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The Marketing Alliance Announces Financial Results for Quarter Ended September 30, 2023 and Declares Quarterly Dividend of $0.05 per share

The Marketing Alliance, Inc. (OTC: MAAL) (“TMA” or the “Company”), today announced that its Board of Directors has declared a $0.05 per share cash dividend for shareholders of record on December 29, 2023, to be paid on or about January 24, 2024.

The Company also announced its financial results for its fiscal 2024 second quarter ended September 30, 2023.

2Q 2024 Financial Key Items (all comparisons to the prior year period)

  • Operating income from continuing operations of $594,792 compared to $452,731, driven by improved performance in both the insurance distribution and construction businesses.
  • Revenues were $4,891,830 compared to $4,839,242, the increase due primarily to an increase in construction revenues.
  • Net income from continuing operations was $492,416 or $0.06 per share compared to $130,557 or $0.02 per share.

Management Comments

Timothy M. Klusas, TMA’s Chief Executive Officer, commented, “Our second quarter 2024 results show a quarter in which, although very consistent to the prior year period, both businesses exceeded the prior year period on a gross profit basis. Our insurance distribution business benefited from some of the reversal of adverse timing of fee revenues mentioned in the last quarter, which is more comparable to what we would historically expect, and a slight improvement in performance overall through successful cost savings initiatives. Although not included in operating income, the Company also benefited from a reversal in a prior period holdback, which is listed as Other income.”

Mr. Klusas added, “Our construction business built upon its good start to the fiscal year through exceptional execution of a large job during the quarter. This business continued to grow and create more opportunities for future large jobs by its increasing penetration in the market and a growing reputation among customers and potential future clients. The geographic areas in which our construction business operates continued to see infrastructure investment, and we were well-positioned to benefit from this trend.”

Fiscal Second Quarter 2024 Financial Review

  • Revenues were $4,891,830 compared to $4,839,242, with Construction revenues increasing modestly due to increasing activity levels. Insurance Commission and Fee revenues fell slightly, reflecting general period to period variances in activity levels and business mix.
  • Net operating revenue (gross profit) for the quarter was $1,427,796, compared to net operating revenue of $1,256,385 in the prior-year fiscal period. The improvement in net operating revenue was due primarily to factors mentioned above, including the reversal of adverse timing of insurance fee revenue.
  • Operating expenses increased to $833,004 compared to $803,654 for the prior year. Investments in technology and professional fees were areas that saw the largest expense increases on a year over year basis.
  • The Company reported operating income from continuing operations of $594,792 compared to $452,731 in the prior year period, with differences due to factors discussed above.
  • Operating EBITDA (excluding investment portfolio income) increased to $673,314 from $521,261 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 $22,949, as compared with ($33,756) during the same period the previous year.
  • Net income from continuing operations was $492,416 or $0.06 per share compared to $130,557 or $0.02 per share.

Balance Sheet Information

  • TMA’s balance sheet on September 30, 2023, reflected cash and cash equivalents of $1.8 million; working capital of $5.9 million; and shareholders’ equity of 6.3 million; compared to cash and cash equivalents of $1.7 million, working capital of $6.7 million, and shareholders’ equity of $6.7 million as of September 30, 2022.

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 our ability to 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, such as the COVID-19 pandemic; 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 (Unaudited)

 

Three Months Ended

Six Months Ended

September 30,

September 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Insurance commission and fee revenue

$

3,915,691

 

$

4,110,728

 

$

7,814,835

 

$

8,112,812

 

Construction revenue

944,139

 

724,084

 

1,124,941

 

929,745

 

Other insurance revenue

32,000

 

4,430

 

61,800

 

179,530

 

Total revenues

4,891,830

 

4,839,242

 

9,001,576

 

9,222,087

 

Insurance distributor related expenses:

Distributor bonuses and commissions

2,598,684

 

2,782,060

 

5,158,737

 

5,100,854

 

Business processing and distributor costs

339,392

 

468,534

 

633,267

 

925,045

 

Depreciation

2,859

 

3,851

 

5,751

 

6,809

 

2,940,935

 

3,254,445

 

5,797,755

 

6,032,708

 

Costs of construction:

Direct and indirect costs of construction

461,617

 

278,252

 

