The Marketing Alliance Announces Financial Results for Its Fiscal 2015 Fourth Quarter and Year Ended March 31, 2015

FY 2015 Annual Financial Highlights (all comparisons to the prior year)

  • Revenues increased 12.2% to $27,239,640, from $24,267,078 the previous year
  • Operating income was $1,818,811, compared to $360,808 for the prior year
  • Operating EBITDA (excluding investment portfolio income) was $2,488,729, compared to $997,549 last year
  • Net income was $1,037,229, or $0.17 per share, as compared to net income of $597,557, or $0.10 per share
  • In November 2014, the Company’s Board of Directors authorized a $0.21 per share cash dividend for shareholders of record on December 12, 2014, paid on or about January 30, 2015, which was a 16.7% increase over the prior year dividend

FY 2015 Fourth Quarter Financial Highlights (all comparisons to the prior year period)

  • Revenues were $7,054,087, compared to $4,147,077
  • Operating income was $552,690, compared to an operating loss of $616,831
  • Operating EBITDA (excluding investment portfolio income) was $746,685, compared to ($457,722)
  • Net income of $283,733, or $0.05 per share, as compared to a net loss of ($132,407), or ($0.02) loss per share

ST. LOUIS--()--The Marketing Alliance, Inc. (OTC:MAAL) (“TMA”), today announced financial results for its fiscal 2015 fourth quarter and year ended March 31, 2015.

Mr. Timothy M. Klusas, TMA’s Chief Executive Officer, stated, “It was important for us to have significant improvements over last year when we saw many external factors present challenges for our business. This year we saw double-digit percentage increases in total revenue, and increases in net income and EBITDA for both the fiscal 2015 full-year and the fiscal fourth quarter. We have been consistently seeking new ways to improve operating efficiency for each part of the Company and we believe that our fiscal 2015 year and fourth quarter results were indicative of these efforts. As in prior communications, we always encourage followers of our company to consider at least twelve-month increments instead of extrapolating results from shorter time periods to gain an understanding of our Company’s condition.”

Insurance Distribution business: “We were focused on offering a wide variety of products from a diverse network of carriers and believe that in doing so our distributors were able to remain competitive in today’s low interest rate environment. Our distributors continue to adapt to changes in life-insurance product mix and have adjusted their sales efforts. While I would not characterize the business environment as having significantly improved, the rate of change has slowed down and as a result we were better able to face these challenges. For example, in the months ahead, TMA will continue to explore easier, faster, more economical ways for our carriers’ products to be distributed and we are excited about the potential to gain new producers through our distributors that would add to our commission revenue.”

Earth Moving (Land Improvement) business: “Despite 25% less revenue for the year, we were pleased to report an increase in construction gross profit margins for the twelve month period and the quarter. While we continue to try to adapt to lower crop prices (which negatively affect revenue for our agricultural customers that purchase our services) by seeking more value-added work, we have also made an effort to expand beyond our agricultural base to commercial construction that could better utilize our resources and equipment through the year. We believe these efforts have begun to gain traction, although wet weather has held back the execution of these jobs. Despite the challenges of a wet spring (defined by number of days with precipitation or days of saturated soil when it was too wet for earth moving activities), we were encouraged by our pipeline of future jobs. In this business we plan to continue to seek ways to increase revenues even during the off seasons, and we plan to continue to explore ways to reduce costs.

Family Entertainment business: “As noted in the previous quarter’s release, we completed the acquisition of two additional Money Joe’s franchises in January, both of which are located in the Fort Lauderdale area. We have been pleased with the progress of integrating these two new facilities, which have required some investment on our part, into our business and with less than three full months’ of operations, these facilities have in part contributed to the increase in revenue for the fourth quarter for this segment of the Company when comparing to the prior year. The rise in revenue also continues to be partly attributable to improvements made throughout the year at our existing facilities. During the quarter, we also executed an agreement to establish a new location in the St. Louis area and will continue to explore new opportunities that will grow this facet of the Company.”

