CHARLOTTE, N.C., Dec. 10, 2025 (GLOBE NEWSWIRE) -- SPAR Group, Inc. (NASDAQ: SGRP) (“SPAR,” “SPAR Group” or the “Company”), an innovative services company offering comprehensive merchandising, marketing and distribution solutions to retailers and brands throughout the United States and Canada, today announced the appointment of Mr. Steven Hennen as the Company’s Chief Financial Officer, effective December 8, 2025. Hennen succeeds Antonio Calisto Pato, who served as the Company’s CFO since February 2023. Cal ...

Financial Performance - Net revenues for the third quarter of 2025 were $41.4 million, representing a 28.2% increase compared to the same quarter last year[5] - For the first nine months of 2025, net revenues were $114.1 million, with a 12.6% increase in comparable net revenues for the U.S. and Canada[14] - Net revenues for Q3 2025 were $41,416 million, a 9% increase from $37,788 million in Q3 2024[20] - Gross profit decreased to $7,690 million in Q3 2025 from $8,442 million in Q3 2024, representing a decline of 8.9%[20] - Adjusted EBITDA for the third quarter was $90 thousand, or 0.2% of sales, down from $221 thousand, or 0.6% of sales in the prior year quarter[7] - Adjusted EBITDA for the first nine months was $2.9 million, or 2.5% of sales, compared to $4.3 million, or 3.3% of sales in the prior year[14] - Consolidated Adjusted EBITDA for the nine months ended September 30, 2025, was $2.900 million, down from $4.324 million in the same period of 2024[29] Loss and Expenses - GAAP net loss attributable to SPAR Group, Inc. was ($8.8) million, or ($0.37) per diluted share, compared to a loss of ($0.2) million, or ($0.01) per diluted share in the prior year quarter[7] - Operating loss for Q3 2025 was $(5,919) million compared to a loss of $(1,530) million in Q3 2024[20] - Net loss attributable to SPAR Group, Inc. was $(8,764) million in Q3 2025, compared to a loss of $(182) million in Q3 2024[27] - Basic loss per share from continuing operations was $(0.37) in Q3 2025, down from $(0.01) in Q3 2024[20] - Consolidated net loss from continuing operations for Q3 2025 was $8.764 million, compared to a loss of $270 thousand in Q3 2024[29] - Consolidated EBITDA for Q3 2025 was $(5.515) million, a decline from $(1.076) million in Q3 2024[29] - Restructuring costs and severance for Q3 2025 amounted to $4.018 million, with no costs reported in Q3 2024[29] - Other one-time expenses for Q3 2025 totaled $959 thousand, slightly up from $952 thousand in Q3 2024[29] Cash and Liquidity - Total liquidity at the end of the quarter was $10.4 million, consisting of $8.2 million in cash and cash equivalents and $2.2 million of unused availability[10] - Cash and cash equivalents decreased to $8,206 million at the end of Q3 2025 from $18,221 million at the beginning of the period[24] - Net cash used in operating activities for the nine months ended September 30, 2025, was $(15,962) million, compared to $(730) million for the same period in 2024[24] Costs and Expenses Management - The company incurred approximately $4.0 million in restructuring costs and severance during the third quarter, along with an additional $1.6 million in unusual or one-time costs[5] - The company is targeting SG&A expenses at approximately $6.5 million per quarter or lower, excluding legal and one-time items[4] - Interest expense from continuing operations increased to $663 thousand in Q3 2025 from $582 thousand in Q3 2024[29] - Depreciation and amortization from continuing operations for Q3 2025 was $404 thousand, a decrease from $454 thousand in Q3 2024[29] - Exceptional BOD payments for Q3 2025 were $544 thousand, with no payments reported in Q3 2024[29] Balance Sheet - Total current assets increased to $51,900 million as of September 30, 2025, from $45,996 million at the end of 2024[22] - Total liabilities rose to $45,076 million as of September 30, 2025, compared to $32,125 million at the end of 2024[22] - The company amended and expanded its revolving credit facilities to $36 million, extending until October 2027[7] - Income tax expense from continuing operations for Q3 2025 was $1.719 million, compared to a tax benefit of $(2.314) million in Q3 2024[29]

Financial Performance - Net revenues for Q3 2025 were $41.416 million, a 9% increase from $37.788 million in Q3 2024[6] - Gross profit for the nine months ended September 30, 2025, was $24.028 million, down 11% from $27.110 million in the same period of 2024[6] - Operating loss for Q3 2025 was $(5.919) million, compared to an operating loss of $(1.530) million in Q3 2024[6] - Net loss attributable to SPAR Group, Inc. for Q3 2025 was $(8.764) million, compared to a net income of $0.270 million in Q3 2024[6] - For the nine months ended September 30, 2025, SPAR Group reported a net loss of $8,303,000 compared to a net income of $3,468,000 for the same period in 2024[14] - Total net revenue for the three months ended September 30, 2025, was $41.4 million, a 9.4% increase from $37.8 million in the same period of 2024[76] - The company reported a net loss attributable to SPAR Group, Inc. of $8.764 million for the three months ended September 30, 2025, compared to a net loss of $182,000 in the same period of 2024[80] Assets and Liabilities - Total current assets increased to $51.900 million as of September 30, 2025, from $45.996 million as of December 31, 2024[8] - Total liabilities rose to $45.076 million as of September 30, 2025, compared to $32.125 million as of December 31, 2024[8] - Cash and cash equivalents decreased to $8.206 million as of September 30, 2025, from $18.221 million as of December 31, 2024[8] - Total stockholders' equity decreased to $16.589 million as of September 30, 2025, from $24.306 million as of December 31, 2024[8] - Long-lived assets increased from $4.479 million as of December 31, 2024, to $6.269 million as of September 