615,160

 

575,604

 

Depreciation

61,482

 

50,160

 

118,494

 

95,364

 

523,099

 

328,412

 

733,654

 

670,968

 

Total costs of revenues

3,464,034

 

3,582,857

 

6,531,409

 

6,703,676

 

Net operating revenue

1,427,796

 

1,256,385

 

2,470,167

 

2,518,411

 

 

Total general and administrative expenses

833,004

 

803,654

 

1,823,184

 

1,681,870

 

Operating income from continuing operations

594,792

 

452,731

 

646,983

 

836,541

 

Other income (expense):

Investment gain (loss), net

22,949

 

(33,756

)

22,949

 

(704,374

)

Interest expense

(50,625

)

(48,218

)

(97,320

)

(101,102

)

Other income (expense):

100,000

 

0

 

100,000

 

0

 

Income (loss) from continuing operations before provision for income taxes

 

 

667,116

 

370,757

 

672,612

 

31,065

 

Income tax expense

174,700

 

240,200

 

192,900

 

183,000

 

Income (loss) from continuing operations

492,416

 

130,557

 

479,712

 

(151,935

)

Discontinued operations:

Income from discontinued operations, net of income taxes

(3,605

)

68,458

 

(3,605

)

82,876

 

Net income from discontinued operations

(3,605

)

68,458

 

(3,605

)

82,876

 

Net Income (Loss)

$

488,811

 

$

199,015

 

$

476,107

 

$

(69,059

)

 

Average Shares Outstanding

8,081,266

 

8,081,266

 

8,081,266

 

8,081,266

 

Operating Income from continuing operations per Share

$

0.07

 

$

0.06

 

$

0.08

 

$

0.10

 

Net Income per Share

$

0.06

 

$

0.02

 

$

0.06

 

$

(0.01

)

 

CONSOLIDATED BALANCE SHEETS

Unaudited

 

 

 

September 30,

 

March 31,

 

2023

 

2023

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

1,764,444

$

2,461,956

Equity securities

4,054,377

3,904,217

Restricted cash

613,932

536,212

Accounts receivable

7,091,640

9,710,905

Inventory

11,777

7,534

Current portion of notes receivable

120,921

146,645

Prepaid expenses

117,352

189,036

Assets related to discontinued operations

1,030

6,822

Total current assets

13,775,473

16,963,327

PROPERTY AND EQUIPMENT, net

965,129

817,945

OTHER ASSETS

Notes receivable, net due to the allowance

568,186

586,435

Restricted cash

1,893,097

2,369,036

Operating lease right-of-use assets

250,735

402,534

Total other assets

2,709,018

3,358,005

$

17,449,620

$

21,139,277

 

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable and accrued expenses

5,677,761

7,930,566

Dividends payable

404,663

566,949

Line of credit payable

675,000

400,000

Current portion of notes payable

920,898

811,223

Current portion of finance lease liability

35,509

67,276

Current portion of operating lease liability

130,285

131,851

Liabilities related to discontinued operations

677

87,194

Total current liabilities

7,844,793

9,995,059

LONG-TERM LIABILITIES

Notes payable, net of current portion and debt issuance costs

2,831,359

3,529,616

Finance lease liability, net of current portion

123,084

165,191

Operating lease liability, net of current portion

112,907

276,497

Deferred taxes

216,000

200,000

Total long-term liabilities

3,283,350

4,171,304

Total liabilities

11,128,143

14,166,363

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY

Common stock, no par value; 50,000,000 shares authorized, 8,081,266 shares issued and outstanding June 30, 2022 and June 30, 2023

1,025,341

1,025,341

Retained earnings

5,296,136

5,947,573

Total shareholders' equity

6,321,477

6,972,914

$

17,449,620

$

21,139,277

 

Note – Operating EBITDA (excluding investment portfolio income)

Three Months Ended

Six Months Ended

EBITDA Calculation

Sept 30,

Sept 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Operating Income from Continuing Operations

$

594,792

$

452,731

$

646,983

$

836,541

Add:

Depreciation/Amortization Expense

$

78,522

$

68,530

$

151,283

$

131,200

EBITDA (Excluding Investment Portfolio Income)

$

673,314

$

521,261

$

798,266

$

967,741

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.

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