ST. LOUIS, Mo., September 04, 2024--(BUSINESS WIRE)--The Marketing Alliance, Inc. (OTC: MAAL) ("TMA" or the "Company"), announced its financial results today for its fiscal 2025 first quarter ended June 30, 2024.
Fiscal Q1 2025 Financial Key Items (all comparisons to the prior year period)
Revenues were $4,385,543 compared to $4,109,746. The 7% increase was primarily due to 9% growth in the insurance distribution business that was partially offset by a decrease in construction revenue
Operating income from continuing operations of $48,856 compared to $52,191 in the prior year period
Net income (loss) was ($49,853) or ($0.01) per share compared to $139,508 or $.02 per share in the prior year period, with the difference primarily in non-operating investment gain (loss), net from the prior year period
Management Comments
Timothy M. Klusas, TMA’s Chief Executive Officer, commented, "While our fiscal first quarter 2025 results, as measured by operating income, were similar to our results in the same quarter last year, we arrived at this destination by a different route. As our insurance distribution revenue increased this year in excess of 9%, we realized more pronounced expenses (as a percentage of revenues) as we continued to invest to grow the business, and historically these expenses have been more evenly distributed throughout the year. The revenue for the construction business decreased this quarter as we maintained a very disciplined approach to only undertaking jobs that were economically profitable with respect to our capabilities. We believed this approach positioned us to perform better as the year progresses and we would have spare capacity to undertake more suitable jobs."
Mr. Klusas added, "Our general and administrative operating expenses were lower this quarter, and while we have worked very hard to reduce our expenses, we recognize that we may have to adjust these expenses in the future to continue to perform at a high level. It was also noteworthy that we attempted to reduce the risk in our balance sheet by moving some of our excess liquidity out of equity securities and into cash and cash equivalents and reduced our line of credit to a zero balance."
Fiscal First Quarter 2025 Financial Review
Revenues were $4,385,543 compared to $4,109,746, due primarily to growth in the insurance distribution business that was offset by a decrease in the construction business due to a more disciplined approach to bidding potential jobs.
Net operating revenue (gross profit) for the quarter was $776,131, compared to net operating revenue of $1,042,371 in the prior-year fiscal period. Net operating revenue was affected by increases in revenue in the insurance distribution business being offset by greater increases in associated expenses, and the decreases in revenue in the construction business.
Operating expenses decreased to $727,275 compared to $990,180 for the prior year.
The Company reported operating income from continuing operations of $48,856 compared to $52,191 in the prior year period, with differences due to factors discussed above.
Operating EBITDA (excluding investment portfolio income) of $123,607 was approximately equal to $124,952 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 ($37,220), as compared with $152,212 during the same period the previous year.
Net income (loss) was ($49,853) or ($0.01) compared to $139,508 or $0.02 per share.
Balance Sheet Information
TMA’s balance sheet on June 30, 2024, reflected cash and cash equivalents of $2.1 million; working capital of $6.4 million; and shareholders’ equity of $5.2 million; compared to cash and cash equivalents of $1.4 million, working capital of $5.6 million, and shareholders’ equity of $5.4 million as of June 30, 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.
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 insurance distribution expenses, our plan to reduce expenses associated with various business initiatives, and our ability to undertake more suitable jobs and 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; the ability of our construction business to be engaged for projects and for those projects to commence on the anticipated timetable and with the anticipated profitability; 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
Three Months Ended
June 30,
2024
2023
Insurance commission and fee revenue
$
4,267,411
$
3,899,144
Construction revenue
97,452
180,802
Other insurance revenue
20,680
29,800
Total revenues
4,385,543
4,109,746
Insurance distributor related expenses:
Distributor bonuses and commissions
3,021,403
2,560,053
Business processing and distributor costs
391,395
293,875
Depreciation
2,921
2,892
3,415,719
2,856,820
Costs of construction:
Direct and indirect costs of construction
131,431
153,543
Depreciation
62,262
57,012
193,693
210,555
Total costs of revenues
3,609,412
3,067,375
Net operating revenue
776,131
1,042,371
Total general and administrative expenses
727,275
990,180
Operating income from continuing operations
48,856
52,191
Other income (expense):
Investment gain (loss), net
(37,220
)
152,212
Interest expense
(43,327
)
(46,695
)
Other income
4,938
-
Income (loss) from continuing operations before provision
(26,753
)
157,708
for income taxes
Income tax expense
23,100
18,200
Net Income (Loss)
$
(49,853
)
$
139,508
CONSOLIDATED BALANCE SHEETS
June 30, 2024
June 30, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
2,126,142
$
1,377,085
Equity securities
2,703,556
4,198,705
Restricted cash
573,841
554,525
Accounts receivable
6,835,969
7,450,218
Current portion of notes receivable
545,211
123,123
Prepaid expenses
250,589
211,569
Total current assets
13,035,308
13,915,225
PROPERTY AND EQUIPMENT, net
758,935
1,043,651
OTHER ASSETS
Notes receivable, net due to the allowance
63,614
568,392
Restricted cash
1,524,081
2,050,737
Operating lease right-of-use assets
143,110
286,150
Total other assets
1,730,805
2,905,279
$
15,525,048
$
17,864,155
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses
5,606,931
6,193,682
Dividends payable
-
404,243
Line of credit payable
-
675,000
Current portion of notes payable
938,068
838,929
Current portion of finance lease liability
26,431
41,579
Current portion of operating lease liability
86,213
137,653
Liabilities related to discontinued operations
677
677
Total current liabilities
6,658,320
8,291,763
LONG-TERM LIABILITIES
Notes payable, net of current portion and debt issuance costs
2,129,313
2,697,906
Finance lease liability, net of current portion
103,199
129,629
Operating lease liability, net of current portion
53,103
139,315
Deferred taxes
313,000
216,000
Other liabilities related to discontinued operations
-
-
Total long-term liabilities
2,598,615
3,182,850
Total liabilities
9,256,935
11,474,613
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 10,000,000 shares authorized, no shares issued and outstanding
-
-
Common stock, no par value; 50,000,000 shares authorized,
8,110,266 shares issued and outstanding June 30, 2023
8,110,266 shares issued and outstanding June 30, 2024
EBITDA (Operating Income from Continuing Operations)
$
123,607
$
124,952
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.
