The Marketing Alliance Announces Financial Results for its Fiscal 2021 Third Quarter Ended December 31, 2020
The Marketing Alliance, Inc. (OTC: MAAL) (“TMA” or the “Company”), today announced financial results for its fiscal 2021 third quarter ended December 31, 2020.
FY 2021 Third Quarter Financial Highlights (all comparisons to the prior year period)
-
Revenues were
$8,047,127 compared to$7,818,351 , an increase largely due to a$301,370 increase in construction revenues versus the prior year period -
Operating income of
$581,519 compared to$679,376 in the prior year period -
Net income from continuing operations for the quarter was
$941,389 , or$0.12 per share, as compared to net income of$421,937 , or$0.05 per share, in the prior year period -
Due to the effects of the pandemic, the Company has elected to exit the family entertainment business, resulting in net loss from discontinued operations of (
$470,265) for the quarter
Management Comments
Timothy M. Klusas, TMA’s Chief Executive Officer, commented, “Our results were highlighted by relatively consistent performance by our insurance distribution business through the difficult conditions of the pandemic and growth in our construction business. The Company has elected to exit the family entertainment business due to impossible circumstances presented to operate such a business during and after a pandemic. We have classified the family entertainment business as a discontinued operation and have included our after-tax financial performance, including realized one-time charges and our estimate of any further costs, associated with this exit.”
Mr. Klusas added, “Like many industries, the pandemic caused disruption in the insurance distribution business leading insurance agents to immediately adopt and implement a variety of solutions in order to maintain doing business in a no-contact and no in-person meetings environment. In many instances, we suspect these solutions could become permanent, especially where cost savings were realized and agent productivity increased. This dynamic underpinned continued growth in our call center, due to the increased appetite for non-contact back-office solutions driven by technology that were preferred by clients.”
Mr. Klusas concluded, “The results from our construction business reflected our movement away from the agricultural cycles that formerly dominated the pace of our business. We have been able to provide more value -added solutions outside of agriculture, such as drainage solutions for road construction and earth moving that have allowed us to improve our planning and execution of projects.”
Fiscal 2021 Third Quarter Financial Review
-
Total revenues for the three-month period ended December 31, 2020, were
$8,047,127 , as compared to$7,818,351 in the prior year quarter. This increase was due mostly to an increase in construction revenue that more than offset a slight decline in the insurance distribution business.
-
Net operating revenue (gross profit) for the quarter was
$1,426,818 , compared to net operating revenue of$1,586,252 in the prior-year fiscal period. Two contributing factors to the decline were unfavorable business mix in the construction business in this quarter versus the prior year period and start-up expenses this quarter in the insurance business to accommodate growth in the call center.
-
Operating expenses decreased to
$845,299 , or10.5% of total revenues for the fiscal 2020 third quarter, as compared to$906,876 , or11.6% of total revenues for the same period of the prior year. The reduction in operating expenses was due in part to less compensation expense and less travel and meetings expense due to pandemic conditions.
-
The Company reported operating income from continuing operations of
$581,519 , compared to operating income of$679,376 in the prior-year period, due to the effects on net operating revenue discussed above.
-
Operating EBITDA (excluding investment portfolio income) was
$643,705 , compared to$706,450 in the prior year quarter. A note reconciling operating EBITDA to operating income can be found at the end of this release.
-
Investment gain, net (from non-operating investment portfolio) for the quarter was
$671,841 , as compared to a loss of$52,301 for the same quarter of the previous fiscal year.
-
Net income from continuing operations for the fiscal 2021 third quarter was
$941,389 , or$0.12 per share, as compared to net income of$421,937 , or$0.05 per share, in the prior year period. The increase was largely due to the increase in net investment gain, and the benefit of a gain on sale of equipment in the construction business, compared to the prior year period.
Fiscal 2020 Nine Months Financial Review
-
Total revenues for the nine months ended December 31, 2020 were
$23,805,772 , compared to$23,680,084 , for the prior-year period. Increases in construction revenue offset a decrease in insurance commission revenue for the nine-month period, which declined in part due to the effects on the business from COVID-19.
-
Net operating revenue (gross profit) was
$4,578,705 , which compares to net operating revenue of$4,582,780 in the prior-year fiscal period. Although net operating revenue was approximately the same, a slight increase due to growth in the construction business was offset by a slightly unfavorable mix in the insurance distribution business and an increase in start-up expenses associated with the call center.
-
Operating expenses decreased to
11.1% of revenues during the first nine months of fiscal 2021 to$2,644,397 , driven by lower expenses across the business, including compensation, rent expense and other general and administrative expenses.
-
The Company reported increased operating income from continuing operations of
$1,934,308 for the nine months ended December 31, 2020, compared to an operating income from continuing operations of$1,699,076 for the prior-year period due the combination of higher revenues and lower expenses noted in the factors discussed above.
-
Operating EBITDA (excluding investment revenue) for the nine months was
$2,114,387 versus$1,774,133 in the prior-year period. A note reconciling Operating EBITDA to Operating Income can be found at the end of this release.
