William Linnane, President and Chief Executive Officer of SPAR Group, commented, "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. The quarter had a benefit to its growth rate due to the timing of one-off project work. However, overall we do expect the growth of U.S. and Canada net revenue to be higher in second half than in first half of 2025. As we plan for 2026, our strategic imperatives center on driving continued revenue growth—particularly within higher margin merchandising services for retailers and consumer packaged goods clients—reducing senior team leadership costs and management layers, eliminating non-revenue-generating costs, and heightening our focus on cash generation and working capital discipline."
"Our leadership team is excited and fully aligned around a shared vision of growth and transformation into a leaner, profit-driven organization. While we remain a people-centric business, our new Chief Technology Officer, Josh Jewett, is accelerating the use of technology and AI to transform SPAR's go-to-market strategy, driving innovation and competitive differentiation across the industry. While growth remains essential, our priority is to build a structurally higher-margin business that delivers strong cash flow and generates long-term shareholder value," concluded Linnane.
Antonio Calisto Pato, Chief Financial Officer of SPAR Group, commented, "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. Our 2026 business development initiatives are highly focused on adjusting to the new sales mix and addressing its lower margins."
"We are also advancing efforts to create a leaner cost structure going forward through disciplined management of controllable selling, general, and administrative expenses. The Company is targeting SG&A at approximately $6.5 million per quarter or lower, excluding legal and other one-time items. In addition, we remain focused on driving positive cash flow and sustaining disciplined working capital management. Notably, accounts receivable balances and operating cash usage increased in 2025, driven by both revenue growth and the impact of our program management agreement with a large retail client. Finally, we recently amended and extended our ABL facilities to provide greater flexibility and support to further strengthen the Company's balance sheet and financial position," concluded Calisto Pato.
Third Quarter 2025 Highlights
Net revenues were $41.4 million. On a comparable basis, net revenues for the U.S. and Canada were up 28.2%1 versus the prior year quarter. The prior year included non-comparable net revenues related to joint venture divestitures in Mexico, Japan, and India.
Consolidated Gross Margin was 18.6% of sales, due to higher remodeling mix shifts, compared to 22.3% of sales in the year ago quarter.
The Company incurred approximately $4.0 million of restructuring costs and severance in the third quarter and an additional $1.6 million of unusual or one-time costs primarily related to legal expenses, strategic alternatives and moving expenses related to our new corporate office in Charlotte. In the prior year quarter, strategic alternative costs were approximately $1 million. Excluding these unusual or one-time costs in both periods, third quarter 2025 SG&A were $7.6 million, compared to a similar amount in the prior year. As noted, the business is aggressively working to reduce this towards a sustainable run rate below $6.5 million per quarter.
Income tax expense of $1.7 million in the quarter includes a $1.9 million valuation allowance related to U.S. federal and state deferred tax assets, which had a $(0.08) per share impact on the GAAP results for the quarter. This non-cash adjustment has no impact on current or future cash flow, liquidity, or debt covenants.
GAAP Net loss attributable to SPAR Group, Inc., including the one-time and restructuring costs, was ($8.8) million, or ($0.37) per diluted share, compared to a loss of ($0.2) million, or ($0.01) per diluted share in the prior year quarter. Non-GAAP adjusted diluted loss per common share attributable to SPAR Group Inc. was ($0.10) compared to adjusted diluted income per common share attributable to SPAR Group Inc of $0.05 in the prior year quarter.
Adjusted EBITDA attributable to SPAR Group, Inc. was $90 thousand, or 0.2% of sales, compared to the prior year quarter of $221 thousand, or 0.6% of sales.
In early October, the Company amended and expanded revolving credit facilities to $36 million, with an extension until October 2027.
1 Refer to the Geographic Data table in the Segment footnote of the Company's Form 10-Q for the third quarter of 2025.
First Nine Months 2025 Highlights
Net revenues were $114.1 million. On a comparable basis, net revenues for the U.S. and Canada were up 12.6%1 versus the prior year quarter. The prior year included non-comparable net revenues related to joint venture divestitures in South Africa, Mexico, China, Japan, and India.
Consolidated Gross Margin was 21.1% of sales, an increase compared to 20.8% of sales in the prior year period.
Restructuring costs and severance of $4.0 million were recognized in the 2025 period compared to zero in the prior year.
Income tax expense of $2.0 million in the period includes a $1.9 million valuation allowance related to U.S. federal and state deferred tax assets, which had a $(0.08) per share impact on the GAAP results for the period. This non-cash adjustment has no impact on current or future cash flow, liquidity, or debt covenants.
GAAP Net income (loss) attributable to SPAR Group, Inc. was ($8.3) million, or ($0.35) per diluted share, compared to $2.6 million, or $0.11 per diluted share, in the first nine months of fiscal 2025. The 2024 period includes a $4.8 million gain on sale. Non-GAAP adjusted diluted loss per common share attributable to SPAR Group Inc. was ($0.07) compared to adjusted diluted income per common share attributable to SPAR Group Inc was $0.01.
Adjusted EBITDA attributable to SPAR Group, Inc. was $2.9 million, or 2.5% of sales, compared to the prior year first nine months of $4.3 million, or 3.3% of sales.
