The Marketing Alliance Announces Financial Results for Its Fiscal 2013 Second Quarter and Six Months
The Marketing Alliance Announces Financial Results for Its Fiscal 2013 Second Quarter and Six Months Ended September 30, 2012
FY 2013 Second Quarter Financial Highlights
- Revenues increased 11% to $6,606,509 from $5,955,098 in the prior year quarter
- Operating income of $239,825, or $0.10 per share, versus $54,067, or $0.02 per share, in the prior year period
- Operating EBITDA (excluding investments) increased to $359,199 from $128,235 in the prior year quarter
- Net income of $314,447, or $0.13 per share, versus net loss of $364,978, or $0.15 (loss) per share, in the prior year period
ST. LOUIS--(BUSINESS WIRE)-- The Marketing Alliance, Inc. (OTC: MAAL) ("TMA"), today announced financial results for its fiscal 2013 second quarter ended September 30, 2012.
Timothy M. Klusas, TMA's President, stated, "We are very pleased with our results for the quarter. We saw double-digit percentage increases in revenue, with notable growth in our net income and operating EBITDA over the prior year. During the quarter our Board of Directors declared a 6:5 stock split (20%), where new shares were distributed on October 15, 2012, to shareholders of record as of the close of business on September 15, 2012. As a result of the 20% stock split, the outstanding shares of the Company's common stock increased by approximately 418,347 shares, from 2,091,736 shares outstanding to approximately 2,510,083 shares. During the quarter we also completed the acquisition of two family entertainment facilities located in Illinois and Missouri and included approximately two weeks of operations in our quarterly results and the completed transaction on our balance sheet. Finally, subsequent to the end of the quarter, our Board of Directors announced a $0.38 per share dividend payable December 26, 2012, to shareholders of record as of December 7, 2012. I would now like to mention some of the highlights from each of the Company's operations during the quarter:
- Insurance Distribution Business: "TMA increased its revenues and gross profit from the insurance distribution business despite continued difficult market conditions for many of the life and annuity insurance products that our individual agent network sells to customers. The current low-interest rate environment and continued expectations for low interest rates into the future has led many carriers to revise their product portfolios by increasing premiums on products with long-term guarantees or choosing not to offer guaranteed products at all due to the fact that longer-term guarantees are most sensitive to interest rates. The current interest rate environment also adversely affected our annuity business, as these products are based on interest rates and low interest rates makes the product less appealing for customers who may choose to defer purchases until rates increase. Less product choice and less attractive products reduce revenues to the Company. Although these changes can be disruptive for distributors and consumers, we feel our value proposition of offering more insurance products, access to more carriers, and shared services to reduce costs to distributors helps to alleviate these disruptions."
- Earth Moving and Excavating: "This quarter marks a full year that our earth moving and excavation business has cycled through TMA's results and despite the effects of seasonality during the quarter; we are pleased with the growth and potential of this segment. We continue to seek alternative uses of the business' resources during the off seasons (calendar first and third quarters) to reduce earnings volatility and produce more consistent results."
- Entertainment Facilities: "During the quarter (September 14), TMA completed the acquisition of two children's party and entertainment facilities located in the St Louis area under the franchise name "Monkey Joe's." With the facilities' operating managers and most employees already in place, we are excited to have completed the transaction and look forward to reporting a full quarter of results. This transaction resulted in the addition of goodwill and other intangible assets as shown on our balance sheet.
Fiscal 2013 Second Quarter Financial Review
- Total revenues for the three-month period ended September 30, 2012 were $6,606,509, an increase of 11%, from $5,955,098 in the prior year quarter. The increase was partially due to an additional $45,782 received in revenue from the Company's acquisition of two entertainment facilities, as well as an additional $605,629 received in commission and construction revenues over the prior year period. Commission revenue increased by 7% over the prior year quarter.
- Net operating revenue (gross profit) for the quarter was $1,583,445, compared to net operating revenue of $1,058,179 in the prior-year fiscal period.
