Q4 2025 SPAR Group Inc Earnings Call

March 31, 2026

Speaker #1: Good morning, and welcome to the SPAR Group fourth quarter and year-end 2025 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero, on your telephone keypad.

Operator: Good morning, and welcome to the SPAR Group Q4 and year-end 2025 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. 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 Sandy Martin, Three Part Advisors. Please go ahead.

Speaker #1: 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.

Speaker #1: 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 Sandy Martin, three-part advisors.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Operator, and good morning, everyone. We appreciate you joining us for SPAR Grouping's conference call to review the fourth quarter and full year 2025 results.

Sandy Martin: Thank you, operator, and good morning, everyone. We appreciate you joining us for SPAR Group, Inc.'s conference call to review the Q4 and full year 2025 results. Joining me on the call today are SPAR's Chief Executive Officer, William Linnane, and the company's Chief Financial Officer, Steven Hennen. This call is 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.

Speaker #2: Joining me on the call today are SPAR's Chief Executive Officer, William Linnane, and the company's Chief Financial Officer, Steven Hennan. This call is being webcast and can be accessed through the audio link on the events and presentations page of the Investor Relations section at investors.spar, Inc. com.

Speaker #2: 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.

Speaker #2: 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—are forward-looking statements.

Sandy Martin: 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, 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 reconciliation 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Management may also refer to non-GAAP financial measures, and reconciliation to the nearest GAAP measures can be found at the end of our earnings release.

Speaker #2: SPAR Group assumes no obligation to update or revise any forward-looking statements publicly. Finally, the earnings press release we issued today is posted on the Investor Relations section of our website at sparinc.com.

Sandy Martin: Finally, the earnings press release we issued today is posted on the investor relations section of our website at sparinc.com. Now I would like to turn the call over to the company's CEO, William Linnane.

Speaker #2: Now I would like to turn the call over to the company's CEO, William Linnane.

William Linnane: Thank you, Sandy, and good morning. I'm pleased to share our fiscal 2025 results. After our prepared remarks, we will open the line for questions. Fiscal 2025 was a transformational year for SPAR. We finalized the work connected to the divestiture of our international joint ventures, a deliberate decision that allowed us to concentrate fully on growing our business in the US and Canada. Last week, we announced a strategic partnership with ReposiTrak, which I'll speak to in a moment. Today, SPAR is the nationwide retail service solutions company with deep expertise in merchandising, both traditional and our new on-demand model. We are North America-centric, people-powered, and tech-enabled, and we are aligned around a clear vision of where this business is going. Before we get to the numbers, I wanna walk you through how we fundamentally changed this organization.

Speaker #3: Thank you, Sandy, and good morning. I'm pleased to share our fiscal 2025 results. After our prepared remarks, we will open the line for questions.

Speaker #3: Fiscal 2025 was a transformational year for SPAR. We finalized the work connected to the divestiture of our international joint ventures, a deliberate decision that allowed us to concentrate fully on growing our business in the US and Canada.

Speaker #3: Last week, we announced a strategic partnership with RepositTrack, which I'll speak to in a moment. Today, SPAR is the nationwide retail service solutions company with deep expertise in merchandising.

Speaker #3: Both traditional and our new on-demand model. We are North America-centric, people-powered, and tech-enabled, and we are aligned around a clear vision of where this business is going.

Speaker #3: Before we get to the numbers, I want to walk you through how we fundamentally changed this organization. About two years ago, we simplified the business.

William Linnane: Last two years, we simplified the business, exiting international operations that added complexity without serving our core strategy, and sharpened our focus on the US and Canada markets, where we have long-standing relationships with retailers and CPG companies. In 2025, we rebuilt the leadership team from the ground up, eliminating management layers, bringing in proven operators with direct and varied industry experience, strengthening our data foundations, and upweighting our advanced analytical capabilities. The result is a leaner organization that can scale profitably, leveraging a right-sized cost base and automating manual tasks to turn complex execution and related data into faster decisions and ultimately better client outcomes. We are focused on delivering continued revenue growth, deliberately targeting higher margin core merchandising business while building on new service offerings. These two streams are complementary.