30, 2025[75] Cash Flow and Operating Activities - Cash used in operating activities for the nine months ended September 30, 2025 was $15,962,000, significantly higher than $730,000 used in the same period of 2024[14] - Cash and cash equivalents at the end of the period on September 30, 2025, were $8,206,000, down from $19,652,000 at the end of September 2024[14] - The company reported a decrease in cash paid for interest, which was $1,553,000 in 2025 compared to $1,640,000 in 2024[14] Restructuring and Costs - The company reported restructuring costs and severance of $4.018 million for Q3 2025, with no such costs reported in Q3 2024[6] - The Company recognized restructuring and severance costs of $4.0 million for both the three and nine months ended September 30, 2025, related to executive team reorganization and headquarters relocation[39] Credit and Financing - Borrowings under the line of credit for the nine months ended September 30, 2025, amounted to $111,018,000, compared to $103,184,000 in 2024[14] - The net cash provided by financing activities for the nine months ended September 30, 2025, was $7,468,000, compared to $210,000 in 2024[14] - The Company has a secured revolving credit facility with North Mill Capital, increasing the US Revolving Credit Facility to $28.0 million and the Canada Revolving Credit Facility to CDN $2.0 million as of February 1, 2023[43] - The NM Credit Facility has been extended to October 10, 2027, ensuring liquidity needs are met in the near term[44] - As of September 30, 2025, the aggregate outstanding loan balance was approximately $23.8 million, with a 9.15% interest rate[46] - The Company is required to maintain a positive trailing EBITDA and comply with various financial covenants under the NM Credit Facility[47] Shareholder Activities - The 2024 Stock Repurchase Program allows for the repurchase of up to 2.5 million shares, with 1 million shares repurchased at $1.80 per share[55] - The Company recognized share-based compensation expense related to stock options of $2.237 million for the nine months ended September 30, 2025[57] - The Company recognized compensation expense of $699,635 related to Phantom Stock Awards for the nine months ended September 30, 2025[61] Discontinued Operations - The Company reported net revenues from discontinued operations of $33.2 million for the nine months ended September 30, 2024, with a loss from discontinued operations, net of tax, of $881,000[38] - The Company’s net revenues from discontinued operations for the nine months ended September 30, 2024, were $33.185 million, with a loss from discontinued operations of $881,000[38] Tax and Valuation - As of September 30, 2025, the Company recorded a valuation allowance of $1.9 million against its deferred tax assets, resulting in a carrying value of $1.9 million[23] - The Company’s gross deferred tax assets were approximately $4.3 million as of December 31, 2024, primarily related to net operating loss carryforwards and R&D tax credits[22] - The Company will implement ASU No. 2023-09 for the fiscal year ending December 31, 2025, which requires specific categories of income tax disclosures[26] Other Financial Metrics - The Company experienced a decrease in accounts receivable by $16,368,000 for the nine months ended September 30, 2025, compared to a decrease of $2,276,000 in 2024[14] - The allowance for credit losses decreased to $238,000 as of September 30, 2025, from $411,000 as of December 31, 2024, indicating improved credit quality[29] - The Company’s gross accounts receivable increased to $41.6 million as of September 30, 2025, compared to $25.2 million as of December 31, 2024, representing a 65% increase[29]

Core Insights - SPAR Group, Inc. reported a 28.2% increase in net revenues for the third quarter of 2025 compared to the same period last year, reaching $41.4 million, driven by growth in the U.S. and Canada [2][4] - The company aims to create a leaner and more profitable business by focusing on higher-margin merchandising services, reducing management costs, and enhancing cash generation [2][3] - The gross margin decreased to 18.6% in Q3 2025 from 22.3% in the prior year, primarily due to a higher proportion of lower-margin retailer remodeling work [4][11] Financial Performance - For the first nine months of 2025, net revenues totaled $114.1 million, a 12.6% increase compared to the previous year [11] - The company incurred restructuring costs of approximately $4.0 million in Q3 2025, impacting overall profitability [4][11] - The net loss attributable to SPAR Group, Inc. was $8.8 million, or $0.37 per diluted share, compared to a loss of $0.2 million, or $0.01 per diluted share, in the prior year quarter [11][28] Strategic Initiatives - The leadership team is focused on leveraging technology and AI to enhance SPAR's market strategy and drive innovation [2] - The company is targeting selling, general, and administrative expenses (SG&A) at approximately $6.5 million per quarter or lower, excluding one-time costs [3][4] - SPAR Group has amended and extended its asset-based lending facilities to $36 million, providing greater financial flexibility [11] Cash Flow and Liquidity - As of September 30, 2025, SPAR Group had total liquidity of $10.4 million, with $8.2 million in cash and cash equivalents [8] - The net cash used by operating activities for the first nine months of 2025 was $16.0 million, indicating challenges in cash flow management [8][23] - Accounts receivable balances increased significantly in 2025, reflecting both revenue growth and the impact of a program management agreement with a large retail client [3][8]

