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SPAR Group Announces Financial Results for the Third Quarter Ended September 30, 2017

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WHITE PLAINS, N.Y., Nov. 14, 2017 (GLOBE NEWSWIRE) -- SPAR Group, Inc. (NASDAQ:SGRP), a leading supplier of retail merchandising, business technology and other marketing services in 10 countries throughout North America, Latin America, Asia Pacific and Africa, today announced financial results for the third quarter ended September 30, 2017.

Highlights for the three and nine month periods ended September 30, 2017, as compared to the same periods in the prior year include:

  • Revenue for the third quarter of 2017 increased $15.3 million, or 45.8 percent, to $48.8 million.  International operations contributed $11.6 million of the increase, primarily driven by its 2016 acquisition of Brazil, which contributed $9.3 million.  Domestic operations contributed $3.7 million of the year-over-year revenue growth.

  • Revenue for the nine month period ending September 30, 2017 increased $41.6 million, or 46.3 percent, to $131.4 million.  The growth in revenue was directly attributable to international operations, $33.8 million (primarily due to Brazil, $27.4 million).  Domestic operations contributed $7.8 million in revenue growth year over year.

  • Operating income for the third quarter increased $398,000, or 92.6%, to $828,000, compared to $430,000 for the same period last year.

  • Operating income for the nine month period ended September 30, 2017 increased $908,000, or 66%, to $2.3 million, compared to $1.4 million for the same period in 2016.

  • Net income attributable to SPAR Group for the third quarter of 2017 was $246,000, or $0.01 per diluted share, compared to a net loss of ($58,000), or ($0.00) per diluted share, during the third quarter of 2016.

  • Net income attributable to SPAR Group for the nine months ended September 30, 2017 was $346,000, or $0.02 per diluted share, compared to a net income of $84,000 or $0.00 per diluted share, for the same period in 2016.

Financial Results by Geography (in 000's)

  Three Months Ended September 30, %   Nine Months Ended September 30,
%
Revenue:   2017     2016 Change    2017    2016
Change
International                                                  $ 33,690   $ 22,106 52.4 %   $ 91,292   $ 57,513 58.7 %
Domestic   15,062     11,332 32.9 %     40,069     32,268 24.2 %
Total $   48,752   $   33,438 45.8 %   $   131,361   $   89,781 46.3 %


  Three Months Ended September 30,               Nine Months Ended September 30,
 
Net Income (loss):   2017     2016       2017   2016
           
International $ 3   $ (66 )               $ (186 )   $ 43    
Domestic   243     8       532       41    
Total $    246   $    (58 )   $    346     $    84    
                     
Earnings Per Basic and Diluted share:                      
  $    0.01   $        0.00     $
0.02     $   0.00     
                                                               

Commenting on third quarter results Chief Executive Officer, Christiaan Olivier said, "Since taking on the role as CEO a little more than two months ago, I am very encouraged by what I've seen. SPAR has a great foundation and multiple opportunities to enhance growth, profitability and shareholder value.  During this past quarter, the Company delivered significant top-line growth, as well as improved profitability.  Our domestic business was ahead of plan for the quarter, primarily due to significant project work from new and existing customers that were looking to position themselves well-ahead of the holiday season.  The incremental contribution from the acquisition in Brazil, combined with double-digit organic growth inside Brazil, as well as strong performance across nearly all our international markets led to 52% growth in our international business.  While gross margin performance was under pressure from a mix shift in our domestic operations and continued investment in Brazil, we delivered significant improvement in dollar terms at both the gross profit and net income lines."

"Accelerated timing of project work in the third quarter and difficult comparisons to strong fourth quarter performance last year, may make quarterly comparisons in our domestic business difficult during the fourth quarter.  Nevertheless, we are on track to deliver solid improvement during the second half of 2017." 

Margin Profile by Geography
Gross Margin:

  Three Months Ended September 30, Basis
Point
Nine Months Ended September 30, Basis
Point
  2017    2016  Change 2017   2016 Change
International 15.6%   19.3% (374) 16.7%   19.6% (293)
Domestic 23.5%   26.5% (300) 26.4%   28.5% (211)
Total 18.0%   21.8% (373) 19.6%   22.8% (316)

Operating Income as a % of Sales:

  Three Months Ended September 30,
Basis
Point
 
Nine Months Ended September 30, Basis
Point
  2017   2016  Change 2017   2016 Change
International 1.4%   2.8% (240) 1.7%   2.6% (206)
Domestic 2.3%   (1.6)% (690) 1.8%   (0.4)% (423)
Total 1.7%   1.3% (414) 1.7
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