SPAR Group, Inc.

Good morning and welcome to the SPAR Group's fourth quarter and full year fiscal 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you can press star then on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I'll now turn the conference over to Sandy Martin, three partner advisors. Please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the SPAR Group, Inc.' 's conference call to review 2022 fourth quarter and fiscal year results. Joining me on the call today are SPAR's Chief Executive Officer, Mike Matacunas, and the company's Chief Financial Officer, Antonio Calisto-Pedo. This call is being webcast and can be accessed through the audio link on the events and presentations page of the investor relations section at investors.sparinc.com. Information recorded on this call speaks only as of today, so please be advised that any time-sensitive information may no longer be accurate as of the date of any replay or transcript reading. I would also like to remind you that statements made in today's discussion that are not historical facts including statements or expectations of future events or future financial performance, and or forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements by their nature are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. please refer to the earnings press release that was issued today for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Management may also refer to non-GAAP financial measures, and reconciliations to the nearest GAAP measures can be found at the end of our earnings release. SPAR Group assumes no obligation to publicly update or revise any forward-looking statements. Finally, the earnings press release we issued earlier today is posted on the investor relations section of our website at sparinc.com. And now I would like to turn the call over to the company's CEO, Mike Matacunas. Mike?

Thank you, Sandy, and good morning, everyone. I am pleased to share our fiscal 2022 results. At the end of our prepared remarks today, we will open the line for questions from analysts and institutional investors. Fiscal 2022 was a transformational year for the company. We successfully grew our businesses, which primarily include merchandising, reset and remodeling, and distribution services, with exceptional strength in the United States and Brazil. Australia was also strong, albeit it's small in comparison to our other geographic footprint. Our 2022 top 10 clients make up 49% of our revenue, which are primarily located in the Americas. These longstanding recurring clients add stability and predictability to our business model. I will speak about our opportunity pipeline and outlook for fiscal 2023 after Antonio provides more details on our 2022 results. I am very pleased with the company's performance for the year. We established priorities and initiatives for 2022, and we met or exceeded our objectives. Our top-line margin and operational initiatives were successfully accomplished in a dynamic and challenging macroeconomic backdrop. The demand environment remained robust throughout 2022, and we were successful implementing technology to advance our recruiting and client service efforts. I'm proud of our entire SPAR team and want to thank them for their hard work and dedication last year. Now turning to our results. We reported record full-year revenue of $261 million, which grew by 3.5% on a constant currency basis. For the fourth quarter, total revenue was $64.6 million, This reflects a strong 7.7% increase year-over-year on a reported basis. On a constant currency basis, which excludes the FX impact, revenue grew by 11.8% over the year-ago quarter. Our Americas segment reported record revenue of $48.6 million, an increase of 20.8%. And the Americas grew organically or on a constant currency basis by 21.2% during the fourth quarter, which was due to strong momentum in the U.S. and Brazil. The Americas segment also includes Mexico and Canada. Within the Americas, the U.S. grew by over 20% and delivered close to $25 million in revenue. Our core merchandising services business grew by 28% in the fourth quarter with the addition of new clients and expansion in our current client agreements. Our resets and remodel business was up 72%, and it is worth noting this division has more than doubled over the past five years, up 113%. The momentum continues as we're working together with more than 20 of the largest retailers in the country, often as a preferred partner, to help them reset categories, remodel locations, and renovate stores. We continue to remain bullish on the prospects of our remodel business as the industry continues to invest in reinventing physical stores across key segments such as big box, discount, drug, and convenience. Our Brazil joint venture reported record growth of 30% in the fourth quarter. This strength is based on winning new business and an expanded share of wallet for existing clients. In addition, we grew EBIT for our Brazil venture by 49%. We've expanded our scope of work for several key clients, including Nivi and Red Bull. And in 2023, we've been awarded a three-year contract with 3M. Adding new logos with large international companies speaks to our positive reputation as a global service partner. Our EMEA segment representing our joint venture in South Africa, reported revenue of $9.4 million, down 2.1%, and on a constant currency basis, expanded by 13.6% over the prior year quarter. We have won new clients, renewed large multi-year agreements, and increased EMEA EBIT on a reported basis of 27%. Organically, EBIT for EMEA grew by a strong 28.5% over last year's quarter. The strengthening of the U.S. dollar devalued the RAND in 2022. Asia Pacific segment reported revenue of $6.7 million, which represents a decline of approximately $3.5 million, or 34.8%. On a constant currency basis, total revenue was down by 26.9% due to China revenue declines of 46%, Japan declines of 33%, India declines of 17%, offset by a strong 25% increase in Australia, albeit small numbers in this joint venture. We continue to watch the APAC market. It makes up approximately 9% of our overall revenue, but it is immaterial to our bottom line. Therefore, we are exploring alternative approaches to improve the leverage of these businesses, ensure we are focused on delivering value for our clients. With a solid organic revenue performance in the quarter of almost 12%, let's now turn to gross margin. Our fourth quarter gross margin was 20.7% compared to 17.7% last year, a 300 basis point expansion. Our Americas segment, which represented 75% of the total business in the quarter compared to 67% last year, grew gross margin to 19.3%, more than a 500 basis point improvement from 14.2% gross profit margin a year ago. Our focus continues to be on pricing, productivity, and leverage of technology during the quarter. Our EMEA segment reported a strong 27.2% gross margin, an improvement of 120 basis points. continue to make progress on merchandiser productivity margin enhancement initiatives this year. I'm pleased that this is reflected in our fourth quarter number. The countries that make up APAC for us, China, Japan, India, and Australia combined, delivered a gross margin of 21.8%, sequentially better than 21.2% in the second quarter, and down 210 basis points from the prior year same period. Notwithstanding the strength in our consolidated gross profit during the fourth quarter, a 41% drop year-over-year in gross margin dollars from APAC impacted our consolidated gross margin percent. We continue to focus on gross profit, and I am pleased with the results to date. I believe there's more opportunity to enhance margins, and we will continue to pursue this strategy. Relative to operating income, we reported consolidated operating loss of $760,000, which had a fair bit of non-recurring noise in the numbers. In the fourth quarter of 2022, we recorded a non-cash goodwill impairment, as well as one-time expenses related to our strategic alternatives announcement. In the same period in 2021, we paid expenses related to the majority stockholders changing control. Without these non-cash and one-time expenses and carving out the APEC segment, our operating income improved from last year in the same period. As I noted in the press release, I expect these expenses and effects to be temporary in nature while we stay focusing on growing the top line and improving gross profits and creating more operating leverage. After Antonio covers the detailed financial results. I will come back and share key strategic wins and then speak about my view on our opportunity pipeline and progress. With that, I will turn the call over to Antonio to review our results.