Core Insights - SPAR Group has appointed William Linnane as the permanent Chief Executive Officer, effective immediately, after serving as President and Interim CEO earlier this year [1][2] - The Executive Chairman of the SPAR Group Board expressed confidence in Linnane's leadership and strategic vision, highlighting his dedication to the company's mission and clients [2] - Linnane aims to transform retail innovation into measurable results, focusing on accelerating growth and executing a strategic plan to create a more profitable business [2] Company Overview - SPAR Group is an innovative services company that provides comprehensive merchandising, marketing, and distribution solutions to retailers and brands in the United States and Canada [3] - The company emphasizes improving brand experiences and transforming retail spaces through a unique combination of scale and flexibility [3]

Summary of Spark Group Conference Call Company Overview - **Company Name**: Spark Group - **Ticker Symbol**: SGRP - **Industry**: Retail Services and Merchandising - **Key Executives**: Mike Matakounis (CEO), William Lanain (Chief Strategy and Growth Officer) [3][4] Core Business and Services - Spark Group provides merchandising services, remodel services, and product assembly for retailers and brands, focusing on outsourcing labor through technology [5][6] - The company has divested from several international markets to concentrate on the U.S. and Canada, doubling its business size in these regions over the last four years [6][7] Market Dynamics - Retailers face ongoing challenges with inventory accuracy and fulfillment, especially as they utilize stores as fulfillment centers for digital sales [11][12] - There is a growing demand for flexible labor solutions rather than fixed labor, as retailers seek to optimize their workforce amidst rising labor costs [13][14] Technology and Innovation - Spark Group is leveraging technology and AI to enhance its services, including real-time data capture and analysis of shelf conditions [8][19] - The company has transitioned its systems to the cloud, allowing for scalable operations and improved data management [18][48] Financial Performance - Revenue reported at $73 million, with a strong EBITDA margin and a cash position of $14 million as of June [25] - The company has a pipeline of $200 million in potential business conversations with brands and retailers [23] Strategic Focus - Spark Group aims to expand EBITDA margins, increase net income, and enhance shareholder returns while maintaining a low capital expenditure model [11][41] - The company is focused on optimizing internal operations and exploring AI solutions to improve efficiency [38][48] Client Relationships - Spark Group has long-standing relationships with major retailers, including Walmart, Home Depot, and Dollar General, providing services that address their labor optimization challenges [10][22][46] Recent Developments - The company faced a terminated acquisition offer from Highwire Capital at $2.50 per share, resulting in a $2 million termination penalty, which is currently being pursued [26][32] - Spark Group has exited eight international joint ventures, strengthening its focus on the U.S. and Canadian markets [20][21] Conclusion - Spark Group is positioned to capitalize on the evolving retail landscape by providing innovative solutions that address inventory management and labor optimization challenges, with a clear strategy for growth and operational efficiency [39][40]

Core Insights - SPAR Group, Inc. will participate in the 16th Annual Midwest IDEAS Investor Conference on August 27, 2025 [1] - The company will host one-on-one investor meetings and a presentation scheduled from 11:30 AM to 12:05 PM CT [2] - The presentation will be webcast live and available for replay shortly after [2] Company Overview - SPAR Group is a leading provider of merchandising and marketing services in North America with over 50 years of experience [3] - The company conducts an average of 30,000+ store visits weekly and maintains long-term relationships with major manufacturers and retailers [3] - SPAR Group's unique combination of scale, merchandising, and marketing expertise distinguishes it from competitors [3]

[PART I: FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls and procedures [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents SPAR Group's unaudited condensed consolidated financial statements, including operations, balance sheets, equity, and cash flows, with explanatory notes [Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For Q2 2025, SPAR Group reported a net loss of $1 thousand, improving from a $3.4 million loss in 2024, while achieving a $461 thousand net income for the six months | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Revenues | $38,629 | $43,402 | $72,671 | $92,799 | | Gross Profit | $9,062 | $8,964 | $16,338 | $18,676 | | Operating Income (Loss) | $715 | $(966) | $1,751 | $7,723 | | Income (Loss) before Income Tax Expense | $119 | $(1,260) | $695 | $6,945 | | Net Income (Loss) | $(1) | $(3,443) | $461 | $3,737 | | Net Income (Loss) attributable to SPAR Group, Inc. | $(1) | $(3,891) | $461 | $2,735 | | Basic EPS attributable to SPAR Group, Inc. | $0.00 | $(0.17) | $0.02 | $0.11 | | Diluted EPS attributable to SPAR Group, Inc. | $0.00 | $(0.16) | $0.02 | $0.12 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $71.6 million, driven by accounts receivable, while total liabilities rose to $46.7 million due to higher credit lines | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $13,929 | $18,221 | | Accounts receivable, net | $44,370 | $24,766 | | Total current assets | $60,558 | $45,996 | | Total assets | $71,560 | $56,431 | | Accounts payable | $10,632 | $8,767 | | Lines of credit and short-term loans | $24,701 | $16,082 | | Total current liabilities | $44,618 | $30,050 | | Total liabilities | $46,668 | $32,125 | | Total stockholders' equity | $24,892 | $24,306 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased from $24.3 million