Speaker #3: Exiting international operations that added complexity without serving our core strategy, and sharpening our focus on the US and Canada markets, where we have long-standing relationships with retailers and CP companies.

Speaker #3: In 2025, we rebuilt the leadership team from the ground up, eliminating management layers, bringing in proven operators with direct and varied industry experience, strengthening our data foundations, and upgrading our advanced analytical capabilities.

Speaker #3: The result is a leaner organization that can scale profitably, leveraging a right-sized cost base and automating manual tasks to turn complex execution and related data into faster decisions, and ultimately better client outcomes.

Speaker #3: We are focused on delivering continued revenue growth, deliberately targeting higher-margin core merchandising business while building on new service offerings. These two streams are complementary.

William Linnane: Together, they open a large and under-penetrated addressable market with a flexible, innovative approach, and each new contract improves the economics of our fixed cost base we've already built. Our partnership with ReposiTrak is a direct expression of this. It demonstrates how AI, data, people, and in-store action can work together seamlessly to solve a problem retailers and vendors cannot solve with technology alone. This brings me to our strategic thesis. We believe the future of retail execution lies at the intersection of human action and AI-enabled intelligence. Technology is transforming how retailers detect out-of-stocks, pricing errors, compliance gaps, and execution failures, but detection alone doesn't fix shelves. Retailers and brands are flooded with signals. What they lack is reliable, fast, verified action in-store. That gap is where SPAR operates and where we are building something defensible. Our industry has long run on a dedicated, inflexible, time-based labor model.

Speaker #3: Together, they open a large and under-penetrated addressable market with a flexible innovative approach. And each new contract improves the economics of our fixed cost base we've already built.

Speaker #3: Our partnership with RepositTrack is a direct expression of this. It demonstrates how AI, data, people, and in-store action can work together seamlessly to solve a problem retailers and defenders cannot solve with technology alone.

Speaker #3: This brings me to our strategic thesis. We believe the future of retail execution lies at the intersection of human action and AI-enabled intelligence. Technology is transforming how retailers detect out-of-stocks, pricing errors, compliance gaps, and execution failures.

Speaker #3: But detection alone doesn't fix shelves. Retailers and brands are flooded with signals. What they lack is reliable, fast, verified actions in-store. That gap is where SPAR operates.

Speaker #3: And where we are building something defensible. Our industry has long run on a dedicated, inflexible, time-based labor model: pay-for-hours, assigned tasks, and hope for outcomes.

William Linnane: Pay for hours, assigned tasks, hope for outcomes. We are moving past that. SPAR is redefining retail execution around intelligent outcome-based action, a model where data, technology, and in-store execution converge in real time on demand. The retailers and brands that will win over the next decade need a partner that can move at their speed, hold themselves accountable to outcomes, and scale without breaking. That is what we are building, and we are just getting started. After Steve covers our detailed financial results, I will share additional thoughts and insights about the business. Steve?

Speaker #3: We are moving past that. SPAR is redefining retail execution around intelligent, outcome-based action—a model where data, technology, and in-store execution converge in real time, on demand.

Speaker #3: The retailers and brands that will win over the next decade need a partner that can move at their speed and hold themselves accountable to outcomes.

Speaker #3: Scale without breaking. That is what we are building. And we are just getting started. After Steve covers our detailed financial results, I will share additional thoughts and insights about the business.

Steven Hennen: Thank you, William, and good morning, everybody. Fiscal 2025 net revenues totaled $136.1 million. During 2025, the company changed its reportable segments from Americas, Asia Pacific, APAC, and Europe, Middle East, and Africa, following our strategic exits from several global joint venture arrangements. Today, we present geographic reportable segments that include the United States and Canada. All prior year segment information has been recast to the year-end presentation, which means that Mexico and all other international operations revenues are included as All Other for the year ended 31 December 2024. On a comparable basis, full year revenues of $136.1 million for the United States and Canada increased by 3.3% over 2024.

Speaker #3: Please?

Speaker #4: Thank you, William. And good morning, everybody. Fiscal 2025 net revenues totaled $136.1 million. During 2025, the company changed its reportable segments from Americas, Asia, Pacific, APAC, and Europe, Middle East, and Africa.

