The Marketing Alliance Announces Financial Results for Quarter Ended December 31, 2024

Rhea-AI Summary

The Marketing Alliance (OTC: MAAL) reported financial results for Q3 FY2025 ended December 31, 2024, showing a decline in performance. The company posted an operating loss of ($124,345) compared to a profit of $615,317 in the prior year period. Revenues decreased to $4.59M from $4.74M, primarily due to timing changes in insurance fee revenue recognition, partially offset by increased construction revenue.

The company reported a net loss of ($164,867) or ($0.02) per share, compared to net income of $692,159 or $0.09 per share year-over-year. During the quarter, MAAL repurchased 202,185 shares under its 800,000-share repurchase program. The company's balance sheet as of December 31, 2024, showed cash and cash equivalents of $1.9M, working capital of $5.7M, and shareholders' equity of $5.9M.

Positive

• Implementation of new interactive website 'TMA Social' with integrated tools for insurance distribution
• Increase in construction business revenues
• Share repurchase program execution with 840,000 shares repurchased
• Maintained strong balance sheet with $5.7M working capital

Negative

• Operating loss of ($124,345) vs profit of $615,317 in prior year
• Revenue decreased 3.2% to $4.59M from $4.74M
• Net loss of ($164,867) vs net income of $692,159 year-over-year
• Operating expenses increased to $823,439 from $680,180
• Gross profit declined to $699,094 from $1,295,497
• Investment portfolio loss of ($48,095) vs gain of $314,271 prior year
• Decreased construction profit margins due to weather-related delays

ST. LOUIS, Feb. 21, 2025 (GLOBE NEWSWIRE) -- The Marketing Alliance, Inc. (OTC: MAAL) (“TMA” or the “Company”), announced its financial results today for its fiscal 2025 third quarter ended December 31, 2024.

Fiscal Q3 2025 Financial Key Items (all comparisons to the prior year period)

• Operating income from continuing operations of ($124,345) compared to $615,317 in the prior year period, the decrease is due in part to a Company-initiated change in recognition and timing of certain insurance distribution fee revenue (discussed below)
• Revenues were $4,586,204 compared to $4,738,004, the decrease was primarily due to timing of insurance fee revenue but was offset by an increase in construction revenue
• Net income was ($164,867) or ($0.02) per share compared to $692,159 or $.09 per share in the prior year period
• During the quarter, the Company repurchased 202,185 shares pursuant to its authorized share repurchase program to repurchase up to 800,000 shares of issued and outstanding common stock

Management Comments
Timothy M. Klusas, TMA’s Chief Executive Officer, commented, “This was a recalibration quarter for our Company, and while our team was not pleased to report negative financial results, we felt we made good progress this quarter that is not yet showing in our results. This was the first quarter with two recently filled key leadership roles and we introduced a new interactive website called TMA Social with integrated new tools and technologies on our insurance distribution platform for customers to save time, save expenses, and in turn drive better outcomes for their customers. The investments in the business we made, and continue to make, have been substantial.

While we had an adverse business mix (shift from higher margin carriers to lower margin carriers) in the insurance business in the quarter compared to the prior year quarter, of which we estimate at $175,000 of gross profit, we also had a few unique unfavorable comparisons versus the prior year quarter. The Company’s expense in the quarter for reimbursing agencies for their marketing and technology expenses was $165,000 more than last year because we accrued for it in the third quarter, instead of accruing all of it in the fiscal fourth quarter (like last year). Further, as our business continues to evolve, we have elected to acknowledge the changing nature of our reimbursement and marketing revenues by recognizing them over their respective projected project lives (often the calendar year) instead of when agreed and billed. Historically the company has treated non-refundable reimbursement and marketing fee revenue from carriers as earned when the agreed upon amount has been invoiced. During the prior year period the company invoiced approximately $370,000 during the fiscal third quarter. Going forward the company will treat reimbursement and marketing revenue as a time-duration item and allocate the revenue evenly throughout its respective period.  

In the construction business we saw an uptick in revenues compared to the prior year quarter, however, we also saw a decrease in construction profit margin compared to the prior year quarter. The margin decrease was primarily due to unexpected project delays during the quarter due to weather. We continued to maintain a very disciplined approach to only undertaking jobs that were economically profitable with respect to our capabilities.”

