Good day ladies and gentlemen. Thank you for standing by. Welcome to the SPAR Group, Inc.'s First Quarter 2012 Update Conference Call. [Operator Instructions] I would now like to turn the conference over to Alan Sheinwald of Alliance Advisors. Please go ahead, sir.

Thank you, Operator, and good morning to all our listeners this morning. I'd like to thank everyone for joining us today for the SPAR Group First Quarter 2012 Shareholder Update Conference Call. Mr. Gary Raymond, Chief Executive Officer; and Mr. Jim Segreto, Chief Financial Officer of SPAR Group, will be your presenters on the call this morning. Before we begin, I'm going to review the company's Safe Harbor statement. Statements in this conference call that are not descriptions of historical facts are forward-looking statements relating to future events, and as such, all forward-looking statements are made pursuant to the Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project and similar expressions, as they relate to SPAR Group, are such a forward-looking statement. Investors are cautioned that all forward-looking statements involve risks and uncertainties which may cause actual results to differ from those anticipated by SPAR Group at this time. In addition, other risks are more fully described in SPAR Group's public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov. With that, I'd now like to congratulate management on yet another strong quarter and introduce Mr. Gary Raymond, CEO of SPAR Group. Gary, the floor is yours.

Thank you, Alan, and thank you, everyone for joining us this morning for our shareholder Update Conference Call. We are pleased with the strong growth that we have experienced in the first quarter of 2012 as we successfully completed integration of several acquisitions in our International businesses while continuing to improve upon our organic growth. Clearly, the International business has provided us with a strong engine going forward as we have significantly expanded our reach with global companies. This division increased 71% in the top line, thus driving gains in both gross profit and earnings. Our ability to implement operations from Turkey and Mexico, while expanding our business in South Africa and Japan, have significantly improved the overall financial standing of the company. Our most notable growth was predominantly from Mexico and Turkey as we added $4 million in new revenue this quarter versus none a year ago. Management expects these 2 emerging markets to continue their growth as the current year progresses. We also experienced strong revenue growth in Japan and South Africa as quarterly sales improved to $3.2 million from $1.4 million a year ago for an improvement of 129%. Our strong international improvement was enabled by both a combination of new client relationships and the expansion of our business with existing global brands. For example, our growth in Mexico was partially driven by a program that we just started with GlaxoSmithKline. Likewise, SPAR's growth in South Africa and Japan, again, was attributed to the escalating relationships with notable Fortune 500 companies such as Nestlé in South Africa, Apple in Japan and Procter and Gamble in both markets. These clients have enabled SPAR Group to initiate strong growth programs in these geographies while also allowing us to lay a strong and lasting foundation for our future in the international arena. Additionally, we continue to be even more encouraged by the International business as we believe we have already identified several new joint venture targets. These companies match our previous -- previously successful addition in expense and strategy in that they are operating profitably in underserved markets with business models that can greatly benefit from our expertise in software systems. Senior management is confident that if SPAR were to acquire these operations and efficiently add their accretive earnings to our portfolio of clients, that we would continue to garner similar successful financial results. Growth in North America was led by Mexico; however, Canada also added a major new client, including mobile. Additionally, we believe that there remains significant opportunity for expansion within our U.S. operations. While domestic operations declined slightly for the first quarter, management does expect it to undergo strong, near-term growth. Our optimism is attributed to our relationships with both current clients, such as Staples and McKesson, and new business from companies such as 7-Eleven and Family Dollar. Management believes that our budding relationships with these worldwide retail clients are critical to strengthening our global platform and enabling us to continue securing new business while improving financial results going forward. We believe that clients such as those referenced earlier, along with other notable names such as Toys "R" Us, CVS and Sony, will allow us to increase revenue, broaden market presence and escalate the scope of services that we will provide for them and future clients throughout the world. Based on our strong first quarter revenue performance, we are well on our way to meeting our $90 million of revenue guidance for 2012. We believe that we are well-positioned for significant operational and financial growth and expect 2012 to be SPAR's -- SPAR Group's best performance in recent memory. I would now like to turn the call over to Jim Segreto, Chief Financial Officer, who will provide more details regarding our financial results.

