SPAR (SGRP) 17 Apr 232022 Q4 Earnings call transcript

Good morning, and welcome to the SPAR Group's Fourth Quarter and Full Year Fiscal 2022 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded.

I'd now like to turn the conference over to Sandy Martin, with Three Part Advisors. ahead. go Please

and us operator, to everyone. appreciate results. We XXXX Thank the good SPAR joining year fiscal for quarter call Group you fourth you, and morning, Inc.'s review conference

call me the and Financial today Joining Chief the are Chief Mike company's Pato. Executive Calisto Antonio SPAR's Officer, Matacunas; Officer, on

not on the only section being page future of forward-looking statements Presentations like as financial Act of webcast or remind harbor is of accessed today's any at XXXX. statements our you call historical reading. of events performance the please that and Information statements can be be and speaks to be the that Reform through of pursuant any are may provisions Investor in Events Relations Securities this the facts, expectations today, or or so of This would time-sensitive date replay and accurate audio Private including as no transcript investors.sparinc.com. future recorded link of call also safe on the to advised made the made that longer I discussion information Litigation

detail and expressed to risks results was and Forward-looking company's and Exchange implied. Actual the are the other are from for our filings may in today in or issued Commission. company's statements. the refer those factors statements, and differ forward-looking uncertain outside Please earnings These control. press materially with that by the nature, their of release described on Securities disclosures uncertainties

Group found our forward-looking to can measures or to non-GAAP refer nearest the GAAP earnings assumes at to statements. publicly obligation end be any also update the may reconciliations no revise of financial release. SPAR Management measures and

the we today release website press Investor sparinc.com. at issued on earlier earnings section of the our Relations posted is Finally,

to Matacunas. the I call CEO, now like would the to Mike? company's And over turn Mike

today, we everyone. from institutional the good for line of will and remarks questions Sandy, morning, results. At open to analysts I end fiscal our our pleased XXXX the prepared you, am and Thank share investors.

for successfully strong, merchandising, reset United comparison our and also the primarily the XXXX strength Brazil. a other albeit Fiscal small Australia company. year and in our businesses, in which is States with was to grew transformational We distribution exceptional remodeling geographic services and footprint. was include

top XXXX make our predictability XX revenue, clients add are These of recurring the clients located which Americas. Our in to XX% up model. our long-standing and stability business primarily

I for with for and results. on will more speak objectives. met the our exceeded after performance XXXX, our details XXXX fiscal Antonio and and We the outlook company's year. established our pleased or we very about am opportunity provides for priorities pipeline XXXX I initiatives

macroeconomic line initiatives operational margin successfully dynamic a accomplished backdrop. Our and and in top were challenging

environment our efforts. and for work their robust proud SPAR our remained service last we and entire team year. throughout were of advance client to hard Demand and recruiting technology successful XXXX, to implementing and want I'm thank them dedication

revenue on to turning which our full record X.X% million, reported currency grew by results. basis. of year a Now $XXX constant We

year-over-year increase was quarter. fourth year This excludes a currency which reflects the basis. constant total XX.X% revenue $XX.X by impact, basis, the ago X.X% FX strong a on For million. revenue grew quarter, reported over a On the

XX.X%, quarter, and U.S. basis by and Americas which currency during increase constant momentum record or the $XX.X in reported Brazil. an grew segment The includes Americas fourth Mexico strong Our of and to segment was million, organically a due revenue of Americas Canada. on XX.X% also the the

and to grew over by U.S. $XX revenue. the million XX% Americas, the delivered in Within close

agreements. in new current Our core client business by clients with our merchandising the and the of services expansion in quarter grew fourth XX% addition

we're them working up preferred to country, categories, XX%, remodel over years, the the help XXX%. has division continues often more this a with the XX than more is and and it past partner together was as resets as than reset noting, in X stores. Our locations business largest doubled renovate remodel up The of worth retailers momentum and

of the across stores key continues convenience. reinventing to as industry remodel to business our as and continue invest box, and prospects bullish the We segments remain big drug on physical such discount,

the Our reported growth of XX% record Brazil joint venture quarter. in fourth

This strength wallet share expanded new is existing on business based winning and clients. for of an