On October 28, 2024, the Company announced its approval of a share repurchase authorization and its decision to discontinue the dividend. At the time, Timothy Klusas, the Company's President and Chief Executive Officer, stated, "The share repurchase authorization represents our financial strength and commitment to enhance shareholder value, and the Board’s willingness to change tactics to do so. The Board recognized, nor did it take lightly, that this action would be a significant change in our shareholder distribution strategy of paying dividends, which the Company has paid consistently since its founding in 1996. The Board arrived at this decision after monitoring the stock price while paying dividends and has concluded in its judgement that its dividend policy was not adequately reflected in the stock price." As of January 31, 2025, the Company has repurchased approximately 840,000 shares under this authorization since its announcement, consistent with the Board of Directors approval of the excess share amount necessary to complete a block purchase.

Fiscal Third Quarter 2025 Financial Review

• Revenues were $4,586,204 compared to $4,738,004, due to a decrease in the insurance distribution business that was not fully offset by an increase in the construction business.
  

• Net operating revenue (gross profit) for the quarter was $699,094, compared to net operating revenue of $1,295,497 in the prior year fiscal period.
  

• Operating expenses increased to $823,439 compared to $680,180 for the prior year.  
  

• The Company reported operating income from continuing operations of ($124,345) compared to $615,317 in the prior year period, with differences due to factors discussed above.
  

• Operating EBITDA (excluding investment portfolio income) of ($58,379) was less than the prior year quarterly operating EBITDA of $694,540. 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 ($48,095) as compared with $314,271 during the same period the previous year. The Company has reduced its holdings of equity securities by 35% at the end of the quarter versus the prior year.
  

• Net income (loss) was ($164,867), or ($0.02) per share, compared to $692,159 or $0.09 per share. Net income was impacted by the change in investment gain (loss), net, during the period.
  

• Common and outstanding shares decreased 202,185 during the quarter ending December 31, 2024, pursuant to the Company’s share repurchase plan.
  

Balance Sheet Information

• TMA’s balance sheet on December 31, 2024, reflected cash and cash equivalents of $1.9 Million; working capital of $5.7 million; and shareholders’ equity of $5.9 million; compared to cash and cash equivalents of $2.2 million, working capital of $6.7 million, and shareholders’ equity of $6.8 million as of December 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 our expectations of growth based upon our investments in our business, our expectations regarding our new website, our recently announced stock repurchase program, our plans to reduce expenses, 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 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; the ways that insurance carriers may react in their underwriting policies and procedures to the continuing risks they perceive from public health matters; 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.

Contact:
The Marketing Alliance, Inc.	-OR-	The Equity Group Inc.
Timothy M. Klusas, President		Jeremy Hellman, Vice President
(314) 275-8713		(212) 836-9626
tklusas@themarketingalliance.com www.TheMarketingAlliance.com		jhellman@equityny.com

CONSOLIDATED STATEMENTS OF OPERATIONS

			Three Months Ended												Nine Months Ended
			December 31,												December 31,
			2024					2023							2024				2023
Insurance commission and fee revenue	$		4,214,111				$	4,423,349					$		12,796,847			$	12,238,184
Construction revenue			276,843					136,655							966,565				1,261,596
Other insurance revenue			95,250					178,000							137,285				239,800
Total revenues			4,586,204					4,738,004							13,900,697				13,739,580
Insurance distributor related expenses:
Distributor bonuses and commissions			2,869,077					2,582,625							8,743,436				7,741,362
Business processing and distributor costs			604,053					566,307							1,441,837				1,199,574
Depreciation			934					3,631							5,768				9,382
			3,474,064					3,152,563							10,191,041				8,950,318
Costs of construction:
Direct and indirect costs of construction			348,790					228,462							677,255				843,622
Depreciation			64,257					61,482							189,446				179,976
			413,047					289,944							866,701				1,023,598
Total costs of revenues			3,887,110					3,442,507							11,057,741				9,973,916
Net operating revenue			699,094					1,295,497							2,842,956				3,765,664
Total general and administrative expenses			823,439					680,180							2,431,806				2,506,969
Operating income from continuing operations			(124,345		)			615,317							411,150				1,258,695
Other income (expense):
Investment gain, net			(48,095		)			314,271							(24,112	)			337,220
Interest expense			(28,827		)			(52,375		)					(103,485	)			(149,695		)
Other income			-					852							4,938				852
Income from continuing operations before provision for income taxes			(201,267		)			878,065							288,491				1,447,072
Income tax expense			(36,400		)			185,906							101,700				352,752
Net Income	$		(164,867		)		$	692,159					$		186,791			$	1,094,320
Average Shares Outstanding			8,008,081					8,081,266							8,008,081				8,081,266
Operating Income from continuing operations per Share	$		(0.02		)		$	0.08					$		0.05			$	0.16
Net Income per Share	$		(0.02		)		$	0.09					$		0.02			$	0.14