Speaker #4: Following our strategic exits from several global joint venture arrangements, today we present geographic reportable segments that include the United States and Canada. All prior-year segment information has been recast to the year-end presentation, which means that Mexico and all other international operation revenues are included as 'All Other' for the year ended December 31, 2024.

Speaker #4: On a comparable basis, full-year revenues of $136.1 million for the United States and Canada increased by 3.3% over 2024. Drilling down, U.S. net revenues increased by 3.9% to $122.1 million, while Canadian sales were essentially flat at $14.1 million.

Steven Hennen: Drilling down, US net revenues increased 3.9% to $122.1 million, while Canadian sales were essentially flat at $14.1 million. Our gross profit here was $21.7 million or 15.9% of revenue, compared with $33.6 million or 20.5% of revenue in 2024. Gross margin compression in 2025 was primarily due to shift towards the remodeling business, which inherently carries higher labor and travel costs, market-driven wage pressure, and shifts in workforce alignment. Full year selling, general, and administrative expenses were $32.2 million or 23.7% of revenues, compared to $33.9 million or 20.7% of revenues in the prior year. SG&A costs included approximately $7 million of one-time costs and out-of-period write-offs in 2025.

Speaker #4: Our gross profit for the year was $21.7 million, or 15.9% of revenue, compared with $33.6 million, or 20.5% of revenue, in 2024. Gross margin compression in 2025 was primarily due to shifts towards the remodeling business, which inherently carries higher labor and travel costs.

Speaker #4: Market-driven wage pressure and shifts in workforce alignment. Full-year selling, general and administrative expenses were $32.2 million, or 23.7% of revenues, compared to $33.9 million, or 20.7% of revenues in the prior year.

Speaker #4: SG&A costs included approximately $700,000 of one-time costs and out-of-period write-offs in 2025. We expect our annual run-rate SG&A costs to be approximately $25.5 to $26.5 million, excluding any unusual and non-recurring costs.

Steven Hennen: We expect our annual run rate SG&A cost to be approximately $25.5 to 26.5 million, excluding any unusual and non-recurring costs. In addition, we recorded restructuring costs and severance of $4.8 million for the 2025 fiscal year end. As a result, we reported operating loss of $16.9 million for fiscal year 2025, compared to $700,000 of operating income in the prior fiscal period. Net loss attributable to SPAR Group, Inc. for 2025 was $24.6 million, or $1.04 per diluted share, compared to a net loss of $3.2 million, or $0.13 per share in 2024. Adjusted net loss attributable to SPAR Group, Inc.

Speaker #4: In addition, we recorded restructuring costs and severance of $4.8 million for the 2025 fiscal year end. As a result, we reported an operating loss of $16.9 million for fiscal year 2025 compared to $700,000 of operating income in the prior fiscal period.

Speaker #4: Net loss attributable to SPAR Group, Inc. for 2025 was $24.6 million, or $1.04 per diluted share, compared to a net loss of $3.2 million.

Speaker #4: Or $0.13 per share in 2024. Adjusted net loss attributable to SPAR Group, Inc. was $10.7 million, or $0.45 per diluted share, compared to $707,000, or $0.03 per diluted share, in the prior period.

Steven Hennen: was $10.7 million or $0.45 per diluted share, compared to $707,000 or $0.03 per diluted share in the prior period. Consolidated EBITDA for the fiscal 2025 year was -$16.5 million compared to $3.5 million in the prior year. 2024 includes $2.5 million gain from the sale of businesses. Consolidated adjusted EBITDA was -$8.6 million, compared to +$6.7 million in the prior year. Fiscal 2025 adjusted EBITDA attributed to the SPAR Group, Inc. was the same as consolidated, with -$8.6 million compared to +$5.6 million in the prior year. Turning to the company's financial position.

Speaker #4: Consolidated EBITDA for the fiscal 2025 year was a negative $16.5 million compared to $3.5 million in the prior year. 2024 includes a $2.5 million gain from the sale of the businesses.

Speaker #4: Consolidated adjusted EBITDA was a negative $8.6 million, compared to a positive $6.7 million in the prior year. Fiscal 2025 adjusted EBITDA attributed to SPAR Group, Inc. was the same as consolidated, with a negative $8.6 million compared to a positive $5.6 million in the prior year.

