SPAR Group, Inc. (SGRP) reported significant changes in its financial performance for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Net revenues for the third quarter decreased by 43.8% to $37.8 million from $67.3 million, while revenues for the nine-month period fell 17.1% to $163.8 million from $197.6 million. The Americas segment, which includes operations in the U.S., Canada, and Mexico, saw a revenue decline of 34.0% in Q3, totaling $35.5 million, and a 6.7% decrease for the nine months to $144.2 million.

Cost of revenues also decreased, with Q3 costs dropping to $29.3 million from $54.0 million, and nine-month costs down to $131.8 million from $157.0 million. This led to a gross profit of $8.4 million for Q3, representing 22.3% of net revenues, compared to $13.4 million (19.9% of revenues) in the prior year. However, the company reported an operating loss of $1.5 million for Q3, a stark contrast to the operating income of $1.5 million in Q3 2023. For the nine-month period, operating income improved to $14.0 million from $6.7 million.

Net loss for Q3 was $(232,000), down from a net income of $1.1 million in the same quarter of 2023. Conversely, net income for the nine months rose to $11.0 million from $4.0 million, indicating a strong performance despite the quarterly loss.

SPAR Group's total assets decreased to $67.4 million as of September 30, 2024, from $90.3 million at the end of 2023. Total current liabilities also fell to $34.3 million from $48.6 million, while cash and cash equivalents increased significantly to $19.7 million from $10.7 million.

Strategically, the company has been active in divesting non-core assets, including the sale of its South African joint venture and other international interests, which contributed to a gain of $7.2 million in Q1 2024. Additionally, SPAR Group entered into a merger agreement with Highwire Capital, LLC, for a cash merger valued at $58 million, with a special stockholder meeting scheduled for October 25, 2024, to approve the transaction.

The company has also adopted new accounting standards related to segment reporting and business combinations, with no material impact expected. Overall, SPAR Group's financial results reflect a challenging market environment, yet the company has shown resilience through strategic asset management and operational improvements.