Thank you, Gary. Management is extremely pleased to announce a strong financial start to the 2012 fiscal year. Judging from the opportunities that lay ahead, we expect this growth to continue throughout the calendar year. Net revenues for the 3 months ended March 31, 2012, were $21 million compared to $16.4 million for the 3 months ended March 31, 2011, an increase of $4.6 million or 28%. International net revenues totaled $11.8 million for the 3 months ended March 31, 2012, compared to $6.9 million for the same period in 2011, an increase of $4.9 million or 71%. International net revenues grew primarily as the result of the incremental revenue from our new subsidiaries in Mexico and Turkey, totaling over $4 million, and a strong performance from our staff at Africa and Japan subsidiaries. Domestic net revenues totaled $9.3 million for the 3 months ended March 31, 2012, compared to $9.5 million for the same period in 2011. Domestic net revenues decreased by approximately $200,000, primarily driven to lower project work in the first quarter of 2012 compared to last year. Gross profit increased 10% to $5.8 million for the first quarter of 2012 when compared to $5.2 million for the same period of 2011. The increase in gross profit was directly attributable to a strong performance from our International businesses. The company reported net income of $307,000 for the 3 months ended March 31, 2012, or $0.01 per diluted share compared to net income of $253,000 or $0.01 per diluted share in the corresponding period last year. As of March 31, 2012, working capital improved to $7.6 million and our current ratio improved to 1.8:1 compared to 1.7:1 at December 31, 2011. The total current assets and total assets were $17.2 million and $21 million, respectively, and cash totaled $1.7 million at March 31, 2012. Total current liabilities and total liabilities were $9.6 million and $10 million, respectively, and total equity was $11 million at March 31, 2012. I would like to now turn the call back to Gary for closing remarks.

Thank you, Jim. In closing, management is pleased with our financial growth and believes that the company is well-positioned to establish itself as a leader within the retail merchandising and marketing services industry. Our results for the first quarter, which is seasonally our slowest, provide validation that our business model will continue to drive increased financial results for shareholders. While management is pleased with our first quarter results, we believe that shareholders will see sequential financial improvement going forward each quarter throughout 2012. SPAR's current project pipeline, coupled with the typical seasonality of the retail merchandising business, which provides us with a very strong fourth quarter every year, will allow us to continue our impressive growth trajectory meet our annual guidance projection of $90 million. Management remains committed to growing our international and domestic business, both organically and via acquisition. We will remain dedicated to moderating overhead costs and improving efficiencies in order to increase our earnings as we continue to incrementally gain Fortune 500 clients throughout the world. We look forward to achieving many new business milestones in the near future and to announcing these material updates to our loyal shareholders. As always, the entire senior management team is always available to discuss any questions that you may have. So please feel free to contact us. On behalf of everyone at SPAR Group, I would like to thank you all for joining us on today's call. This concludes our formal comments and presentation. At this time, we'd like to open the call for questions. So operator please start the Q&A portion of the call.

[Operator Instructions] Our first question is from the line of Bob Rickman, private investor.

I was curious that the growth this quarter internationally is fantastic, but I'm curious about what's happening with China.

Okay. Yes, China for the first quarter last year that we're anniversary-ing, we had 1 big change. We had a large -- very large first quarter last year for that, and this year, we had a 1 client that ran a big Chinese New Year promotional program last year that chose not to do it this year. They've chosen instead to spend their money throughout the 2012 calendar year on various promotion. So that was our big revenue change in China for 2012 versus '11. But all in all, we're fine where we fit in China with all of our other particular clients right now.

Can I ask a follow-up?

Sure.

So with that on large client, that's a timing shift. Or is it -- they're just going to -- they're reducing with you.

It's a time -- the way they've told us, it's a timing shift in how they expect to spend their funds or monies with us in 2012. Yes. So that's what we've been told by our clients. So we're still looking for growth year-on-year 2012 to '11 as it relates to our progress in China.

[Operator Instructions] Our next question is from the line of Ray Sullivan [ph] with Lakeview Capital.

Since Q1 is your slowest quarter, can we expect significant increases from the other 3 quarters?