Brazil grew XX%. we venture addition, In EBIT for by our

been Nivea our expanded with Adding X-year contract clients, for partner. reputation service Red including as with XXXX, of a we our have speaks We And international large and key logos XM. work positive new global have several in awarded Bull. companies to scope a

our down the million, expanded over prior reported Our South joint representing EMEA quarter. in Africa, X.X% a and constant on by XX.X% year $X.X venture segment basis revenue of currency

won multiyear on rand and renewed grew XXXX. have year's XX.X% EBIT agreements XX%. for new clients, U.S. increased in over We basis the reported of strengthening dollar of Organically, large by devalued the the strong last a EMEA EMEA a quarter, EBIT

due in million, revenue of reported of China $X.X XX%, offset of XX% declines XX%, million currency India Asia a increase of of XX.X%. albeit was revenue XX%, Pacific $X.X by declines represents revenue Australia, this declines down strong which segment XX.X% to or total decline joint constant On approximately in small venture. by basis, numbers a Japan

overall we up leverage bottom alternative revenue, approaches ensure exploring to Therefore, It on the value watch X% to improve makes for these it line. of are clients. our of APAC but focused are we is delivering businesses immaterial to continue our our to We approximately market. the

revenue in of quarter With the a solid XX%, to let's turn organic almost now margin. performance gross

XXX XX.X% last XX.X% was quarter basis fourth Our margin year, a to gross expansion. point compared

XX% XX% a basis year, profit to more than to business segment, in XX.X%, compared total of represented point a Americas grew the last XX.X% quarter from XXX margin year gross gross the ago. which improvement Our margin

technology to pricing, continues quarter. on the Our and productivity of be focus leverage during

reported points. Our a an margin, improvement XXX EMEA gross of XX.X% segment strong basis

pleased year. to that make this this reflected productivity continue merchandiser number. and quarter I'm fourth initiatives We in margin progress our on enhancement

our us, from up of China, The margin combined period. year-over-year down the delivered Notwithstanding our consolidated profit gross strength quarter, margin in in countries the fourth that same and year points XX% consolidated during basis impacted the Australia and gross in APAC, prior a gross quarter sequentially India the for from Japan, second XXX margin XX.X%, percent. drop XX.X% than better dollars a make gross APAC

We continue to the more strategy. profit, to there's pleased I'm and enhance continue margins, we will and with results focus on date. this gross believe pursue I opportunity to to

impairment reported onetime and we In period related of alternatives consolidated our majority fourth carving period. noise XXXX, segment, change paid we the our expenses income, the bit income well to onetime as loss APAC the of announcement. quarter these had $XXX,XXX, In from in out a goodwill expenses operating a recorded of strategic nonrecurring same the operating stockholders to the Relative the we numbers. of fair which a Without same in improved as last in XXXX, to expenses control. operating noncash and year in related noncash

press As these more I temporary focusing noted be leverage. we release, the to and in creating top gross stay operating while I effects expect profits on nature, expenses line, the and in improving growing

that, will view strategic will detailed on the then come about With I Antonio the and and my to Antonio turn over and I progress. results, wins call After our key share our covers opportunity results. to pipeline speak financial back review

filing international SEC everyone. notification involving error over XX-K our discovered controls with material This reporting, late March late required we financial an was after filing after we weakness corrected Form morning, filed accounting. good and Mike, Today, and triggered internal XXb-XX the a of you, the XX. on filing Thank that in our

Now turning the to results. financial

X.X%, includes Our $X.X million net $X.X revenue revenues fourth million, from $XX.X EMEA million which an million from from of of quarter XXXX totaled the increase APAC. Americas, $XX.X and

year, number from strengthened and significant of our for against this exchange the As U.S. foreign a suffered international currencies the dollar adjustments. quarter other businesses

versus fourth previous foreign revenues down the improved revenue constant exchange by for a up currency APAC by Reported Excluding year, of on by impact, revenues and X.X% down segment XX.X%. XX.X%, QX Americas our by XX.X% comprised EMEA quarter the by the basis.

