The Marketing Alliance Announces Financial Results for Quarter Ended September 30, 2024

Rhea-AI Summary

The Marketing Alliance (OTC: MAAL) reported financial results for Q2 FY2025 ended September 30, 2024. Revenue increased to $4,928,950 from $4,891,830, driven by 10% growth in insurance distribution, offset by construction revenue decline. Operating income from continuing operations was $486,639, down from $591,187. Net income rose to $401,511 ($0.05 per share) from $236,599 ($0.03 per share).

The company announced a share repurchase program for up to 800,000 shares and discontinued dividend payments. As of November 27, approximately 62,000 shares were repurchased. The balance sheet showed $1.4 million in cash, $6.1 million in working capital, and $6.4 million in shareholders' equity as of September 30, 2024.

Positive

• 10% revenue growth in insurance distribution business
• Net income increased 70% to $401,511 ($0.05 per share) from $236,599
• Investment portfolio gained $61,203 compared to previous year's loss of $129,263
• 32% reduction in equity securities holdings, indicating improved risk management

Negative

• Operating income decreased to $486,639 from $591,187
• Operating expenses increased due to one-time non-cash expense of $147,720
• Operating EBITDA declined to $553,396 from $669,709
• Cash position decreased to $1.4 million from $1.8 million year-over-year

ST. LOUIS, Dec. 04, 2024 (GLOBE NEWSWIRE) -- The Marketing Alliance, Inc. (OTC: MAAL) (“TMA” or the “Company”), announced its financial results today for its fiscal 2025 second quarter ended September 30, 2024.

Fiscal Q2 2025 Financial Key Items (all comparisons to the prior year period)

• Revenues were $4,928,950 compared to $4,891,830. The increase was primarily due to 10% revenue growth in the insurance distribution business that was offset by a decline in construction revenue
• Operating income from continuing operations of $486,639 compared to $591,187 in the prior year period  
• Net income was $401,511 or $0.05 per share compared to $236,599 or $.03 per share in the prior year period
• Subsequent to the end of the quarter, on October 28, the Company announced its Board of Directors had authorized a share repurchase program to repurchase up to 800,000 shares of issued and outstanding common stock and decided to discontinue paying dividends effective immediately

Management Comments
Timothy M. Klusas, TMA’s Chief Executive Officer, commented, “While our bottom-line results were similar to the second fiscal quarter last year, this quarter showed a 10% revenue increase in the insurance distribution business. The investments in the business we made, and continue to make, appeared to begin to result in growth. During this quarter the Company filled two key open leadership roles, introduced a new logo to reflect a more modern customer-centric company, and integrated new tools and technologies on to our insurance distribution platform for customers to save time, save expense, and in turn drive better outcomes for their customers. In the construction business we completed a large job that was initiated in the prior fiscal year. We continued to maintain a very disciplined approach to only undertaking jobs that were economically profitable with respect to our capabilities. We continued to believe this approach positions us to perform better and have capacity to undertake more suitable jobs.”

Mr. Klusas added, “Our general and administrative operating expenses increased this quarter due to a one-time $147,720 non-cash compensation expense. While we have worked very hard to reduce our expenses, we recognized that we may have to adjust these expenses to continue to perform at a high level. We continued to reduce debt and further strengthened our balance sheet by changing our position on dividends.”

On October 28 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 November 27, the Company has repurchased approximately 62,000 shares under this authorization.

Fiscal Second Quarter 2025 Financial Review

• Revenues were $4,928,950 compared to $4,891,830, due to 10% growth in the insurance distribution business that was offset by a decrease in the construction business.

• Net operating revenue (gross profit) for the quarter was $1,367,731, compared to net operating revenue of $1,427,796 in the prior year fiscal period. While Net operating revenue was greater this quarter in the insurance business, it was offset by a decrease in the construction business versus the prior year quarter.

• Operating expenses increased to $881,092 compared to $836,609 for the prior year. The increase was due to a one-time non-cash expense of $147,720.

• The Company reported operating income from continuing operations of $486,639 compared to $591,187 in the prior year period, with differences due to factors discussed above.

• Operating EBITDA (excluding investment portfolio income) of $553,396 was less than the prior year quarterly EBITDA of $669,709. 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 $61,203 as compared with ($129,263) during the same period the previous year. The Company has reduced its holdings of equity securities by 32% at the end of the quarter versus the prior year.

• Net income was $401,511, or $0.05 per share, compared to $236,599 or $0.03 per share.

• Common shares outstanding increased 100,000 pursuant to Director retention plans.
  
  

Balance Sheet Information

• TMA’s balance sheet on September 30, 2024, reflected cash and cash equivalents of $1.4 million; working capital of $6.1 million; and shareholders’ equity of $6.4 million; compared to cash and cash equivalents of $1.8 million, working capital of $6.1 million, and shareholders’ equity of $6.5 million as of September 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.

