SPAR (SGRP) 1 Apr 242023 Q4 Earnings call transcript

Hello, and welcome to the SPAR Group Fourth Quarter and Full 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the call to Sandy Martin with Three Part Advisors. Sandy, please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you joining us for SPAR Group, Inc.'s conference call to review 2023 fourth quarter and full year results.

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

are for outside control. and forward-looking by disclosures Forward-looking detail implied. of materially those in nature, release statements, results statements. Actual factors uncertainties refer other expressed their press our in company's Please earnings from risks described or differ and may and are on These today's the to uncertain company's end SPAR obligation and update can Management found to or the any also refer publicly. GAAP earnings our and Exchange financial no the be Securities filings measures, with may non-GAAP measures reconciliations statements forward-looking at Commission. Group to the assumes release. of the nearest revise to

Mike? company's release would Matacunas. on press CEO, Finally, the like A earlier also Relations was the Investor the call posted SEC. And of in we now section to the over website an is to the I release sparinc.com. copy earnings today X-K Mike included our at issued to turn submitted

open $XX.X today, pleased over prepared institutional was investors. On full up quarter the results. year. you, and end the basis, fourth for consolidated of analysts will million, Sandy, from year I'm remarks to our our share fourth prior and the questions and Thank morning, a revenue good At quarter our we line everyone. X.X%

in same for improvement compared our for XXX-basis by loss reflecting year. EBITDA $X.X rose last Our gross profit XX%, the the percentage, quarter period a point $XXX,XXX profit million a was and to

net last were consolidated line same and year our $XXX,XXX merchandising was core EBITDA quarter revenue margins the net of for up, was to revenue the performance $X.XX the million of income, was quarter. up was up owned Our the a In was income up, loss that business the quarter short, for in X%. U.S. increased compared materially. But our revenue bottom

by top up XX% in call. South our Africa by Our Brazil, will small and later ventures a decline comment increased ventures. that joint X%. Japan was Canada was and U.S. growth this business line on business in in offset our This joint more I

the States, our to had strong recover large in in and business retailers largest, pleased of U.S., and big I'm United results. quarter provided the box Within with sortation delivered services how fourth delays center. project the bottom-line pivoted with our Combined we to the excellent client we growth responded country's business to services top in and quickly and one as successful our quarter most a and an began nicely, remodel distribution merchandising

gross a of quarter XX% by While profit I'm a margins. net fourth experienced cash compelling we point is pleased with basis, and the of is our than quarter fourth XXX-basis profitability, gross on dollars declining We years with ago, fourth a story improvement for focusing results competitors by XX.X% of X margins the terms, This, XXX increased while the Percentage and higher improvement. basis gross revenue, quarter the points have in on consolidated rates many achieved our productivity. profit. XXXX. This of the

last to our the fourth revenue sale. onetime these of a the Year-over-year, all for the for the XX% EBITDA our on joint income team the team want of $X.X on Again, year to our million I sale and with quarter of goodwill of this Our the results, results. Net pleased revenue. a adjusting quarter. consolidated ventures included impairment for parts attributable pleased results. EBITDA quarter $XXX,XXX. onetime and SPAR thank numbers business or was loss This onetime am loss year's I improved I'm or my X.X% by with was for for great X.X% members and and strong $X.XX of across our million net

was year, $XXX.X full the million, our up revenue For X.X%.

are results in is this consolidated While top line business compelling. our modest the growth, core

calls, to pleased We business developed drive merchandising quarterly grocery, specialty U.S. I over division full discount XX% these with more was shared the and I'm our revenue XXXX. continued million, over the $XX.X really work brands numbers. with Our of up merchandising the and prior growth performance. double-digit year in

our business and up and U.S. addition, of Canada, XX%, was line XX% distribution assembly has more the In business results. Canadian top business delivered in was installation dollars. outstanding XXXX remodel in launch our than in Especially our up

believe is we is much to business for market. the XXX% this there in year, remodel Canada Our up and come more

Our growth Australia, Each came Mexico, in these businesses and South Africa international of headwinds revenue. China. Japan, in declined revenue from India,

up Our profit was gross the XXX margin and gross dollars profit up for basis points XXXX. full X.X%, year were over our

those stated I've this purposeful I continue results. work, to is As be and with before, pleased

Antonio back insights the additional call million last to improvement. last compared about was finally, SPAR will come or net year. income Antonio that, million financial to and EBITDA to turn million XXXX to And $XXX,XXX will XXXX I over year our I Our attributable consolidated for a XX% to thoughts covers After results, and review detailed loss compared $X.X for a was $X.X share business. With the more $XX.X our results.

