SPAR Group shares slip 4% on worse-than-expected Q3 results
CHARLOTTE - SPAR Group, Inc. (NASDAQ:SGRP) reported third quarter financial results that fell short of analyst expectations, sending shares down 4.8% as the merchandising services provider posted a loss despite revenue growth.
The company reported a third quarter adjusted loss of $0.10 per share, significantly missing analyst estimates of $0.03 earnings per share. Revenue came in at $41.4 million, below the consensus estimate of $45 million, though it represented a 28.2% increase YoY for U.S. and Canada operations. The company noted that the quarter benefited from one-off project work that boosted the growth rate.
Gross margin declined to 18.6% from 22.3% in the year-ago quarter, which the company attributed to a higher proportion of lower-margin retailer remodeling work. SPAR incurred approximately $4.0 million in restructuring costs and severance during the quarter, along with an additional $1.6 million in one-time expenses.
"Although we are very pleased to report topline momentum this quarter, with combined U.S. and Canada net revenues up 28.2% over third quarter last year, we recognize that there is more work ahead to build a structurally leaner and more profitable business," said William Linnane, President and CEO of SPAR Group.
The company is targeting a reduction in selling, general, and administrative expenses to approximately $6.5 million per quarter or lower, excluding legal and one-time items. SPAR recently amended and expanded its revolving credit facilities to $36 million, extending them until October 2027.
Antonio Calisto Pato, CFO, noted: "The second half of 2025, which includes third quarter results, represents a reset period for SPAR. While we are pleased with topline performance, the revenue mix weighed on margins due to a higher proportion of retailer remodeling work in total net revenues."
The company ended the quarter with $8.2 million in cash and cash equivalents and $2.2 million in unused credit availability.
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