SPAR Group, Inc. :SGRP-US: Earnings Analysis: Q3, 2016 By the Numbers : November 23, 2016

SPAR Group, Inc. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of SPAR Group, Inc. – Autobytel Inc. and Insignia Systems, Inc. (ABTL-US and ISIG-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 33.44 million, Net Earnings of USD -0.06 million.
  • Gross margins narrowed from 22.08% to 20.31% compared to the same period last year, operating (EBITDA) margins now 3.17% from 2.48%.
  • Year-on-year change in operating cash flow of 13.88% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-09-30 2016-06-30 2016-03-31 2015-12-31 2015-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 33.44 29.73 26.61 32.28 28.27
Revenue Growth (%YOY) 18.29 0.9 -9.07 0.7 -8.84
Earnings (mil) -0.06 0.28 -0.14 1.03 -0.09
Earnings Growth (%YOY) 36.96 875.86 -87.84 -61.61 -124.02
Net Margin (%) -0.17 0.95 -0.52 3.19 -0.33
EPS -0 0.01 -0.01 0.05 -0
Return on Equity (%) -0.94 4.69 -2.3 17.64 -1.63
Return on Assets (%) -0.46 2.58 -1.29 9.68 -0.87

Access our Ratings and Scores for SPAR Group, Inc.

Market Share Versus Profits

Revenues History
Earnings History

SGRP-US‘s change in revenue this period compared to the same period last year of 18.29% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that SGRP-US is holding onto its market share. Also, for comparison purposes, revenues changed by 12.46% and earnings by -120.49% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 2.48% to 3.17%. For comparison, gross margins were 22.01% and EBITDA margins were 4.25% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

SGRP-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 34.20 days from 47.82 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

SGRP-US‘s change in operating cash flow of 13.88% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 0.81% to 1.72% and (2) one-time items. The company’s pretax margins are now 1.37% compared to 0.67% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for SPAR Group, Inc.

Company Profile

SPAR Group, Inc. operates as an international merchandising and marketing services company, which provides an array of services worldwide to help companies improve their sales, operating efficiency and profits at retail locations. Its operations are divided into two divisions: Domestic Merchandising Services and International Merchandising Services. The Domestic Merchandising Services division provides merchandising and marketing services, furniture and other product assembly services, Radio Frequency Identification services, technology services and marketing research to manufacturers, distributors and retailers in the United States. These services are primarily performed in mass merchandisers, office supply, grocery, drug store and other chains, and independent, convenience and electronics stores. The International Merchandising Services division provides merchandising, marketing services and in-store event staffing through the company’s subsidiaries. The company was founded by Robert G. Brown and William H. Bartels in 1967 and is headquartered in White Plains, NY.

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