to $24.9 million by June 30, 2025, driven by net income and other comprehensive income | Metric (in thousands) | Balance at January 1, 2025 | Balance at June 30, 2025 | | :-------------------- | :------------------------- | :----------------------- | | Common Stock Amount | $234 | $234 | | Treasury Stock Amount | $(2,075) | $(2,075) | | Additional Paid-In Capital | $19,886 | $19,940 | | Accumulated Other Comprehensive Loss | $(1,198) | $(1,127) | | Retained Earnings | $7,459 | $7,920 | | Total Stockholders' Equity | $24,306 | $24,892 | - Share-based compensation contributed **$54 thousand** to additional paid-in capital during the six months ended June 30, 2025[12](index=12&type=chunk) - Net income of **$462 thousand** was recognized for the period ending March 31, 2025, and a net loss of **$1 thousand** for the period ending June 30, 2025[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, operating activities used $11.9 million cash, a shift from prior year's $170 thousand provided, while financing provided $8.5 million | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(11,900) | $170 | | Net cash (used in) provided by investing activities | $(959) | $10,962 | | Net cash (used in) provided by financing activities | $8,547 | $(109) | | Net change in cash, cash equivalents | $(4,292) | $10,976 | | Cash and cash equivalents at end of period | $13,929 | $21,695 | - The significant increase in cash used in operating activities for 2025 was largely due to a **$19,012 thousand** increase in accounts receivable[17](index=17&type=chunk) - Investing activities in 2024 included **$7,982 thousand** from the sale of joint ventures, which was not present in 2025[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section details accounting policies, financial instruments, and transactions, providing crucial context for understanding the company's financial position and performance [1. Nature of the Business](index=9&type=section&id=1.%20Nature%20of%20the%20Business) SPAR Group, Inc. is a global merchandising and brand marketing services company serving retailers, manufacturers, and distributors worldwide - SPAR Group, Inc. provides global merchandising and brand marketing services to retailers, consumer goods manufacturers, and distributors[19](index=19&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Financial statements adhere to U.S. GAAP and SEC interim rules, consolidating subsidiaries and using management estimates, with recent adoptions of new accounting pronouncements - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial statements[20](index=20&type=chunk) - The Company consolidates its wholly-owned subsidiaries, and all significant intercompany transactions are eliminated[22](index=22&type=chunk) - As of March 31, 2025, the Company's reportable segments changed to one segment due to the exit of substantially all international operations during 2024[24](index=24&type=chunk) - The Company adopted ASU No. 2023-05 (Business Combinations – Joint Venture Formations) effective January 1, 2025, which did not have a material effect as the Company has exited all previous joint ventures[25](index=25&type=chunk)[26](index=26&type=chunk) - The Company adopted ASU 2023-07 (Segment Reporting) effective January 1, 2024, for fiscal year and January 1, 2025, for interim periods, requiring enhanced segment disclosure[27](index=27&type=chunk) - The Company is evaluating the impact of ASU No. 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) which are effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively[28](index=28&type=chunk)[29](index=29&type=chunk) Accounts Receivable, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------- | :------------ | :---------------- | | Trade | $29,368 | $12,059 | | Unbilled | $12,506 | $9,284 | | Non-trade| $2,738 | $3,834 | | Gross Accounts Receivable | $44,612 | $25,177 | | Less allowance for credit losses | $(242) | $(411) | | Accounts Receivable, net | $44,370 | $24,766 | Property and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------- | :------------ | :---------------- | | Equipment | $4,025 | $4,060 | | Furniture and fixtures | $668 | $591 | | Leasehold improvements | $387 | $384 | | Capitalized internal use software costs | $20,610 | $18,967 | | Gross property and equipment | $25,690 | $24,002 | | Less accumulated depreciation and amortization | $(22,725) | $(21,987) | | Property and equipment, net | $2,965 | $2,015 | Intangible Assets, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------- | :------------ | :---------------- | | Trade names | $900 | $900 | | Patents | $870 | $870 | | Gross intangible assets | $1,770 | $1,770 | | Less accumulated amortization | $(995) | $(929) | | Intangible assets, net | $775 | $841 | Accrued Expenses and Other Current Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------- | :------------ | :---------------- | | Taxes payable | $519 | $137 | | Accrued salaries and wages | $3,737 | $1,644 | | Accrued third party labor | $2,321 | $1,314 | | Other | $439 | $438 | | Total | $7,016 | $3,533 | [3. Debt](index=14&type=section&id=3.