ST. LOUIS--(BUSINESS WIRE)--The Marketing Alliance, Inc. (OTC: MAAL) ("TMA" or the "Company"), announced its financial results today for its fiscal 2024 third quarter ended December 31, 2023.
Third Quarter Fiscal 2024 Financial Key Items (all comparisons to the prior year period)
- Operating income from continuing operations of $615,317 compared to $849,467, as operating income was adversely affected by less general activity in the Construction business and a $143,629 charge-off due to a reconciliation at the end of a job lasting multiple years.
- Revenues were $4,738,004 compared to $4,757,329, where an increase in Insurance distribution revenue was offset by a comparable decline in Construction revenues.
- Net income was $766,105, or $0.09 per share compared to $1,000,743, or $0.12 per share.
Management Comments
Timothy M. Klusas, TMA's Chief Executive Officer, commented, "Our third quarter fiscal year 2024 results were largely the result of three factors which drove our performance. First, our Insurance distribution business had a quarter marked by increased revenues and top-line growth. Our Insurance distribution business also benefited again this quarter from more reversals of the adverse timing of fee revenues that were mentioned earlier this year. As we progress through the year, we feel the year-to-date results have become more comparable to the prior year. Although our Business processing and distributor costs were up this quarter due to the introduction and implementation of new projects, our operating expenses (Total general and administrative expenses) were down company-wide due to successful cost savings initiatives, which was the second factor that drove our performance. Also, 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 had a good start to the year, but anticipated planned projects did not materialize in this quarter and some projects were deferred to next year. Finally, as we completed a large project that was started last year and finished this year, we found excess materials billings that totaled $143,629 and upon realization, promptly reversed the charge. It seemed that the error was made moving materials between seasons (fiscal years) and why we, again, always stress looking at the business over an extended period such as the combination of the previous year and this year taking this adjustment into account. The reduction in construction activity and related charge-off this quarter combined to be the third factor that dominated our quarterly performance."
Fiscal Third Quarter 2024 Financial Review
- Revenues were $4,738,004 compared to $4,757,329, with an increase in Insurance Distribution revenues offset by less Construction revenues, including the charge-off of materials billings discussed above.
- Net operating revenue (gross profit) for the quarter was $1,295,497, compared to net operating revenue of $1,711,262 in the prior-year fiscal period. The decline in net operating revenue was due primarily to factors mentioned above, but before including the benefit of a company-wide reduction in general and administrative costs.
- Operating expenses decreased to $680,180, compared to $861,795 for the prior year period, as a result of cost savings initiatives executed by the Company.
- The Company reported operating income from continuing operations of $615,317 compared to $849,467 in the prior year period, with differences due to factors discussed above.
- Operating EBITDA (excluding investment portfolio income) decreased to $694,540 this quarter from $914,611 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 $314,271, as compared with $267,422 during the same period the previous year.
- Net income was $766,105 or $0.09 per share compared to $1,000,743 or $0.12 per share.
Balance Sheet Information
- TMA's balance sheet on December 31, 2023, reflected cash and cash equivalents of $2.2 million; working capital of $6.6 million; and shareholders' equity of $6.7 million; compared to cash and cash equivalents of $2.5 million, working capital of $7.0 million, and shareholders' equity of $7.0 million as of March 31, 2023.
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; the ability of our construction business to be engaged for projects and for those projects to commence on the anticipated timetable; 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 | Nine Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Insurance commission and fee revenue | $ | 4,423,349 | $ | 3,503,981 | $ | 12,238,184 | $ | 11,616,793 | ||||
Construction revenue | 136,655 | 1,091,018 | 1,261,596 | 2,020,763 | ||||||||
Other insurance revenue | 178,000 | 162,330 | 239,800 | 341,860 | ||||||||
Total revenues | 4,738,004 | 4,757,329 | 13,739,580 | 13,979,416 | ||||||||
Insurance distributor related expenses: | ||||||||||||
