SPAR Group, Inc.

Good morning, and welcome to the SPAR Group Second Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note, this event is being recorded. I would now like to turn the conference over to Sandy Martin of Three Part Advisors. Please go ahead.

Thank you, Operator, and good morning, everyone. We appreciate you joining us for the Spar Group, Inc. conference call to review the second quarter 2024 results. Joining me on the call today are Spar's Chief Executive Officer, Mike Matakunas, and the company's Chief Financial Officer, Antonio Calisto-Pato. This call is also 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. The 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 the statements made in today's discussion that are not historical facts, including statements, expectations, future events, or future financial performance, 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 today's earnings press release 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 update or revise any forward-looking statements publicly. Finally, the earnings press release we issued earlier today is posted on the investor relations section of our website at sparinc.com. A release copy was also included in the eight case submitted to the SEC. Now I would like to turn the call over to the company's CEO, Mike Matacunas.

Thank you, Sandy, and good morning. I am pleased to share our second quarter results and continued progress. We will not be opening the line for questions today in light of our announced co-private transaction that is in process. We announced on June 5th that we signed a letter of intent with Highwire Capital to take Spar Group private. This process is ongoing. and we will make additional announcements as we complete the appropriate steps. For the second quarter, our consolidated revenue was $57 million as we exited several global joint ventures in the quarter, and the performance of these businesses was in last year's numbers. To be specific, note that South Africa, China, Australia, and National Merchandising Services revenue was not in our 2024 second quarter numbers. Brazil was in two of the three months in the quarter. We realize this makes comparing our performance difficult as we complete the simplification of our business. Perhaps the best way to think about our second quarter is to look within our America segment that made up 94% of the company's total quarter revenue. Let's look at the United States and Canada specifically. These are our core businesses, and they had a strong performance. The United States revenue was up 37% over last year. You may recall that our remodel business had slowed in the second quarter last year while clients pulled back on capital projects. As I noted in last quarter's call, the remodel business recovered faster than we expected and grew by 88% over last year in the second quarter. We've added new clients and expanded our key client relationships. The merchandising work also grew in the second quarter. We re-signed a $5 million annual agreement with a long tenured client and expanded our work in another small box discount retailer with more than 10,000 stores. At the same time, we negotiated a new four-year $25 million plus agreement with a leading brand that expands our current business and covers both the United States and Canada. Behind both of these growth stories is our assembly and distribution services business that grew by 17.5% in the second quarter. We expanded our services and distribution centers and initiated new work in bike assembly for a large retailer. Consolidated gross margin for the quarter was 19.2%. This is a 100 basis point improvement over the first quarter reflects the strong growth in remodel and transformation work. The remodel and transformation margins are lower than merchandising, so when this grows disproportionately, the consolidated margin is lower. SG&A for the second quarter was $9.5 million, down $1.1 million from $10.6 million last year, but up 60 basis points as a percent of revenue. As you might expect, as we divest from these international joint ventures, the cost of exiting has a tail on it. In addition, we are spending money to support our strategic initiative. In general, we believe the dollars are trending the right way and we are managing SG&A carefully. As a result of the one-time capital gain, consolidated EBITDA for the quarter was $6.4 million, up approximately $4 million from last year. The resulting net income attributable to SPAR for the quarter was $3.6 million, or 15 cents per share. We have more work to complete the simplification of our business. We are announcing our exit of our business in Japan today. This transaction has been completed and will close without condition later this month. We continue to operate in the U.S., Canada, Mexico, and India. The core of our business is the U.S. and Canada with significant growth potential. We have dialed in our ability to recruit. The pipeline is strong. Cash is excellent. We are energized by the market's reaction to our strategy. After Antonio covers more detailed financial results, I will share additional thoughts and insights about the business. Antonio.