TARRYTOWN, N.Y.----Aug. 11, 2003--SPAR Group, Inc. (Nasdaq:SGRP - News) today reported financial results for the second quarter and six months ended June 30, 2003.
Net income for the 2003 second quarter amounted to $608,000, equal to $0.03 per share, on net revenues of $17.4 million. For the comparable prior-year period, the company recorded net income of $1.1 million, or $0.06 per share, on net revenues of $17.5 million.
For the 2003 year-to-date period, net income advanced 21.5% to $1.9 million, equal to $0.10 per share, from $1.6 million, or $0.08 per share, a year ago. Net revenues for the first half of 2003 rose 7.4% to $36.1 million from $33.6 million last year.
The company said results for the quarter were impacted primarily by external economic factors affecting the retail sector.
"The second quarter was challenging for retailers throughout the nation, and, hence, for most of our customers," said Bob Brown, SPAR Group's chairman and chief executive officer. "In turn, our customers utilized our services to a lesser degree, restraining our revenues and impacting earnings. Additionally, costs associated with the completion earlier in the year of two acquisitions and a restructuring of our field organization also impacted results. The acquisitions, as well as the field organization restructuring, however, are expected to positively contribute to our performance in the future. However, if these revenue challenges continue during the 3rd and 4th quarter, the Company would fall short of our previously announced goal of $0.33 in earnings per share for 2003.
"Our business base remains strong, and the company's foundation is solid," Brown said. "We are intensifying our marketing efforts, paying close attention to costs and getting our message across to existing and prospective clients that SPAR's unique merchandising expertise can help enhance their sales and profitability."
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 are forward-looking, including, but not limited to, benefits from the company's two acquisitions completed earlier in the year and from the field organization restructuring, 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 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 Income
(unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Net Revenues $17,351 $17,542 $36,090 $33,588
Cost of revenues 11,146 10,591 22,397 20,342
Gross profit 6,205 6,951 13,693 13,246
Selling, general and
administrative expenses 4,768 4,675 9,711 9,642
Depreciation and amortization 399 460 777 877
Operating income 1,038 1,816 3,205 2,727
Interest expense 72 38 140 86
Other (income) expense (10) 52 28 134
Income before provision for
income taxes 976 1,726 3,037 2,507
Provision for income taxes 368 657 1,151 956
Net Income $608 $1,069 $1,886 $1,551
Net Income per common share
(basic/diluted) $0.03 $0.06 $0.10 $0.08
Weighted average common shares -
basic 18,858 18,593 18,850 18,592
Weighted average common shares -
diluted 19,538 19,021 19,447 19,021
SPAR Group, Inc.
Consolidated Balance Sheets
(unaudited)
(In thousands, except share and per share data)
June 30, December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $- $-
Accounts receivable, net 19,504 17,415
Prepaid expenses and other current
assets 1,208 783
Deferred income taxes 707 903
Total current assets 21,419 19,101
Property and equipment, net 2,267 1,972
Goodwill 8,100 7,858
Deferred income taxes 648 705
Other assets 677 121
Total assets $33,101 $29,757
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $958 $422
Accrued expenses and other current
liabilities 5,229 6,097
Accrued expense due to affiliates 1,535 958
Restructuring charges, current 772 1,354
Due to certain stockholders - 3,951
Total current liabilities 8,494 12,782
Line of credit 6,648 148
Restructuring charges, long-term - 235
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--
18,858,972 - June 30, 2003, and
18,824,527 - December 31, 2002 189 188
Treasury Stock (582) (30)
Additional paid-in capital 10,951 10,919
Retained Earnings 7,401 5,515
Total stockholders' equity 17,959 16,592
Total liabilities and stockholders'
equity $33,101 $29,757
Contacts: SPAR Group, Inc.
Charles Cimitile
914-332-4100
PondelWilkinson MS&L
Roger S. Pondel
323-866-6060
