MAAL Marketing Alliance Inc (PK)

The Marketing Alliance, Inc. (OTC: MAAL) (“TMA”), a provider of services and distributor of products to independent insurance agencies throughout the United States, today announced financial results for its fiscal fourth quarter and year ended March 31, 2012.

Timothy M. Klusas, TMA’s President, stated, “We feel that the 2012 fiscal year was a significant one for TMA’s customers and shareholders, marked by double-digit percentage increases in revenues, operating income, and Operating EBITDA excluding investments. Net Income was off in part due to less investment income than last year. We continued to pursue a capital-efficient distribution model for our insurance distribution business whose results are due to helping independent insurance agencies become more successful and providing this group of entrepreneurs more ways and tools to grow their businesses. This year we also took a step forward in our plan to deploy additional capital in operating businesses when we acquired the assets of an earth moving and excavating business in July of 2011. I would like to highlight a few key points:

• Insurance Distribution Business: “We continued to develop new and maintain existing relationships with our carriers (suppliers), which are among the largest and most renowned life, annuity and long-term care insurance providers in the country and the world. By providing our customers, and therefore our customers’ customers, a wide variety of insurance products from a diverse network of carriers, our distribution network offers more selection and solutions to their clients. This approach contributed to a 13% increase in our commission revenue for fiscal 2012 compared to fiscal 2011.”
• Earth moving and excavating: “Because of its extensive work in agriculture, during the fiscal second and fourth quarters our earth moving and excavating subsidiary has traditionally focused its efforts on maintenance activities and other non-agricultural excavation work prior to its customers’ crop plantings in the spring and before the onset of winter in the fall. The business historically has two periods during the year where it can actively enter a farmer’s field and provide its excavating (tiling) and terracing service. These quarters are typically in TMA’s fiscal first and third quarter. In the hopes of achieving a more consistent flow of operations, the Company has begun to explore new ways to better utilize these resources during the off-seasons to reduce the volatility of business activity and increase overall asset utilization. We continue to make progress in this business through the integration of financial controls and realizing the benefits of an infrastructure.”

Mr. Klusas concluded, “We continue to seek appropriate means to grow our top-line, operate more efficiently, and deploy our capital for the benefits of the shareholders and customers. This includes working with our insurance distribution business to add more products to our network and expanding the services that we offer to our member agencies. The more effectively we can grow this network, the more we can take advantage of the economies-of-scale that we have developed over the past six years. We have also been pleased with the progress being made in the excavating business, which we acquired using free cash flow. While still a relatively small portion of TMA’s revenue, we feel the business has the potential to expand. While we remain cautious, we are continuing to pursue potential avenues for growth, but only consistent with our plan to add value for our shareholders.”

Fiscal 2012 Financial Review*

• Total revenues for the year ended March 31, 2012, increased 24% to $26,603,867, from $21,535,235 in revenues for the prior year. This was in part due to a 13% increase in insurance distribution revenue as well as the additional $2,196,922 received in construction revenue.
• Net operating revenue (gross profit) grew 16% to $8,614,326, from net operating revenue of $7,447,794 in the prior year.
• Operating expenses increased 22% versus the prior year but held steady at 15% of revenues to match the prior year.
• Operating income increased 11% to $4,558,349 from $4,119,136 for the prior year. The increase in operating income was due to an increase in gross profit that was partially offset by the increase in operating expenses.
• Operating EBITDA (excluding investments) for FY 2012 was $4,903,288 compared to $4,215,728 in the prior-year period. A note reconciling Operating EBITDA to Operating Income can be found at the end of this release.
• Net investment income for fiscal 2012 totaled $149,624 compared to $569,944 for the prior year.
• Net income for fiscal 2012 was $2,955,198, or $1.41 per share, compared to $3,150,323, or $1.51 per share, in the prior year. This decrease was largely due to less investment income relative to the prior year and a higher provision for income taxes in fiscal 2012. These factors offset higher operating income in fiscal 2012 versus the prior year.

* Copies of The Marketing Alliance’s audited financial statements are available upon request (see contact information below)

Fiscal 2012 Fourth Quarter Financial Review

• Total revenues for the three-month period ended March 31, 2012, were $7,015,400 up 26% from $5,575,051 for the prior-year period. This was in part due to a 16% increase in insurance distribution revenue as well as the additional $572,031 received in construction revenue.
• Net operating revenue (gross profit) for the quarter grew 10% to $3,311,899, compared to net operating revenue of $3,022,195 in the prior-year fiscal period.
• Operating income increased to $2,133,110 from operating income of $2,107,632 for the prior-year period due to increases in revenue and gross profit that offset an increase in operating expenses.
• Net investment income during the period totaled $506,914 compared to $58,487 for the prior-year period.
• Net income for the fiscal 2012 fourth quarter increased to $1,657,329 or $0.79 per share, from net income of $1,569,970 or $0.75 per share, in the fiscal 2011 fourth quarter, primarily as a result of improved operating income and net investment income.