Fiscal 2015 Fourth Quarter Financial Review

  • Total revenues for the three-month period ended March 31, 2015, were $7,054,087, as compared to $4,147,077 in the prior year quarter. The effect of the annual deferred first-year commission calculation in this quarter did not decrease revenue as in the prior year period due to a more favorable deferred first-year commissions calculation this year compared to the previous year. The deferred first-year commission calculation is an annual reconciliation calculation that is recognized in this quarter at the fiscal year-end. Revenue from the Family Entertainment business increased in part due to the addition of two locations acquired in Florida during this quarter.
  • Net operating revenue (gross profit) for the quarter was $2,444,637, compared to net operating revenue of $932,331 in the prior-year fiscal period, reflecting the benefit of higher revenues in the quarter. A large factor in the change from the prior year was a more beneficial effect of deferred first-year commissions to net operating revenue compared to the prior year.
  • Operating income was $552,690, versus operating loss of ($616,831) reported in the prior-year period. Operating profit was not adversely affected by the annual deferred first-year commission calculation as it was in the prior year.
  • Operating EBITDA (excluding investment portfolio income) for the quarter was $746,685, as compared to ($457,722) loss in the prior-year period. A note reconciling operating EBITDA to operating income can be found at the end of this release. Operating EBITDA was affected by increased revenue and increased operating profit mentioned above.
  • Net income for the fiscal 2015 fourth quarter was $283,733, or $0.05 per share, as compared to a net loss of ($132,407), or ($0.02) loss per share for the prior year period. Net Income was affected by Investment gain (loss) net of $32,550 this quarter compared to $306,840 in the prior year period.

Fiscal 2015 Financial Review

  • Total revenues for the year ended March 31, 2015 increased 12.2% to 27,239,640, as compared to $24,267,078 in revenues for the prior-year period. Revenues in the Insurance Distribution and Family Entertainment business increased while the revenue decreased in the Earth Moving business.
  • Net operating revenue (gross profit) was $7,923,683, which compares to a net operating revenue of $6,538,268 in the prior-year fiscal period.
  • Operating income increased to $1,818,811 from $360,808 for the prior-year period. A significant difference in operating income from the prior year was due to the deferred first-year commission calculation and less volatile conditions in the Insurance Distribution business.
  • Operating EBITDA (excluding investment portfolio income) for the year ended March 31, 2015 was $2,488,729 versus $997,549 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 year ended March 31, 2015 increased to $1,037,229, or $0.17 per share, compared to $597,557, or $0.10 per share, in the prior-year period. Net Income was affected by Investment gain (loss) net of ($104,481) this year compared to $563,895 last year.
  • Purchases of property and equipment were $951,161 for the fiscal year (not including proceeds from sales of equipment in the Earth Moving business of $55,971). The Earth Moving business accounted for 39% (of which $245,000 for land and building to house this business, replacing rent expense) and the Family Entertainment business accounted for the remaining 61% of purchases (of which 74% was related to the acquisition of the two new stores).

Balance Sheet Information

TMA’s balance sheet at March 31, 2015 reflected cash and cash equivalents of approximately $5.7 million, working capital of $10.1 million, and shareholders’ equity of $12.6 million; compared to $5.5 million, $11.3 million, and $12.8 million, respectively, at March 31, 2014.

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 four 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, expectations of the economic environment; material adverse changes in economic conditions in the markets we serve and in the general economy; future regulatory actions and conditions in the states in which we conduct our business; the integration of our operations with those of businesses or assets we have acquired or may acquire in the future and the failure to realize the expected benefits of such acquisition and integration. 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
       
3 Months Ended 12 Months Ended
3/31/15   3/31/14 3/31/2015   3/31/2014
 
Commission revenue $ 6,068,999 $ 3,513,564 $ 23,566,230 $ 20,459,664
Construction revenue 132,298 111,982 1,728,736 2,302,921
Family entertainment revenue $ 852,790 $ 521,531 $ 1,944,674 $ 1,504,493
Revenues 7,054,087 4,147,077 27,239,640 24,267,078
 
Distributor Related Expenses
Bonus & commissions 3,725,038 2,178,411 15,824,905 13,858,842
Processing & distribution 499,642 655,809 1,846,574 1,812,572
Depreciation   2,704   2,984   10,818   11,817
Total 4,227,384 2,837,204 17,682,297 15,683,231
 
Cost of Construction
Direct and Indirect costs of construction 116,666 200,253 913,280 1,427,285
Depreciation   87,152   86,386   342,261   352,130
Total 203,818 286,639 1,255,541 1,779,415
 
