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 Linane, Chief Strategy and Growth Officer for the company.

Thank you, Philip. So I'm William Linane. I'm our Chief Strategy and Growth Officer at Spar. Just a little bit of background. of about 25 years in the retail industry worked for a company called tesco in europe for 14 years i run their fresh food business in ireland and i run their candy snacks beverage business in the uk originally started in finance so i've got finance operating merchandising and retail background so nice to meet everyone um 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 and then just touch on the numbers briefly and take some questions so we offer services to retailers and brands in terms of merchandising services remodel services we assemble products we work in distribution centers but we basically provide services that they want to outsource that we can use technology to provide with labor so 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 etc etc so 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 US and Canada that work was done over the last 18 months we have doubled the size of our US and Canada business over the last four years, and we've got a significant pipeline for the business going forward. Just to touch on technology and AI, so 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, and that means that people can analyze in real time and optimize their ability to leverage labor against problems in retail so rather than have people full-time or have their own staff full-time they can spot the things are missing ask for someone to go in that day or the next day and change something understand why they buy online pick up and store doesn't work as efficiently as it should because the what's on the shelf isn't what's on the the book stock or their own system etc and 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 but 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 so like every company we and 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 it 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 100% owned Canada business. And that allows us to think about our operation in terms of how can we have a simpler structure around that going forward. And 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. So, the last point is, in the near term, there's a strong opportunity to expand EBITDA margins, increased net income, and increased returns. We're a low-capex business, and we'll remain that unless we change course. But for now, we're a low-capex business. Just want to talk about the wider market. As you probably all know, there's 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. And they're exasperated somewhat, as most retailers are using their stores as partially fulfillment centers, right? So a significant portion of their sales are coming from digital fulfillment. A significant portion of that has been done through stores, right? So 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. And that's everyone from Home Depot to Walmart to the Dollar Chains 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's 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 W-2s, contractors, or crowd-based solutions that's all been actively looked at. And they really want to solve some of their issues in more real time, to what I said earlier. So if there's 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? And their labor models are really tight and have become tighter as labor has increased in cost over the last five years. And ultimately, you know, empty is always wrong. You go into any retail store, even the best in the country, Walmart, Kroger, whoever, and you will see gaps. And if you check what's on the shelf versus their systems, you'll see inconsistencies. So 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. So, 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 give a report. Now it's everyone wants a photo, and we captured up to seven 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? So there's 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, et cetera. So 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. So in our Q2 results, we were about 5% up year and year in the U.S. and Canada. On the back, we've been up 19% next year with more to come. In terms of that real-time capture, that's just to print it to life. That's someone capturing an image with their own phone. But that can be done as a video rather than a photo. It can be done in other solutions as I said so 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 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 has probably worked calling out. So 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, so we own 100% of our U.S. business. We returned about 10 million plus 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 South East and the brands are obviously spread around the country and we've reorganized our focus on the US and Canada which is why I think in our Q2 results if you have read them we've talked about a pipeline of 200 million and and that's a real number in terms of conversations we're happening with the 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 plus just mostly retailers brands as you can see McKesson's in there they own their own franchise business of of Halmart pharmacies, and we're their sole provider. We do all the work I'm talking about in their stores, so just to make that connection. But you'll be familiar with all the logos on this page. So 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. So 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. So revenue is 73 million. You can see the EBITDA and the operating income and then 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, it's on the bullet points on the slide so we did get a number of offers for the company last year they've all been documented in the public domain the the last offer the one that the company accepted was from a company called hi war capital for $2.50 a share and that transaction didn't get executed but it got terminated at the end of May so there's some costs related to that which are in the first half of the year which are exceptional but overall we're in a far stronger place than we've been far more focused place that we've been five year vision so go ahead no the other offers came before so we got a we got two or three other offers between about a dollar sixty-five and two dollars and then hi work came in with a two dollar fifty offer which we accepted and then put their shareholder vote which got approved in October no not not at this point they didn't get funding yeah so we just issued an AK in a press release in terms of of that point but we negotiated with them there was basically roughly a two million termination penalty and we negotiated with them to for them to buy shares to to that effect to invest in the company at two dollars a share they didn't reach the threshold of investing two million so we're pursuing them for the balance of the termination agreement they did a group both the investors behind hire were agreed to invest at two dollars a share for my company shares 220,000 shares. So we just announced on the last 48 hours. That's right. So we're pursuing the balance.

