SPAR (SGRP) - 2024 Q1 - Quarterly Results

SPAR Group, Inc. Reports First Quarter 2024 Results Performance Overview SPAR Group reported strong Q1 2024 results, driven by U.S. remodel business recovery and Canadian performance, while simplifying its structure Q1 2024 Key Financial Highlights (YoY) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Consolidated Revenues | $68.7 million | $64.4 million | +6.7% | | Consolidated Operating Income | $9.6 million | $3.2 million | +204% | | Diluted EPS | $0.28 | $0.04 | +600% | - The strong financial performance was attributed to the U.S. remodel business recovering more quickly than planned and continued excellent results from the Canadian business[2] - The company is significantly simplifying its structure through strategic divestitures, acquisition of minority interest in its U.S. joint venture, and share repurchases[2] Detailed Financial Analysis Q1 2024 net revenues increased, driven by Americas growth, while operating income surged due to a significant one-time gain from strategic divestitures Q1 2024 Net Revenues by Segment | Segment | Revenue (Q1 2024) | % of Total | YoY Change | | :--- | :--- | :--- | :--- | | Americas | $54.7 million | 79.6% | +12.5% | | EMEA | $8.3 million | 12.0% | -14.7% | | APAC | $5.8 million | 8.4% | -5.5% | | Total | $68.7 million | 100% | +6.7% | - Gross profit margin declined from 22.0% to 18.3% YoY, caused by a mix shift to the remodeling business with higher costs and margin pressure in South Africa from government-mandated wage increases[4] - Operating income rose to $9.6 million, which included a $7.2 million gain on the sale of business from strategic divestitures[5] Q1 2024 GAAP vs. Non-GAAP Net Income | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income (GAAP) | $6.6 million | $866 thousand | | Diluted EPS (GAAP) | $0.28 | $0.04 | | Adjusted Net Income (Non-GAAP) | $1.3 million | $1.3 million | | Adjusted Diluted EPS (Non-GAAP) | $0.06 | $0.05 | Financial Position and Liquidity As of March 31, 2024, SPAR Group maintained a strong liquidity position with $21.0 million in total worldwide liquidity and $38.2 million in net working capital - Total worldwide liquidity was $21.0 million at the end of the quarter[10] - The company held $16.6 million in cash and cash equivalents[10] - Net cash provided by operating activities for the three months was $615 thousand[10] - The company ended the quarter with net working capital of $38.2 million[10] Financial Statements This section presents the company's condensed consolidated financial statements, detailing its performance and financial position Condensed Consolidated Statements of Income Q1 2024 net revenues grew, and operating income significantly increased to $9.6 million, primarily due to a $7.2 million gain on business sale, leading to a surge in net income Q1 2024 vs Q1 2023 Income Statement Highlights (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net revenues | $68,693 | $64,380 | | Gross profit | $12,542 | $14,138 | | Gain on sale of business | $(7,157) | - | | Operating income | $9,572 | $3,150 | | Net income attributable to SPAR Group, Inc. | $6,627 | $866 | | Diluted income per common share | $0.28 | $0.04 | Condensed Consolidated Balance Sheets As of March 31, 2024, total assets increased to $104.5 million, while total liabilities rose to $64.5 million, with stockholders' equity remaining flat Balance Sheet Summary (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $16,629 | $10,719 | | Total current assets | $93,194 | $76,109 | | Total assets | $104,531 | $90,281 | | Total current liabilities | $55,023 | $48,565 | | Total liabilities | $64,475 | $50,035 | | Total stockholders' equity | $40,056 | $40,246 | Condensed Consolidated Statements of Cash Flows For Q1 2024, net cash from operations was $615 thousand, with financing activities providing $6.3 million, leading to a $5.9 million net increase in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $615 | $2,936 | | Net cash used in investing activities | $(878) | $(343) | | Net cash provided by (used in) financing activities | $6,344 | $(628) | | Net increase in cash and cash equivalents | $5,910 | $1,908 | Supplemental Information This section provides supplemental financial information, including segment performance and GAAP to non-GAAP financial measure reconciliations Segment Performance In Q1 2024, the Americas segment was the standout performer with revenue increasing to $54.7 million and operating income jumping to $9.4 million, offsetting declines in other regions Segment Performance Q1 2024 vs Q1 2023 (in thousands) | Segment | Net Revenues (2024) | Net Revenues (2023) | Operating Income (2024) | Operating Income (2023) | | :--- | :--- | :--- | :--- | :--- | | Americas | $54,655 | $48,578 | $9,427 | $2,521 | | APAC | $5,761 | $6,100 | $(216) | $(192) | | EMEA | $8,277 | $9,702 | $361 | $821 | | Total | $68,693 | $64,380 | $9,572 | $3,150 | Reconciliation of GAAP to Non-GAAP Financial Measures The company uses non-GAAP measures to provide a clearer view of core performance, with Q1 2024 Adjusted Net Income at $1.3 million and Consolidated Adjusted EBITDA at $3.4 million - Non-GAAP measures are presented to supplement GAAP results by excluding items like one-time gains, restructuring costs, and other special items to better reflect core operating performance[26] Adjusted Net Income Reconciliation (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income attributable to SPAR Group Inc. | $6,627 | $866 | | Adjustments (net of taxes) | $(5,292) | $387 | | Adjusted Net income attributable to SPAR Group, Inc. | $1,335 | $1,253 | Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Consolidated Net Income | $7,181 | $1,777 | | Adjustments (Depreciation, Interest, Taxes, etc.) | $2,902 | $1,905 | | Consolidated EBITDA | $10,083 | $3,682 | | Further Adjustments (Gain on Sale, etc.) | $(6,699) | $490 | | Consolidated Adjusted EBITDA | $3,384 | $4,172 | | Adjusted EBITDA attributable to SPAR Group, Inc. | $2,466 | $2,896 | Other Disclosures This section provides additional disclosures, including conference call details, company overview, and cautionary notes on forward-looking statements Conference Call Information The company scheduled a conference call for May 15, 2024, at 10:00 a.m. Eastern Time to discuss its Q1 2024 results - A conference call to discuss Q1 2024 results was scheduled for May 15, 2024, at 10:00 a.m. Eastern Time[11] About SPAR Group, Inc. SPAR Group is a prominent global merchandising and marketing services company with over 50 years of experience, operating in more than eight countries - SPAR Group is a leading global merchandising and marketing services company with over 50 years of experience, operating in more than eight countries[12] Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements subject to various risks and uncertainties, where actual results may differ materially from expectations - The report contains 'forward-looking statements' which involve known and unknown risks and uncertainties[13][15] - Readers are advised to carefully consider these statements and the associated risk factors described in SEC filings and not to place undue reliance on them[15][16]