compared to $20.8 million in the fourth quarter of 2001.
For the year ended December 31, 2002, income from continuing operations increased 28 percent to $5.3 million, or $0.28 per diluted share, compared to $4.2 million or $0.23 per diluted share, a year earlier. Net income for the year was $5.3 million compared to a net loss of $1.7 million for 2001. Revenues for 2002 were $69.6 million compared to $70.9 million last year.
"Once again, SPAR achieved record operating results for the year and met its goal of $0.28 per diluted share from continuing operations," said Bob Brown, SPAR Group's chairman and chief executive officer. "During the year, we continued to refine our product offerings and strengthened our selling and marketing functions. We believe our success is testament to our innovative products, superior technology, dedicated people and continued cost management. As always, moving forward we plan to work closely with our clients and leverage SPAR's unique merchandising expertise to increase their sales and profits." Brown noted that the company is well positioned for top line growth in 2003 and is targeting a 20% increase in net income, translating to earnings per share of $0.33 for the year.
During the fourth quarter the company's board of directors authorized a stock repurchase program of up to 100,000 shares of the company's outstanding common stock. Since the time of the authorization, the company has repurchased approximately 24,400 shares of its common stock at an average share price of $3.23. The company will remain active with the share repurchase program should the right market conditions exist.
SPAR Group, Inc. is a diversified marketing services company, providing a broad array of productivity enhancing products and services to help Fortune 1000 companies improve their sales, operating efficiency and profits. The company provides in-store merchandising, database and research services to general retail, mass market, drug, and grocery chains both, throughout the United States and internationally.
Certain statements in this news release (including, without limitation, the top line, net income and earnings per share estimates for 2003) are forward-looking and involve a number of risks and uncertainties (both known and unknown). 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's selling and marketing functions, continued customer satisfaction and contract renewal, new product development and marketing, continued technological superiority over its competitors, continued availability of capable dedicated personnel, continued cost management, the success of its international efforts, and other factors, as well as by factors applicable to most companies such as general economic, competitive and other business and civil conditions. Information respecting certain of these and other factors that could effect future results, performance or trends are discussed in SPAR Group's annual report of 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.
Condensed, Consolidated Statements of Operations
(unaudited)
(In thousands, except per share data)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2002 2001 2002 2001
Net Revenues $18,249 $20,834 $69,612 $70,891
Cost of revenues 9,230 10,606 40,331 40,883
Gross profit 9,019 10,228 29,281 30,008
Selling, general and
administrative expenses 4,593 5,569 18,804 19,380
Depreciation and amortization 499 680 1,844 2,682
Operating income 3,927 3,979 8,633 7,946
Interest expense 133 109 363 561
Other (Income) expense (193) 107 (26) 107
Income before provision for
income taxes 3,987 3,763 8,296 7,278
Provision for income taxes 1,454 1,718 2,998 3,123
Income from continuing
operations 2,533 2,045 5,298 4,155
Loss from discontinued
operations, net of tax benefit 0 (5,332) 0 (5,869)
Net Income (loss) $2,533 $(3,287) $5,298 $(1,714)
Net income (loss) per common
share:
Income from continuing
operations - basic/diluted $0.13 $0.11 $0.28 $0.23
Loss from discontinued
operations, net of tax
benefit
- basic 0.00 (0.29) 0.00 (0.32)
- diluted 0.00 (0.28) 0.00 (0.32)
Net Income (loss)
- basic $0.13 $(0.18) $0.28 $(0.09)
- diluted $0.13 $(0.17) $0.28 $(0.09)
Weighted average common shares
- basic 18,816 18,582 18,761 18,389
Weighted average common shares
- diluted 19,237 18,957 19,148 18,467
SPAR Group, Inc.
Condensed, Consolidated Balance Sheets
(unaudited)
(In thousands, except per share data)
December 31,
2002 2001
Assets
Current Assets:
Cash and cash equivalents $0 $0
Accounts receivable, net 17,415 21,144
Prepaid expenses and other current assets 783 440
Deferred income taxes 903 3,241
Total current assets 19,101 24,825
Property and equipment, net 1,972 2,644
Goodwill and other intangibles, net 7,858 8,357
Deferred income taxes 705 389
Other assets 121 110
Net assets from discontinued operations 0 4,830
Total assets $29,757 $41,155
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $422 $440
Accrued expenses and other current liabilities 7,054 5,868
Restructuring and other charges, current 1,355 1,597
Due to certain stockholders 1,951 2,655
Current portion of long-term debt 0 57
Net liabilities from discontinued operations 0 5,732
Total current liabilities 10,782 16,349
Line of credit 148 11,287
Long-term debt due to certain stockholders 2,000 2,000
Restructure and other charges, long-term 235 585
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- 18,824,527 -
December 31, 2002 and 18,582,615 - December
31, 2001 188 186
Treasury stock (30) 0
Additional paid-in capital 10,919 10,531
Retained Earnings 5,515 217
Total stockholders' equity 16,592 10,934
Total liabilities and stockholders' equity $29,757 $41,155
Contact:
SPAR Group, Inc.
Charles Cimitile, 914/332-4100
or
PondelWilkinson MS&L
Roger S. Pondel, 323/866-6060
