SPAR Group, Inc.

Good day and welcome to the SPAR Group Second Quarter 2026 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. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Philip Cooper from Three Part Advisors. Please go ahead.

Thank you, operator. And good morning, everyone. We appreciate you joining us for SPAR Group, Inc.'s conference call to review second quarter 2026 results. Joining me on the call today are SPAR's chief executive officer, William Linnane, and the company's chief financial officer, Steve Hennen. This call is also being webcast and can be accessed through the audio link on the events and presentation 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 on today's discussion that are not historical facts, including statements, expectations, future events, or future financial performance are 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 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. A copy of the release was also included in an 8K submitted to the SEC. Now I'd like to turn the call over to the company's CEO, William Linnane.

Thank you, Philip. Good morning. Thank you for your interest in SPAR Group and for joining us today. After our prepared remarks, we will open the line for questions. The second quarter represented an important milestone in SPAR's transformation. We returned to profitability for the first time since the first quarter of 2025. We also delivered more than 60% year-on-year growth in adjusted EBITDA and maintained gross margins above 22%. These results reflect the progress we've made over the last 12 months to simplify the business, strengthen operating discipline, improve the quality of our revenue, and focus on profitable growth. While there was a revenue mix shift to higher margin business which impacted overall growth in the quarter, We have focused our efforts on markets and accounts where we have the scale and expertise necessary to offer competitive rates to the customer and still earn a reasonable return on the investment. We maintained pricing and operational discipline, supporting a stronger profitability program. We have continued to prioritize reoccurring merchandising programs over lower margin project work, and the results are increasingly evident in both our earnings and cash generating potential. Importantly, the underlying health of the business continues to improve. Both our core U.S. merchandise business and our Canada operations generated sales growth in the quarter. Canada remains a strong performer, underscoring the strength and resilience of our diversified North America platform. At the same time, our operational initiatives are gaining traction. Gross margins have stabilized in the low 20% range and remain towards the upper end of our guidance. We continue to believe there is a clear path towards achieving gross margins of approximately 25% over time as our revenue mix improves, productivity initiatives mature, and scale benefits increase. We are also making significant progress in building a leaner, more efficient organization Our actions over the last year have reduced complexity, improved execution, and positioned the business to drive greater operating leverage as we grow. We continue to expect our underlying SG&A run rate to trend towards approximately 20 million annually. Looking ahead, I believe the business has been in a fundamentally stronger position than it was a year ago. Our balance sheet has improved during the first half of the year. Our operations are delivering greater consistency. and we have established a clear roadmap to enhance how SPAR executes, goes to market, leverages technology and delivers financial performance. Overall, we believe we're building a business with improving momentum, expanding operating leverage and increasing visibility into long-term value creation. Finally, we began trading on the OTCQB in late July under the same ticker symbol, SGRP, following the NASDAQ delisting notice. Notably, this has not changed our strategy. Our focus remains on execution, operational improvement, and maintaining transparency. I will discuss our strategic initiatives in a few moments after Steve covers our detailed financial results for Q2. Steve.