- Operating income was $239,825, an increase from operating income of $54,067 reported in the prior-year period. Operating income in the quarter ending September 30, 2011, was revised to $54,067 from $3,319 due to a reclassification of expenses reimbursed by a third party.
- Operating EBITDA (excluding investment revenue) for the quarter was $359,199 versus $128,235 in the prior-year period. A note reconciling Operating EBITDA to Operating Income can be found at the end of this release.
- Net income for the fiscal 2013 second quarter was $314,447, or earnings per share of $0.13, compared to a net loss of $364,978, or $0.15 (loss) per share, in the prior year period. The primary reason for the bottom line improvement was increased profitability for the Company's insurance and excavating segments and a loss on realized and unrealized investments of $587,442 in the prior year period versus a gain of $274,316 this year.
- Investment gains of $274,316 compared favorably to an Investment loss of $587,442 in the prior year quarter. The difference in performance was due in part to a generally more favorable time for equities.
Fiscal 2013 Six Months Financial Review
- Total revenues for the six months ended September 30, 2012 were $13,439,359, compared to $11,762,595 in revenues for the prior-year period, an increase of 14%. Commission revenue increased by 7% over the prior year quarter.
- Net operating revenue (gross profit) was $3,422,736, which compares to net operating revenue of $2,592,314 in the prior-year fiscal period.
- Operating income increased to $833,143 from $685,099 for the prior-year period.
- Operating EBITDA (excluding investment revenue) for the six months was $1,071,037 versus $780,672 in the prior-year period. A note reconciling Operating EBITDA to Operating Income can be found at the end of this release.
- Net income for the six months ended September 30, 2012 was $567,861, or $0.23 per share, compared to $18,032, or $0.01 per share, in the prior-year period.
- Investment gains of $105,832 compared favorably to an Investment loss of $639,270, in the prior-year period. Realized losses were $91,330 in the six-month period ending September 30, 2012, versus realized losses $71,202 in the prior-year period. Unrealized gains of $123,455 in the current six-month period compared favorably to unrealized losses of $606,844 in the prior-year period. The balance of Investment gain (loss), net performance is comprised of dividend and interest income, investment interest, and investment management fees.
Balance Sheet Information
TMA's balance sheet at September 30, 2012 reflected cash and cash equivalents of $5.4 million, working capital of $10 million, and shareholders' equity of $11.9 million; compared to $4.5 million, $7.2 million, and $9.2 million, respectively, at September 30, 2011. Intangible Assets, Net increased to $1,022,804 from $93,606 at March 31, 2012, primarily due to the acquisition of family entertainment centers completed in the quarter.
About The Marketing Alliance, Inc.
Headquartered in St. Louis, MO, TMA operates three business segments. TMA provides support to independent insurance brokerage agencies, with a goal of providing members value-added services on a more efficient basis than they can achieve individually. The Company also owns an earth moving and excavating business and two children's play and party facilities. Investor information can be accessed through the shareholder section of TMA's website at:
TMA's common stock is quoted on the OTC Markets (http://www.otcmarkets.com) under the symbol "MAAL".
Forward Looking Statement
Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect TMA's business and prospects. Any forward-looking statements contained in this press release represent our estimates only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our estimates as of any subsequent date. These statements involve a number of risks and uncertainties, including, but not limited to, general changes in economic conditions. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.
