The Marketing Alliance Announces Financial Results for Its Fiscal 2016 First Quarter Ended June 30, 2015

FY 2016 First Quarter Financial Highlights (all comparisons to the prior year)

  • Revenues increased to $6,740,254 from $6,549,538
  • Operating income (loss) was ($76,260) from due in part to approximately $249,000 of certain items that had been previously deferred and expensed over the course of the prior year were determined that for 2015 did not benefit future quarters and were expensed in the current quarter. Operating income also affected by weather-related lower revenues in the land improvement business
  • Operating EBITDA (excluding investment portfolio income) was $117,013 compared to $912,738
  • Net loss of ($60,419) or ($0.01) per share, as compared to net income of $527,751, or $0.08 per share
  • Subsequent to the quarter end, TMA’s Board of Directors approved a 7:6 stock split. The record date for the split was August 21, 2015. The distribution of the new shares was made on or about September 25, 2015, and as a result the Company’s common stock outstanding increased to 7,028,233 shares outstanding from 6,024,200 shares outstanding
  • Subsequent to the end of the quarter, the Company acquired three additional Monkey Joe’s locations in the Charlotte, North Carolina, metropolitan area, and reached an agreement to acquire a fourth Charlotte location

ST. LOUIS--()--The Marketing Alliance, Inc. (OTC:MAAL) (“TMA”), today announced financial results for its fiscal 2016 first quarter ended June 30, 2015.

Mr. Timothy M. Klusas, TMA’s Chief Executive Officer, stated, “Our results were affected by several factors that negatively impacted our financial results in this quarter. While we were pleased to report increases in revenue for our insurance distribution and the family entertainment businesses, a very wet spring and summer suppressed land improvement (construction) revenues through lost working days. Our earnings were impacted negatively by changes in the mix of our customer and carrier supplier bases in the insurance distribution business and increases in expenses associated with re-establishing our newly acquired Florida locations in the Family Entertainment business. Finally, suppressed revenues in the land improvement (construction) business due to weather could not support expenses levels in the quarter.

“Our operating income in the insurance distribution business was also affected by certain items that had been previously deferred and expensed over the course of the prior year that were determined that for 2015 did not benefit future quarters, and were expensed in the current quarter. The net effects of these items were approximately $249,000 in the quarter by realizing these expenses in this quarter as opposed deferring and realizing in a different quarter later in the year. The effects of the reconciliations of distributor commissions, which have historically occurred at the end of the calendar year, are expected to be reduced as a result. ”

Mr. Klusas provided additional details below on each of the Company’s operations for the first quarter of the fiscal 2016 year:

  • Insurance Distribution Business: “Our insurance business was affected by changes in the relative competitiveness of our supplier carriers and an unfavorable mix of business. For example, carriers that have been prominent and had been growing among our distributors have rationalized the competitiveness of their product portfolios which has had the effect of reducing their sales within our network of agencies. As a result, some of these sales went to other carriers that were not as well developed within our network. In an effort to grow our insurance business in this environment, our expenses in the insurance business that were required to grow increased relative to the desired increases in revenue. As a generalization, these changes were brought about by continued strain on carriers from low interest rates and changes in reserving requirements that have affected carriers’ product availability and competitive positioning. In the months ahead, we will continue to work closely with our long-time existing carriers, and we commend our distributors who continue to adapt to these industry changes. We are also continuing to explore relationships with new carriers and as mentioned in the previous quarter, seek more economical and faster ways for our carriers’ products to be distributed which would benefit our small and mid-size distributors.
  • Earth Moving and Excavating Business: “Adverse weather conditions negatively impacted our results for this segment of the Company for the quarter. Over 30% of possible working hours were missed due to weather conditions. Although several of our jobs had to be postponed until later in the year, this business continues to strive to improve operations through streamlining costs, eliminating unnecessary expenses and seeking new customers and markets such as commercial construction during non-agricultural seasons (for example, summer, when farm fields are unavailable due to crops) to generate higher returns for TMA. While we made progress in diversifying the customer base to include more commercial construction projects, we could not recover from the missed work days due to weather during this quarter.”
  • Family Entertainment Business: “While we experienced revenue increases and more favorable earnings in our St. Louis facilities, our Florida facilities were negatively affected by expenses and non-optimal performance during the process of improving these operations during the quarter. Subsequent to the end of the quarter, we acquired three new facilities in Charlotte. The addition of these three facilities and potentially a fourth was due, in part, to generate economies of scale and leverage improvements and best practices from other stores. A few of the improvements made at our existing facilities include increasing marketing efforts to expand our customer base and purchasing additional video game machines for our customers to enjoy during their visit.”

