What's cool on it, you should always do this. I don't know if you do it personally, but you should look through the 52-leaflets at the end of September and into the beginning of October. You should look at it every fucking day. Then just look for the companies that are getting blown out because whatever the blue bell is. It's tax law stuff, so you get like free looks at a bunch of shit. Yeah. Yeah. All right. Thank you guys for joining us at the Midwest IDEAS Conference today. Our next presenting company is SPAR Group, traded on the NASDAQ exchange under SGRP. Here from the company today are Mike Matacunas, Chief Executive Officer, and William Linnane, Chief Strategy and Growth Officer for the company. William? Okay. Thank you, Phillip. I'm William Linnane. I'm our Chief Strategy and Growth Officer at SPAR Just a little bit of background. I'm about 25 years in the retail industry. Worked for a company called Tesco in Europe for 14 years. I ran their fresh food business in Ireland and I ran their candy, snacks, beverage business in the U.K. Originally started in finance, so I've got finance, operating, merchandising, and retail background. Nice to meet everyone. I'm going to talk through the investment thesis and then just explain what the company does a little bit and talk about the market. I'll just touch on the numbers briefly and take some questions. We offer services to retailers and brands in terms of merchandising services and remodel services. We assemble products. We work at distribution centers. We basically provide services that they want to outsource that we can use technology to provide with labor. We go into stores and we reset products. We take pictures of products, we audit, we quality control pictures, we can send information on what's missing, what's on shelf, promotional compliance, et cetera. We work with retailers and brands in terms of what's happening at the shelf edge with labor and technology. In terms of SPAR., if you know some of the history or if you don't, we were in up to 11 countries. We have divested a number of businesses so we can focus on the U.S. and Canada. That work was done over the last 18 months. We have doubled the size of our U.S. and Canada business over the last four years. We've got a significant pipeline for the business going forward. Just to touch on technology and AI, it's changing our business in two ways. One is externally. There's a lot more demand for photos, videos, and real-time capture of what's on shelves. That means that people can analyze in real time and optimize their ability to leverage labor against problems in retail. Rather than have people full time or have their own staff full time, they can spot the things they're missing, ask for someone to go in that day or the next day and change something, understand why their buy online, pick up in store doesn't work as efficiently as it should because what's on the shelf isn't what's on the bookstock or their own system, etc. This company is in our space like Tracks, who've leaned into technology, and some of our competitors who are exploring what's out there in the market in terms of whether photo capture by individuals, whether video, or whether real-time capture of information will produce the right solutions for them going forward. It's been heavily explored in terms of trying to understand how to optimize shelves, whether it's Walmart, Kroger, and others. The other opportunity is our internal processes. Like every company, we manage people, we have processes, we run call centers, we book travel, we deploy people, we schedule people, lots of different activities which can be done differently as the world changes around us. Fourth thing is, and this goes back to the divestments, this is a simpler, more optimized business than it was before. We're not running 11 countries. We're not involved in multiple joint ventures. We're running a 100% owned U.S. business and a 100% owned Canada business. That allows us to think about our operation in terms of how can we have a simpler structure around that going forward. We're actively looking at that at the moment. We also have longstanding world-class clients, and I'll touch on our client base as I go through so you can get a feel for that. The last point is, in the near term, there's a strong opportunity to expand EBITDA margins, increase net income, and increase returns. We're a low CapEx business and will remain that unless we change course. For now, we're a low CapEx business. I just want to talk about the wider market. As you probably all know, there are significant challenges that retailers are struggling with, and they're similar to the challenges they've had in the last 10 or 20 years around accuracy of inventory, availability. They're exasperated somewhat as most retailers are using their stores as partially fulfillment centers, right? A significant portion of their sales are coming from digital fulfillment. A significant portion of that is being done through stores, right? Knowing exactly what's on shelf in an accurate way, knowing that things are set up accurately in terms of promotions, price integrity, all of that remains as relevant as it was 10 or 20 years ago, but it's more of a pain point for the customer experience for retailers. That's everyone from Home Depot to Walmart to Dollar Tree to CVS. They're all trying to find a solution for how do I get a better handle on my inventory? How do I know exactly what's available? How do I use either data or images to solve that problem? There are a lot of challenges with labor. They want less fixed labor, more flexible labor. They don't want to add extra people that are 40 hours a week. They don't want to engage with agencies or other people that can help them and add fixed labor 40 hours a week. They want to work with people who can provide flexible labor, whether that's W2s, contractors, or crowd-based solutions. That's all being actively looked at. They really want to solve some of their issues in more real time to what I said earlier. If there are products missing, but they're actually in the back of the store and they can see that