%20Debt) The Company's debt includes a secured revolving credit facility with North Mill Capital, extended to October 2025, and seller notes, with all debt covenants in compliance as of June 30, 2025 - The North Mill Credit Facility (US and Canada Revolving Credit Facility) was extended from October 10, 2024, to **October 10, 2025**[43](index=43&type=chunk) - The Company is evaluating refinancing options and plans to secure an extension or replacement financing before the maturity date of the NM Credit Facility[43](index=43&type=chunk) - As of June 30, 2025, the aggregate interest rate on the NM Credit Facility was **9.40%** per annum, with an outstanding loan balance of approximately **$24.7 million**[45](index=45&type=chunk) - The NM Loan Parties were in compliance with all financial and other restrictive covenants as of June 30, 2025[46](index=46&type=chunk) - The Company acquired the remaining minority joint venture interests of Resource Plus and its sister companies for a total of **$3 million**, with **$2.3 million** remaining outstanding as of June 30, 2025, reported as a promissory note[47](index=47&type=chunk) Summary of Company's Lines of Credit (in thousands) | Lender | Interest Rate (June 30, 2025) | Balance (June 30, 2025) | Interest Rate (December 31, 2024) | Balance (December 31, 2024) | | :----- | :---------------------------- | :---------------------- | :-------------------------------- | :-------------------------- | | USA / Canada North Mill Capital | 9.40% | $24,701 | 9.40% | $16,082 | | Total | | $24,701 | | $16,082 | Summary of Company's Seller Notes (in thousands) | Note Type | Interest Rate (June 30, 2025) | Balance (June 30, 2025) | Interest Rate (December 31, 2024) | Balance (December 31, 2024) | | :-------- | :---------------------------- | :---------------------- | :-------------------------------- | :-------------------------- | | USA - Resource Plus Seller Notes (Current) | 4.30% | $500 | 4.30% | $500 | | USA - Resource Plus Seller Notes (Long-term) | 4.30% | $1,753 | 4.30% | $1,722 | | Total | | $2,253 | | $2,222 | Summary of Unused Company Credit and Other Debt Facilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------- | :------------ | :---------------- | | United States / Canada | $1,179 | $13,310 | | Total Unused Availability | $1,179 | $13,310 | [4. Commitments and Contingencies](index=17&type=section&id=4.%20Commitments%20and%20Contingencies) The Company is engaged in routine legal and administrative proceedings, with management expecting no material adverse effect on financial condition or operations - Management believes that the resolution of current legal actions and administrative proceedings will not have a material adverse effect on the Company[51](index=51&type=chunk) [5. Common Stock](index=17&type=section&id=5.%20Common%20Stock) As of June 30, 2025, 47 million common shares were authorized, with rights subject to preferred stock, no cash dividends paid, and 1 million shares repurchased in April 2024 - As of June 30, 2025, **47,000,000** shares of common stock were authorized, with **23,489,752** shares issued and outstanding[10](index=10&type=chunk) - No cash dividends were declared or paid on common stock during the periods presented[52](index=52&type=chunk) - Under the 2024 Stock Repurchase Program, **1,000,000** shares of common stock were repurchased from William H. Bartels, a director and significant stockholder, at **$1.80 per share** on April 30, 2024[53](index=53&type=chunk) [6. Preferred Stock](index=17&type=section&id=6.%20Preferred%20Stock) The Corporation is authorized to issue 3 million preferred shares, with all Series B convertible preferred stock converting to common stock by March 31, 2024 - The Corporation is authorized to issue **3,000,000** shares of preferred stock[54](index=54&type=chunk) - All **854,753** shares of Series B convertible preferred stock vested and converted into **1,282,129** shares of common stock during 2023, with the process completed by March 31, 2024[57](index=57&type=chunk) - Series B convertible preferred stock did not carry voting or dividend rights and converted at a **1-to-1.5 ratio** to common stock upon vesting[56](index=56&type=chunk) [7. Share-Based Compensation](index=17&type=section&id=7.%20Share-Based%20Compensation) Share-based compensation for stock options and RSUs decreased in H1 2025, while Phantom Stock Awards expense significantly increased due to vesting Share-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock Options | $0 | $35 | $2 | $70 | | Restricted Stock Units | $25 | $93 | $50 | $186 | | Phantom Stock Awards | $414 | $0 | $466 | $0 | - Phantom Stock Units, issued to executives in 2022 and 2023, represent the right to receive cash payments based on the fair market value of common stock at vesting and are classified as liabilities[62](index=62&type=chunk)[63](index=63&type=chunk) [8. Related Party Transactions](index=19&type=section&id=8.%20Related%20Party%20Transactions) Related party transactions involve director benefits, minority interest acquisitions, and marketing services, alongside the strategic divestiture of several international joint ventures in 2024 - Retirement benefits for William H. Bartels, a director and founder, totaling **$1.1 million** over five years, concluded on December 31, 2024[66](index=66&type=chunk) - The Company repurchased **1,000,000** shares of common stock from William H. Bartels for **$1.80 per share** on April 30, 2024[67](index=67&type=chunk) - The Company acquired the remaining minority joint venture interests of Resource Plus and its sister companies from Mr. Richard Justus for **$3 million**, with **$2.3 million** outstanding as of June 30, 2025[68](index=68&type=chunk) - Expenses for marketing and advertising services from WB Marketing, Inc. (now Qantm Creative), an entity owned by the CEO's wife, were approximately **$170 thousand** for the six months ended June 30, 2025, up from **$87 thousand** in 2024[70](index=70&type=chunk) - The Company sold its **51%** ownership interest in its South African Joint Venture for approximately **$7.7 million** (**80%** paid upon closing) in April 2024, recognizing a pre-tax gain of approximately **$7.2 million**[73](index=73&type=chunk)[74](index=74&type=chunk) - The Company sold its **51%** ownership interest in its Chinese Joint Venture for **$200,000** in April 2024, recognizing a loss of **$1.1 million**[75](index=75&type=chunk) - The Company sold its Brazilian holding company (owning **51%** interest in its Brazilian joint venture) for approximately **$11.8 million** in June 2024, recognizing a loss of **$1.2 million**[76](index=76&type=chunk) - The Company sold its **100%** ownership interest in SPAR Japan for **$500,000** in August 2024, recognizing a loss of **$0.7 million**[77](index=77&type=chunk) - The Company sold its **51%** ownership interest in its Indian Joint Venture for **$500,000** in September 2024, recognizing a loss of **$1.4 million**[78](index=78&type=chunk) - The Company sold its **51%** ownership interest in its Mexican Joint Venture for **$417,000** in December 2024, recognizing a loss of **$1.1 million**[79](index=79&type=chunk) [9. Segment Information](index=21&type=section&id=9.