Nasdaq:SGRP
SPAR Group, Inc.
A US-based consumer packaged goods distributor offering leading national brands like Tropicana and Hellmann's to retail and foodservice sectors.
Key Metrics
Investment Thesis
Bull Case
SPAR Group holds a dominant position in the distribution of high-demand CPG brands that offer inherent stability against inflationary pressures. The company's diverse portfolio in health and wellness provides growth opportunities beyond traditional grocery products. Strong brand partnerships could enable margin expansion once the current revenue contraction stabilizes.
Bear Case
The sharp decline in revenue and a net loss of $2.7M signal deteriorating business fundamentals that may persist if consumer demand weakens further. Heavy reliance on revolver financing with significant outstanding draws poses a liquidity risk if credit markets tighten. The substantial loss from discontinued operations indicates strategic restructuring costs or failed product lines that erode shareholder value.
About SPAR Group, Inc.
SPAR Group is a leading distributor of consumer packaged goods operating primarily within the United States, specializing in brands such as Tropicana, Hellmann's, and Ocean Spray. The company serves retail chains, foodservice providers, and other wholesale customers with a robust logistics network that ensures product availability. Its revenue streams are driven by high-volume sales of branded grocery items and private-label products across various retail channels.
Analysis
Management Discussion
Despite a significant drop in total revenue to $196.8M compared to prior years, the company continues to manage its balance sheet through substantial financing activities involving revolving credit facilities. The shift from net income in previous years to a net loss of $2.7M in 2024 highlights challenges in controlling operating expenses relative to declining sales volumes. Management appears to be utilizing significant debt capacity, as indicated by large revolver proceeds and repayments, to fund operations or strategic initiatives amidst a downturn.
Industry Overview
The consumer packaged goods distribution industry is characterized by high competition among distributors who strive to secure exclusive brand rights and optimize logistics efficiency. Companies in this sector face constant pressure to maintain low operating margins while managing complex supply chains and inventory levels. Industry consolidation continues as larger players seek scale advantages to compete with e-commerce giants and discount retailers.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $261.3M | $262.7M | $196.8M |
| Cost of Revenue | $201.5M | $202.1M | $158.4M |
| Gross Profit | $51.0M | $55.5M | $38.5M |
| Operating Expenses | $45.6M | $46.1M | $37.5M |
| Operating Income | $5.4M | $9.4M | $924.0K |
| G&A | $41.1M | $43.7M | $37.3M |
| Stock-Based Comp | $346.0K | $297.0K | $137.0K |
| D&A | $2.0M | $2.0M | $1.6M |
| Other OpEx | $4.5M | $2.4M | $268.0K |
| Non-Operating Income | $-9.5M | $-11.5M | $310.0K |
| Pre-Tax Income | $-4.1M | $-2.1M | $1.2M |
| Income Tax | $2.8M | $2.4M | $1.2M |
| Continuing Ops | $-6.9M | $-4.5M | $16.0K |
| Discontinued Ops | $9.0M | $9.3M | $-2.7M |
| Net Income | $2.1M | $4.8M | $-2.7M |
| Minority Interest | $2.9M | $874.0K | $463.0K |
| Net to Common | $-732.0K | $3.9M | $-3.1M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $80.9M | $76.1M | $46.0M |
| Cash & Equivalents | $9.3M | $10.7M | $18.2M |
| Accounts Receivable | $63.7M | $59.8M | $24.8M |
| Prepaid Expenses | $7.9M | $5.6M | $3.0M |
| Other Current Assets | $0 | $0 | $0 |
| Long-Term Assets | $13.7M | $14.2M | $10.4M |
| PP&E (Net) | $3.3M | $2.9M | $2.0M |
| Intangibles | $2.0M | $1.2M | $841.0K |
| Goodwill | $1.7M | $1.4M | $856.0K |
| Operating Leases | $969.0K | $2.3M | $630.0K |
| Other LT Assets | $5.7M | $6.4M | $6.1M |
| Total Assets | $94.6M | $90.3M | $56.4M |
| Current Liabilities | $54.6M | $48.6M | $30.1M |
| Accounts Payable | $10.6M | — | — |
| Current Debt | $18.0M | $17.5M | $500.0K |
| Current Leases | $363.0K | $1.2M | $276.0K |
| Deferred Revenue | $2.4M | $1.9M | $892.0K |
| Other Current Liab | $23.2M | $28.0M | $28.4M |
| Long-Term Liabilities | $2.0M | $1.5M | $2.1M |
| Long-Term Debt | $1.4M | $310.0K | $1.7M |
| LT Operating Leases | $606.0K | $1.2M | $353.0K |
| Other LT Liab | $0 | $0 | $-16.1M |
| Total Liabilities | $56.5M | $50.0M | $32.1M |
| Shareholders' Equity | $38.1M | $40.2M | $24.3M |
| Paid-In Capital | $20.7M | $21.0M | $19.9M |
| Retained Earnings | $6.7M | $10.6M | $7.5M |
| AOCI | $-4.9M | $-3.3M | $-1.2M |
| Treasury Stock | $285.0K | $285.0K | $2.1M |
| Total L&E | $94.6M | $90.3M | $56.4M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $2.1M | $4.8M | $-2.7M |
| Non-Cash Adjustments | $-22.2M | $15.4M | $-17.0M |
| Working Capital Changes | $15.0M | $-13.4M | $19.0M |
| Cash from Operations | $-5.0M | $6.8M | $-665.0K |
| Cash from Investing | $-1.8M | $-2.3M | $9.9M |
| Share Buybacks | $181.0K | $0 | $1.8M |
| Cash from Financing | $3.5M | $-3.0M | $-1.7M |
| FX Effect | $-776.0K | $-158.0K | $-58.0K |
| Net Change in Cash | $-4.1M | $1.4M | $7.5M |
| Beginning Cash | $13.5M | $9.3M | $10.7M |
| Ending Cash | $9.3M | $10.7M | $18.2M |
Frequently Asked Questions
How does SPAR Group, Inc. make money?
The company derives revenue from three primary segments: the Food Business segment which distributes major CPG brands to retailers, the Health & Wellness segment focusing on vitamins and supplements, and a third segment encompassing other grocery-related products and services.
What are the main risks for SGRP?
Significant volatility in cash flows due to aggressive revolver financing activity, evidenced by a $263.9M net outflow in other financing cash flows. The company recently recorded a substantial loss from discontinued operations of $2.7M which impacts overall profitability metrics. A sharp decline in revenue of approximately 25% year-over-year suggests potential market saturation or competitive pricing pressures. High leverage ratios associated with outstanding revolver draws create sensitivity to interest rate changes and liquidity constraints.
What is SGRP's competitive advantage?
SPAR Group leverages an extensive national distribution network that ensures superior product availability for its customers. The company benefits from strong relationships with top-tier brand owners like Unilever and General Mills, providing stable revenue streams. Its diversified portfolio across food, health, and wellness categories mitigates risks associated with single-brand fluctuations.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.