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

Rhea-AI Summary

The Marketing Alliance (OTC: MAAL) reported financial results for Q1 fiscal 2025 ended June 30, 2024. Revenues increased 7% to $4,385,543, primarily due to 9% growth in insurance distribution, partially offset by a decrease in construction revenue. Operating income from continuing operations was $48,856, slightly down from $52,191 in the prior year period. The company reported a net loss of $49,853 or ($0.01) per share, compared to a net income of $139,508 or $0.02 per share last year, mainly due to differences in non-operating investment performance.

CEO Timothy M. Klusas noted that while overall results were similar to last year, the company saw increased expenses in insurance distribution as they invested in growth. The construction business saw decreased revenue due to a disciplined approach to job selection. TMA's balance sheet as of June 30, 2024, showed cash and cash equivalents of $2.1 million, working capital of $6.4 million, and shareholders' equity of $5.2 million.

Positive

• Revenue increased 7% to $4,385,543, with 9% growth in insurance distribution
• Operating income from continuing operations remained relatively stable at $48,856
• Cash and cash equivalents increased to $2.1 million from $1.4 million year-over-year
• Working capital improved to $6.4 million from $5.6 million year-over-year
• General and administrative operating expenses were lower for the quarter

Negative

• Net loss of $49,853 or ($0.01) per share compared to net income in the prior year
• Decrease in construction business revenue
• Net operating revenue (gross profit) decreased to $776,131 from $1,042,371
• Investment loss of $37,220 compared to a gain of $152,212 in the prior year period
• Shareholders' equity decreased to $5.2 million from $5.4 million year-over-year

ST. LOUIS, Mo.--(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.

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 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		1,025,341			1,025,341
Retained earnings		5,242,772			5,364,201
Total shareholders' equity		6,268,113			6,389,542
	$	15,525,048		$	17,864,155

Note – Operating EBITDA (excluding investment portfolio income)

	Three Months Ended
EBITDA Calculation	June 30,			June 30,
	2024			2023
Operating Income continuing operations	$	48,856		$	52,191
Add:
Depreciation/Amortization	$	74,751		$	72,761
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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240904756910/en/

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

Source: The Marketing Alliance, Inc.

FAQ

What was The Marketing Alliance's (MAAL) revenue for Q1 fiscal 2025?

The Marketing Alliance reported revenues of $4,385,543 for Q1 fiscal 2025 ended June 30, 2024, a 7% increase from the prior year period.

How did MAAL's insurance distribution business perform in Q1 fiscal 2025?

MAAL's insurance distribution business grew by 9% in Q1 fiscal 2025 compared to the same period last year.

What was The Marketing Alliance's (MAAL) earnings per share for Q1 fiscal 2025?

MAAL reported a net loss of ($0.01) per share for Q1 fiscal 2025, compared to earnings of $0.02 per share in the prior year period.

How much cash did The Marketing Alliance (MAAL) have as of June 30, 2024?

As of June 30, 2024, The Marketing Alliance reported cash and cash equivalents of $2.1 million.

Did MAAL's construction business revenue increase or decrease in Q1 fiscal 2025?

MAAL's construction business revenue decreased in Q1 fiscal 2025 due to a more disciplined approach to bidding on potential jobs.