CONSOLIDATED BALANCE SHEETS

		December 31,				December 31,
ASSETS		2024				2023
CURRENT ASSETS
Cash and cash equivalents	$	1,925,398			$	2,171,210
Equity securities		2,696,783				4,148,960
Restricted cash		1,623,127				624,525
Accounts receivable		6,125,827				6,549,034
Current portion of notes receivable		478,712				118,935
Prepaid expenses and other current assets		110,349				101,568
Total current assets		12,960,195				13,714,232
PROPERTY AND EQUIPMENT, net		691,722				885,907
OTHER ASSETS
Notes receivable, net due to the allowance		-				561,941
Restricted cash		-				1,473,128
Operating lease right-of-use assets		173,571				215,092
Total other assets		173,571				2,250,161
	$	13,825,488			$	16,850,300
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses		4,626,314				4,894,136
Dividends payable		-				405,513
Line of credit payable		-				675,000
Current portion of notes payable		2,388,976				936,788
Current portion of finance lease liability		109,869				39,160
Current portion of operating lease liability		118,534				104,139
Liabilities related to discontinued operations		677				677
Total current liabilities		7,244,370				7,055,413
LONG-TERM LIABILITIES
Notes payable, net of current portion and debt issuance costs		264,713				2,589,723
Finance lease liability, net of current portion		-				109,869
Operating lease liability, net of current portion		56,489				104,710
Deferred taxes		313,000				216,000
Total long-term liabilities		634,202				3,020,302
Total liabilities		7,878,572				10,075,715
COMMITMENTS AND CONTINGENCIES (NOTE 13)
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,
8,081,266 shares issued and outstanding December 31, 2023
8,008,081 shares issued and outstanding December 31, 2024		1,154,979				1,025,341
Treasury Stock		(142,940	)			-
Retained earnings		4,934,877				5,749,244
Total shareholders' equity		5,946,916				6,774,585
	$	13,825,488			$	16,850,300

Note – Operating EBITDA (excluding investment portfolio income)

		Three Months Ended							Nine Months Ended
EBITDA Calculation		December 31,							December 31,
		2024				2023			2024			2023
Operating Income from Continuing Operations	$	(124,345	)		$	615,317		$	411,150		$	1,258,695
Add:
Depreciation/Amortization Expense	$	65,966			$	79,223		$	207,474		$	230,506
EBITDA (Excluding Investment Portfolio Income)	$	(58,379	)		$	694,540		$	618,624		$	1,489,201

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.

FAQ

What caused MAAL's operating loss in Q3 FY2025?

The operating loss was primarily due to changes in insurance fee revenue recognition timing, adverse business mix shifting to lower margin carriers (estimated $175,000 gross profit impact), and increased agency marketing expense reimbursements of $165,000.

How many shares did MAAL repurchase in Q3 2025?

MAAL repurchased 202,185 shares during Q3 2025 under its share repurchase program, with approximately 840,000 shares repurchased in total since the program's announcement.

What is MAAL's current financial position as of December 31, 2024?

As of December 31, 2024, MAAL had $1.9M in cash and cash equivalents, $5.7M in working capital, and $5.9M in shareholders' equity.

Why did MAAL discontinue its dividend program in October 2024?

MAAL discontinued its dividend program in favor of a share repurchase program, as the Board concluded that the dividend policy was not adequately reflected in the stock price.