would our solely earlier, in and positive Mike our revenue African negative As the APAC to to decrease pandemic-related reset for QX exchange constant lockdowns in year. revenues due was and segment primarily South both due to in in up quarter The our Headwinds been and the work XX.X% by business. last In compared remodel for U.S. driven currencies, Japan. was EMEA has was mentioned impacts momentum Brazil. strength revenue have foreign EMEA from Americas China

implemented but gross during previous quarter. based XX.X% profit year, or strong the prior year. (sic) APAC. Mike results million of XX.X% [ was are -- was quarter or in $XX.X which revenue to revenues offset XX.X% was from Australia's million point that discussed the prior compared from quarter not of initiatives we on and countries improvement did revenues other the pressure $XX.X Fourth year numbers the XXX basis that for small ]

impairment fourth quarter. $XX.X or goodwill in XX% XXXX. Selling, the quarter for recorded prior of fourth general XX.X% expenses totaled We for administrative in revenues million $X.X million revenues or a of charge to million the quarter noncash $XX.X compared the and year of

million write-off there, well the -- filed XXXX U.S. in for as in hardship, alternative shareholder in work. majority increases SG&A as recorded for strategic bankruptcy we prior fees one bad fees included sorry, well a not year, correction file in bankruptcy, facing as as change the financial Also debt it's did a the $X.X for from advisory stake that costs. control customer

in fourth quarter. million operating Group -- loss QX per to loss to the loss per $XXX,XXX or of $X.XX or share $XXX,XXX operating $X.XX loss the to million quarter income $X.X SPAR $XXX,XXX $XXX,XXX Inc. quarter Net quarter SPAR fourth the Group quarter. to income net attributable was in attributable The share $X.XX compared Inc. share to attributable loss year SPAR or was per million in income for versus of in or net $X.X the quarter. $X.XX per of year compared was ago Group compared the $X.X a per to previous a $X.XX share million year was ago Adjusted net net of in $X.X a share or

quarter a of million to compared the $X.X EBITDA in the quarter. to million EBITDA Consolidated in $X of Group the prior $X.X SPAR attributable previous in fourth a compared adjusted year adjusted loss XXXX to quarter. million year loss million $X.X QX was was

from year, For were million, the period. X.X% net the year-ago up revenues $XXX.X

for $XX representing revenue, total revenue. the $XXX.X of year-to-date million revenues EMEA XX% or Americas, segment, and million APAC XX% or the million total while revenue, the of was of were $XX.X XX% For was

Despite $XX favorably strength basis million in points in due prior period. the The and points. million revenues year markets. year. X Gross was up due profit by in successful improvement was negatively of to Gross points improvement basis a the APAC was basis for XXXX points APAC of compared to EMEA margin and certain other revenues favorable basis -- XX XXX pandemic impacted lockdowns or due XXX mix or margin gross up negatively in margin increased XX.X% the for strength actions the XX.X% impacted XXX Americas, by to shifts to $XX.X segments, margin

we $X.X primarily that year, were SG&A we from revenues million the business charge XX.X% mentioned reported revenues to For million the the rebound goodwill or for period, a for or of of QX. impairment XX.X% compared year $XX.X due a to noncash of $XX.X in pandemic. million prior expenses

costs. full addition, are that rate of SG&A X-year the year expenses the not results In included run part

in year was period. $X.X million versus million $X.X Full ago year operating income the

in million full or million in was $X.XX $XXX,XXX or $X.X compared per net period. $X.XX attributable share Adjusted year income to Inc. year Group million $X.XX the the was share the loss year, or attributable per $X.X SPAR $X.XX per share compared to period. share net or per $X.X SPAR to ago For to ago

year EBITDA in to $XX.X full for million year. was prior million adjusted the Consolidated the $XX.X compared

to Inc. Excluding $X the adjusted year. attributable million EBITDA compared SPAR million in noncontrolling was $X.X the interest, prior to Group,