Fiscal 2016 First Quarter Financial Review

  • Total revenues for the three-month period ended June 30, 2015, were $6,740,254, as compared to $6,549,538 in the prior year quarter. The increase was the result of an increase in revenue for the insurance distribution business and family entertainment businesses of the Company due to the facilities that were acquired during fiscal 2015, which offset the decrease in construction revenue reported from the prior year period.
  • Net operating revenue (gross profit) for the quarter was $1,654,566, compared to net operating revenue of $2,025,214 in the prior-year fiscal period. The decrease in gross profit year over year was due in part to an increase in distributor related expenses in the insurance distribution business and a decline in construction revenue for the quarter. The decrease in net operating revenue was partially offset by a $57,662 (including depreciation) reduction in construction cost over the prior year period and a $392,239 increase in revenues year over year for the family entertainment portion of the Company.
  • Operating expenses increased by $453,238 versus the prior year period. The increase in operating expenses was in part attributable to the additional expenses of two additional facilities in the Family Entertainment Business and a non-recurring reduction in expenses in the prior year related to compensation expense.
  • Operating loss was ($76,260) compared to operating income of $747,626 reported in the prior-year period. The change in operating income was due in part to the factors discussed above including approximately $249,000 of certain items that had been previously deferred and expensed over the course of the prior year were determined that for 2015 did not benefit future quarters and were expensed in the current quarter, and increases in operating expenses.
  • Operating EBITDA (excluding investment portfolio income) for the quarter was $117,013 compared to $912,738 in the prior-year period driven mostly by changes in operating income. A note reconciling operating EBITDA to operating income can be found at the end of this release.
  • Net loss for the fiscal 2016 first quarter was ($60,419), or loss per share of $0.01, compared to a net income of $527,751, or earnings per share of $0.08, in the prior year period.

Balance Sheet Information

TMA’s balance sheet at June 30, 2015 reflected cash and cash equivalents of approximately $5.7 million, working capital of $10.1 million, and shareholders’ equity of $12.5 million; compared to $5.7 million, $10.1 million, and $12.6 million, respectively, at March 31, 2015.

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 seven 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 ( 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. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during fiscal 2016 and the production of favorable returns to shareholders, our ability to obtain new carriers and more economical and faster ways for carrier products to be distributed, our ability to diversify our earth moving and excavating business and increases in revenue from our family entertainment business. Any forward-looking statements contained in this press release represent our estimates, expectations or intentions only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our views 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; pricing and other payment decisions and policies of the carriers in our insurance distribution business, weather and environmental conditions in the areas served by our earth moving and excavation 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.

Three-months ended
June 30,
  2015           2014
Commission revenue $ 5,724,543 $ 5,669,881
Construction revenue 299,210 555,395
Family entertainment revenue $ 716,501 $ 324,262
Revenues 6,740,254 6,549,538
Distributor Related Expenses
Bonus & commissions 4,219,782 3,627,732
Processing & distribution 438,043 476,595
Depreciation   2,740   2,667
Total 4,660,565 4,106,994
Cost of Construction
Direct and Indirect costs of construction 194,917 253,504
Depreciation   87,404   86,479
Total 282,321 339,983
Family entertainment cost of sales   142,802   77,347
Net Operating Revenue   1,654,566   2,025,214
Operating Expenses   1,730,826   1,277,588
Operating Income (76,260) 747,626
Other Income (Expense)
Investment gain, (loss) net 5,484 113,177
Interest expense (34,661) (29,519)
(Loss) on disposal of assets - (197)
Interest rate swap, fair value adjustment   1,980   307
Income Before Provision for Income Tax (103,457) 831,394
Provision for income taxes   (43,038)   303,643
Net Income $ (60,419) $ 527,751
Average Shares Outstanding 7,028,233 7,028,233
Operating Income per Share $ (0.01) $ 0.11
Net Income per Share $ (0.01) $ 0.08
Consolidated Selected Balance Sheet Items
    As of
Assets 6/30/15         3/31/15
Cash & Equivalents $ 5,690,621 $ 5,678,445
Investments 5,705,269 5,406,399
Receivables 8,260,918 8,250,089
Other   2,346,701   1,532,021
Total Current Assets 22,003,509 20,866,954
Property and Equipment, Net 1,711,891 1,837,916
Intangible Assets, net 956,849 991,006
Other   762,383   760,851

Total Non Current Assets

  3,431,123   3,589,773
Total Assets $ 25,434,632 $ 24,456,727
Liabilities & Stockholders' Equity
Total Current Liabilities $ 11,903,892 $ 10,714,388
Long Term Liabilities  




Total Liabilities   12,916,678   11,878,354
Stockholders' Equity   12,517,954   12,578,373
Liabilities & Stockholders' Equity $ 25,434,632 $ 24,456,727

Note – Operating EBITDA (excluding investment portfolio income)

Q1FY2016 Operating EBITDA (excluding investment portfolio income) was determined by adding Q1FY 2016 Operating Loss of ($76,260) and Depreciation and Amortization Expense of $193,273 for a total of $117,013. Q1FY2015 Operating EBITDA (excluding investment portfolio income) was determined by adding Q1FY 2015 Operating Income of $747,626 and Depreciation and Amortization Expense of $165,112 for a total of $912,738. 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.


The Marketing Alliance, Inc.
Timothy M. Klusas, 314-275-8713
Investor Relations:
The Equity Group Inc.
Adam Prior, 212-836-9606
Senior Vice President
Terry Downs, 212-836-9615


The Marketing Alliance, Inc.
Timothy M. Klusas, 314-275-8713
Investor Relations:
The Equity Group Inc.
Adam Prior, 212-836-9606
Senior Vice President
Terry Downs, 212-836-9615