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 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 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.
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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						Six Months Ended
		September 30,						September 30,
		2024			2023			2024			2023
Insurance commission and fee revenue	$	4,315,325		$	3,915,691		$	8,582,736		$	7,814,835
Construction revenue		592,270			944,139			689,722			1,124,941
Other insurance revenue		21,355			32,000			42,035			61,800
Total revenues		4,928,950			4,891,830			9,314,493			9,001,576
Insurance distributor related expenses:
Distributor bonuses and commissions		2,852,956			2,598,684			5,874,359			5,158,737
Business processing and distributor costs		446,389			339,392			837,784			633,267
Depreciation		1,913			2,859			4,834			5,751
		3,301,258			2,940,935			6,716,977			5,797,755
Costs of construction:
Direct and indirect costs of construction		197,034			461,617			328,465			615,160
Depreciation		62,927			61,482			125,189			118,494
		259,961			523,099			453,654			733,654
Total costs of revenues		3,561,219			3,464,034			7,170,631			6,531,409
Net operating revenue		1,367,731			1,427,796			2,143,862			2,470,167
Total general and administrative expenses		881,092			836,609			1,608,367			1,826,789
Operating income from continuing operations		486,639			591,187			535,495			643,378
Other income (expense):
Investment gain, net		61,203			(129,263)			23,983			22,949
Interest expense		(31,331)			(50,625)			(74,658)			(97,320)
Other income		-			-			4,938			-
Income from continuing operations before provision		516,511			411,299			489.758			569,007
for income taxes
Income tax expense		115,000			174,700			138,100			192,900
Net Income	$	401,511		$	236,599		$	351,658			376,107
Average Shares Outstanding		8,210,266			8,081,266			8,210,266			8,081,266
Operating Income from continuing operations per Share	$	0.06		$	0.07		$	0.07		$	0.08
Net Income per Share	$	0.05		$	0.03		$	0.04		$	0.05

CONSOLIDATED BALANCE SHEETS
		Sept 30,		Sept 30,
		2024		2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,373,965	$	1,764,444
Equity securities		2,768,917		4,054,377
Restricted cash		2,098,557		613,932
Accounts receivable		6,937,248		7,091,640
Current portion of notes receivable		541,860		120,921
Prepaid expenses and other current assets		172,557		130,159
Total current assets		13,893,104		13,775,473
PROPERTY AND EQUIPMENT, net		762,452		965,129
OTHER ASSETS
receivable, net due to the allowance		63,614		565,186
Restricted cash		-		1,893,097
Operating lease right-of-use assets		115,183		250,735
Total other assets		178,797		2,709,018
	$	14,834,353	$	17,449,620
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses		4,980,015		5,537,353
Dividends payable		-		404,663
Line of credit payable		-		675,000
Current portion of notes payable		2,604,804		920,898
Current portion of finance lease liability		119,946		35,509
Current portion of operating lease liability		76,956		130,285
Liabilities related to discontinued operations		677		677
Total current liabilities		7,782,398		7,704,385
LONG-TERM LIABILITIES
Notes payable, net of current portion and debt issuance costs		291,174		2,831,359
Finance lease liability, net of current portion		-		123,084
Operating lease liability, net of current portion		35,951		112,907
Deferred taxes		313,000		216,000
Other liabilities related to discontinued operations		-		-
Total long-term liabilities		640,125		3,283,350
Total liabilities		8,422,523		10,987,735
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 September 30, 2023
8,210,266 shares issued and outstanding September 30, 2024		1,173,061		1,025,341
Retained earnings		5,238,769		5,436,544
Total shareholders' equity		6,411,830		6,461,885
	$	14,834,353	$	17,449,620

Note – Operating EBITDA (excluding investment portfolio income)

		Three Months Ended						Six Months Ended
EBITDA Calculation		September 30,						September 30,
		2024			2023			2024			2023
Operating Income from Continuing Operations	$	486,639		$	591,187		$	535,495		$	643,378
Add:
Depreciation/Amortization Expense	$	66,757		$	78,522		$	141,508		$	151,283
EBITDA (Excluding Investment Portfolio Income)	$	553,396		$	669,709		$	677,003		$	794,661

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 was The Marketing Alliance (MAAL) revenue for Q2 2025?

The Marketing Alliance reported revenue of $4,928,950 for Q2 FY2025, slightly up from $4,891,830 in the previous year.

How many shares did MAAL authorize for repurchase in October 2024?

The company authorized a share repurchase program for up to 800,000 shares of issued and outstanding common stock.

What was MAAL's earnings per share for Q2 2025?

The Marketing Alliance reported earnings of $0.05 per share, compared to $0.03 per share in the prior year period.

Why did MAAL discontinue dividend payments in October 2024?

The Board decided to discontinue dividends after concluding that the dividend policy was not adequately reflected in the stock price, opting instead for a share repurchase program.