The Marketing Alliance Announces Financial Results for Its Fiscal 2013 Third Quarter and Nine Months
The Marketing Alliance Announces Financial Results for Its Fiscal 2013 Third Quarter and Nine Months Ended December 31, 2012
FY 2013 Third Quarter Financial Highlights (all comparisons to the prior year period)
- Revenues increased approximately 9% to $8,513,742 from $7,825,872
- Operating income was $1,328,846, compared to $1,740,140
- Operating EBITDA (excluding investments) was $1,490,859, compared to $1,871,129
- Net income of $864,706, or $0.34 per share, as compared to net income of $1,279,837, or $0.51 per share
- Dividend of $0.38 per share paid December 26, 2012, to shareholders of record as of December 7, 2012
ST. LOUIS--(BUSINESS WIRE)-- The Marketing Alliance, Inc. (OTC: MAAL) ("TMA"), today announced financial results for its fiscal 2013 third quarter ended December 31, 2012.
Timothy M. Klusas, TMA's President, stated, "We are pleased with the Company's developments during the quarter, including revenue increases in each of our business lines. Our insurance distribution network continued to perform well despite a challenging interest rate environment. Our construction and earth moving segment provided TMA with diversification and additional growth opportunities. We are also excited to announce the first full quarter of results for the two children's party and entertainment facilities that were acquired during the second quarter of the fiscal year. We continue to aspire to deploy capital as efficiently as we can for our shareholders." Highlights from each of the Company's operations include:
Insurance Distribution Business: "Our insurance distribution business saw an increase in commission revenue for the period. As we have mentioned in prior releases, the current low interest rate environment and continued expectations for low interest rates into the future have 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 guaranteed products are most sensitive to interest rates. We experienced some adverse changes this year as life insurance carriers changed their product lines in reaction to current conditions, which were particularly notable in this quarter due to the year-end reconciliations of our annual distribution agreements measuring periods with carriers." The reconciliations resulted in increases in the commissions and other distributions made to distributors that were not fully offset by increases in revenues received by TMA compared to prior years.
The current interest rate environment also adversely affected TMA's annuity business, where annuity products are based on interest rates and low interest rates could make the product less appealing for customers who may choose to defer purchases until rates increase. While less product choice and less attractive products reduce revenues to the Company, TMA was particularly affected in this quarter versus last year by the year-end reconciliations of our annual distribution agreements measuring periods with carriers that fall in this quarter. Klusas commented, "As we have said before, although these changes can be disruptive for distributors, TMA, 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. We continued to reinvest in this business and our life insurance business in ways we feel furthers the effectiveness of our value proposition. These investments are largely reflected in our current expenses."
- Earth Moving and Excavating: Klusas said, "We were pleased with the development of the earth moving and excavating business as we continued to integrate this business with our Company. Part of our integration was to redistribute certain costs directly to the construction operation going forward instead of general operating expenses (see financial review below). We were pleased to see the improvement in the performance of our agriculture business in a year where agriculture was marked by drought. Some farmers attributed services like ours as beneficial for crops in a drought by helping to establish strong early-season root growth in crops to more effectively sustain hot and dry conditions. We also experienced adverse seasonality of the business in this quarter compared to last year, as the onset of winter ceased operations earlier this year than last year. While we made certain adjustments due to weather, we continued to focus on improving asset and labor utilization, while providing the superior customer service our clients expect."
- Entertainment Facilities: Last quarter, we completed the acquisition of two children's party and entertainment facilities that are located in the St Louis area and operate under the franchise name Monkey Joe's. We have recognized substantially all of the initial one-time expenses associated with this acquisition and look forward to integrating the operations into the Company.
Fiscal 2013 Third Quarter Financial Review
- Total revenues for the three-month period ended December 31, 2012, were $8,513,742, as compared to $7,825,872 in the prior year quarter. The increase was due to an additional $314,715 received in revenue from the Company's acquisition of two entertainment facilities, as well as a combined increase of $373,155 received in commission and construction revenues over the prior year period.
- Net operating revenue (gross profit) for the quarter was $2,351,801, compared to net operating revenue of $2,814,536 in the prior-year fiscal period. Some direct and indirect construction expenses were reclassified, but were fully offset by an offsetting reclassification in SG&A. No reclassifications of expenses affected operating income.
- Operating income was $1,328,846, versus operating income of $1,740,140 reported in the prior-year period. A large component of this decrease was the aforementioned year-end reconciliations of annual distribution agreements with carriers that occur in this quarter and a corresponding increase in distributor expenses relative to revenue.
- Operating EBITDA (excluding investment revenue) for the quarter was $1,490,859 versus $1,871,129 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 third quarter was $864,706, or earnings per share of $0.34, compared to a net income of $1,279,837, or $0.51 per share, in the prior year period.
- Investment gains for the third quarter ended December 31, 2012 was $42,682, as compared to an Investment gain of $281,980 for the same quarter of the fiscal 2012 year.
- A $0.38 per share cash dividend for shareholders of record on December 7, 2012, was paid on December 26, 2012.
