The Marketing Alliance Announces Financial Results for Quarter Ended September 30, 2023 and Declares Quarterly Dividend of $0.05 per share
ST. LOUIS, December 22, 2023--(BUSINESS WIRE)--The Marketing Alliance, Inc. (OTC: MAAL) ("TMA" or the "Company"), today announced that its Board of Directors has declared a $0.05 per share cash dividend for shareholders of record on December 29, 2023, to be paid on or about January 24, 2024.
The Company also announced its financial results for its fiscal 2024 second quarter ended September 30, 2023.
2Q 2024 Financial Key Items (all comparisons to the prior year period)
Operating income from continuing operations of $594,792 compared to $452,731, driven by improved performance in both the insurance distribution and construction businesses.
Revenues were $4,891,830 compared to $4,839,242, the increase due primarily to an increase in construction revenues.
Net income from continuing operations was $492,416 or $0.06 per share compared to $130,557 or $0.02 per share.
Management Comments
Timothy M. Klusas, TMA’s Chief Executive Officer, commented, "Our second quarter 2024 results show a quarter in which, although very consistent to the prior year period, both businesses exceeded the prior year period on a gross profit basis. Our insurance distribution business benefited from some of the reversal of adverse timing of fee revenues mentioned in the last quarter, which is more comparable to what we would historically expect, and a slight improvement in performance overall through successful cost savings initiatives. Although not included in operating income, the Company also benefited from a reversal in a prior period holdback, which is listed as Other income."
Mr. Klusas added, "Our construction business built upon its good start to the fiscal year through exceptional execution of a large job during the quarter. This business continued to grow and create more opportunities for future large jobs by its increasing penetration in the market and a growing reputation among customers and potential future clients. The geographic areas in which our construction business operates continued to see infrastructure investment, and we were well-positioned to benefit from this trend."
Fiscal Second Quarter 2024 Financial Review
Revenues were $4,891,830 compared to $4,839,242, with Construction revenues increasing modestly due to increasing activity levels. Insurance Commission and Fee revenues fell slightly, reflecting general period to period variances in activity levels and business mix.
Net operating revenue (gross profit) for the quarter was $1,427,796, compared to net operating revenue of $1,256,385 in the prior-year fiscal period. The improvement in net operating revenue was due primarily to factors mentioned above, including the reversal of adverse timing of insurance fee revenue.
Operating expenses increased to $833,004 compared to $803,654 for the prior year. Investments in technology and professional fees were areas that saw the largest expense increases on a year over year basis.
The Company reported operating income from continuing operations of $594,792 compared to $452,731 in the prior year period, with differences due to factors discussed above.
Operating EBITDA (excluding investment portfolio income) increased to $673,314 from $521,261 in the prior year period. A note reconciling operating EBITDA to operating income can be found at the end of this release.
Investment gain (loss), net (from non-operating investment portfolio) for the quarter was $22,949, as compared with ($33,756) during the same period the previous year.
Net income from continuing operations was $492,416 or $0.06 per share compared to $130,557 or $0.02 per share.
Balance Sheet Information
TMA’s balance sheet on September 30, 2023, reflected cash and cash equivalents of $1.8 million; working capital of $5.9 million; and shareholders’ equity of 6.3 million; compared to cash and cash equivalents of $1.7 million, working capital of $6.7 million, and shareholders’ equity of $6.7 million as of September 30, 2022.
About The Marketing Alliance, Inc.
Headquartered in St. Louis, MO, TMA provides support to independent insurance brokerage agencies, with a goal of integrating insurance and "insuretech" engagement platforms to provide members value-added services on a more efficient basis than they can achieve individually.
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. Examples of forward-looking statements include, among others, statements we make regarding the timing of our receipt and recognition of fee revenues and our ability to generate earnings from our construction 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; the ways that insurance carriers may react in their underwriting policies and procedures to the continuing risks they perceive from public health matters, such as the COVID-19 pandemic; our reliance on a limited number of insurance carriers and any potential termination of those relationships or failure to develop new relationships; privacy and cyber security matters and our ability to protect confidential information; future state and federal regulatory actions and conditions in the states in which we conduct our business; our ability to work with carriers on marketing, distribution and product development; pricing and other payment decisions and policies of the carriers in our insurance distribution business, changes in the public securities markets that affect the value of our investment portfolio; and weather and environmental conditions in the areas served by our construction business. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Insurance commission and fee revenue | $ | 3,915,691 | $ | 4,110,728 | $ | 7,814,835 | $ | 8,112,812 | ||||||||