%20Segment%20Information) After exiting most international operations in 2024, SPAR Group now operates as a single segment, with most revenue and assets concentrated in the United States and Canada - The Company operates as one operating segment, with the CEO reviewing financial information on a consolidated basis[80](index=80&type=chunk) Long-Lived Assets (in thousands) | Geographic Region | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | United States | $4,858 | $4,014 | | Canada | $418 | $465 | | Total long lived assets | $5,276 | $4,479 | Geographic Net Revenue (in thousands) | Geographic Region | Three Months Ended June 30, 2025 | % of Consolidated Net Revenue (3M 2025) | Three Months Ended June 30, 2024 | % of Consolidated Net Revenue (3M 2024) | Six Months Ended June 30, 2025 | % of Consolidated Net Revenue (6M 2025) | Six Months Ended June 30, 2024 | % of Consolidated Net Revenue (6M 2024) | | :---------------- | :------------------------------- | :-------------------------------------- | :------------------------------- | :-------------------------------------- | :----------------------------- | :-------------------------------------- | :----------------------------- | :-------------------------------------- | | United States | $35,258 | 91.3% | $32,993 | 76.0% | $66,135 | 91.0% | $61,816 | 66.6% | | Canada | $3,371 | 8.7% | $3,900 | 9.0% | $6,536 | 9.0% | $7,169 | 7.7% | | Total net revenue | $38,629 | 100.0% | $43,402 | 100.0% | $72,671 | 100.0% | $92,799 | 100.0% | [10. Leases](index=23&type=section&id=10.%20Leases) The Company leases office space and equipment, with total lease costs decreasing to $425 thousand in H1 2025, and a weighted-average remaining lease term of 2.86 years Lease Costs (in thousands) | Lease Costs | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $57 | $93 | $129 | $269 | | Short-term lease cost | $272 | $128 | $296 | $299 | | Total lease cost | $329 | $221 | $425 | $568 | Balance Sheet Information Related to Leases (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------- | :------------ | :---------------- | | Operating lease right-of-use assets | $477 | $630 | | Current portion of operating lease liabilities | $180 | $276 | | Non-current portion of operating lease liabilities | $297 | $353 | | Total Operating lease liabilities | $477 | $629 | - Weighted average remaining lease term for operating leases is **2.86 years** as of June 30, 2025, with a weighted average discount rate of **8.06%**[84](index=84&type=chunk) [11. Earnings Per Share](index=25&type=section&id=11.%20Earnings%20Per%20Share) Basic and diluted EPS for Q2 2025 were $0.00, an improvement from a loss in 2024, while six-month EPS decreased to $0.02 from $0.11-$0.12 in 2024 | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.00 | $(0.17) | $0.02 | $0.11 | | Diluted EPS | $0.00 | $(0.16) | $0.02 | $0.12 | | Weighted-average common shares outstanding – basic | 23,470 | 23,786 | 23,460 | 23,670 | | Weighted-average common shares outstanding – diluted | 23,499 | 24,010 | 23,532 | 23,873 | [12. Subsequent Events](index=25&type=section&id=12.%20Subsequent%20Events) Post-period, on August 12, 2025, the Company extended its North Mill Capital credit facilities to October 2027, increasing the total facility size to $36 million - On August 12, 2025, the Company agreed to extend its credit facilities with North Mill Capital through **October 10, 2027**[87](index=87&type=chunk) - The total credit facility size will increase to **$36 million** (**$30 million** for the US facility and **$6 million** for the Canadian facility)[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, including key performance drivers, non-GAAP measures, liquidity, the impact of international divestitures, and internal control remediation efforts [Forward-Looking Statements](index=26&type=section&id=Forward-Looking%20Statements) This section warns that forward-looking statements are subject to risks and uncertainties, and actual results may differ materially, with no obligation for public updates - The report contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially from expectations[89](index=89&type=chunk)[91](index=91&type=chunk) - The Company does not intend to publicly update or revise any forward-looking statements[92](index=92&type=chunk) [Overview of Our Business](index=27&type=section&id=Overview%20of%20Our%20Business) SPAR Group, a leading merchandising and brand marketing services company in North America, strategically exited international ventures in 2024 to enhance client sales and efficiency - SPAR Group is a leading merchandising and brand marketing services company[94](index=94&type=chunk) - As of June 30, 2025, the Company operates in the United States and Canada, having strategically exited joint ventures in Mexico, Brazil, South Africa, China, Japan, and India during 2024[95](index=95&type=chunk) - The Company's goal is to drive sales, margins, and operating efficiency for brand and retail clients through specialized services, including new product launches, promotional displays, fixture assembly, stock availability, store renovations, and distribution center optimization[94](index=94&type=chunk)[97](index=97&type=chunk) [EBITDA