Speaker #4: Turning to the company's financial position, as of December 31, 2025, our balance sheet remains solid with positive working capital of $14.7 million, excluding the balance owed on the line of credit and the current portion of long-term debt.

Steven Hennen: As of 31 December 2025, our balance sheet remains solid with working capital of +$14.7 million, excluding the balance owed on the line of credit and the current portion of the long-term debt. This includes $3.3 million in cash and cash equivalents. For the 12 months ending 31 December 2025, net cash used by operating activities was -$18.4 million. With that, I would like to turn it back to William.

Speaker #4: This includes $3.3 million in cash and cash equivalents for the 12 months ending December 31, 2025. Net cash used by operating activities was $18.4 million.

Speaker #4: With that, I would like to turn it back to William.

William Linnane: Thank you, Steve. On March 26, we announced our strategic partnership with ReposiTrak, and I want to give you a sense of what that looks like in practice. When a truck arrives with promotional items, seasonal goods, or high velocity SKUs, a retailer, and as importantly, the vendor needs those products on shelf immediately. They can't wait for scheduled labor. This is relevant to all vendors, but can be especially challenging for scan-based trading with direct store vendors. SPAR teams are dispatched in real time to any store, anywhere in the country. We call this surge or on-demand merchandising. It's a cost-effective, flexible labor buffer that activates exactly when and where it's needed without adding to the store's team's workload, providing a high return on investment. The ReposiTrak partnership adds the intelligence layer, out-of-stock detection, perpetual inventory accuracy, and route optimization so that our dispatch decisions are data-driven, not reactive.

Speaker #5: Thank you, Steve. On March 26th, we announced our strategic partnership with Reposit Truck, and I want to give you a sense of what that looks like in practice.

Speaker #5: When a truck arrives with promotional items, seasonal goods, or high-velocity SKUs, a retailer and, as importantly, the vendor, need those products on shelf immediately.

Speaker #5: They can't wait for scheduled labor. This is relevant to all vendors, but can be especially challenging for scan-based trading or direct-to-store vendors. SPAR teams are dispatched in real time to any store, anywhere in the country.

Speaker #5: We call this surge, or on-demand merchandising. It's a cost-effective, flexible labor buffer that activates exactly when and where it's needed, without adding to the store team's workload, and provides a high return on investment.

Speaker #5: The Reposit Truck partnership adds the intelligence layer—out-of-stock detection, perpetual inventory accuracy, and route optimization—so that our dispatch decisions are data-driven, not reactive.

William Linnane: The result is a seamless loop. Technology identifies the need, and SPAR executes the fix. This model is applicable to grocery, mass, club, dollar, convenience, and specialty retail across the United States and Canada, depending on the data source. The addressable market is large, and the need is immediate. We are bullish about what this partnership and other similar partnerships unlock for SPAR in 2026 and beyond. Turning to our fiscal year 2026 financial guidance issued today. We expect top line revenue to be in the range of $143 million to $151 million, and gross margins to improve to 20.5% to 22.5%, primarily driven by our service mix with a growing percent of merchandising work relative to remodel work.

Speaker #5: The result is a seamless loop. Technology identifies the need, and SPAR executes to fix it. This model is applicable to grocery, mass, club, dollar, convenience, and specialty retail across the United States and Canada, depending on the data source.

Speaker #5: The addressable market is large, and the need is immediate. We are bullish about what this partnership and other similar partnerships unlock for SPAR in 2026 and beyond.

Speaker #5: Turning to our fiscal year 2026 financial guidance issued today, we expect top-line revenue to be in the range of $143 million to $151 million.

Speaker #5: And gross margins to improve to 20.5% to 22.5%, primarily driven by our service mix, with a growing percent of merchandising work relative to remodel work.

