SPAR (SGRP) 14 Aug 232023 Q2 Earnings call transcript

Good morning, and welcome to the SPAR Group Second Quarter 2023 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After the today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

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

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

only the Presentations Chief Financial be on the Antonio recorded Executive of of on Joining being the time-sensitive SPAR's is section This audio the Officer, today be webcast Relations please and reading. company's this advised today, of as page of speaks Matacunas; link be at investors.sparinc.com. and so Calisto transcript date on information Chief can call Information me the Officer, replay call may call Mike and accurate Investor also Pato. Events that are the or through any any accessed no as longer

the performance like in safe to statements including Act statements the I to made Securities Litigation that not events that of future are of harbor financial or Reform XXXX. provisions you remind or historical statements are also future forward-looking or facts, the discussion Private today's pursuant would made expectations

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

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

issued Investor of section an X-K press website sparinc.com. of Relations on is copy submitted also earnings posted today release in earlier Finally, A SEC. included the to will has our at -- release been the we the the

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

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

The first gross all profit, of months six in the been have has strongest reached XXXX half the new business. of history levels. Revenue, EBIT the

said I've been but client between of But services our the are our have and as agreements work can revenue This and of parties. for and this the quarters, the third legacy services move long-standing the largest As expanding. to and to services. outsource These company we businesses. merchandising grow business is some past, in the consistently businesses heart marketing of work world's have continue do look to are

grew Year-to-date, is United Brazil; second services services gross merchandising In by XX%, the with and XX% Our in States these growing. so Mexico business of core strong the short, in in our in States United on. and are margin. up the the quarter, strong improvement in for related X% XX%

XXXX. Our year in to the renovating, finished repurposing it sales U.S. in floor than the remodel started slower improvement in which business overall store staging, has we physical assist and retailers

rates. reaction future Our clients the quarters. delaying is U.S. This likely interest have rising a been into projects to

cared a online has wide consumer is is The the for need renovated to retail accelerated stores. consumer their product years. every is staple stores retail remodeling of work of reminder, Every in a a growth needs What store habits. shift for looking few a As be operating neighborhood the this some of buying assortment in level business. at and and for

requires their a assortment. with company, This introduce working So for resetting perishables into of layout, store example, thousands we changing fixtures, locations cetera. floor the are to et large with small-box

we I converting online last expect years to the in for the our space as been online, with holiday pack the this head of in Related few large-box to the year. ship stores and come work doing season back growth into retailers, of We've clients. are the orders. this more at end their to particular

our I'm at in front work confident I'm demand year-to-date, of remains extended. performance us the this of remodel hasn't business the has dropped, While schedule disappointed as the

mention the I'll currencies through second going item the last on fluctuation business. in highlights is of the quarter impact our before and The the

Let's use the South example. quarter in as a Africa prime second

in in quarter. business local Africa the by Our South We the X%. in performed currency top well grew second line

South slowing staying job really Our impact economy. leadership a Africa nice and team of of the in a ahead did

by rate The African impact P&G, decline Rand. U.S. rising in into impacted exchange the lot rate was baby are dollar for a think Africa South clients the for to X% to A increased are in growth clients currency of as dollars. us interest diapers U.S. that formula. demand our for consumable the the of for inflation compared The less South such has a turn XX% U.S.

As these health of to regardless businesses, continue international our you grow operational we businesses ask the would that note successfully I conversion of fluctuations. the currency of

second our to Turning results. quarter

period. million, the same $XX was year X.X% from of decline Our a prior consolidated revenue

Our exchange a X%. income gross $XX.X $X.X was consolidated income to net or in $X.X million would have or revenue the currency $X.X million. compared and for $XX.X consolidated period same On million, million our basis, rate profit million XXXX. our been up was approximately X%. constant impact $X.X Operating up $X negative was million million, The was a

revenue Australia and reflects and the Canada, Brazil XX% Mexico our China, United of approximately Japan, Americas, about quarter. and India revenue Africa the by now Asia South X%. which our Pacific which segment, XX% includes represents includes EMEA, States, in is Breaking results represents the which

revenue were over Our quarter and down. tale year States United second services remodeling Merchandising services XX% was a cities. last the in of up two

clients, to half our some and revenues continue margins. products delayed shifting growth a increased XXXX quarter. XXXX. and first which see improved into remodels, On first plan part and out new half in the cases, is business, into remodeling the of the retailers added second We've productivity of store of in we merchandising, the expected For

a shift canceled, which is have believe small in temporary but of to to quarter seasonal A they the when saw we preference so SPAR out again important increase bright U.S. the important reaction in these an rates. our reach to clients We our rising projects interest speaks and the have to been no clients, a work. indication spot, we yet patterns prior that this relationships to our of have and work scope unplanned second related from

