Valter Pinto - IR, Capital Markets Group Jill Blanchard - CEO and President Jim Segreto - Chief Financial Officer.

Analysts:.

Good day and welcome to this 2014 Fourth Quarter and Full Year Financial Results Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Valter Pinto of Capital Markets Group. Please go ahead, sir..

Thank you, operator and good afternoon. I’d like to thank everyone for joining us today for the SPAR Group 2014 full year financial results conference call. On the call today, your presenters will be Jill Blanchard, CEO and President; and Jim Segreto, Chief Financial Officer. Before we begin, I’m going to review the company’s safe harbor statement.

Statements in this conference call that are not descriptions of historical fact are forward-looking statements related to future events, as such, all forward-looking statements are made pursuant to the Securities Litigation Reform Act of 1995.

These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project and similar expressions as they relate to SPAR Group are such forward-looking statements.

Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by SPAR Group at this time. In addition, other risks are more fully described in SPAR Group’s public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov.

With that I’d like to turn the call over to Jill Blanchard, CEO and President of SPAR Group. Jill, the floor is yours..

Thank you Valter, and thank you everyone for joining us today for our 2014 Full Year Financial Results Conference Call. SPAR Group is focused on helping Fortune 1000 companies get more out of the store. We are partnering with our clients to drive in-store sales, profits, productivity efficiency by enhancing their in-store brand presence.

During my first year here as CEO, I set out to meet our top clients, some of which have been with us for 10 years and some even 20, to understand what their needs are and what where the industry is headed. As the industry evolves, so does SPAR.

Therefore in 2014, we built a strategic plan for 2015 and beyond that lays the foundation for long-term growth through investments in new industry trends, newly evolving technologies and senior level personnel.

This effort has further enhanced our global capabilities and knowledge base, and we believe that it is the key to long term differentiation within our industry. To understand what to expect in 2015 from SPAR Group, I’d like to take a step back and discuss the shift that is unfolding today in the retail industry.

The retail industry that we operate in is evolving rapidly and that evolution includes the growth of brick and mortar retail sales. According to FTI Consulting 90% of the $3.7 trillion in total retail sales for 2015 is expected to be from the brick and mortar stores.

Even more so, brick and mortar sales are expected to make up 85% of the $7 trillion in retail sales by 2024 and that’s nearly $2.7 trillion in growth over the next 10 years and more than $2 trillion more than the growth for online retail. One of our newest clients Apple is a really good example of this.

They’ve figured out early on that the consumer wants to go to the store, touch and feel the product and engage in discussions about their purchases. Today e-commerce companies like the Amazon is following this playbook and are now opening up physical stores.

Our experience, our global reach and insight, adaptation to retail trends and dedication to technology leadership perfectly positions SPAR to grow alongside the industry.

The future of retail is all about reinventing the in-store experience, growing trends for the downsizing of stores in the smaller formats that provide a more intimate shopping experience, setting up stores that cater to local taste and the establishment of Omni-channel as a new retail model.

For us operational flexibility and efficiency, our technological leadership, our capability to provide valuable data to our clients in real-time and our global connectivity are increasingly important as these trends continue.

SPAR is poised to capitalize on retail needs resulting from these trends such as one, the need for in-store merchandising to be aligned with the online experience; two, the need for stores to be reset to take advantage of the explosion in mobile technology; three, the need for Click & Collect customers to be serviced without disrupting the service of in-store shoppers; and four, the need for merchandising data to provide key insights on shopping behavior by region, by market and by store.

We’re actively building, marketing and selling our expertise in these areas with existing and with new clients. While having a skilled workforce with expertise is core to our business, our evolving technology and global rich are the key competitive advantage and reason why SPAR has continued to grow year-after-year our more loyal client base.

As you might imagine, our global clients such P&G, Apple and Sony are actively seeking mobile solutions to better manage workforce as well as recording and analyzing retail data across the globe. To our tool, these clients are connected in real-time within cycle[ ph] data point.

Our SPARTrac global retail service operation system is the first and only retail service management system to work seamlessly worldwide in a multiple languages. It is a key selling point for SPAR. It allows our global clients to have more visibility and control over their merchandising efforts in multiple countries.

And our domestic clients benefit from the insights that we provide along with the new tools solutions that we develop through these global partnerships which are then applied to their business.

SPARTrac has by far the most capabilities of any retail service option system with more than 10-times the applications of many others, enabling the most efficiency and productivity. Its data collection capacity is unlimited. We have collected more than 1,000 data points in a single store visit and most of our competitors collect only a handful.

Our pursuit of technological leadership does not stop here. We continue to invest in source and technologies that can add value to the retail service industry.

A couple of examples include the integration of voice recognition software that can greatly increase order efficiency and the incorporation of cloud sourcing with merchandising to create a differentiated and cost efficient cloud merchandising service. We have invested in talent as well.