William Linnane: We are encouraged by the growing strength of our business pipeline, driven by wallet expansion from existing clients and market share gains this year. We believe that SPAR will win because we are uniquely positioned to serve as a critical operating layer for leading retailers and brands with national scale, deep execution DNA, and a large, highly flexible labor model. We've also invested in modern cloud and ERP infrastructure to enable fast, efficient recruiting and client services. As we discussed earlier, we are successfully pursuing a partner-led technology strategy. With our strategic retail partners, we can move faster and more credibly than anyone else. In addition, our proprietary SPARView platform is a mobile-first tool that collects data as we perform projects and allows us to communicate with our people on outcomes. We are increasingly utilizing AI platforms to detect issues, help us prioritize what matters most.

Speaker #5: We are encouraged by the growing strength of our business pipeline, driven by wallet expansion from existing clients and market share gains this year. We believe that SPAR will win because we are uniquely positioned to serve as a critical operating layer for leading retailers and brands, with national scale, deep execution DNA, and a large, highly flexible labor model.

Speaker #5: We've also invested in modern cloud and ERP infrastructure to enable fast, efficient recruiting and client services. And, as we discussed earlier, we are successfully pursuing a partner-led technology strategy.

Speaker #5: With our strategic retail partners, we can move faster and more credibly than anyone else. In addition, our proprietary SPAR View platform is a mobile-first tool that collects data as we perform projects and allows us to communicate with our people on outcomes.

Speaker #5: We are increasingly utilizing AI platforms to detect issues and help us prioritize what matters most. A trigger is signaled with ROI-driven tasks, and SPAR deploys trained field teams dynamically.

William Linnane: A trigger is signaled with ROI-driven tasks, and SPAR deploys trained field teams dynamically. Soon after, the execution is verified and outcomes are measured and reported. This creates closed-loop retail execution from signal to fix to ROI. SPAR is the execution engine that turns retail intelligence into revenue recovery. Turning to our strategic transformation, our roadmap over the past year has been disciplined and deliberate, and now we are laser-focused on building a profitable business that generates free cash flow. Growth underpins everything we do. Our plans include growth in each of our core areas. We are deepening existing relationships and building new ones with mass retailers, grocery partners in the dollar channel, and with leading CPG partners. We are expanding our services for existing clients and increasing wallet share.

Speaker #5: Soon after the execution is verified and outcomes are measured and reported, this creates closed-loop retail execution from signal to fix to ROI. SPAR is the execution engine that turns retail intelligence into revenue recovery.

Speaker #5: Turning to our strategic transformation, our roadmap over the past year has been disciplined and deliberate. And now, we are laser-focused on building a profitable business to generate free cash flow.

Speaker #5: Growth underpins everything we do. Our plans include growth in each of our core areas. We are deepening existing relationships and building new ones with mass retailers, grocery partners, in the dollar channel, and with leading CPG partners.

Speaker #5: We are expanding our services for existing clients and increasing wallet share. At the same time, we are investing in data integration, AI, and technology partnerships, workforce intelligence, dynamic scheduling, automation, and margin expansion.

William Linnane: At the same time, we are investing in data integration, AI and technology partnerships, workforce intelligence, dynamic scheduling, automation, and margin expansion. None of this works without the right people. That's why we've strengthened our leadership bench, simplified the organization, stabilized SAP, our ERP, invested in workforce management, and focused on training, deployment, and retention. Our ambition is not just to lead in technology, but to genuinely lead in how people are managed, developed, and valued. Because the future of this company is tech and people-powered. We are developing SPAR's reliable and repeatable human operating layer for the retail and CPG industries, and we believe this will deliver sustainable shareholder value. The work ahead is significant, but the direction is clear. If we execute consistently, decisively, and with discipline, SPAR will not just participate, but will lead in the future of retail execution.

Speaker #5: None of this works without the right people. That's why we've strengthened our leadership bench, simplified the organization, stabilized Workday—our ERP—invested in workforce management, and focused on training, deployment, and retention.

Speaker #5: Our ambition is not just to lead in technology, but to genuinely lead in how people are managed, developed, and valued. Because the future of this company is tech- and people-powered.

Speaker #5: We are developing SPAR’s reliable and repeatable human operating layer for the retail and CPG industries, and we believe this will deliver sustainable shareholder value.

Speaker #5: The work ahead is significant, but the direction is clear. If we execute consistently, decisively, and with discipline, SPAR will not just participate, but will lead in the future of retail execution.

William Linnane: With that, operator, I would like to open the line for questions.

