Marketing Alliance Inc (MAAL)

[ErnieBilco]

FY 2015 Second Quarter Financial Highlights (all comparisons to the prior year period)
? Revenues were $6,236,435 compared to $6,261,436, largely due to lower construction revenues versus the
prior year period
? Net operating revenue (gross profit) improved to $1,722,337, compared to $1,721,114
? Operating income was $177,967 compared to $171,598
? Operating EBITDA (excluding investment portfolio income) was $333,253, compared to $332,927
? Net income (loss) of ($36,926), or ($0.01) per share, as compared to net income of $187,447, or $0.03 per
share (all per share values were adjusted retroactively for stock split at February 28, 2014)
? Subsequent to end of the quarter, the Board of Directors authorized a $0.21 per share cash dividend for
shareholders of record on December 12, 2014, to be paid on or about January 30, 2015, representing an
increase of 16.7% over the previous annual cash dividend after giving effect to the 2:1 stock split distributed
on March 28, 2014
St. Louis, MO, December 19, 2014 – The Marketing Alliance, Inc. (OTC: MAAL) (“TMA”), today announced
financial results for its fiscal 2015 second quarter and six months ended September 30, 2014.
Mr. Timothy M. Klusas, TMA’s Chief Executive Officer, stated, “We were pleased with revenue increases this
quarter in our insurance and family entertainment businesses. However, revenue growth in our land
improvement business was challenged by low crop prices. We felt like we continued to take steps to reduce costs
and operate more efficiently, despite the setbacks of low crop prices which drive the demand for our services.
TMA remains committed to growing each of our lines of business while continuing to explore opportunities to
increase returns for our shareholders.” Mr. Klusas provided additional details below on each of the Company’s
operations for the second quarter of the fiscal 2015 year:
? Insurance Distribution Business: “We are pleased with our results for the quarter, as we saw an increase in
commission revenues this quarter over the prior year period. We commend our network of brokerage general
agents, as they have continued to have to adapt to changes within the industry throughout a protracted lowinterest
rate environment. Low interest rates have the general effect of making some life insurance products
more expensive causing an environment where product prices are increasing, or some products even
discontinued. Also, annuity and long-term care products could appear less attractive to consumers than in
past periods of time when interest rates were closer to historical averages. However, we are continuing to
work with our distributors to ensure that they have top-notch access and information on a broad spectrum of
insurance products offered by our carriers.
? Earth Moving (Land Improvement – Construction): “Market conditions continued to impact our results for
the quarter, as low prices for soybeans and corn have caused many of our customers to defer or alter
purchases of land improvement and crop yield-improving services. We have continued to evaluate ways to
more efficiently utilize assets in this operating environment, including expanding our market by geography
and areas served as well as looking for opportunities to reduce costs.
? Family Entertainment: “We are pleased to report an 18% increase in year-over-year revenue for business. We
believe the increase is attributable in part to internal improvements that the Company has made since we The Marketing Alliance, Inc.
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December 19, 2014
acquired these facilities in September 2012. These improvements included increased marketing efforts to
expand our customer base and purchasing additional video game machines for our customers to enjoy during
their visit. ”
Fiscal 2015 Second Quarter Financial Review
? Total revenues for the three-month period ended September 30, 2014, were $6,236,435, as compared to
$6,261,436 in the prior year quarter. The decrease was due to a $299,972 decline in construction revenue
which was partially offset by an increase of $220,569 in commission revenue and a $54,402 increase in
revenue from the two family entertainment facilities.
? Net operating revenue (gross profit) for the quarter was $1,722,337, compared to net operating revenue of
$1,721,114 in the prior-year fiscal period.
? Operating expenses decreased by $5,146 for the fiscal 2015 second quarter as compared to the prior year,
due in part to less compensation expense for the quarter versus the prior year. The decrease in compensation
expense was offset by increases in administrative and professional related expenses from the prior year, of
which approximately $50,000 of the increase in this quarter was a unique one-time expense related to a nonrecurring
project.
? Operating income was $177,967, compared to operating income of $171,598 reported in the prior-year
period, resulting from similar levels of gross profit and overall operating expenses in the prior year period.
? Operating EBITDA (excluding investment portfolio income) for the quarter was $333,253 compared to
$332,927 in the prior-year period. A note reconciling operating EBITDA to operating income can be found at
the end of this release.
? Net income (loss) for the fiscal 2015 second quarter was ($36,926), or ($0.01) per share, as compared to net
income of $187,447, or $0.03 per share, in the prior year period despite nearly the same levels of operating
income. The net loss for the fiscal 2015 second quarter was the result of the performance of the Company’s
investment portfolio as compared to the same period of the prior year. (Operating EPS and Net EPS are stated
after giving effect to a 2:1 stock split for shareholders of record as of February 28, 2014 and paid March 28,
2014 for all periods. Shares outstanding increased to 6,024,200 from 3,012,100 with this stock split and have
been retroactively adjusted to account for the split.)
? Net investment loss, net (from investment portfolio) for the second quarter ended September 30, 2014 was
$247,256, as compared to net investment gain, net of $148,104, for the same quarter of the previous fiscal
year. The decrease was largely due to increased realized and unrealized losses on investments during the
period as opposed to realized and unrealized gains in the prior year period.
? Capital expenditures were approximately $308,000 in the quarter and comprised primarily of the purchase of
real estate for the construction / land improvement business of roughly $240,000. Rental expense (replaced
by this purchase) for the facility that housed the construction / land improvement business was $60,000 in the
prior fiscal year. Most of the remaining purchases were for new video game machines in the family
entertainment business, completing projects at those facilities.
Fiscal 2015 Six Months Financial Review
? Total revenues for the six months ended September 30, 2014 were $12,785,973, compared to $13,250,497 in
revenues for the prior-year period. Construction revenues were $644,603 less than the prior period, although
the decrease was partially offset by insurance distribution revenue increases and family entertainment
revenue increases. The Marketing Alliance, Inc.
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December 19, 2014
? Net operating revenue (gross profit) was $3,747,551, which compares to net operating revenue of $3,831,233
in the prior-year fiscal period.
? Operating income was $925,593 compared to $754,940 for the prior-year period, driven mostly by a $254,335
decrease in operating expenses. The decrease in operating expenses was due to declines in compensation,
office, and payroll related expenses.
? Operating EBITDA (excluding investment revenue) for the six months was $1,245,991 versus $1,067,993 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 six months ended September 30, 2014 was $490,825, or $0.08 per share, compared to
$477,819 or $0.08 per share, in the prior-year period.
Balance Sheet Information
? TMA’s balance sheet at September 30, 2014 reflected cash and cash equivalents of approximately $5.5 million,
working capital of $11.5 million, and shareholders’ equity of $13.3 million; compared to $5.5 million, $11.3
million, and $12.8 million, respectively, at March 31, 2014.
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: 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