SPAR Group Reports Third Quarter, Nine-Months Results
TARRYTOWN, N.Y., Nov 10, 2003 -- SPAR Group, Inc. (Nasdaq:SGRP) today reported financial results for the third quarter and nine months ended September 30, 2003.
The company sustained a net loss for the quarter of $345,000, equal to $0.02 per fully diluted share, compared with net income of $1.2 million, or $0.06 per fully diluted share, a year ago. Net revenue for the 2003 third quarter amounted to $16.6 million vs. $17.8 million last year.
Net income for the 2003 year-to-date period was $1.5 million, equal to $0.08 per fully diluted share, compared with $2.8 million, or $0.14 per fully diluted share, for the first nine months of 2002. Net revenue rose to $52.7 million from $51.4 million last year.
"A lower level of sales, reflecting an increasingly competitive environment, had a disproportionate impact on earnings for the third quarter," said Bob Brown, SPAR Group's chairman and chief executive officer. "Higher selling, general and administrative expenses, along with increased field costs, also affected the quarter.
"While we are currently implementing cost reductions throughout the company, we will continue to invest in systems, technology and a number of growth programs that we believe will enhance returns over the long term," Brown said. "Domestically, we plan to expand our merchandising services through development of new products as well as the development of attractive sales and marketing programs. We also plan to expand our in-store demonstration business through both acquisition and organic growth. Internationally, we will focus on acquisitions, as well as joint ventures in various countries.
"SPAR's merchandising expertise has proven to enhance our customers' sales and profitability," Brown said. "We believe SPAR is well positioned to attract new customers and increase business with our existing customer base. While the investments we are currently making may have a short term negative impact on operating results, and not all of the cost reductions will have an immediate impact, we believe the actions we are taking now will improve SPAR's profitability in the future."
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, in-store demonstration, 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 to be derived from cost reductions, new products, sales and marketing programs and international expansion. 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, continued technological superiority over its competitors, continued availability of capable dedicated personnel, continued cost management, the success of its international efforts, the success and availability of acquisitions, 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 Operations
(unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003 2002
Net revenues $16,615 $17,775 $52,704 $51,363
Cost of revenues 11,380 10,760 33,777 31,102
Gross profit 5,235 7,015 18,927 20,261
Selling, general and
administrative expenses 5,334 4,571 15,044 14,212
Depreciation and amortization 385 467 1,162 1,345
Operating (loss) income (484) 1,977 2,721 4,704
Interest expense 69 144 209 231
Other expense - 32 28 166
(Loss) income before provision
for income taxes (553) 1,801 2,484 4,307
(Benefit) provision for income
taxes (208) 588 943 1,544
Net (loss) income $(345) $1,213 $1,541 $2,763
Net (loss) income per common share:
Basic $(0.02) $0.06 $0.08 $0.15
Diluted $(0.02) $0.06 $0.08 $0.14
Weighted average common shares
- basic 18,859 18,696 18,853 18,700
Weighted average common shares
- diluted 18,859 19,103 19,508 19,118
SPAR Group, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
Sept. 30, Dec. 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $ - $ -
Accounts receivable, net 15,002 16,458
Prepaid expenses and other current assets 1,055 783
Deferred income taxes 707 903
Total current assets 16,764 18,144
Property and equipment, net 2,166 1,972
Goodwill 8,157 7,858
Deferred income taxes 648 705
Other assets 664 121
Total assets $ 28,399 $ 28,800
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,219 $ 422
Accrued expenses and other current
liabilities 2,700 5,140
Accrued expense due to affiliates 1,628 958
Restructuring charges, current 772 1,354
Line of credit, short-term 4,673 -
Due to certain stockholders - 3,951
Total current liabilities 10,992 11,825
Line of credit, long-term - 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 - September 30, 2003
18,824,527 - December 31, 2002 189 188
Treasury stock (710) (30)
Additional paid-in capital 10,872 10,919
Retained earnings 7,056 5,515
Total stockholders' equity 17,407 16,592
Total liabilities and stockholders' equity $ 28,399 $ 28,800
CONTACT: SPAR Group, Inc.
Charles Cimitile, 914-332-4100
or
PondelWilkinson MS&L
Roger S. Pondel, 323-866-6060