Net Pacific. by APAC EMEA totaled versus QX grew Americas, for X.X% revenues $X.X from Americas, year by X.X% million for EMEA. from from included over million, $X.X and the and morning, segment revenues XXXX Reported X.X% revenues QX by and Asia prior million reported quarter million XXXX everyone. Fourth X.X% for an net Thank for declined of numbers. $XX.X increase you, revenue $XX.X good of Mike, the

attributable third other and for the revenues, fourth contract see Americas year $X.X Group, attributable strong quarter. year from or per net $XX.X QX million during services loss recovery EBITDA Group, share fourth merchandising share costs quarter to income sequential strong Inc. in XX.X% fourth $X.X $XX.X $X.XX SPAR year U.S. the or to or SPAR from Canada. Fourth $XXX,XXX per prior million owned second a in $X.XX was to the compared quarters, Net quarter per we or our the revenues ago income mix or Selling, the per enhancements was Inc. quarter. was XX.X% million, $XXX,XXX basis compared compared remodels profit mentioned quarter. $XX.X and Consolidated SPAR for share in and revenues to $X.X year reflects an improvement million SG&A our as segment revenues the costs Similar or operating in million legal a diluted shift year the saw $X.X fourth included prior progressed. the million million in quarter. The of compared year. million we to sales prior adjusted XXXX Mike compared to million of of business to in prior in and $XXX,XXX and XXXX expenses ago in client to $X.X income QX $X.X the $X.X store share system U.S. Group, continue attributable fourth the XX.X% was As to and in compared XX.X% quarter. Adjusted related to in merchandising the administrative was million adjusted of quarter year quarter gross momentum was $X.X quarter $X.XX revenues point based general the the quarter. diluted prior or $XX.X the million nonrecurring $X.XX in pricing, on net operating to terms EBITDA million to of This and the year service prior XXX for was quarter. totaled of containment in Inc. or quarter loss the quarter. of earlier, up improved

$XXX.X was or increase up $X.X sales, year profit points million gross XX.X% million, basis over $XX XXX the XX%. XXXX. million of For sales full were income Operating of with an of XXXX,

On income the per $X.XX per XXXX impairment $X.XX was XXXX $X.X was year goodwill the year the in attributable or noncash for the versus Excluding income diluted to for prior SPAR to was the per or $X.X basis, per share XXXX period. $X.XX adjusted an $X.XX million income million, attributable share share. operating increase from year. Net ago non-GAAP charge, net share, diluted XX.X% up SPAR significantly

Finally, $X.X XX% in XXXX adjusted XXXX SPAR XXXX. EBITDA attributable million, from was to up

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

progress our in with [indiscernible] We that, each back continue improvements to outstanding turn would to Mike. I like to it make quarter. With

Antonio. you, Thank

This U.S. As provides global retail, opportunities. U.S. number minutes the to up Retail XXXX especially a different countries our This a anything X.X%. a are in In spend on is business, there's that I is for we SPAR. to retail leads opening landscape. According those typically there shaping turning paces. is what up other look were is for albeit an few sales X% of indicator follow, number with and material macro and the product of our changing at for familiar and industry faster, at world retail trends work Federation, more sales X% to and true market are opportunity. the want National the that over the influences,

reminder, on to person As before the are buys. a the the we place shelf product, the last it touch customer

work promotional sales sales strips, our retailers for and When caps need more of changing materials, clip means more end and brands more. also are resetting Higher services. up, us. adjusting are We

drives is prices. was in and United labor, compete businesses means unemployment low, for the Second, for unemployment this typically this When X.X% up States. must February

this For retailers financial their organization own become challenge. have critical brands field services can that and quickly a

For SPAR, it. we solve

to and resources individuals service services. labor, or at we We can provide with levels. help. maintaining we a while trained lower cost brands are retailers who syndicated dedicate offer positioned thousands of have struggling can people shared We can and Those

have noticed may You in retail employees less your less stores. local and

part-time, XXXX. February noted services. value-added is from more our to more that more report in than first economy variable well in X,XXX shift had transactional, is the model Yahoo capitalize this just Our placed cut and resourcing of on retailers jobs changing, X weeks The to and Finance

from Third, XXXX, has do of begun to XXXX. have point the we the half the point, prospects vantage XXX-basis deployment to the to increases since March in of deployment the By what to half our this. rates. related while XXXX, monitored clients return the of second and of slowed capital normal digested Reserve first the this Federal economy my interest seems From capital

services at have us. normal, Canada, again these the may Based appears the to in is more remodel open on and towards announced for You that the stores year, planning trends stores more if the an ambitious in the In open in XXX not plan are U.S. in U.S. Target the from moving to demand plan. par. seen to total, this the decade. It's announcements X-year next the Walmart macro cetera. capital our flowing shifts they rates. economy et January for year, this All and be both accelerated exciting store

announcing complex for and strategic of In provides And which and and the repatriating and of narrow through our analysis ability structure We're operations simplify thin the in capitalize JV I double The our announced financial the services complex. deep. growing people, core utilizes months. portfolio, more national that today, further in is shifting our wide months, in focus in operating and structure interest closed became order cash few Brazil States. is accelerate sometime clear the we've value the organization more agreements our the and for more to versus positions even by equity to simplifying dollars process to divestitures it and our was of long-term venture during our are last process the for the business allow United announced other shareholders. to have XX model. significantly We cash we is is best and that our on organization, second and shareholders, on SPAR, a will South through joint trends. In divestitures a cash us the of that the working use the selling company's we brand merchandising on our fiscal year. partnerships and Africa, growth last create the on want simplify These marketing to of China sell strategy simplification topic the and to our technology. finances our Australia, XX% growth, our confident flow comment our harvest generate our macro you This digits quarter alternatives in Growing

the revenue, partnership and business. want group Directors, I'm Board our forward Lastly, of This people, look cash for employees of SPAR. With our generating shareholder clients of would lead be for partners incremental value, I profitability great to questions. a thank outstanding our flow. contributions, all counsel, and and associates is Operator? business to I of passion time to and grateful their the this the building for to open like line and that, I to SPAR,