Canada had an outstanding quarter. second

the mid-XXXX. apply XX%, Our period Commercial Canadian period. under as to strong XX% an last expect oversight the of revenue of reflection Brazil year also Reid, of Global Lutz, continue This leadership expanding business second same prior a in a increased same Canada trend we our the revenues increasing compared the to Chief this began on over focus Officer. of had Niana is this Ron intentional I quarter year. to

the all over Brazil the X% had in in the up with few this period change I based quarter provided team wanted country. brands to our operations the a large last of in as note in over and and efforts particular excitement to generated solid Mexico same business year. Paulo, The clients rebuild a years. Mexico make has this root. legislative Sao are post but across last the We our of taken has really services impact

constant was from currency in the attention by In explained to by quarter revenue down or X%. conversion. is prior second This revenue Africa, South the XX% our currency, Turning up was EMEA entirely year.

parts While appreciate to Johannesburg, in I our of South other efforts I'm the [indiscernible], our Cape and more. Nestle, Woolworths, JDE work in team Durban, and Food displeased as Africa great Rhodes clients services by the business and that exchange Town, for such provide rate of our impact Group, continue P&G,

and Australia China, by Japan, India Pacific and increased includes Asia that profit gross by points. X% basis revenue XXX

our part a grew same solid we've want in call the and years on under two footing small top by Dean While Australia out of the this leadership quarter to business, after XX% a established a Zeelie Craig the Australia is Based I of XXXX. line over results, in challenging that Nixon.

additional I results, about financial and our turn come insights detailed that, will Antonio With thoughts to share the results. over covers review Antonio the will back business. I call the to and After

Mike, everyone. and you, morning, good Thank

on numbers Asia Net from constant million, million comprised growth XXXX Second from net a revenues of million reported from basis. currency and decline quarter $XX.X of X.XX% a million $X.X revenues Americas, totaled of $X.X with on the Pacific. X.X% EMEA revenue a $XX.X

for revenues segment X.X% declined while decline included EMEA and a in Americas, of QX increased prior the by APAC X%. by revenues Reported year, XX.X% the versus

As store as services, and client Mike U.S. somewhat offset mentioned that earlier, remodels of momentum result merchandising our revenue been in softness Canada. American was the have out, strong U.S. pushed segment well by Brazil as

services as revenues discussed contract this shifts XX.X% system to compared XX million quarter. year Second or terms the improvement other in of as the year, containment, Mike enhancements on which pricing, million profit $XX.X was was and gross in prior from the based XX.X% basis or quarter quarter. prior well point of improved and $XX.X revenues mix

$XX.X second the revenues prior with revenues to corporate million as primarily second other general well XX.X% in or during of costs expenses project the administrative XX.X% and totaled SG&A quarter. as the totaled Selling, million associated year alternatives, for of strategic items, included quarter. $XXX,XXX non-recurring compared which with or quarter the $XX.X costs the

$X is year in income the of million quarter quarter. second The XX.X% prior $X.X million, operating income which was down operating versus

million $X.X attributable in to quarter. share quarter to in adjusted QX in ago year or EBITDA XXXX compared $X or to share Net compared was or $X.XX $X.X per the Adjusted Group quarter net the compared was $X.X of year million quarter. million attributable million year ago $X.XX $X.XX to the income in second was to quarter. Group Consolidated was income per quarter. the prior a prior to $X.X compared attributable in for per $XXX,XXX per million SPAR EBITDA income in share SPAR the $XXX,XXX or Group $X.XX adjusted share $X.X year the net SPAR to QX million

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

would it I back to Mike. to that, With like turn

Antonio. you, Thank

private unlock you remarks. for quarter, answering engaged a The of management not do completed updated range be value. going evaluate strategic a options not our and on we or related SPAR. includes questions to update team ways the running the a full yet, I and As just of few process process to that M&A Board still alternatives to have We've process management are including after last This transaction our options. fully deal this shared, strategic strategic name alternatives today. shareholders we are exploring an company's I now maximize a with the sale, to Board and a shareholder potential We'll to value have

provide our the extraordinary more our to like Beyond team. I'd current shareholders insight the commitment of financial results, effort and to

types place all all want professionals thinking, and expand a initiative better to and different value ensure embracing and believe of start create the We the SPAR at committee makes team of our company, our I the us equity committed launched highlight from of a I enhance levels proud of us and effort. First, for to parts this diversity, more inclusion business, that a formed as we of this for shareholders. our diversity everyone. to our I'm and enables to organization year.