Five-year History

    FY 2008       FY 2009       FY 2010       FY 2011       FY 2012             Revenues $ 16,592,849 $ 22,694,490 $ 19,640,944 $ 21,535,235 $ 26,603,867 Operating Income 2,063,810 2,741,384 2,809,897 4,119,136 4,558,349 Net Income 522,440 1,205,604 2,532,864 3,150,323 2,955,198 Operating EPS 0.99 1.31 1.34 1.97 2.18 Net EPS 0.25 0.58 1.21 1.51 1.41

About The Marketing Alliance, Inc.

Headquartered in St. Louis, MO, TMA is one of the largest organizations providing 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.

Investor information can be accessed through the shareholder section of TMA’s website at http://www.themarketingalliance.com/si_who.cfm. 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. Any forward-looking statements contained in this press release represent our estimates only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our estimates as of any subsequent date. These statements involve a number of risks and uncertainties, including, but not limited to, general changes in economic conditions. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.

Consolidated Statement of Operations       Quarter Ended     Year to Date 3 Months Ended 12 Months Ended 3/31/12     3/31/11 3/31/12     3/31/11 Revenues Commission revenue $ 6,443,369 $ 5,575,055 $ 24,406,945 $ 21,535,235 Construction revenue 572,031 - 2,196,922 - Total Revenues 7,015,400 5,575,055 26,603,867 21,535,235   Distributor Related Expenses Bonus & commissions 2,825,965 1,887,643 14,360,581 11,828,909 Benefits & processing 316,862 656,103 1,778,570 2,226,876 Depreciation 5,506 9,114 28,062 31,656 3,148,333 2,552,860 16,167,213 14,087,441   Costs of construction: Direct and indirect cost of construction 329,038 - 1,596,198 - Depreciation 86,074   226,130 - 415,112 - 1,822,328 -   Total Cost of Revenue 3,703,501 2,552,860 17,989,541 14,087,441   Net Operating Revenue 3,311,899 3,022,195 8,614,326 7,447,794     Operating Expenses 1,178,789 914,563 4,055,977 3,328,658   Operating Income 2,133,110 2,107,632 4,558,349 4,119,136   Other Income (Expense) Investment income, net 506,914 58,487 149,624 569,944 Interest expense (13,917) (6,233) (45,992) (19,912)   Income Before Provision for Income Tax 2,626,107 2,159,886 4,661,981 4,669,168   Provision for income taxes (968,778) (589,916) (1,706,783) (1,518,845)   Net Income 1,657,329 1,569,970 $ 2,955,198 $ 3,150,323   Average Shares Outstanding 2,091,736 2,091,736 2,091,736 2,091,736   Operating Income per Share $ 1.02 $ 1.01 $ 2.18 $ 1.97 Net Income per Share $ 0.79 $ 0.75 $ 1.41 $ 1.51

Note: * - Operating EPS and Net EPS stated after giving effect to the 10% stock split for shareholders of record as of June 15, 2011 and paid July 15, 2011 for all periods. Shares outstanding increased to 2,091,736 as of March 31, 2012, from 1,901,578 with this stock split and have been retroactively adjusted to account for the split.

Consolidated Selected Balance Sheet Items

      As of       Assets 3/31/12 3/31/11 Current Assets Cash & Equivalents $ 4,785,736 $ 3,982,330 Investments 3,943,369 3,498,229 Receivables 7,470,958 6,160,868 Other 582,645 446,277 Total Current Assets 16,782,708 14,087,704   Property and Equipment, Net 1,654,862 160,074

 

Other Non Current Assets

671,499 558,464   Total Assets $ 19,109,069 $ 14,806,242   Liabilities & Stockholders' Equity   Total Current Liabilities $ 5,869,105 $ 5,601,617   Long Term Liabilities

1,908,800

33,800   Total Liabilities 7,777,905 5,635,417   Stockholders' Equity 11,331,164 9,170,825   Liabilities & Stockholders' Equity $ 19,109,069 $ 14,806,242

Note – Operating EBITDA (excluding investments)

FY 2012 Operating EBITDA (excluding investments) was determined by adding FY 2012 Operating Income of 4,558,349 and Depreciation and Amortization Expense of 344,939 for a sum of 4,903,288.

FY 2011 Operating EBITDA (excluding investments) was determined by adding FY 2011 Operating Income of 4,119,136 and Depreciation and Amortization Expense of 96,592 for a sum of 4,215,728.

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.