Litchfield from first Theodore with Today's O'Neill comes Instructions] question Research. [Operator Hills

on Congratulations a quarter. great

couple a So part Mike, question. my first question, is

have, percentage next months. for approximate million that current says cap. top exceed you at dividend transaction it your represented Africa, On with of would will or $XX raise there's a you and Brazil, buyback I in of of being levels. in this market stock We'll if release, can your that couple looking already maybe raise we're any what it plans And that. cash was cash And revenue wondering an us the the press NMS, on Australia in South XXXX? China, give

Theo, the and thanks question for parts. X

of think U.S. is total a and look sort as as EBITDA the impact XX% road front of contribution divestitures the in revenue sort windshield about other the of the as at from rearview is look the some markets process On percentage shareholders. to of context, smaller to to divesting and these the bottom that the open. we opposed first, the divested the in and we've or to businesses way a of out mirror. Maybe Canada really car actual sort We us in wide and for revenue, of of of of directly XX% of neighborhood line a the the from

some capital Theo, a discussing pocket your at And for and but businesses to we number businesses potentially are could when potentially so value with our good value looked investments, on we back second and giving might how accretive these be could and potentially holding shareholders, capitalize the like the we do in of what us back or the Board of we shareholders. To investments, more I other acquisitions directly question, look options.

cash you the You have know business. a there are categories X material always amount of X when or in

you that you to accelerate where The of the look today. first growth is for have organic the growth can do that business things

second offer, for alternative you The the to shareholders. to directly that give is then that opportunities cash clients back the then And accretive ways quarter-by-quarter. look also direct what expand can do more third to results for that deliver

of of us be morning. our the exciting to in a appreciate you're for those Theo. choices sitting this All by short think announce that, I at will which But amount future. number looked being large of nothing Board, right, capital, we gives it I on are because is a

wondering, is made area expected. were there contribution a margins, industry I'm positive geographic that quarter? in And was this And a this in or normal? than And if Okay. the that particular margins stronger on so much new

No.

continues grow our really Some it quarter our was quickly In other of profitable merchandising which mix. the business, most and affects words, is to it that U.S. really, the in as each come of bigger. margins business enough and back, last quarter that. as to offset but yet in remodel to began over slowing the year, bigger our gets second was shared And not we've some business, but

productivity. bank number, on in continued the wasn't terms side there also the one-off quarter focus So the and anything the and margin of on it's

from So for that how each clients. work can do get dollar much we we

I so remodels possible expecting the as the quarter to hard available the sure for effective So QX for we'll from given the grow quickly make say us. strong. into at looking being them. to year, and coming It's us were quite capital this as am the that's demand margins to to we're seems clients be

points, of this points. of there's think X we're at I on a XXX So think. but years sort point, basis normal We'll a I basis it keep at after not sure good place. we're in focused another XXX I'm

strong demand Okay. My question the Canada? in driving what's is, last

took brands grown was field of brands merchandising when And couple merchandising that remodels organizations early take and one, to X And and partner well. as successful that third-party determined a and to the a well, that couple in over wanted Canada into work and One, the things. our A in work. has business of XXXX, global had large business, XXXX shift, things: used we for relationships States them. were our very they win that United in we a

point to in for And that services for into but clients Canada in and the we're had quickly 'XX, us remodel be became then late providers ourselves a of us, that's came successful And now. finding preferred we a to one workouts. very scale, very lot of that in the be merchandising second Canada. I've we lot going program So do and said, Canada. pilot the we not We have of given that and market in this, in the in Canada. growth to of a There's remodels Certainly, few few the see and we part we I we a front I the had in why recall, there that us I other at States of we're our business, a on of sort year. But think business, -- opportunity. grew gives going given store think our I strong this. discussed commented, this United hand market know good of can that is in there's players business our this believe, raised another us how the a as lot and merchandising room to may for you past, But to of are want of scale

like call closing concludes over Thank back for you. remarks. turn Mike to Matacunas would any the our I This question-and-answer now to session.

you very thank much. Operator,

in We from providing listening today. everyone the call thank the want Just forward months quarter few broadly first participated speaking, I look for and in just going the next an update was who to here. and to coming

again, everyone. thank So you,

now for Thank your you The has concluded. participation. conference

may You now disconnect lines. your