through their data, can someone go in and pull that out? Their labor models are really tied and have become tighter as labor has increased in cost over the last five years. Ultimately, empty is always wrong. You go into any retail store, even the best in the country, Walmart, Kroger, whoever, and you will see gaps. If you check what's on the shelf versus their systems, you'll see inconsistencies. These are the things that they're grappling with. We provide the labor with technology to solve these things, and that will increasingly become more of a tech solution than a labor solution as real-time capture of information becomes more commonplace. At the moment, we're going in and doing audits, we're doing product replenishment, resets, remodels. If we go back five years, a lot of that labor was done and we'd give a report. Now it's everyone wants a photo, and we captured up to 7 million photos last year, but it's moving beyond that. They want to understand what the shelf looked like when we went in, when we left. They want to understand, can we integrate to their capture of real-time data? There are lots of companies looking at how to do that best, whether it's a robot going around the store, whether it's cameras in real time, etc. The industry's changing, but the basics are still the same in terms of can I get someone in to fix that, but how do you trigger the action? We have 7,000 associates across the U.S. and Canada, over 200 clients, and 50,000 locations visited, and that's growing. In our Q2 results, we were about 5% up year in year in the U.S. and Canada on the back of being up 19% next year with more to come. In terms of that real-time data capture, that's just to bring it to life, that's someone capturing an image with their own phone. That can be done as a video rather than a photo. It can be done in other solutions, as I said. We've got ourselves ready to play an active role in this market. We've moved our systems to the cloud over the last three or four years. We've worked with our clients to understand how they can optimize what they're trying to do, and we've integrated with partners some solutions to capture shelf edge and images so that we can work with them on this whole area, which is a big topic going forward. Just to touch on, I covered some of this, but the company transformation is probably worth calling out. We've exited eight international joint ventures. They're listed here. We owned 100% of our Japan business. We exited. In the U.S., we exited one of our joint ventures and we purchased the other one. We own 100% of our U.S. business. We returned about $10 million+ to the balance sheet through that exercise so that we've got options and are a stronger company going forward. We moved our tech to the cloud. We've right-sized the organization. There's more to do on that as we look forward. We're moving our head office to Charlotte from Detroit. We believe that positions us closer to our bigger clients. If you think of Lowe’s, Home Depot, Walmart, Dollar Tree, Family Dollar, Office Depot, a lot of the bigger retailers are based in the Southeast, and the brands are obviously spread around the country. We've reorganized our focus on the U.S. and Canada, which is why at the Q2 results. If you have read them, we've talked about a pipeline of $200 million, and that's a real number in terms of conversations we're having with brands and retailers about future business. Some of our clients I've talked to, some of these, some of them are very long term. We've been with some of these companies 20+ years. Mostly retailers and brands, as you can see, McKesson's in there. They own their own franchise business of Health Mart Pharmacies, and we're their sole provider. We do all the work I'm talking about in their stores, just to make that connection. You'll be familiar with all the logos on this page. Just to talk about the numbers, the comparisons in the public domain talk to the 2024 numbers inclusive of the joint ventures and international businesses we've exited. I think in terms of looking at exactly where we are now, we just pulled out the balance sheet at the end of June and the six months to the end of June so you can get a sense of the business. Revenue is $73 million. You can see the EBITDA and the operating income. The balance sheet's on the right-hand side, and you can see our cash position, $14 million at the end of June. The other thing worth calling out, and it's on the bullet points on the slide, we did get a number of offers for the company last year. They've all been documented in the public domain. The last offer, the one that the company accepted, was from a company called Highwire Capital for $2.50 a share. That transaction didn't get executed, but it got terminated at the end of May. There are some costs related to that, which are in the first half of the year, which are exceptional. Overall, we're in a far stronger place than we've been, a far more focused place than we've been. Five-year vision. Go ahead. Where are you guys? Oh, I think you lost us in the offers. No, the other offers came before. We got two or three other offers between about $1.65 and $2, and then Highwire came in with a $2.50 offer, which we accepted and then put to their shareholder vote, which got approved in October. I'm sure not, but considering it's all dropped. No, not at this point. Did they rescind the offer? They didn't get funding. What penalty funds were you going to get? Are Are you going to follow through on the purchase of your company? Yeah, we just issued an 8-K and the press release in terms of that point. We negotiated with them. It was basically roughly a $2 million termination penalty. We negotiated with them for them to buy shares to that effect, to invest in the company at $2 a share. They didn't reach the threshold of investing $2 million. We're pursuing them for the balance of the termination agreement. A group of the investors behind Highwire agreed to invest at $2 a share for my company shares, 220,000 shares. We just announced that in the last 48 hours. It's nowhere near the financial penalty that you're looking for. That's