The Marketing Alliance Announces Financial Results for Its Fiscal 2013 Fourth Quarter and Year Ended March 31, 2013
FY 2013 Annual Financial Highlights (all comparisons to the prior year)
- Revenues increased 16.4% to $30,973,626 from $26,603,867
- Operating income was $4,311,332, compared to $4,558,349
- Operating EBITDA (excluding investment portfolio income) was $4,863,317, compared to $4,903,288
- Net income of $2,915,706, or $1.16 per share, as compared to net income of $2,955,198, or $1.18 per share
- Shareholders' equity increased 17.3% to $13,293,024
FY 2013 Fourth Quarter Financial Highlights (all comparisons to the prior year period)
- Revenues increased 28.6% to $9,020,525 from $7,015,400
- Operating income was $2,149,343, compared to $2,133,110
- Operating EBITDA (excluding investment portfolio income) was $2,301,421, compared to $2,251,487
- Net income of $1,483,139, or $0.59 per share, as compared to net income of $1,657,329, or $0.66 per share
ST. LOUIS--(BUSINESS WIRE)-- The Marketing Alliance, Inc. (OTC: MAAL) ("TMA"), today announced financial results for its fiscal 2013 fourth quarter and year ended March 31, 2013.
Mr. Timothy M. Klusas, TMA's Chief Executive Officer, stated, "When we consider the challenges of the last fiscal year, we are both pleased and energized by our results. Fiscal 2013 marked another year of growth for The Marketing Alliance. We saw increases in total revenue, operating income and EBITDA for the fiscal fourth quarter, and a 16% increase in total revenue for the fiscal year. Despite the current interest rate environment, our insurance distribution business continues to perform with a 10% increase in commission revenue over the prior fiscal year. We were heartened to see our insurance business grow in the face of historically-low interest rates." As mentioned in previous quarters, the current interest rate environment adversely affected TMA's annuity business, because annuity products are based on interest rates and low interest rates could make the product less appealing for customers who may choose to defer annuity purchases until rates and product features increase. While less product choice and less attractive products reduce revenues to the Company, Mr. Klusas also added, "We have seen the emergence of lesser-rated (by rating agencies) carriers in our annuity business that are growing by offering relatively attractive rates. Due to ratings concerns we chose not to pursue distribution agreements with these carriers. The combination of these issues negatively affected our annuity business."
As mentioned in prior releases, the current low interest rate environment and continued expectations for low interest rates into the future have led many carriers to revise their product portfolios by increasing premiums on products with long-term guarantees or choosing not to offer guaranteed products at all due to the fact that longer-term guaranteed products are most sensitive to interest rates. Mr. Klusas said, "Interest rates also had the effect of increasing the cost, or reducing the number, of life insurance products we could distribute, as many carriers increased their premiums on products with longer-term guarantees, while other carriers chose to exit this market altogether. Further, the disruptions that these factors caused had the general effect of displacing business at life insurance carriers where we have historically had large successful relationships, although this was partially offset by increases at some of our newer carriers. Because of all of these factors, we were grateful to have smart and agile distributors who were able to adjust to these changes and their entrepreneurial spirit encourages our team every day."
TMA's earth moving and excavation business also faced setbacks in the latter half of the fiscal year versus last year. Winter weather conditions ceased operations earlier than anticipated in the third quarter, and during the fourth quarter construction revenue decreased as a result of a longer winter than the previous year. Despite these challenges, TMA's gross profit for this segment of the Company increased substantially versus last year from $374,594 to $822,952 (both figures after depreciation), due in part to including the business for an entire year of operations for the first time. Mr. Klusas said, "We continued to feel encouraged by the potential of this business and its benefit for our shareholders. We also continued to make progress on our integration plan, such as looking to utilize the company's assets outside of its historically busy season in our fiscal second and fourth quarters."
This is the first fiscal year-end that includes the children's entertainment business that TMA acquired last September, which consists of two Monkey Joe's children's party and entertainment facilities located in the St. Louis area. TMA realized one-time costs in operating expenses associated with this transaction and its subsequent integration. Additionally, a large cost component in this business is rent and facilities expense, which increased TMA's operating expenses for the fiscal year and quarter. Mr. Klusas commented, "Our team is currently exploring new marketing tools and promotional programs that we intend to use to expand our customer base and increase the number of return visits. We are excited about the growth potential of this business and its prospective benefit for our shareholders."
Fiscal 2013 Fourth Quarter Financial Review
- Total revenues for the three-month period ended March 31, 2013, were $9,020,525, as compared to $7,015,400 in the prior year quarter. The 28.6% increase was due in part to an additional $442,322 received in revenue from the two entertainment facilities, as well as an additional $1,741,343 in commission revenue which offset a $178,540 decrease in construction revenue from the prior year period.
- Net operating revenue (gross profit) for the quarter was $3,557,348, compared to net operating revenue of $3,311,899 in the prior-year fiscal period.
- Operating income was $2,149,343, versus operating income of $2,133,110 reported in the prior-year period.
- Operating EBITDA (excluding investment portfolio income) for the quarter was $2,301,421 versus $2,251,487 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 fiscal 2013 fourth quarter was $1,483,139, or earnings per share of $0.59, compared to a net income of $1,657,329, or $0.66 per share, in the prior year period, due in part to less investment income in this quarter compared to the prior year.