addition, a finalist our of competitive Talent XX in our Head proud. Talent a Top more of the are a the or couldn't Acquisition have XXX Professional. Competition, number as award of currently Marketing and Craft, Organization Acquisition Marketing of awards, Top team Danealle organization industry finalist In Knight, sample. our a I Head and members are Tom just is of an a received our Recently, be won in U.S.,

proud deliver shareholders. a our and the is shareholder, a I'm value in a we SPAR the people difference organization, level every on talent to ultimately, our the As make of day of that and committed performance, to

in to I'm a a other growth is brief late of provide comments, track update $X U.S. let on we our XXXX few services a of business. net nearly deliver new on XXXX me pleased This for business. our and fulfillment the revenue million business With is in launched

distribution this for expected a get number to delivery XX ground new the provide off fulfillment our and resources clients. to we of test take We are centers, facilities, months prepare months where we We online we to for purchase services to provide of resources be. provide point and materials exactly to XX and want to support

shipped. it subject as the we person of grow to the As remains with to are I the the on in a the growing the who be our being online positions Based last our box product legacy grows, demand business us also the want on or last person touched shopping goes touch product stable for this who before stores, technology. of be in touched to it. consumer

with the our One win is software. portfolio of ways applications we of SPARview and

enables We recognition and scheduling, image that work, have software training, merchandising geo-fencing, remodel more. work, field much

more before I'm pleased years that to We great last work million backbone this partnering cloud, and was this of last the that done. move effort Web all shared running photos growth solved I've countries. all by than captured this the over the is business, the out across XX of and invested technology We our to we with of two technology. business our Services year to our report Amazon

unlike of nine tools in SPARview's in a competitive As Japanese used any multiple across eight space, reminder, and including our languages, our countries.

focus ago of that in and the pleased strides was analytics the clients. date. itself, with stated important quarters progress a the I I'm an provide we made Beyond area few to this we've expanding application great

the a standard potential them build insight more. India of stocks and out have to in of for business We our dashboards clients out leveraged to to and set reporting resources in give demand,

we Lastly, the companies of class before team we partners. questions, joint open the leaders world the members, world Because some privilege venture we have clients, successful and at with to as our of want in of need most I managers, perform thank working level. to the a our call each to

This every Our same every client can day. at exhausting and is invigorating time. mantra be the

revenue, look passion am lead and I value Thank people SPAR. incremental shareholder you that for grateful forward and to outstanding and cash to generating to commitment, profitability flow. group your of building dedication and this get I

that, would the line to Operator? With like open questions. I for

the question is Litchfield now with [Operator question-and-answer will Theodore from Research. Please begin Our session. We ahead. Instructions] first O'Neill Hills go

retail comments about big-box your Thanks Angeles adding high very by going I adding if seeing you're of sort wondering we level perishables and on driven pack appreciate last stores and the that's changes much. saw week? I theft any of here was the Mike, Los like ship. in stores

you can hear First look, me okay?

Yes.

Thanks.

question. Just for your checking. Thanks

We I had are retailers. And can't we the say discussions years having with ago, two same.

of might in to tasked where this analytics, team So rising. the the who's What shrink because lot gone seen with any is look has been indicators a dramatically. is number press for have doing or you've that suggest up our we've shrink data

So for stock images at in creative using looking outs a our to example, way.

give if area X-foot stock So we're image that span like shelf, when should any does even it an looks indication it we a of not of an more than it take particular touching of that has have, product.

a interesting having that So to I we think are some because months. very Thanks. in be months creative discussions about continue question. a great the six that for It's XX retailers challenge next will to

be that remodel All shelves put of added -- I I to for a part a things if supermarket And right. the cart. of bunch supermarket And because sort whole more large that's it question would you? had make national the was in the thing asked to your in was chain that that and products wondering of I grab difficult it a

Yeah.

that put like as yet. time. of happening. a they it's whether two a around remodels get get as real which a in retailers more it can hard an your count We're means year, once very seeing shrink of our arms of haven't devices indicator it in different shrink The part we seen can We the is retailers to ways, lot sense

or it, cycle you into, count You see it coming don't you count it.

at help space know or look a as authority been as for consumers, up somebody a razor department, blades in all some to getting certain for with without open example, you haven't So buy the we years to us. able we key

theft case. things the are count typically cycle that they in high that So

than lot because retailers of think investment other merchandising. to an But that we lots the return now retailers to a to doing cost more used as remodel categories had regularly we're the determined don't look on at haven't we asking of when a for. yet they've us are So incremental I that's

use and go sort That makes trends any remove your cashiers sense. do Are to you stores automatic platform checkout? to of trying seeing in

We for you used haven't use code of tech the asked haven't idea capture, last itself forward-thinking us But over bar image retailers same that the take up, anybody that can by it few year, who's the yet. customer walk tailwinds and testing are, packaging the you as self-checkout. have for say or that would self-checkout yet. We're the out. in leap. ready and there the to basket are we a haven't sort are any about, I put of where your But I seen take businesses pick behind it it really

still hurdles technology there's of over all out. walking checking think to before without I out get plenty we're

much. very Thanks Okay.

this any our the Instructions] concludes to turn for [Operator Michael conference questions, would over no remarks. to question-and-answer back like session. I Showing further closing Matacunas

Well, are conference look your to who may for it thank our turning interest back listening I for you listen SPAR listening in forward when we our call thank for I and recording. providing just to the you quarter again. and who thank those report third an on to again, update just operator, and you progress for results earnings want today. to those

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

You may now disconnect.