right. We're pursuing the balance. What we did is we said that you and I said, "We already have a bunch of them." We were just showing them, and they said, "How about we buy a million shares for $2 per share?" What you did, and we saw that we got a lot more value from shares. We just didn't cash into them. I said, "Okay, you get the $2 million worth of 1 billion shares. We'll consider it that way. You don't get them too many. We won't owe any." We got through our 40,000 fill-up, which we did. The shares we announced yesterday had the right amount. It's awesome. We're looking forward. We got started on legal battle where your expenses and, you know, yeah, our expenses. We just made a full picture of them. We spent about a quarter of it last year. Okay. I'm not going to read this slide, but just in summary, and I'll come back to the investment thesis. There's an opportunity to leverage a simpler business we have now, number one. We want to make sure we optimize that opportunity in terms of FSG and etc. We are growing with our clients. There's demand for the services. The market is changing. We've got a healthy pipeline. We want to land some of that. We want to lean in, whether it's with partners or whether it's with the clients directly in terms of their aspirations of where they want to go to close that gap and understanding of what's actually on the shelf edge, what I talked about earlier. We want to take a hard look at our internal operations in terms of where there's affordable and deployable and scalable AI already existing that can make things a little bit easier for us. We believe there's options out there that we can deploy in the immediate term in the next 12 months or so that will help, again, move us to a simpler, more efficient operation. We want to continue to be energized and be innovative for our clients. We're winning business because we're trying to adapt to what they're trying to do. I believe we're doing that in a way which is better than what our competition are doing. That brings me back to the investment thesis. I've talked to some of this already. It is a huge market. Just in terms of the current market, not necessarily the future market, there's about 180,000 merchandisers in the U.S. doing this kind of work We employ about 5,000-6,000. Even without the market changing, there's a lot to grow into based on where the market's at. Talked about the U.S. and Canada being, you know, double what we were four years ago with sales growth is a good place to be in a pipeline. Tech and AI, as I said already, changes us in two ways, both what we do in the store, but also how we operate internally. I've touched on it, this being a simpler business. Really, the opportunity in the near term is to expand margins because of those reasons, focus on net income and shareholder return. We are a low CapEx business. We've spent roughly, I don't know, $1 million broadly a year. Questions. I want to just speak to you now so we can see a little bit on the website before we talk about any of the other owners. I'm saying the 10% always, you know, because I think I'm concerned. Don't go down there. Sure. There's no risk. Yeah. Tell me about the money you're looking for. Who are you thinking about? Who are thinking about? Who are you hiring to carry on? People in big retailers who want to stop doing it. I mean, as I mean, as a result, we already have the pass-through, that money through us with a report. We're not the ones that already have gone through, so we're basically receiving. Yeah. Does your business relationship with Dollar Tree include assisting the individual locations stock the shelves? Yeah. You're not commenting on this. I live in the Chicago suburbs. There's two Dollar General. There's a Dollar General in particular. I'll point it out. The Dollar General in Illinois. It's the plural. I buy stuff in the aisles, not even taken off from the carts. They're on the shelves. There used to be a situation like that in Dollar Tree in Bartlett, Illinois, right before the fact. The city, they should have a summons for how much disarray there was in the store. I mean, literally every aisle is stuffed this high and up on the floor. I'm not like you. Whether they're unfortunately continually understanding or don't care enough about the image in the store, there's definitely great value in these two chains, particularly for seasonal goods, Halloween decorations, versus a store like me. This one, your presentation really intrigued me, seeing those customers on that slide presentation. That's just two stores. Maybe there's better circumstances than others, but I haven't met others where it stays the same way. Yes, sure. Yes. I appreciate it. I mean, it's been almost a day or so more ago. It did really, really come out of the window. We do. We may have to refresh the Dollar Tree membership. They're going to be a lot of just reselling stores. They're rolling up. We had to. That I'm supposed to break the relationship. Dollar Tree is like a beam on the wayside. We're actually going to do it five days a week when we get the $135.79. We have a heavy structure. We have the results. The other is we're saying $100 with a $50 charge. Some truths you get at Dollar Tree. If there's one more Dollar Generals and Dollar Trees in the Chicago, you're $70. I think part of the answer to the question is they've got labor challenges, obviously, right? Where they can use their budget so they don't have like three people 40 hours a week, but they can have two people 40 hours a week and then use half of that third person to bring in merchandisers for five hours a day or three hours a day or deal with issues when there's genuine issues. That's where the industry's moved to and will be moving to more. What you're seeing is part of why we've got a place in the market and why that place will grow over time because they're trying to solve their own labor optimization challenges, right? Does that make sense? Let's get the store section. Dollar Tree and the Super Bowl have more pressure on their door. I see. Labor-wise, $10 million is in bank, so you'll expect someone that day. It's