- Net investment income (from investment portfolio) for the fourth quarter ended March 31, 2013 was $327,282, as compared to net investment income of $506,914, for the same quarter of the fiscal 2012 year due in part to the prior year period being a generally more favorable period for equities in the portfolio.
Fiscal 2013 Financial Review
- Total revenues for the year ended March 31, 2013 increased 16.4% to $30,973,626, as compared to $26,603,867 in revenues for the prior-year period.
- Net operating revenue (gross profit) was $9,331,885, which compares to a net operating revenue of $8,614,326 in the prior-year fiscal period.
- Operating income decreased to $4,311,332 from $4,558,349 for the prior-year period, due in part to the year-end reconciliations of annual distribution agreements with carriers that occurred in the fiscal third quarter as well as a corresponding increase in distributor expenses relative to revenue.
- Operating EBITDA (excluding investment portfolio income) for the year ended March 31, 2013 was $4,863,317 versus $4,903,288 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, 2013 decreased to $2,915,706, or $1.16 per share, compared to $2,955,198, or $1.18 per share, in the prior-year period.
- Net investment income (from investment portfolio) of $475,796 compared to a net investment income of $149,624, in the prior-year period, due in part to the current fiscal year timeframe being a generally more favorable period for equities in the portfolio. Realized losses were $90,480 for year ended March 31, 2013, versus realized losses of $149,129 in the prior-year period. Unrealized gains of $439,692 for the fiscal year 2013 as compared to unrealized gains of $186,519 for the prior-year period. The balance of net investment income (loss), net performance is comprised of dividend and interest income, investment interest, and investment management fees.
Balance Sheet Information
TMA's balance sheet at March 31, 2013 reflected cash and cash equivalents of approximately $6.0 million, working capital of $12.7 million, and shareholders' equity of $13.3 million; compared to $4.8 million, $10.9 million, and $11.3 million, respectively, at March 31, 2012. The Company's intangible assets increased to $960,899 at March 31, 2013 from $93,606 at March 31, 2012, primarily due to increases in Goodwill, Franchise Agreements and Covenants Not To Compete associated with the acquisition of family entertainment centers completed in the second quarter.
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 two 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 (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|
|Quarter Ended||Year to Date|
|3 Months Ended||12 Months Ended|
|Family entertainment revenue||$||442,322||-||802,819||-|
|Distributor Related Expenses|
|Bonus & commissions||4,927,548||2,803,409||17,291,537||14,360,581|
|Processing & distribution||57,880||339,428||1,720,707||1,778,570|
|Cost of Construction|
|Direct and Indirect costs of construction||322,828||469,094||2,143,600||1,596,198|
|Family entertainment cost of sales||67,332||-||114,647||-|
|Net Operating Revenue||3,557,348||3,311,899||9,331,885||8,614,326|
|Other Income (Expense)|
|Investment gain, (loss) net||327,282||506,914||475,796||149,624|
|Interest rate swap, fair value adjustment||(35,921||)||-||(35,921||)||-|
|Loss on disposal||(1,661||)||-||(1,661||)||-|
|Income Before Provision for Income Tax||2,416,611||2,626,107||4,647,995||4,661,981|
|Provision for income taxes||933,472||968,778||1,732,289||1,706,783|
|Average Shares Outstanding||2,510,083||2,510,083||2,510,083||2,510,083|
|Operating Income per Share||$||0.86||$||0.85||$||1.72||$||1.82|
Net Income per Share
Note: * - Operating EPS and Net EPS stated after giving effect to the 20% stock split for shareholders of record as of September 15, 2012 and paid October 15, 2012 for all periods. Shares outstanding increased to 2,510,083 from 2,091,736 with this stock split and have been retroactively adjusted to account for the split.
|Consolidated Selected Balance Sheet Items|
|Cash & Equivalents||$ 6,007,286||$ 4,785,736|
|Total Current Assets||20,117,503||16,782,708|
|Property and Equipment, Net||1,652,031||1,654,862|
|Intangible Assets, net||960,899||93,606|
Total Non Current Assets
|Total Assets||$ 23,532,009||$ 19,109,069|
|Liabilities & Stockholders' Equity|
Total Current Liabilities
|$ 7,463,975||$ 5,869,105|
|Long Term Liabilities||
|Liabilities & Stockholders' Equity||$ 23,532,009||$ 19,109,069|
Note - Operating EBITDA (excluding investment portfolio income)
Q4FY2013 Operating EBITDA (excluding investment portfolio income) was determined by adding Q4FY 2013 Operating Income of $2,149,343 and Depreciation and Amortization Expense of $152,078 for a sum of $2,301,421. Q4FY2012 Operating EBITDA (excluding investment portfolio income) was determined by adding Q4FY 2012 Operating Income of $2,133,110 and Depreciation and Amortization Expense of $118,377 for a sum of $2,251,487. The Company elects not to include investment portfolio income because the Company believes it is non-operating in nature.
Fiscal 2013 year-end Operating EBITDA (excluding investment portfolio income) was determined by adding FY2013 year-end Operating Income of $4,311,332 and Depreciation and Amortization Expense of $551,985 for a sum of $4,863,317. FY2012 year-end Operating EBITDA (excluding investment portfolio income) was determined by adding FY 2012 year-end Operating Income of $4,558,349 and Depreciation and Amortization Expense of $344,939 for a sum of $4,903,288. 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, President
The Equity Group Inc.
Adam Prior, Senior Vice President
Terry Downs, Associate
KEYWORDS: United States North America Missouri
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