Construction revenue | 944,139 | 724,084 | 1,124,941 | 929,745 | ||||||||||||
Other insurance revenue | 32,000 | 4,430 | 61,800 | 179,530 | ||||||||||||
Total revenues | 4,891,830 | 4,839,242 | 9,001,576 | 9,222,087 | ||||||||||||
Insurance distributor related expenses: | ||||||||||||||||
Distributor bonuses and commissions | 2,598,684 | 2,782,060 | 5,158,737 | 5,100,854 | ||||||||||||
Business processing and distributor costs | 339,392 | 468,534 | 633,267 | 925,045 | ||||||||||||
Depreciation | 2,859 | 3,851 | 5,751 | 6,809 | ||||||||||||
2,940,935 | 3,254,445 | 5,797,755 | 6,032,708 | |||||||||||||
Costs of construction: | ||||||||||||||||
Direct and indirect costs of construction | 461,617 | 278,252 | 615,160 | 575,604 | ||||||||||||
Depreciation | 61,482 | 50,160 | 118,494 | 95,364 | ||||||||||||
523,099 | 328,412 | 733,654 | 670,968 | |||||||||||||
Total costs of revenues | 3,464,034 | 3,582,857 | 6,531,409 | 6,703,676 | ||||||||||||
Net operating revenue | 1,427,796 | 1,256,385 | 2,470,167 | 2,518,411 | ||||||||||||
Total general and administrative expenses | 833,004 | 803,654 | 1,823,184 | 1,681,870 | ||||||||||||
Operating income from continuing operations | 594,792 | 452,731 | 646,983 | 836,541 | ||||||||||||
Other income (expense): | ||||||||||||||||
Investment gain (loss), net | 22,949 | (33,756 | ) | 22,949 | (704,374 | ) | ||||||||||
Interest expense | (50,625 | ) | (48,218 | ) | (97,320 | ) | (101,102 | ) | ||||||||
Other income (expense): | 100,000 | 0 | 100,000 | 0 | ||||||||||||
Income (loss) from continuing operations before provision for income taxes | 667,116 | 370,757 | 672,612 | 31,065 | ||||||||||||
Income tax expense | 174,700 | 240,200 | 192,900 | 183,000 | ||||||||||||
Income (loss) from continuing operations | 492,416 | 130,557 | 479,712 | (151,935 | ) | |||||||||||
Discontinued operations: | ||||||||||||||||
Income from discontinued operations, net of income taxes | (3,605 | ) | 68,458 | (3,605 | ) | 82,876 | ||||||||||
Net income from discontinued operations | (3,605 | ) | 68,458 | (3,605 | ) | 82,876 | ||||||||||
Net Income (Loss) | $ | 488,811 | $ | 199,015 | $ | 476,107 | $ | (69,059 | ) | |||||||
Average Shares Outstanding | 8,081,266 | 8,081,266 | 8,081,266 | 8,081,266 | ||||||||||||
Operating Income from continuing operations per Share | $ | 0.07 | $ | 0.06 | $ | 0.08 | $ | 0.10 | ||||||||
Net Income per Share | $ | 0.06 | $ | 0.02 | $ | 0.06 | $ | (0.01 | ) | |||||||
CONSOLIDATED BALANCE SHEETS | ||||||
Unaudited | ||||||
September 30, | March 31, | |||||
2023 | 2023 | |||||
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash and cash equivalents | $ | 1,764,444 | $ | 2,461,956 | ||
Equity securities | 4,054,377 | 3,904,217 | ||||
Restricted cash | 613,932 | 536,212 | ||||
Accounts receivable | 7,091,640 | 9,710,905 | ||||
Inventory | 11,777 | 7,534 | ||||
Current portion of notes receivable | 120,921 | 146,645 | ||||
Prepaid expenses | 117,352 | 189,036 | ||||
Assets related to discontinued operations | 1,030 | 6,822 | ||||
Total current assets | 13,775,473 | 16,963,327 | ||||
PROPERTY AND EQUIPMENT, net | 965,129 | 817,945 | ||||
OTHER ASSETS | ||||||
Notes receivable, net due to the allowance | 568,186 | 586,435 | ||||
Restricted cash | 1,893,097 | 2,369,036 | ||||
Operating lease right-of-use assets | 250,735 | 402,534 | ||||
Total other assets | 2,709,018 | 3,358,005 | ||||
$ | 17,449,620 | $ | 21,139,277 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
CURRENT LIABILITIES | ||||||
Accounts payable and accrued expenses | 5,677,761 | 7,930,566 | ||||
Dividends payable | 404,663 | 566,949 | ||||
Line of credit payable | 675,000 | 400,000 | ||||
Current portion of notes payable | 920,898 | 811,223 | ||||
Current portion of finance lease liability | 35,509 | 67,276 | ||||
Current portion of operating lease liability | 130,285 | 131,851 | ||||
Liabilities related to discontinued operations | 677 | 87,194 | ||||
Total current liabilities | 7,844,793 | 9,995,059 | ||||
LONG-TERM LIABILITIES | ||||||
Notes payable, net of current portion and debt issuance costs | 2,831,359 | 3,529,616 | ||||
Finance lease liability, net of current portion | 123,084 | 165,191 | ||||
Operating lease liability, net of current portion | 112,907 | 276,497 | ||||
Deferred taxes | 216,000 | 200,000 | ||||
Total long-term liabilities | 3,283,350 | 4,171,304 | ||||
Total liabilities | 11,128,143 | 14,166,363 | ||||
COMMITMENTS AND CONTINGENCIES | ||||||
SHAREHOLDERS' EQUITY | ||||||
Common stock, no par value; 50,000,000 shares authorized, 8,081,266 shares issued and outstanding June 30, 2022 and June 30, 2023 | 1,025,341 | 1,025,341 | ||||
Retained earnings | 5,296,136 | 5,947,573 | ||||
Total shareholders' equity | 6,321,477 | 6,972,914 | ||||
$ | 17,449,620 | $ | 21,139,277 | |||
Note – Operating EBITDA (excluding investment portfolio income)
Three Months Ended | Six Months Ended | |||||||||||
EBITDA Calculation | Sept 30, | Sept 30, | ||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Operating Income from Continuing Operations | $ | 594,792 | $ | 452,731 | $ | 646,983 | $ | 836,541 | ||||
Add: | ||||||||||||
Depreciation/Amortization Expense | $ | 78,522 | $ | 68,530 | $ | 151,283 | $ | 131,200 | ||||
EBITDA (Excluding Investment Portfolio Income) | $ | 673,314 | $ | 521,261 | $ | 798,266 | $ | 967,741 | ||||
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.
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Contacts
The Marketing Alliance, Inc.
Timothy M. Klusas, President
(314) 275-8713
tklusas@themarketingalliance.com
www.TheMarketingAlliance.com
-OR-
The Equity Group Inc.
Jeremy Hellman, Vice President
(212) 836-9626
jhellman@equityny.com