Distributor bonuses and commissions | 2,582,625 | 1,781,183 | 7,741,362 | 6,882,037 | ||||||||
Business processing and distributor costs | 566,307 | 463,140 | 1,199,574 | 1,388,185 | ||||||||
Depreciation | 3,631 | 2,976 | 9,382 | 9,785 | ||||||||
3,152,563 | 2,247,299 | 8,950,318 | 8,280,007 | |||||||||
Costs of construction: | ||||||||||||
Direct and indirect costs of construction | 228,462 | 751,086 | 843,622 | 1,326,690 | ||||||||
Depreciation | 61,482 | 47,682 | 179,976 | 143,046 | ||||||||
289,944 | 798,768 | 1,023,598 | 1,469,736 | |||||||||
Total costs of revenues | 3,442,507 | 3,046,067 | 9,973,916 | 9,749,743 | ||||||||
Net operating revenue | 1,295,497 | 1,711,262 | 3,765,664 | 4,229,673 | ||||||||
Total general and administrative expenses | 680,180 | 861,795 | 2,503,364 | 2,543,665 | ||||||||
Operating income from continuing operations | 615,317 | 849,467 | 1,262,300 | 1,686,008 | ||||||||
Other income (expense): | ||||||||||||
Investment gain (loss), net | 314,271 | 267,422 | 337,220 | (436,952) | ||||||||
Interest expense | (52,375) | (49,262) | (149,695) | (150,364) | ||||||||
Other income (expense): | 100,852 | 0 | 200,852 | 0 | ||||||||
Income from continuing operations before provision for income taxes | 978,065 | 1,067,627 | 1,650,677 | 1,098,692 | ||||||||
Income tax expense | 211,960 | 68,100 | 404,860 | 251,100 | ||||||||
Income from continuing operations | 766,105 | 999,527 | 1,245,817 | 847,592 | ||||||||
Discontinued operations: | ||||||||||||
Income from discontinued operations, net of income taxes | 0 | 1,216 | (3,605) | 84,092 | ||||||||
Net income from discontinued operations | 0 | 1,216 | (3,605) | 84,092 | ||||||||
Net Income | $ | 766,105 | $ | 1,000,743 | $ | 1,242,212 | $ | 931,684 | ||||
Average Shares Outstanding | 8,081,266 | 8,081,266 | 8,081,266 | 8,081,266 | ||||||||
Operating Income from continuing operations per Share | $ | 0.08 | $ | 0.11 | $ | 0.16 | $ | 0.21 | ||||
Net Income per Share | $ | 0.09 | $ | 0.12 | $ | 0.15 | $ | 0.12 | ||||
CONSOLIDATED BALANCE SHEETS Unaudited | ||||||
December 31, | March 31, | |||||
2023 | 2023 | |||||
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash and cash equivalents | $ | 2,171,210 | $ | 2,461,956 | ||
Equity securities | 4,148,960 | 3,904,217 | ||||
Restricted cash | 624,525 | 536,212 | ||||
Accounts receivable | 6,549,034 | 9,710,905 | ||||
Inventory | 11,777 | 7,534 | ||||
Current portion of notes receivable | 118,935 | 146,645 | ||||
Prepaid expenses | 88,761 | 189,036 | ||||
Assets related to discontinued operations | 1,030 | 6,822 | ||||
Total current assets | 13,714,232 | 16,963,327 | ||||
PROPERTY AND EQUIPMENT, net | 885,907 | 817,945 | ||||
OTHER ASSETS | ||||||
Notes receivable, net due to the allowance | 561,941 | 586,435 | ||||
Restricted cash | 1,473,128 | 2,369,036 | ||||
Operating lease right-of-use assets | 215,092 | 402,534 | ||||
Total other assets | 2,250,161 | 3,358,005 | ||||
$ | 16,850,300 | $ | 21,139,277 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
CURRENT LIABILITIES | ||||||
Accounts payable and accrued expenses | 4,986,652 | 7,930,566 | ||||
Dividends payable | 405,513 | 566,949 | ||||
Line of credit payable | 675,000 | 400,000 | ||||
Current portion of notes payable | 936,788 | 811,223 | ||||
Current portion of finance lease liability | 39,160 | 67,276 | ||||
Current portion of operating lease liability | 104,139 | 131,851 | ||||
Liabilities related to discontinued operations | 677 | 87,194 | ||||
Total current liabilities | 7,147,929 | 9,995,059 | ||||
LONG-TERM LIABILITIES | ||||||
Notes payable, net of current portion and debt issuance costs | 2,589,723 | 3,529,616 | ||||
Finance lease liability, net of current portion | 109,869 | 165,191 | ||||
Operating lease liability, net of current portion | 104,710 | 276,497 | ||||
Deferred taxes | 216,000 | 200,000 | ||||
Total long-term liabilities | 3,020,302 | 4,171,304 | ||||
Total liabilities | 10,168,231 | 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 March 31, 2023 and December 31, 2023 | 1,025,341 | 1,025,341 | ||||
Retained earnings | 5,656,728 | 5,947,573 | ||||
Total shareholders' equity | 6,682,069 | 6,972,914 | ||||
$ | 16,850,300 | $ | 21,139,277 | |||
Note - Operating EBITDA (excluding investment portfolio income) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
EBITDA Calculation | Dec 31, | Dec 31, | ||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Operating Income from Continuing Operations | $ | 615,317 | $ | 849,467 | $ | 1,262,300 | $ | 1,686,008 | ||||
Add: | ||||||||||||
Depreciation/Amortization Expense | $ | 79,223 | $ | 65,144 | $ | 230,506 | $ | 196,344 | ||||
EBITDA (Excluding Investment Portfolio Income) | $ | 694,540 | $ | 914,611 | $ | 1,492,806 | $ | 1,882,352 | ||||
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, 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
