Spar Group 2025 Q1 Earnings Disappointing Net Income Plunge by 93.6%

Spar Group reported its fiscal 2025 Q1 earnings on July 17, 2025. The company's earnings fell short of expectations, with net income dropping significantly compared to the previous year. Despite this decline, the company has focused on expanding its U.S. and Canada operations, expecting improved performance in the second quarter of 2025. The guidance remains positive, with a pipeline of over $200 million in future business opportunities. However, no specific quantitative targets are provided for revenue or EPS in the forward-looking statements.

Revenue

The total revenue for Spar Group decreased by 31.1% to $34.04 million in 2025 Q1, compared to $49.40 million in 2024 Q1. This decline primarily reflects the company's strategic decision to exit international joint ventures, concentrating operations in North America.

Earnings/Net Income

Spar Group's EPS declined dramatically by 92.9% to $0.02 in 2025 Q1 from $0.28 in 2024 Q1, while net income fell by 93.6% to $462,000 from $7.18 million. The sharp decline in EPS and net income signals a challenging quarter for the company.

Price Action

The stock price of Spar Group has jumped 12.55% during the latest trading day, has surged 16.84% during the most recent full trading week, and has climbed 4.72% month-to-date.

Post-Earnings Price Action Review

Over the past three years, the strategy of acquiring Spar Group shares post-revenue raise quarter-over-quarter on the financial report release date and holding them for 30 days yielded a poor return of -9.80%, considerably underperforming the benchmark return of 85.48%. This resulted in an excess return of -95.29%, with a compound annual growth rate (CAGR) of -2.05%, indicating consistent losses and a lack of growth. The data suggests that buying Spar Group shares under these conditions has not been a successful strategy, and investors should be cautious when considering similar approaches in the future.

CEO Commentary

Mike Matacunas, President and CEO of Spar Group, stated, “This is the first quarter we are reporting without any international joint ventures. Our U.S. and Canada business achieved 6% topline growth, improved operating margins, and reduced SG&A, resulting in $0.5 million net income from continuing operations or $0.02 EPS. I remain bullish on our future and plans.” He expressed disappointment over the termination of the merger agreement with Highwire Capital but emphasized the company’s commitment to pursuing a termination fee. He noted the company is positioned for future success and exciting announcements in the coming months.

Guidance

Spar Group is focused on expanding its U.S. and Canada operations, with a pipeline of over $200 million in future business opportunities. The company indicated a positive outlook, expecting continued performance improvement in the second quarter of 2025. However, there are no specific quantitative targets provided for revenue or EPS in the forward-looking statements.

Additional News

Recently, Spar Group faced governance challenges as three directors were not re-elected during the 2025 Annual Shareholders' Meeting. Despite company bylaws requiring immediate resignation upon failed re-election, these directors continue to serve until successors are appointed. This situation raises concerns about the company's adherence to its governance standards. Additionally, founder Robert G. Brown announced his voting plans for the June 12, 2025 Annual Meeting, expressing dissatisfaction with company performance and management. Brown highlighted several issues, including stock price decline, significant revenue reduction, and executive compensation increases. Furthermore, Spar Group received an Amended and Restated Commitment Letter for the financing required under the merger agreement with Highwire Capital, extending the Commitment Termination Date to February 15, 2025.