SPAR Group Reports 31.1% Revenue Decline in Q1 2025 Amid Strategic Market Exits

SPAR Group, Inc. reported a significant decline in financial performance for the first quarter of 2025, with net revenues of $34.0 million, down 31.1% from $49.4 million in the same period of 2024. The decrease is attributed primarily to the company's strategic exit from several international markets, including South Africa, Mexico, China, Japan, and India, during 2024. Gross profit also fell to $7.3 million, compared to $9.7 million a year earlier, while operating income dropped to $1.0 million from $8.7 million. The company recorded net income of $462,000, a sharp decline from $7.2 million in the previous year.

In terms of operational metrics, SPAR Group's cost of revenue decreased to $26.8 million, representing 78.6% of net revenue, down from 80.3% in the prior year. Selling, general, and administrative expenses also saw a reduction, totaling $5.9 million, or 17.2% of net revenue, compared to $7.7 million, or 15.6% of net revenue, in the first quarter of 2024. The company’s interest expense remained stable at approximately $0.5 million for both periods. The overall decline in revenues and profitability reflects the impact of the company's strategic decisions and market conditions.

SPAR Group has undergone significant organizational changes, including the exit from international joint ventures, which has led to a streamlined focus on its North American operations. The company now operates primarily in the United States and Canada, with a commitment to enhancing its merchandising and brand marketing services. As of March 31, 2025, SPAR Group's total assets increased to $70.2 million from $56.4 million at the end of 2024, driven by higher accounts receivable and cash reserves. The company reported a total employee headcount of 23,449 shares outstanding, consistent with the previous year.

Looking ahead, SPAR Group is actively pursuing strategic alternatives to enhance its operational efficiency and financial performance. The company is evaluating refinancing options for its credit facilities, which are set to expire in October 2025. Management believes that its existing credit facilities and projected operational results will be sufficient to meet its liquidity needs over the next 12 months. However, the company acknowledges potential risks, including delays in receivables collection and economic downturns, which could adversely affect its cash flow and operational capabilities.