Speaker #5: With that, operator, I would like to open the line for questions.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Ross Davidson with Highwire Capital. Please go ahead.

Speaker #4: We will now begin the question and answer session. To ask a question, you may press *1 on your telephone keypad. If you are using a speakerphone, please pick up your handset.

Speaker #4: Before pressing the keys, if at any time your question has been addressed and you would like to withdraw your question, please press *2. At this time, we will pause momentarily to assemble our roster.

Speaker #4: The first question comes from Ross Davidson with Benetton Capital. Please go ahead.

Ross Davidson: Yeah. Hi, William. Hi, Steven. Thanks for taking the question. I know 2025 is a big transformational year. I think you guys have done a good job of laying that out. Just on Q4, though, can you give us any just a little bit of color around both the revenue decline and, I guess, the resulting negative gross margin? Just help us understand how we are inflecting from, you know, that Q4 into what you've described for 2026.

Speaker #5: Yeah. Hi, William. Hi, Steve. Thanks for taking the question. I know 2025 is a big transformational year. I think you guys have done a good job of laying that out.

Speaker #5: Just on Q4, though, can you give us just a little bit of color around both the revenue decline and, I guess, the resulting negative gross margin?

Speaker #5: Just help us understand how we are inflecting from that Q4 into what you've described for 2026.

William Linnane: Yeah. Thanks, Ross, for your question. In terms of the shape of 2025, obviously Q3 was significant growth rate and we had some timing of projects in terms of how they landed in 2025 and how they landed in 2024. That's part of the answer to 2025 Q4. I think you'll see a more stable growth rate as we go into 2026, and that's partly related to the focus back onto really growing merchandising as opposed to remodel business. Does that answer the question?

Speaker #6: Yeah, thanks, Ross, for your question. In terms of the shape of 2025, obviously Q3 was significant—growth rate—and we had some timing of projects in terms of how they landed in 2025 and how they landed in 2024.

Speaker #6: So that's part of the answer to 2025 Q4. I think you'll see a more stable growth rate as we go into 2026, and that's partly related to the focus back onto really growing merchandising as opposed to remodel business.

Speaker #6: So, does that answer the question?

Ross Davidson: I think so. Almost like a little bit of an air pocket as you kind of wrapped up some projects and then, you know, as you get into 2026, worked through that and on to the sort of the numbers you described, I guess.

Speaker #5: I think so. So, almost like a little bit of an air pocket as you kind of wrapped up some projects, and then as you get into 2026, that's sort of—we're through that and onto the numbers you described, I guess.

William Linnane: Yeah, that's correct. We've purposely pivoted the business development and sales team to really focus on the merchandising going forward, given the margin difference between the two business. Obviously we'll take the remodel work if it's profitable, but we want to focus this on where we see the headroom for growth and where we think we can add technology with partners to improve margin over the long term. Yeah, that's correct.

Speaker #6: Yeah, that's correct. And we've purposely pivoted the business development and sales team to really focus on the merchandising going forward, given the margin difference between the two businesses.

Speaker #6: So, obviously, we'll take the remodel work if it's profitable. But we want to focus this on where we see the headroom for growth and where we think we can add technology with partners to improve margin over the long term.

Speaker #6: So yeah, that's correct.

Ross Davidson: Okay, great. That makes sense. I think that you described that well. Then just in terms of expectations for the year, in no way am I trying to get to quarterly guidance. I don't think you should do that. Just, you know, as we think about the ramp and the transformation, should we expect, you know, a build up towards the first margin you described or, you know, any seasonality I got, anything we should expect, you know, with respect to what we'll see in Q1, Q2 versus Q3, Q4?

Speaker #5: Okay, great. That makes sense, and I think you described that well. And then just in terms of expectations for the year, in no way am I trying to get to quarterly guidance.

Speaker #5: I don't think you should do that. But just as we think about the ramp and the transformation, should we expect a build-up towards the gross margin you described, or any seasonality, I guess?

Speaker #5: Anything we should expect with respect to what we'll see in Q1, Q2 versus Q3, Q4?