Yes, Jay, if you look at us historically, we used to be more I guess what I would describe as seasonal in terms of our revenue. We had a very large fourth quarter and then smaller quarters prior to that. If you look at the way we were forecasting our revenue for this year, you're seeing it more of a leveling out on the revenue side and as I mentioned in my comments, we're looking for kind of sequential revenue growth as we go throughout the year, but generally speaking, our net income if you look at history, would show you that we get by far our biggest bang profitability wise in the fourth quarter versus the other quarters and we do expect that again similar to our history -- we do expect that again going forward.

The next question is from the line of B. Macken [ph] with Courtside Capital [ph].

Can you expand on the gross margin trajectory, both what happened in the fourth quarter domestically, but perhaps more how you see that trending domestically this year and then also particularly in Mexico, I know that was a drag on gross margin in the fourth -- in the first quarter -- excuse me, what should happen there in international and general over the course of the rest of this year?

Yes. No problem. It's kind of a twofold piece. The gross margins, particularly as it is in the United States, we're probably seeing -- or going to see also similar margins to probably what we saw last year from a gross margin perspective in the U.S. So I think that you should see that really level off when we look at the full year 2012 for the U.S. market place. For the international markets collectively, you're going to probably see drag on the gross margin part, only similar to what we did in the fourth quarter, only because today Mexico is still a higher cost market for us than what some of the other ones were. And when you take the weight of what their revenue was for the fourth quarter, the weight for what it is in the first quarter and what you'll see going forward for the year, it's a significant chunk of our international revenue. So when you look at it collectively, you'll see our margins look like they're taking a little bit of a beating. When you look at it on a market by market basis, our gross margins are actually in a pretty good place and our expectation is that Mexico will improve in and of itself going forward. We have a lot of dedicated teams right now in the market. We're going to be doing a lot more syndication, which is what we do in the U.S., some of the other markets that are out there. And going forward, we'll be doing more of that, but we're getting a little bit of a slower start on that part of it than we anticipated because, frankly, we've got 3 new major clients on board and we're trying to make sure that we can have all of them done accordingly before we start pressing the issue and syndicating and looking for other particular efficiencies in the operation, so we've made a conscious choice to do that. And with that, it's just like I said, it's having a little bit of a drag in the margin, but we think all in all, it's just going to be a good thing for us in the Mexico market going forward.

If you're successful in growing the revenue sequentially as you discussed, should gross margin percentage also improve sequentially?

It will a little bit. Like I said in the U.S., it might not -- I try to say this, but it's going to be pretty much on to what it was last year, but until I get all the efficiencies in Mexico right, it will be probably a little bit difficult for you to be able to see those numbers when you're looking at them collectively.

And second question, if I could, the other acquisitions or other partnerships, can you give us a sense of what's in the pipeline or what type of opportunities are available to you?

Well, the types of opportunities are probably not dissimilar to what we've discussed on prior calls. There are companies that we're looking at both the in U.S. marketplace, up in Canada and then we're also looking internationally at one company that's actually in a market that we're currently in that potentially we could bolt on to our current business, as well as we're looking at 2 separate international markets that we do not do business in today. And looking at the prospects of trying to form a new company or a new joint venture in that market. So I wouldn't...

Just a separate question. Did the -- I know you disclosed the sale of one of your divisions or partnerships in Romania in the Q. Did that add any cash? Or -- give us a sense of any financial implications of that transaction.

It added very little cash to us. It was a small transaction for us.

On the other hand, did it remove any drag in terms of losses? Or does it affect anything going forward, I guess?

No, it shouldn't affect anything going forward.

[Operator Instructions] And I'm currently showing no further questions at this time. I will turn it back over to management for any closing remarks.

All right. Well, thank you, everybody. Hopefully you were able to get what you wanted to from our prepared comments and I do appreciate the questions that were surfaced by a few of the callers on today. Again, I appreciate your interest in the company and look forward to speaking with you again on another call. And with that, operator, I'll ask you to conclude our conference for today.

Ladies and gentlemen, this does concludes the conference call. You may now disconnect, and thank you for your participation.