just because they've been one year's working and making two. On most days, you know, maintenance is gone. That's what I've been talking about. I've got a lot of time with Dollar Tree to talk about. I've got a lot of time with Dollar Tree to talk to you. They have an absolute labor problem. The interesting part is a lot of the subways don't have the branch. Dollar Tree, I said, I want you in the store, but it's going to be... This is the stall I'm doing here in Kansas. I was in the Dollar Tree two days home after that. There was one person. Works in the store. You're totally in a labor issue. Now, Dollar Tree, yeah, it's just a multi-person now. It's a city shift. Pressure is $1 million. When it was a single pressure, I mean, the margin was $100. I was... No, you're good. I'm glad to hear your perspective. I think it's looking at this hard time. I think you've asked the question. When did we join the company? Mike joined in February 2021. I joined July 2021. Why hasn't the stock been gone like four years? I know. We did get the stock. I think it went above $3 just before we had the Highwire and they offered at $2.50. It stayed close to $2.50 while that deal looked like it was going to happen, and then it dropped down. The stock has dropped since the deal was announced that it's not happening, is one thing. In terms of what's different, we had a management team that we were trying to run like nine. We were going to South Africa, Brazil, Japan, trying to understand these markets and how could we grow them with the challenge then of if we did grow them, we weren't getting the full benefit because we were 51% owners, right? Now we own 100% of the U.S., 100% of Canada. We don't have all this other distraction. We can focus on our clients in this market and Canada. We've moved our systems to the cloud, and we've put in some back office systems which are now scalable. We're in a position to run the company slightly differently going forward in terms of leveraging that opportunity. Putting our systems into the cloud in itself, that took about 18 months, but it allows us to be in a position where you not just have a more secure environment, you have a more scalable environment. As you digest 7 million pictures, which could grow to 50 million pictures with videos and other data points, you can actually partner with companies out there that are doing really interesting things to add value to the clients in the way they want that to be added. I think the share price is reflecting what's happened, and that's fine. In terms of where we are as we look forward, there's great opportunity. Mike, jump in. It wasn't a debate like this at all. I wanted to just find out. I guess the two big things that I've seen in recess, the big challenge for one are all the other public competitors who put you on the public land. You're usually maintaining those. I've looked at that. It's not a wonder that there's no question that there is because we were far more in the band before healthcare. We didn't want to be here relatively consistently. Most importantly, there's what the world looks at us as much more original than the dollars for your stock versus your... That's not... That's what we do. It's not. I'm glad I was a friend of mine doing everything you can, but it's a... There's no There's no question we're taking advantage of that. One business that's growing. The second is we have limited funds. We have two entire founders who go about 40%-something collectively. That keeps the business... We're giving a lot of you about 200,000 shares as opposed to my managing shares, which are absolutely miscellaneous. For example, on that monthly, yesterday morning, the president boards interested in increasing his shareholders. This is the decline in transactions. I'm not sure. Now the 283-year-old founders, although I want to be very efficient and tell them, but he's at least 82. Or whatever he says. A very interesting decline in some of the shares. Some of the shares are not in hand. Hope he gets a better real estate. I was here 10 years before and after that, he had my own income. I think, oh, it's like less than $1 or something like that. It was, I mean, you could say, I guess it's interesting how if I could get an opportunity to have a better chance of paying my father, but I knew that it was difficult. I was super adamant that he could hold me. Those are all very different ways of stuff. Was it just because retail's listening to online? Do you think that that's? No, no, no. careful and accurate in what we communicate. No, no, no. I know I actually was talking to someone at Walmart yesterday who runs one of their categories. They gave me a stat that said 20% of their digital fulfillment orders weren't picked last week. If they got 10,000 orders for their category, 2,000 weren't picked. As in the product wasn't there, even though the website thought it was going to be in the store, right? Problems like that need solutions where you're really able to understand not just the old school merchandising. I'm going to pay you money. You're going to go to a store. I don't really know what you're doing in real time. All I know is I asked you to go to 500 stores and you went to 400, but I don't know what you did. I don't know if you pulled the product from the back. I don't know. I don't have a picture to say what it looked like when you walked in, what it looked like when you left. I don't know if you rearranged it the way I meant to have it, right? It's invisible. So there... For his problem, yeah, essentially, yeah, he's like, I need to know in real time how can you help me with this problem versus whoever I'm working with now so that you're actually solving this issue and my customer KPIs get better. I think the number of stores in the U.S. has not dramatically changed. Just high-profile people have gone out of business in the last five or ten years. There's still stores being opened at different channels. There's a lot of investment in the store itself in terms of making it a little bit more of a fulfillment center, whether that's Target, Walmart, and others. Oop, I'm sorry. Mike.