SPAR (US:SGRP)2024-05-15 17:50Financial Data and Key Metrics Changes - For Q1 2024, consolidated revenue increased by 6.7% year-over-year, totaling $68.7 million, with net income attributable to SPAR at $6.6 million or $0.28 per diluted share, compared to $0.04 per diluted share in the prior year [16][44][57] - SG&A expenses decreased by nearly $850,000, representing a 220 basis point improvement as a percentage of revenue, totaling $9.6 million or 14% of revenues [16][17] - Consolidated EBITDA for Q1 2024 was $10.1 million, significantly up from $3.7 million in the prior year [44][57] Business Line Data and Key Metrics Changes - The Americas segment saw a revenue increase of 12.5%, while EMEA and APAC segments experienced declines of 14.7% and 5.5%, respectively [43] - The US business, including the Resource Plus joint venture, grew by 17%, and Canada grew by 79% [42] - The remodeling business in the US accelerated, growing by 98% compared to the same quarter last year [42] Market Data and Key Metrics Changes - The South African business experienced a significant drop in gross margin by 910 basis points, contributing to overall margin compression [4][5] - The company exited several international markets, including South Africa and Brazil, to simplify operations and focus on core markets [8][9] Company Strategy and Development Direction - The company is focused on simplifying its operations and has exited several international markets to enhance shareholder value [8][9] - The core business remains in merchandising, remodeling, and distribution, primarily in the US and Canada, with a strong emphasis on client-centric services [10][11] - The company aims to capitalize on macro trends such as low unemployment and retail staffing challenges to drive growth [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future, highlighting strong demand for services in the US and Canada and a positive response from clients regarding recent strategic changes [17][35] - The management noted that the remodeling business is recovering faster than expected, driven by pent-up demand from clients [50][63] Other Important Information - The company reported total worldwide liquidity of $21 million, with $16.6 million in cash and cash equivalents [6] - The company has announced a share buyback of 1 million shares from a major shareholder and acquired the balance of the Resource Plus joint venture [55] Q&A Session Summary Question: What caused the revenue increase despite selling off several businesses? - Management indicated that the core business is growing, with the US and Canada combined up 22%, and emphasized the strong performance of new clients [60][63] Question: What is the margin profile expected if the Brazilian business is exited? - Management confirmed that Brazilian gross margins are lower than those in Canada and the US, and exiting Brazil is expected to benefit overall margins [52] Question: What is the company's approach to capital allocation moving forward? - The company is considering both share repurchases and acquisitions, focusing on both large and small opportunities to enhance capabilities and shareholder value [25][53]