We have assigned Todd Bryce to lead International Business Development; appointed Dave Manchester as Senior Vice President of Customer Development; and also appointed Dave Musiel as Senior Vice President of Marketing.

Their experience and success across operations, client services, sales and marketing are great fit for SPAR and for our clients globally. Todd Bryce has been an outstanding leader over the past 8 years, driving SPAR Group’s domestic operational success and leading our client service teams.

His ability to identify customer needs, build and implement operational plans, and execute with the highest quality has been instrumental in SPAR retaining and growing our current customer base.

Going forward, Todd is going to retain focus on domestic operations and expand his role by lending his significant experience to the International Business Development Team.

Todd’s thorough understanding of SPAR, his operational expertise, and his 25 year retail industry experience are the perfect combination to identifying and integrating future acquisition opportunities internationally.

Dave Manchester joins SPAR Group with 20 years of experience in the retail industry and proven success in Strategic Account Management and Sales across multiple companies including Nielsen, Wrigley & HAVI. He is known for delivering value to his customers resulting in strong partnerships that ultimately lead to the increased revenue.

SPAR is thrilled to have him join our team. Dave Musiel brings a wealth of relevant experience to SPAR with over 20 years in building brands, and leading the creation of innovative solutions in the areas of in-store and shopper marketing, sales promotion, experiential marketing and social media.

Dave has worked with some of the biggest marketing agencies in the world on both brand and retailer clients, including Coca-Cola, IKEA, Kellogg’s, and Sony. Dave’s vision, creativity and marketing knowledge will be a big asset for SPAR.

Before I turn the call over our CFO Jim Segreto for a more detailed view of the financial results in 2014, I do want to highlight a few things. In 2014, our revenue totaled $122 million, an increase of 9% year-over-year. It’s worth noting that since 2010, our business has grown at a compounded annual growth rate of approximately 18%.

Also net income for 2014 totaled $3.3 million or earrings per diluted share of $0.15. International operations were a driving factor on this growth. During the year, international division experienced 12% growth but if that adjusted for local currency actually grew at 20%.

With that I would now like to turn the call over to Jim Segreto, who will provide greater detail on our 2014 financial results.

Jim?.

Thank you, Jill. I would also like to welcome everyone to today’s call. As Jill highlighted, our net revenues for the year ended December 31, 2014 were $122 million compared to $112 million for the same period last year, an increase of $10 million and 9%.

However, when we adjusted for foreign currency translation, our overall growth was 14% and our organic growth was 10% year-over-year.

Domestic net revenues totaled $46.4 million in the year ended December 31, 2014 compared to $44.6 million for the same period in 2013, an increase of $1.8 million or 4% primarily attributable to the continued growth of our company syndicated services, increased project work and a full year impact of the acquisition of the competitive company in 2013.

International net revenues totaled $75.6 million for the year ended December 31, 2014 compared to $67.4 million for the year ended December 31, 2013, an increase of $8.2 million or 12%.

Key contributors to the 2014 increase in international net revenues were China at $2.9 million primarily due to the acquisition of the Unilink; Mexico $2.8 million; India $2.1 million; and South Africa at $1.6 million. Adjusting for the impact of foreign currency, the organic growth in the international division would have been 14%.

The company’s gross profit margins were 25% for both years ended December 31, 2014 and 2013. The domestics division’s gross profit margins were 32% for both years ended December 31, 2014 and 2013 while the international gross profit margins improved by 1 percentage point from 20% in 2013 to 21% for the year ended December 31, 2014.

The improvement in international gross profit margin was primarily driven by lower cost business in both South Africa and the China markets. The company reported net income attributable to SPAR Group, Inc.

of $3.3 million for the year ended December 31, 2014, or $0.15 per diluted share compared to net income of $3.4 million for the year ended December 31, 2013, or $0.15 per diluted share. Also those are based on diluted outstanding shares of approximately 21.7 million.

Our balance sheet remains strong with cash at $4.4 million as of December 31, 2014 compared to $2.8 million at the end of December 2013. Our working capital improved from $10 million in 2013 to $16.5 million in 2014 and total equity improved to $23 million. With that, I’d like to turn the call back to Jill for closing remarks..

Thanks Jim. Our balance sheet remains strong with the flexibility to explore additional opportunity. The industry is highly fragmented with smaller players who have skilled labor and excellent contracts but lack technology capability of SPAR.

Domestically we are in discussions with several candidates that can expand our current service offerings and internationally we are focused on expansion efforts in South America and Asia and we are continuing to explore expansion in our current countries.

We are optimistic about our future and believe that the investments that we are making in talented management and evolving retail trend and technology will lead a stronger client relationship and ultimately create greater value for our shareholder. On behalf of the entire team here at SPAR Group, we appreciate everyone for being on the call today.

This ends our prepared comments and we are now available to answer any questions. Thank you..

Operator:.

Okay. Thank you again. I want to thank everyone for taking the time to join us on today’s call..

This does conclude the conference. We thank you for your participation..