Fiscal 2013 Nine Months Financial Review
- Total revenues for the nine months ended December 31, 2012 increased 12% to $21,953,101, as compared to $19,588,467 in revenues for the prior-year period.
- Net operating revenue (gross profit) was $5,774,537, which compares to a net operating revenue of $5,302,427 in the prior-year fiscal period. The reclassifications for the fiscal 2013 third quarter (noted above) were completed to reconcile to the nine-month year-to-date statement, which management believes is the best classification of direct and indirect construction costs and operating expenses.
- Operating income decreased to approximately $2,161,989 from $2,425,239 for the prior-year period.
- Operating EBITDA (excluding investment revenue) for the nine months was $2,561,896 versus $2,651,801 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 nine months ended December 31, 2012 increased by 10% to $1,432,567, or $0.57 per share, compared to $1,297,869, or $0.52 per share, in the prior-year period.
- Investment gains of $148,514 compared favorably to an Investment loss of $357,290, in the prior-year period. Realized losses were $29,041 in the nine-month period ending December 31, 2012, versus realized losses $155,504 in the prior-year period. Unrealized gains of $69,071 in the current nine-month period compared favorably to unrealized losses of $277,515 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 December 31, 2012 reflected cash and cash equivalents of approximately $6.1 million, working capital of $10.2 million, and shareholders' equity of $11.8 million; compared to $4.8 million, $10.9 million, and $11.3 million, respectively, at March 31, 2012. The Company's intangible assets increased to $991,852 at December 31, 2012 from $93,606 at March 31, 2012, primarily due to the acquisition of family entertainment centers completed in the second quarter.
About The Marketing Alliance, Inc.
Headquartered in St. Louis, MO, TMA operates three business segments. TMA provides support to independent insurance brokerage agencies, with a goal of providing members value-added services on a more efficient basis than they can achieve individually. The Company also owns an earth moving and excavating business and two children's play and party facilities. Investor information can be accessed through the shareholder section of TMA's website at: http://www.themarketingalliance.com/shareholder-information.
TMA's common stock is quoted on the OTC Markets (http://www.otcmarkets.com) under the symbol "MAAL".
Forward Looking Statement
Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect TMA's business and prospects. Any forward-looking statements contained in this press release represent our estimates only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our estimates as of any subsequent date. These statements involve a number of risks and uncertainties, including, but not limited to, general changes in economic conditions. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.
|Consolidated Statement of Operations|
|Quarter Ended||Year to Date|
|9 Months Ended|
|Family entertainment revenue||$||314,715||-||360,497||-|
|Distributor Related Expenses|
|Bonus & commissions||4,542,643||4,004,367||12,363,989||11,557,172|
|Processing & distribution||520,340||345,282||1,662,827||1,439,142|
|Cost of Construction|
|Direct and Indirect costs of construction||960,043||569,960||1,820,772||1,127,104|
|Family entertainment cost of sales||43,782||-||47,315||-|
|Net Operating Revenue||2,351,801||2,814,536||5,774,537||5,302,427|
|Other Income (Expense)|
|Investment gain, (loss) net||42,682||281,980||148,514||(357,290)|
|Income Before Provision for Income Tax||1,337,245||2,007,515||2,231,384||2,035,874|
|Provision for income taxes||472,539||727,678||798,817||738,005|
|Average Shares Outstanding||2,510,083||2,510,083||2,510,083||2,510,083|
|Operating Income per Share||$||0.53||$||0.69||$||0.86||$||0.97|
|Net Income per Share||$||0.34||$||0.51||$||0.57||$||0.52|
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||$||6,082,436||$||4,785,736|
|Total Current Assets||18,646,985||16,782,708|
|Property and Equipment, Net||1,756,289||1,654,862|
|Intangible Assets, net||991,852||93,606|
Total Non Current Assets
|Liabilities & Stockholders' Equity|
|Total Current Liabilities||$||8,495,168||$||5,869,105|
|Long Term Liabilities|
|Liabilities & Stockholders' Equity||$||22,199,139||$||19,109,069|
Note - Operating EBITDA (excluding investments)
Q3FY2013 Operating EBITDA (excluding investments) was determined by adding Q3FY 2013 Operating Income of $1,328,846 and Depreciation and Amortization Expense of $162,013 for a sum of $1,490,859. Q3FY2012 Operating EBITDA (excluding investments) was determined by adding Q3FY 2012 Operating Income of $1,740,140 and Depreciation and Amortization Expense of $130,989 for a sum of $1,871,129.
Fiscal 2013 nine month Operating EBITDA (excluding investments) was determined by adding FY2013 nine month Operating Income of $2,161,989 and Depreciation and Amortization Expense of $399,907 for a sum of $2,561,896. FY2012 nine month Operating EBITDA (excluding investments) was determined by adding FY 2012 nine month Operating Income of $2,425,239 and Depreciation and Amortization Expense of $226,562 for a sum of $2,651,801.
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, 314-275-8713
The Equity Group Inc.
Adam Prior, 212-836-9606
Senior Vice President
Terry Downs, 212-836-9615
KEYWORDS: United States North America Missouri
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