SPAR (SGRP) - 2025 Q2 - Quarterly Results

SPAR Group, Inc. Q1 2025 Earnings Release Executive Summary & Business Outlook The core US and Canada business saw 6% revenue growth and positive net income, supported by a record business pipeline exceeding $200 million - The core U.S. and Canada business grew 6% in revenue, with improved operating margins and reduced SG&A, leading to a net income of $0.5 million from continuing operations ($0.02 EPS)[3] - The company reports its largest-ever pipeline of new business opportunities, valued at over $200 million[3] - The merger agreement with Highwire Capital was terminated due to Highwire's inability to secure funding, and SPAR Group's Board intends to pursue the termination fee[4] - The 10-K and 10-Q filings were delayed because the company expected to be private following the merger and will be current upon submission of the 10-Q[5] First Quarter 2025 Financial Highlights The company reported $34.0 million in revenue, $0.5 million in net income from continuing operations, and maintained a solid liquidity position Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | Note | | :--- | :--- | :--- | :--- | | Net Revenues | $34.0M | $49.4M (incl. int'l JVs) | - | | Consolidated Gross Margin | 21.4% | 19.7% | Improvement YoY | | Net Income (Continuing Ops) | $0.5M | $6.6M | Q1 2024 included a $7.2M gain on sale | | Diluted EPS (Continuing Ops) | $0.02 | $0.26 | - | | Adjusted EBITDA | $1.5M | $2.5M | - | Financial Position as of March 31, 2025 | Metric | Value | | :--- | :--- | | Total Worldwide Liquidity | $23.4 million | | Cash and Cash Equivalents | $17.9 million | | Unused Availability | $5.5 million | | Net Working Capital | $15.7 million | Financial Statements Unaudited statements show decreased revenue due to divestitures but an improved gross margin percentage for Q1 2025 Condensed Consolidated Statements of Operations Q1 2025 revenue was $34.0 million, with net income falling to $0.5 million due to a large prior-year gain on a business sale Q1 2025 vs Q1 2024 Statement of Operations (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net revenues | $34,041 | $49,396 | | Gross profit | $7,275 | $9,712 | | Operating income | $1,036 | $8,671 | | Income from continuing operations | $462 | $6,796 | | Net income attributable to SPAR Group, Inc. | $462 | $6,627 | | Diluted EPS from continuing operations | $0.02 | $0.26 | - The significant decrease in operating and net income compared to the prior year is primarily due to a one-time $7.2 million gain on the sale of a business recorded in Q1 2024[18] Condensed Consolidated Balance Sheets Total assets grew to $70.2 million, driven by higher accounts receivable, while liabilities also increased Balance Sheet Comparison (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $59,062 | $45,996 | | Total assets | $70,164 | $56,431 | | Total current liabilities | $43,402 | $30,050 | | Total liabilities | $45,458 | $32,125 | | Total stockholders' equity | $24,706 | $24,306 | - The increase in current assets was primarily due to a rise in Accounts Receivable to $38.2 million from $24.8 million, while the increase in current liabilities was driven by higher Lines of Credit ($20.4 million vs $16.1 million) and Accounts Payable ($13.8 million vs $8.8 million)[20] Condensed Consolidated Statements of Cash Flows The company experienced a $4.0 million cash outflow from operations, primarily due to an increase in accounts receivable Cash Flow Summary for Three Months Ended March 31 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(4,044) | $615 | | Net cash used in investing activities | $(525) | $(878) | | Net cash provided by financing activities | $4,290 | $6,344 | | Net (decrease) increase in cash | $(279) | $5,910 | | Cash and cash equivalents at end of period | $17,942 | $16,629 | Reconciliation of GAAP to Non-GAAP Financial Measures The company reported Q1 2025 Adjusted Net Income of $0.5 million and Adjusted EBITDA of $1.5 million Adjusted Net Income Reconciliation (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income attributable to SPAR Group Inc. | $462 | $6,627 | | Adjustments to Consolidated EBITDA (net of taxes) | $73 | $(5,292) | | Adjusted Net income attributable to SPAR Group, Inc. | $535 | $1,335 | Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Consolidated net income from continuing operations | $462 | $6,796 | | Depreciation and amortization | $367 | $475 | | Interest expense | $469 | $475 | | Income tax expense | $114 | $1,393 | | Other adjustments (Gain on Sale, Strategic Review, etc.) | $84 | $(6,699) | | Adjusted EBITDA attributable to SPAR Group, Inc. | $1,496 | $2,466 | Company Overview SPAR Group is a leading merchandising and marketing services company in the US and Canada with over 50 years of experience - SPAR Group is a leading merchandising and marketing services company in North America[9] - The company has over 50 years of experience and averages more than 30,000 store visits weekly[9] Forward-Looking Statements This section contains a standard legal disclaimer regarding forward-looking statements and associated risks - The press release contains "forward-looking statements" within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995[11] - Investors are advised to carefully consider the company's risk factors and other disclosures in its SEC reports, as actual performance may differ materially from expectations[13][14]