1 Refer to the Geographic Data table in the Segment footnote of the Company's Form 10-Q for the third quarter of 2025.
Financial Position as of September 30, 2025The Company's total liquidity at the end of the quarter was $10.4 million, with $8.2 million in cash and cash equivalents and $2.2 million of unused availability as of September 30, 2025. For the nine months ending September 30, 2025, net cash used by operating activities was $16.0 million. The Company ended the period with net working capital of $8.5 million on September 30, 2025.
About SPAR Group, Inc.SPAR Group is an innovative services company offering comprehensive merchandising, marketing and distribution solutions to retailers and brands throughout the United States and Canada. We provide the resources and analytics that improve brand experiences and transform retail spaces. We offer a unique combination of scale and flexibility with a passion for client results that separates us from the competition. For more information, please visit the SPAR Group's website at http://www.sparinc.com.
Cautionary Note Regarding Forward-Looking StatementsThis Press Release contains, and the above referenced recorded comments, will contain "forward-looking statements" within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, made by, or respecting, SPAR Group, Inc. ("SGRP") and its subsidiaries (together with SGRP, "SPAR", "SPAR Group" or the "Company"), filed in an Annual Report on Form 10-K/A by SGRP with the Securities and Exchange Commission (the "SEC") for its fiscal year ended December 31, 2024, and SGRP's Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and statements as and when filed with the SEC (including the Quarterly Report, the Annual Report and the Proxy Statement, the Information Statement, the Second Special Meeting Proxy/Information Statement, each a "SEC Report"). "Forward-looking statements" are defined in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and other applicable federal and state securities laws, rules and regulations, as amended (together with the Securities Act and Exchange Act, the "Securities Laws").
The forward-looking statements made by the Company in this Press Release may include (without limitation) any expectations, guidance or other information respecting the pursuit or achievement of the Company's corporate strategic objectives. The Company's forward-looking statements also include, in particular and without limitation, those made in "Business", "Risk Factors", "Legal Proceedings", and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report. You can identify forward-looking statements in such information by the Company's use of terms such as "may", "will", "expect", "intend", "believe", "estimate", "anticipate", "continue", "plan", "project" or similar words or variations or negatives of those words.
You should carefully consider (and not place undue reliance on) the Company's forward-looking statements, risk factors and the other risks, cautions and information made, contained or noted in or incorporated by reference into this Press Release, the Annual Report, the Proxy Statement and the other applicable SEC Reports that could cause the Company's actual performance or condition (including its assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, liabilities, liquidity, locations, marketing, operations, performance, prospects, sales, strategies, taxation or other achievement, results, risks, trends or condition) to differ materially from the performance or condition planned, intended, anticipated, estimated or otherwise expected by the Company (collectively, "expectations") and described in the information in the Company's forward-looking and other statements, whether expressed or implied. Although the Company believes them to be reasonable, those expectations involve known and unknown risks, uncertainties, and other unpredictable factors (many of which are beyond the Company's control) that could cause those expectations to fail to occur or be realized or such actual performance or condition to be materially and adversely different from the Company's expectations. In addition, new risks and uncertainties arise from time to time, and it is impossible for the Company to predict these matters or how they may arise or affect the Company. Accordingly, the Company cannot assure you that its expectations will be achieved in whole or in part, that the Company has identified all potential risks, or that the Company can successfully avoid or mitigate such risks in whole or in part, any of which could be significant and materially adverse to the Company and the value of your investment in SGRP's Common Stock.
You should also carefully review the risk factors described in the Annual Report (See Item 1A, Risk Factors) and any other risks, cautions or information made, contained or noted in or incorporated by reference into the Annual Report, the Proxy Statement or other applicable SEC Report. All forward-looking and other statements or information attributable to the Company or persons acting on its behalf are expressly subject to and qualified by all such risk factors and other risks, cautions and information.
The Company does not intend or promise, and the Company expressly disclaims any obligation, to publicly update or revise any forward-looking statements, risk factors or other risks, cautions or information (in whole or in part), whether as a result of new information, risks or uncertainties, future events or recognition or otherwise, except as and to the extent required by applicable law.
Investor Relations Contact:
Sandy Martin or Phillip KupperThree Part
Financial Statements Follow,
SPAR Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
(In thousands, except per share amounts)
Three Months Ended
Nine Months Ended
September 30
September 30
2025
2024
2025
2024
Net revenues
$
41,416
$
37,788
$
114,087
$
130,586
Field management
2,048
2,569
7,489
6,681
Direct expenses
31,678
26,777
82,570
96,795
Gross profit
7,690
8,442
24,028
27,110
Selling, general and administrative expense
9,187
8,558
22,994
24,322
Restructuring costs and severance
4,018
-
4,018
-
Loss (gain) on sale of business
-
960
-
(4,786
)
Depreciation and amortization
404
454
1,185
1,380
Operating (loss) income
(5,919
)
(1,530
)
(4,169
)
6,194
Interest expense
663
582
1,721
1,647
Other expense, net
463
472
460
184
(Loss) income before income tax (benefit) expense
(7,045
)
(2,584
)
(6,350
)
4,363
Income tax (benefit) expense
1,719
(2,314
)
1,953
14
(Loss) income from continuing operations
(8,764
)
(270
)
(8,303
)
4,349
Discontinued Operations
Income from discontinued operations
-
-
-
1,381
Loss on disposal of business
-
-
-
(1,188
)
Income tax expense
-
-
-
(1,074
)
Net loss from discontinued operations
-
-
-
(881
)
Net (loss) income
(8,764
)
(270
)
(8,303
)