of the at find reconciliation of financial measures can You the end release. non-GAAP today's management's GAAP press to

availability The $XX.X at Now with turning cash, was working and and million, million, unused liquidity XX, and to balance the of the capital restricted was equivalents company's in total as the position million sheet $XX.X $X.X financial The the December as was $XX.X $X.X million. cash; of worldwide receivable of XX and company's balance year-end. year-end strong at December company's XXXX. remains accounts million cash

program. have for share turn of back our it year, under would repurchase the to I shares Finally, that, Mike. we Board-authorized to XXX,XXX stock common like SGRP With repurchased

traded company. growth evaluate to ways Thank to SPAR. our fall, shareholders for the potential the profile as sale, a other including Last engaged going Antonio. we accelerate management team to as potential process includes had This exploring unlock that creation private value. fully announced The a range Board of you, opportunities full process a of well on and maximize as value alternatives publicly strategic return value options, to is merger, initiated shareholder divestiture a

do I update have We related the concluded I questions and will company's this have to an process be not alternatives not remarks. process strategic not yet, answering today, after so our

made earlier, store the we strategic goals, both and We expanding As I organically experience progress significant longer our mentioned services. remodeling with short term. by U.S. business and expanded term long-term

quick advancement also capabilities, solution our way a in for invested our reps in over hired QX on talent platform. evidenced our a established artificial to This was up expanded fulfillment services work X,XXX is of sign developed framework the data analytics we example SPARView framework intelligence. using as Canada, our reps our like lake establishing and expanded We in technology. A with talent of

internal margin to in XXXX, gross during the our quarter. in expansions resulted especially regard fourth margin, With initiatives

not Our business has slowed.

have is robust, market from competitors. we continued pipeline share to take and Our our

there While we that a impact our we not expect to are do recognize headwinds, plans. macro have meaningful on this

Our in retailers any sell business Where these down, people XX announcing economic business those retailing and products, our who growth include day brands to large discount work pharmacies environment. up more. of the brands open is market, in needed comparable companies sales been every customers trading box resilient. that largest continuing Many have are products food retailers are or the stores and that in We are consumable and clients and need expansion. that with

pressures cost discussions a begun with structure. looking how are exploring cost margin that and clients SPAR incremental ways We've their leverage. operating for prospects number input of to challenges optimize provide and businesses and and have Most

for that syndicated better technology For use those expenses, with leverage agreements capture insights, multi-country by about models us create visits of large field organizations, can that and they're asking targeted share them. to

our identifying this invested We've quarter, also to business mentioned member. our people. hiring remove to paying future technology in from growing access recruiting SPAR only team our is As I last in constraint to invested labor. dedicated to resources friction the We've to

leveraging to recruiting to talent rate Our ] conversion We're contact tracking ensure track right that we and tracking all quite the date record our weekly [ the are technology. good. higher has been appropriate

Now comments opportunities. our let few and a me make about pipeline

I contract many are of seeing across earlier, $XX addition profile other a a the we closed has softening the one for a for potential in these either multiyear fourth responsibility smaller As to geography quarter, of million-dollar a competitor noted agreements or of and or revenue store A we not is typical that number business. In for a larger contracts. remodels. replacing the providing in-store of assuming merchandising million,

pipeline and we Africa Looking India. have the opportunities in U.S., across multimillion into active our dollar Brazil, South several XXXX,

and and and area business health tools. in borders. taken insights We've data to while retailers to from countries. branded opportunities analytics These support our expand challenges for and provide capturing learned the technology resources and to is SPAR something The lean ability our offshore marketplace. to world pipeline relationships India multiple that unique of expand performance across in offering. to invested in our our lessons analytics An into improves the global client to retail best clients clients. aggressively the every is and from share This continue wallet our business that insights to our our resources is business we in We've visit

is believe in XX important. globally United million We We of inventory points XXXX captured and more the the continue million to data XX in artificial pictures than that application than States. intelligence more just