Steven Hennen: Yeah. This is Steve. You know, when we provided the guidance that we'd released today, that is on an annual basis. Now the only quarter that we see kind of below that, potentially at the bottom end of that range is Q4, which is typically our slowest quarter of the year.

Speaker #6: Yeah, so this is Steve. When we provided the guidance that we released today, that is on an annual basis. Now, the only quarter that we see kind of below that, potentially at the bottom end of that range, is the fourth quarter, which is typically our slowest quarter of the year.

William Linnane: Ross, that's partly because within our gross margins we have our field management costs, which is somewhat semi-fixed. You know, we've intentionally pivoted strongly to focus back on some merchandising. I think, you know, we'll post Q1 here in the next 4 to 6 weeks. As Steve said, they're full year numbers, but you'll see the story laid out as we post that and then refine the guidance.

Speaker #6: And Ross, that's partly because within our gross margins, we have our field management costs, which are somewhat semi-fixed. But we've intentionally pivoted strongly to focus back onto merchandising.

Speaker #6: So, I think we'll post Q1 here in the next four to six weeks. And as Steve said, they're full-year numbers, but you'll see the story laid out as we post that and then refine the guidance.

Ross Davidson: Okay. Well, it's a pretty quick turnaround for Q1 as you noted. The business, you know, we should expect pretty clean numbers with respect to kind of all the transformation work you've done in 2025. Even early in 2026, we'll see kind of the profile of, you know, or a result of that work, I guess, is kind of what I'm hearing.

Speaker #5: Okay, so it's a pretty quick sort of—well, it's a pretty quick turnaround for Q1, as you noted. And then the business, we should expect pretty clean numbers.

Speaker #5: With respect to kind of all the transformation work you’ve done in 2025—even early in 2026—we’ll see kind of the profile of, or the result of, that work, I guess, is kind of what I’m hearing.

Steven Hennen: That is correct. Yes.

Speaker #6: That is correct. Yes.

Ross Davidson: Okay, that's great. Then the ReposiTrak partnership, just to confirm, so is that, you know, that's quote-unquote live, like that's something you're out now marketing and offering to potential customers?

Speaker #5: Okay, that's great. And then the repository partnership—just to confirm, that's live? You've got something you're out now marketing and offering to potential customers.

William Linnane: That's correct. Yeah, meetings are actually in progress in terms of conversations. Yes, it's live. We're excited about it. It's the first of potentially some other announcements we'll make into the future, but it aligns to our strategy of where we can really add the most value, but also, you know, create a defensible model. We have a higher margin rate by having partners who can feed data about different parts of the market. ReposiTrak specifically have a strong out-of-stock management tool, and they've good access to data across certain parts of the market that they're strong in. Yeah, we're excited about that partnership.

Speaker #6: That's correct. Yeah. Meetings are actually in progress in terms of conversations, so yes, it's live, and we're excited about it. It's the first of potentially some other announcements we'll make in the future.

Speaker #6: But it aligns to our strategy of where we can really add the most value, but also create a defensible model at a higher margin rate by having partners who can feed data about different parts of the market.

Speaker #6: Repository specifically has a strong out-of-stock management tool, and they've got access to data across certain parts of the market that they're strong in. So yeah, we're excited about the partnerships.

Ross Davidson: Okay, great. Yeah, no, that sounds really exciting. Okay, thanks for taking the questions, guys, and congrats on all the progress with the business.

Speaker #5: Okay, great. Yeah, no, that sounds really exciting. Okay, thanks for taking the questions, guys, and congrats on all the progress with the business.

Steven Hennen: Thank you.

William Linnane: Thank you, Ross.

Speaker #6: Thank you. Thank you, Ross.

Operator: As there are no further questions from investors, I would like to turn the conference back over to William Linnane for any closing remarks.

Speaker #7: Has there been no further questions from investors? I would like to turn the conference back over to William Linnane for any closing remarks.

William Linnane: Thank you. Thank you for continuing to follow our company. I look forward to providing our Q1 results and updating on strategic initiatives in a couple of months. Have a great day, everyone, and thank you again.

Speaker #6: Thank you, and thank you for continuing to follow our company. I look forward to providing our first quarter results and updating our strategic initiatives in a couple of months.

Speaker #6: Have a great day, everyone, and thank you again.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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