Family entertainment cost of sales   178,248   90,903   378,119   266,164
 
Net Operating Revenue   2,444,637   932,331   7,923,683   6,538,268
 
Operating Expenses   1,891,947   1,549,162   6,104,872   6,177,460
 
Operating Income 552,690 (616,831) 1,818,811 360,808
 
Other Income (Expense)
Investment gain, (loss) net 32,550 306,840 (104,481) 563,895
Interest rate swap, fair value adjustment (1,530) 2,595 4,990 22,165
Gain (Loss) on disposal 6,937 (2,216) 15,478 5,980
 
Interest expense   (29,869)   (32,709)   (115,344)   (113,104)
 
Income Before Provision for Income Tax 560,778 (342,321) 1,619,454 839,744
 
Provision for income taxes   277,045   (209,914)   582,225   242,187
 
Net Income $ 283,733 $ (132,407) $ 1,037,229 $ 597,557
 
Average Shares Outstanding 6,024,200 6,024,200 6,024,200 6,024,200
 
Operating Income per Share $ 0.09 $ (0.10) $ 0.30 $ 0.06
Net Income per Share $ 0.05 $ (0.02) $ 0.17 $ 0.10

Note: * - Operating EPS and Net EPS stated after giving effect to a 2:1 stock split for shareholders of record as of February 28, 2014 and was distributed on or about March 28, 2014. Shares outstanding increased to 6,024,200 from 3,012,100 with this stock split and have been retroactively adjusted to account for the split.

 
Consolidated Selected Balance Sheet Items
    As of
Assets 3/31/15   3/31/14
Cash & Equivalents $ 5,678,445 $ 5,531,060
Investments 5,406,399 5,245,505
Receivables 8,250,089 7,607,064
Other   1,532,021   1,899,946
 
Total Current Assets 20,866,954 20,283,575
 
Property and Equipment, Net 1,837,916 1,490,381
Intangible Assets, net 991,006 835,290
Other   760,851   920,566

Total Non Current Assets

  3,589,773   3,246,237
 
Total Assets $ 24,456,727 $ 23,529,812
 
Liabilities & Stockholders' Equity
Total Current Liabilities $ 10,714,388 $ 8,993,130
 
Long Term Liabilities  

1,163,966

 

1,730,456

 
Total Liabilities   11,878,354   10,723,586
 
Stockholders' Equity   12,578,373   12,806,226
 
Liabilities & Stockholders' Equity $ 24,456,727 $ 23,529,812
 

Note – Operating EBITDA (excluding investment portfolio income)

Q4FY2015 Operating EBITDA (excluding investment portfolio income) was determined by adding Q4FY 2015 Operating Income of $552,690 and Depreciation and Amortization Expense of $193,995 for a total of $746,685. Q4FY2014 Operating EBITDA (excluding investment portfolio income) was determined by adding Q4FY 2014 Operating Income of ($616,831) and Depreciation and Amortization Expense of $159,109 for a total of ($457,722). The Company elects not to include investment portfolio income because the Company believes it is non-operating in nature.

Fiscal 2015 year-end Operating EBITDA (excluding investment portfolio income) was determined by adding FY2015 year-end Operating Income of $1,818,811 and Depreciation and Amortization Expense of $669,918 for a sum of $2,488,729. Fiscal 2014 year-end Operating EBITDA (excluding investment portfolio income) was determined by adding FY2014 year-end Operating Income of $360,808 and Depreciation and Amortization Expense of $636,741 for a sum of $997,549. The Company elects not to include investment portfolio income because the Company believes it is non-operating in nature.

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.

Contacts

The Marketing Alliance, Inc.
Timothy M. Klusas, 314-275-8713
President
tklusas@themarketingalliance.com
www.themarketingalliance.com
or
Investor Relations
The Equity Group Inc.
Adam Prior, 212-836-9606
Senior Vice President
aprior@equityny.com
or
Terry Downs, 212-836-9615
Associate
tdowns@equityny.com

Contacts

The Marketing Alliance, Inc.
Timothy M. Klusas, 314-275-8713
President
tklusas@themarketingalliance.com
www.themarketingalliance.com
or
Investor Relations
The Equity Group Inc.
Adam Prior, 212-836-9606
Senior Vice President
aprior@equityny.com
or
Terry Downs, 212-836-9615
Associate
tdowns@equityny.com