with artificial ParallelDots our by clients each have turn data our images insights to apply our to to in applying AI and intelligence. creation these value we our tools into sell we learning XXXX this launched recognition, is broader Earlier points progress data vision of partnership on year, great expanded this image applying and now geologies. top made analytics SPARView business of work. We by Our and expanding and machine for

these for long-standing in such provide many some creative with Family Foster XM, be Cargill, Dollar, Walmart, their work us. the to McKesson, companies Auto, to privileged the Many distribution Advanced relationships many, earn the on Grant, services while P&G goal. of revenue Nivea, We're our are recurring best more. long-term CVS, new of of and as marketing winning and clients energizing and our most more to to We ambitious and planet. the effective business business pursuing This aspire merchandising, vision is world,

to dedication I'm I'm Let to and me commitment grateful to people for that, wrap recognizing again like up I'd their group We're future. day. look an by line my thanking that With our allowed questions. Operator? even with work of and this open forward incredible brighter team. each the comments

Our Litchfield will come [Operator Hills question Research. with first O'Neill from Instructions] Theodore

Mike, were that was your expand share a bit. you like that you of you you're on wondering -- taking it I some saying sounds competitors. from can if market little

Theo, out over that had in locations. client of thank hear. starting a one we Yes. lot in United also pharmacy joining to early we're work. you do a here business that asked that large the XXXX a had in few opportunities, of that of of up early we our in they some 'XX, We've want and of to segments, morning. particular, good saw pick A them, question who's again and didn't to client for retail part in Thanks competitors to the would the for space for them cosmetics, particularly a this thousands us in We, of sort abandoned ours said and example. see reached and States,

seeing that. we're of some So

have because out the and us rolled business on up were businesses how felt their strongly consumer going. gave in serving served large so a a us just the and very U.S. integration it one brands about of of of them brand and one discount we of reached up that example, disappointed was had in competitor in they they was ours. with the business other that for acquisitions marketplace many They examples, of the they picking pick in competitors. way some to -- been of were them because I'm management large example from the consumer asked half to And locations, retailer Second SPAR's SPAR, we multi-box had took the our

to business teams or we're field we're to lastly, I of would or say brands difficult So they're where they've to turning continuing that. take competencies that's much recruit to merchandising core where that, and as the see just organizations asking And seeing of have us found attract and some to all to because engage know is it do work. that one our labor us and

up question? been continued and well. the into that more picking has of help we've So that answer year as that this Does

And does. It the on is retail about the side layoffs. focusing media

customer great, view saying And so kind but the not mix got. the based on that you're that of seems you've here positioned for you're environment better

Yes. you backend. ] [ retail this, years types In lieu hire can retail many I model, of in In I'll X my spent the role. senior of with retail comment people. a

person hours. your can XX that's of is part-time as hire But the oftentimes, one resources between your a expensive to spend XX a to can XX doesn't You or person, XX you retailer and a part-time and full-time the inventory. that consume hours, most work

a X expense the hours to they of need [ us. where in to starting When need a someone that case. X they X to in product, more for variable to shelf ] And to to shift retailer for comes example, them They replenish they're able to that be do and that they they really need to need truck attractive reset need for in And hours. department. is X day, particular the where people, find they but a as

-- hours' hours more to large of do clients, example, XX for work So adding turning giving are -- us in to to our of more labor, to consider they part-time instead some week. each of and they're turning us us X worth

us So next for few the years. an for I think that's opportunity

XXXX? related options fees strategic exploring to were there continue And Will into quarter. in Okay. the that

allowed for Theo. little quite bit candidly, We have XXXX, in a

to more that out in said, But and I As have noted at ongoing. lot of we've carved I well. don't the is some XXXX a offer moment. the process yes, as

back appears are Instructions] our any question-and-answer remarks. to [Operator turn questions. further Mike there it like for This the to no concludes I session. over conference would closing

thank Operator, you.

today. for thanks first our your listening to to conference update for I and the you progress Just and again. an report today, of forward and listened look interest the all providing quickly, company quarter in results. who participated our Thank earnings call

presentation. concluded. The conference has Thank now you attending today's for

now disconnect. may You