|Consolidated Statement of Operations|
|Quarter Ended||Year to Date|
|6 Months Ended|
|Family entertainment revenue||45,782||-||45,782||-|
|Distributor Related Expenses|
|Bonus & commissions||3,939,462||3,837,871||7,821,346||7,554,620|
|Processing & distribution||543,176||607,937||1,142,487||1,155,707|
|Cost of Construction|
|Direct and Indirect costs of construction||442,201||389,059||860,729||389,059|
|Family entertainment cost of sales||3,533||-||3,533||-|
|Net Operating Revenue||1,583,445||1,058,179||3,422,736||2,592,314|
|Other Income (Expense)|
|Investment gain, (loss) net||274,316||(587,442||)||105,832||(639,270||)|
|Income Before Provision for Income Tax||495,713||(548,868||)||894,139||28,359|
|Provision for income taxes||181,266||(183,890||)||326,278||10,327|
|Average Shares Outstanding||2,510,083||2,510,083||2,510,083||2,510,083|
Operating Income per Share
Net Income per Share
Note: * - Operating EPS and Net EPS stated after giving effect to the 20% stock split for shareholders of record as of September 15, 2012 and paid October 15, 2012 for all periods. Shares outstanding increased to 2,510,083 from 2,091,736 with this stock split and have been retroactively adjusted to account for this split. Operating EPS and Net EPS have also been stated and after giving effect to the 10% stock split for shareholders of record as of June 15, 2011 and paid July 15, 2011 for all periods. Shares outstanding were increased to 2,091,736 from 1,901,578 with this stock split and at the time of the split were retroactively adjusted to account for this split.
|Consolidated Selected Balance Sheet Items|
|Cash & Equivalents|
|Total Current Assets||16,787,504||16,782,708|
|Property and Equipment, Net||1,871,321||1,654,862|
|Intangible Assets, net||1,022,804||93,606|
Total Non Current Assets
|Liabilities & Stockholders' Equity|
|Total Current Liabilities||$||6,833,907||$||5,869,105|
|Long Term Liabilities|
|Liabilities & Stockholders' Equity||$||20,355,178||$||19,109,069|
Note - Operating EBITDA (excluding investments)
Q2FY 2013 Operating EBITDA (excluding investments) was determined by adding Q2FY 2013 Operating Income of $239, 825 and Depreciation and Amortization Expense of $119,374 for a sum of $359,199. Q2FY2012 Operating EBITDA (excluding investments) was determined by adding Q2FY 2012 Operating Income of $54,067 and Depreciation and Amortization Expense of $74,168 for a sum of $128,235.
Fiscal 2013 six months Operating EBITDA (excluding investments) was determined by adding FY2013 six month Operating Income of $833,143 and Depreciation and Amortization Expense of $237,894 for a sum of $1,071,037. FY2012 six month Operating EBITDA (excluding investments) was determined by adding FY 2012 six month Operating Income of $685,099 and Depreciation and Amortization Expense of $95,573 for a sum of $780,672.
The Company uses Operating EBITDA as a measure of operating performance. However, Operating EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or GAAP, and when analyzing its operating performance, investors should use Operating EBITDA in addition to, and not as an alternative for, income as determined in accordance with GAAP. Because not all companies use identical calculations, its presentation of Operating EBITDA may not be comparable to similarly titled measures of other companies and is therefore limited as a comparative measure. Furthermore, as an analytical tool, Operating EBITDA has additional limitations, including that (a) it is not intended to be a measure of free cash flow, as it does not consider certain cash requirements such as tax payments; (b) it does not reflect changes in, or cash requirements for, its working capital needs; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Operating EBITDA does not reflect any cash requirements for such replacements, or future requirements for capital expenditures or contractual commitments. To compensate for these limitations, the Company evaluates its profitability by considering the economic effect of the excluded expense items independently as well as in connection with its analysis of cash flows from operations and through the use of other financial measures.
The Company believes Operating EBITDA is useful to an investor in evaluating its operating performance because it is widely used to measure a company's operating performance without regard to certain non-cash or unrealized expenses (such as depreciation and amortization) and expenses that are not reflective of its core operating results over time. The Company believes Operating EBITDA presents a meaningful measure of corporate performance exclusive of its capital structure, the method by which assets were acquired and non-cash charges, and provides additional useful information to measure performance on a consistent basis, particularly with respect to changes in performance from period to period.
The Marketing Alliance, Inc.
Timothy M. Klusas, President
The Equity Group Inc.
Adam Prior, Vice President
Terry Downs, Account Executive
KEYWORDS: United States North America Missouri
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