and Adjusted EBITDA](index=27&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) EBITDA and Adjusted EBITDA are non-GAAP measures for operating performance, with Consolidated Adjusted EBITDA decreasing to $1.3 million for Q2 2025 and $2.8 million for the six months - EBITDA and Adjusted EBITDA are non-GAAP measures used to compare operating performance by excluding non-recurring items[99](index=99&type=chunk)[100](index=100&type=chunk) Consolidated Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consolidated EBITDA | $1,128 | $41 | $2,531 | $10,124 | | Consolidated Adjusted EBITDA | $1,313 | $1,905 | $2,809 | $5,289 | | Adjusted EBITDA attributable to SPAR Group, Inc. | $1,313 | $1,380 | $2,809 | $3,846 | - Adjusted EBITDA has limitations as an analytical tool, as it does not reflect cash expenditures, working capital changes, debt service, or non-cash compensation[104](index=104&type=chunk) [RESULTS OF OPERATIONS](index=28&type=section&id=RESULTS%20OF%20OPERATIONS) Q2 and H1 2025 results show decreased net revenues and cost of revenues due to international exits, with improved gross profit margins and increased Q2 operating income [For the three months ended June 30, 2025, compared to the three months ended June 30, 2024](index=28&type=section&id=For%20the%20three%20months%20ended%20June%2030%2C%202025%2C%20compared%20to%20the%20three%20months%20ended%20June%2030%2C%202024) Q2 2025 net revenues decreased 11.0% to $38.6 million due to international exits, yet gross profit slightly increased, and operating income became positive | Metric (in thousands) | 2025 ($) | 2025 (%) | 2024 ($) | 2024 (%) | | :-------------------- | :------- | :------- | :------- | :------- | | Net revenues | 38,629 | 100.0% | 43,402 | 100.0% | | Total cost of revenue | 29,567 | 76.5% | 34,438 | 79.4% | | Gross profit | 9,062 | 23.5% | 8,964 | 20.6% | | Selling, general and administrative expense | 7,934 | 20.5% | 8,068 | 18.6% | | Operating income (loss) | 715 | 1.9% | (966) | (2.3)% | | Income (loss) before income tax expense | 119 | 0.3% | (1,260) | (3.0)% | | Loss from continuing operations | (1) | 0.0% | (2,194) | (5.1)% | | Net loss | (1) | 0.0% | (3,443) | (8.0)% | - Net revenues decreased by **$4.8 million** (**11.0%**) due to the exit of Mexico, China, Japan, and India operations in late 2024[106](index=106&type=chunk) - Cost of revenues decreased by **$4.9 million** (**14.1%**), improving as a percentage of net revenue from **79.4%** to **76.5%**[107](index=107&type=chunk)[108](index=108&type=chunk) - Selling, general, and administrative expenses decreased by **$0.2 million**, primarily due to the exit of international operations[109](index=109&type=chunk) - Income tax expense for Q2 2025 was **$0.1 million** with an effective rate of **100.8%**, differing from the statutory rate due to permanent differences[113](index=113&type=chunk) [For the six months ended June 30, 2025, compared to the six months ended June 30, 2024](index=31&type=section&id=For%20the%20six%20months%20ended%20June%2030%2C%202025%2C%20compared%20to%20the%20six%20months%20ended%20June%2030%2C%202024) H1 2025 net revenues decreased 21.7% to $72.7 million due to international divestitures, but the company achieved net income from continuing operations and improved cost of revenues | Metric (in thousands) | 2025 ($) | 2025 (%) | 2024 ($) | 2024 (%) | | :-------------------- | :------- | :------- | :------- | :------- | | Net revenues | 72,671 | 100.0% | 92,799 | 100.0% | | Total cost of revenue | 56,333 | 77.5% | 74,123 | 79.9% | | Gross profit | 16,338 | 22.5% | 18,676 | 20.1% | | Selling, general and administrative expense | 13,807 | 19.0% | 15,773 | 17.0% | | Operating income | 1,751 | 2.4% | 7,723 | 8.3% | | Income before tax expense | 695 | 1.0% | 6,945 | 7.5% | | Income from continuing operations | 461 | 0.6% | 4,618 | 5.0% | | Net income | 461 | 0.6% | 3,737 | 4.0% | - Net revenues decreased by **$20.1 million** (**21.7%**) due to the exit of South Africa, Mexico, China, Japan, and India operations in late 2024[115](index=115&type=chunk) - Cost of revenues decreased by **$17.8 million** (**24.0%**), improving as a percentage of net revenue from **79.9%** to **77.5%**[117](index=117&type=chunk)[118](index=118&type=chunk) - Selling, general, and administrative expenses decreased by **$2.0 million**, primarily due to the exit of international operations[119](index=119&type=chunk) - Income tax expense for the six months ended June 30, 2025, was **$0.2 million** with an effective rate of **33.7%**, compared to **$2.3 million** with a **33.5%** effective rate in 2024[123](index=123&type=chunk) [Critical Accounting Estimates](index=32&type=section&id=Critical%20Accounting%20Estimates) Financial statement preparation involves management estimates and judgments, which, while believed reasonable, may differ from actual results due to inherent uncertainties - The preparation of financial statements requires management to make estimates and judgments, which may differ from actual results[124](index=124&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The Company expects sufficient liquidity for 12 months, contingent on credit facility extension, with operating cash flow shifting to negative and financing activities providing significant cash in 2025 - The Company expects current credit facilities, projected operations, and other financing to be sufficient for liquidity over the next 12 months, pending an extension or replacement of credit facilities[126](index=126&type=chunk) - Delays in receivable collection, reduced business from major clients, or economic downturns could materially affect the Company's liquidity[126](index=126&type=chunk) Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :----------------------------- | :----------------------------- | | Operating Activities | $(11,900) | $170 | | Investing Activities | $(959) | $10,962 | | Financing Activities | $8,547 | $(109) | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) SPAR Group, Inc., as a smaller reporting company, is exempt from providing quantitative and qualitative market risk disclosures - SPAR Group, Inc. is a smaller reporting company and is not required to provide disclosures about market risk[130](index=130&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of June 30, 2025, due to material weaknesses in financial statement close processes and non-recurring transactions, with remediation efforts underway including ERP implementation and team centralization - Disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[131](index=131&type=chunk) - Material weaknesses include ineffective controls related to the financial statement close process (completeness and accuracy of reconciliations, segment disclosures) and non-recurring transactions (deconsolidation and sale of international components)[132](index=132&type=chunk)[133](index=133&type=chunk) - Remediation efforts include implementing a new ERP system (live January 1, 2025), hiring an experienced Assistant Controller (January 1, 2025), consolidating the finance and accounting team, and simplifying the organizational structure by divesting six foreign joint venture operations[134](index=134&type=chunk) - No other material changes in internal controls over financial reporting occurred during the three months ended June 30, 2025, beyond the described remediation efforts[136](index=136&type=chunk) [PART II: OTHER INFORMATION](index=36&type=section&id=PART%20II%3A%20OTHER%20INFORMATION) This section addresses legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and required exhibits [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The Company is engaged in routine legal and administrative proceedings, with management expecting no material adverse effect on financial condition or operations - Management does not anticipate that the resolution of ongoing legal and administrative proceedings will have a material adverse effect on the Company[137](index=137&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the Company's risk factors have occurred since the filing of its 2024 Annual Report on Form 10-K/A - No material changes to the Company's risk factors have occurred since the 2024 Annual Report on Form 10-K/A[139](index=139&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the Company for the current reporting period [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the current reporting period [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the current reporting period [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the Company for the current reporting period [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Exhibits include CEO and CFO certifications (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act) and Inline XBRL documents[146](index=146&type=chunk) [SIGNATURES](index=38&type=section&id=SIGNATURES) This section contains the required signatures for the filing

Core Insights - SPAR Group, Inc. reported a strong second quarter with revenues of $38.6 million, reflecting a 13.5% sequential increase from the first quarter and a 5% increase year-over-year for the continuing U.S. and Canada businesses [2][9] - The company's gross margin improved to 23.5%, up from 21.4% in the first quarter and 20.6% in the same quarter last year [9] - SPAR Group has a robust pipeline with over $200 million in future business opportunities [2] Financial Performance - For the second quarter of 2025, net revenues were $38.6 million, a 13.5% increase from the first quarter, while net revenues for the first half of 2025 totaled $72.7 million [9] - The net income attributable to SPAR Group was essentially break-even at $0.00 per diluted share, compared to a loss of $3.9 million or ($0.16) per diluted share in the prior year quarter [9] - Adjusted EBITDA for the second quarter was $1.3 million, or 3.4% of sales, compared to $1.4 million, or 3.2% of sales in the prior year quarter [9] Liquidity and Financial Position - As of June 30, 2025, SPAR Group had total liquidity of $15.1 million, including $13.9 million in cash and cash equivalents [7] - The company ended the period with net working capital of $15.9 million [7] - Net cash used by operating activities for the first half of 2025 was $11.9 million [7] Operational Highlights - The company is well-positioned with a solid balance sheet and available liquidity, indicating a strong foundation for future growth [3] - SPAR Group has been focusing on expanding its services in North America, leveraging over 50 years of experience in merchandising and marketing [8]

Company Performance - SPAR Group, Inc. (SGRP) experienced a decline of 2.66% in its stock price, closing at $1.10, which was less than the S&P 500's daily loss of 0.13% [1] - Over the past month, SPAR Group's shares appreciated by 15.31%, outperforming the Business Services sector's loss of 0.51% and the S&P 500's gain of 3.39% [1] Earnings Estimates - For the upcoming earnings disclosure, Zacks Consensus Estimates project earnings of $0.12 per share and revenue of $0 million, indicating no change from the previous year [2] - Recent changes to analyst estimates for SPAR Group suggest a positive outlook, reflecting analyst optimism regarding the company's business and profitability [3] Zacks Rank and Valuation - SPAR Group currently holds a Zacks Rank of 3 (Hold), with the consensus EPS projection remaining stagnant over the past 30 days [5] - The company has a Forward P/E ratio of 9.42, which is a discount compared to its industry's Forward P/E of 18.33 [6] - The Business Services industry, which includes SPAR Group, has a Zacks Industry Rank of 91, placing it in the top 37% of over 250 industries [6]