Good morning, and welcome to the SPAR Group Fourth Quarter and Year-End 2025 Financial Results Conference Call. [Operator Instructions] 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.

Thank you, operator, and good morning, everyone. We appreciate you joining us for SPAR Group, Inc.'s conference call to review the fourth quarter 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. 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. 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.

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 U.S. and Canada. Last week, we announced a strategic partnership with ReposiTrak, which I'll speak to in a moment. Today, SPAR is a 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 want to walk you through how we fundamentally changed this organization. Last 2 years, we simplified the business, exiting international operations that added complexity without serving our core strategy and sharpened our focus on the U.S. 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 rightsized 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 2 streams are complementary. Together, they open a large and underpenetrated addressable market with a flexible, innovative approach. And each new contract improves the economics of our fixed cost base we've already built.…

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 operation revenues are included as all other for the year ended December 31, 2024. 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 3.9% to $122.1 million, while Canadian sales were essentially flat at $14.1 million. 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 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 onetime costs and out-of-period write-offs in 2025. We expect our annual run rate SG&A costs to be approximately $25.5 million to $26.5 million, excluding any unusual and nonrecurring 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 the 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…

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-to-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 teams 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. The result is a seamless loop. Technology identifies the need and SPAR executes to 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. 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…

[Operator Instructions] The first question comes from [ Ross Davidson ] with Benetton Capital.

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 that Q4 into what you've described for 2026?

Yes. 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 land in 2025 and how they land in 2024. 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 on to really growing merchandising as opposed to remodel business. So does that answer the question?

I think. So almost like a little bit of an air pocket as you kind of wrapped up some projects and then as we get into 2026, sort of work through that and on to the sort of the numbers you described, I guess.

Yes, 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 2 businesses. 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. So yes, that's correct.

Okay. Great. And that makes sense. And I think that 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, 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, anything we should expect with respect to what we'll see in Q1, Q2 versus Q3, Q4?

Yes. 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.

And Ross, that's partly because within our gross margins, we have our field management costs, which is somewhat semi fixed. But we've intentionally pivoted strongly to focus back office merchandising. So I think we'll post Q1 here in the next 4 to 6 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.

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 with respect to kind of all the transformation work we'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.

That is correct. Yes.

Okay. That's great. And then the ReposiTrak partnership, just to confirm, so is that -- that's "live" and that's something you're out now marketing and offering to potential customers?

That's correct. 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 into the future, but it's -- 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 be data about different parts of the market. ReposiTrak specifically have 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 yes, we're excited about the partnership.

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

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. Have a great day, everyone, and thank you again.

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