You get the two million dollars worth of money, like the shares, we got $40,000 from them, which we did, well, the shares we had, it's not a legal battle where your expenses, you know, are, it's like, we'll be careful, yeah, we spend that money, of course.

Yeah, okay. I'm not going to read this slide, but just in summary, and I'll come back to the investment thesis. is there's an opportunity to lever the simpler business we have now, number one, and we want to make sure we optimize that opportunity in terms of Vestia and et cetera. 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, and 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 look, 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 and we want to continue to I'm sorry 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 and I believe we're doing that in a way which is better than what our competition they're doing and that brings me back investment thesis I've talked to some of this already it is a huge market just in terms of the the current market not necessarily the future market there's about a hundred and eighty thousand merchandisers in the UK it's our US in this kind of work and we employ about five to six thousand so even without the market changing there's still there's a lot to grow into based on what where markets are talked about the US and Canada being you know double what we were four years ago with sales grow is a good place to be in the pipeline tech and AI as I said already changes us in two ways about what we do in the store but also how we operate internally and then I've touched on it this being a simpler business so really the opportunity in the near term is to expand margins because of those reasons focus on net income and shareholder return and we are a low capex business so we've spent roughly I don't know a million broadly a year so questions

in the aisles not even taking off the carts with all the shelves there used to be a situation like that dollar tree in portland illinois right over the back the city issued them a summit for how much disarray there was in the store i mean literally every aisle stuff packed this high on the floor or whatever it might be now whether they're unfortunately continually understandable or don't care enough about the image of the store, I mean there's definitely great value in these two Halloween decorations. Your presentation really intrigued me, seeing those customers on that slide presentation, and that's just two stories, maybe there's better circumstances than others, but I have

I think part of the answer to the question is they've got labor challenges, obviously.

right and where they can you know 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 industries move to and we'll be moving to more so 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 When did we join the company so Mike joined in February 2021 I joined July 2021 I know yeah well we yeah well we're we did get the stock I think it went above three dollars just before had the high wire and that they offered at 250 it stayed close to 250 while that deal looked like it was going to happen and then it dropped down so the stock has dropped since the deal was announced that it's not happening is one thing in terms of what's different um 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 um with the challenge then of if we did grow them we we weren't getting the full benefit because we were 51% owners, right? Now we own 100% of the US, 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, so we're in a position to run the company slightly differently going forward in terms of leveraging that opportunity. And 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. So as you digest seven million pictures, which grow to 50 million pictures with videos and other data points, you can actually partner with companies that are doing really interesting things that value to the clients in the way they want that to be added. So I think the share price is reflecting what's happened, that's fine. But in terms of where we are as we look forward, there's great opportunity. So Mike, jump in.

Well, you know, it's super clever. Yeah. I've looked at that. So I'm wondering if there's no question that your access, because we're far more innovative, we're far healthier, we're meeting . There's not a good stock price. Yeah, that's not a good stock either. It's gone, yeah. I was a friend of mine. There's no question we're taken by that one business. The second is we have limited money. We have two insider founders who are. And that's usually what makes it more difficult. How do you buy two or three hundred thousand shares? We'll have that in yesterday morning because the board's introduced to the private transaction of the treasurer. And now the 82 and 83-year-old founders. So it's been a real constraint. No, no, no, no, no, no, I actually was talking to someone at Walmart yesterday who runs one

of their categories, and they gave me a stat that said 20% of their digital fulfillment orders weren't picked last week, so if they got 10,000 orders for their category, two 2,000 weren't picked, as in the product wasn't there, even though the website thought it was gonna be in the store, right? So problems like that need solutions where you're really able to understand not just the old school merchandising, I'm gonna pay you money, you're gonna 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 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 that's what your employees do, they take a picture, they do the market when they take

a picture. So 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 and I think I mean they're the the number of stores in the US has not dramatically changed just high profile people have gone out of business in the last five or ten years but there's still stores being open at different channels and 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. I'm sorry. Mike.

Okay. Anything else?

Okay.