-
Net income from continuing operations for the nine months ended December 31, 2020, was
$2,479,581 , or$0.31 per share, compared to a net income of$1,347,000 , or$0.17 per share, for the prior-year nine-month period. The year over year increase was the result of higher operating income and higher investment gain compared to the prior year period.
Balance Sheet Information
-
TMA’s balance sheet at December 31, 2020, reflected cash and cash equivalents of
$1,771,280 , working capital of$8,022,941 , and shareholders’ equity of$7,200,540 ; compared to cash and cash equivalents of$2,130,973 , working capital of$10,241,394 , and shareholders’ equity of$7,299,119 as of March 31, 2020. - Due to collateral requirements related to refinancing bank debt in the quarter, the Company lists Restricted Cash separately on the balance sheet from cash and cash equivalents to reflect the cash balances collateralizing debt and specifies in Current Assets the restricted amount scheduled to become unrestricted in the next twelve months.
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 for our performance and the production of favorable returns to shareholders, our ability to obtain industry acceptance and competitive advantages of a multi-carrier digital platform for life insurance applications, our expectations with respect to the relative permanence of insurance sales responses to the COVID -19 pandemic, the distribution of new life insurance products, the effects of ongoing uncertainty regarding our annuity business, our ability to exit the family entertainment business in accordance with our estimated costs and our ability to continue to diversify our earth moving and excavating 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, the effect of the COVID-19 pandemic on our business, financial condition and results of operations, as well as the pandemic’s effect of heightening other risks within our business, privacy and cyber security regulations, expectations of the economic environment; material adverse changes in economic conditions in the markets we serve and in the general economy; 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, weather and environmental conditions in the areas served by our earth moving and excavation business, the integration of our operations with those of businesses or assets we have acquired or may acquire in the future and the failure to realize the expected benefits of such acquisition and integration. 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 and Nine Months Ended December 31, 2020 and September 30, 2019 |
||||||||||||
Unaudited |
||||||||||||
Three Months Ended |
|
Nine Months Ended |
||||||||||
December 31, |
|
December 31, |
||||||||||
|
|
|
||||||||||
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||
Insurance commission and fee revenue |
$ |
7,129,328 |
$ |
7,279,352 |
$ |
21,717,663 |
$ |
22,108,864 |
||||
Construction revenue |
|
757,299 |
|
455,929 |
|
1,927,609 |
|
1,435,550 |
||||
Other insurance revenue |
|
160,500 |
|
83,070 |
|
160,500 |
|
135,670 |
||||
Total revenues |
|
8,047,127 |
|
7,818,351 |
|
23,805,772 |
|
23,680,084 |
||||
|
|
|
|
|
|
|
|
|||||
Insurance distributor related expenses: |
||||||||||||
Distributor bonuses and commissions |
|
5,400,596 |
|
5,511,359 |
|
16,548,516 |
|
16,773,453 |
||||
Business processing and distributor costs |
|
507,615 |
|
430,217 |
|
1,393,833 |
|
1,206,431 |
||||
Depreciation |
|
6,600 |
|
1,350 |
|
19,800 |
|
4,050 |
||||
|
5,914,811 |
|
5,942,926 |
|
17,962,149 |
|
17,983,934 |
|||||
Costs of construction: |
||||||||||||
Direct and indirect costs of construction |
|
670,461 |
|
273,573 |
|
1,166,286 |
|
1,066,570 |
||||
Depreciation |
|
35,037 |
|
15,600 |
|
98,632 |
|
46,800 |
||||
|
705,498 |
|
289,173 |
|
1,264,918 |
|
1,113,370 |
|||||
Total costs of revenues |
|
6,620,309 |
|
6,232,099 |
|
19,227,067 |
|
19,097,304 |
||||
Net operating revenue |
|
1,426,818 |
|
1,586,252 |
|
4,578,705 |
|
4,582,780 |
||||
Operating expenses |
|
845,299 |
|
906,876 |
|
2,644,397 |
|
2,883,704 |
||||
|
|
|
|
|||||||||
Operating income from continuing operations |
|
581,519 |
|
679,376 |
|
1,934,308 |
|
1,699,076 |
||||
Other income (expense): |
||||||||||||
Investment gain, net |
|
671,841 |
|
(52,301) |
|
1,412,833 |
|
330,877 |
||||
Interest expense |
|
(61,321) |
|
(83,739) |
|
(160,613) |
|
(257,967) |
||||
Interest rate swap, fair value adjustment loss |
|
- |
|
2,821 |
|
(216) |
|
(30,166) |
||||
Interest rate swap settlement income |
|
- |
|
1,130 |
|
(3,063) |
|
10,230 |
||||
Gain on sale of equipment |
|
35,750 |
|
9,250 |
|
59,832 |
|
9,250 |
||||
Income from continuing operations before provision for income taxes |
|
1,227,789 |
|
|
556,537 |
|
|
3,243,081 |
|
|
1,761,300 |
|
Income tax expense |
|
286,400 |
|
134,600 |
|
763,500 |
|
414,300 |
||||
Income from continuing operations |
|
941,389 |
|
|
421,937 |
|
|
2,479,581 |
|
|
1,347,000 |
|
|
|
|
|
|
|
|
|
|||||
Discontinued Operations: |
|
|
|
|
|
|
|
|||||
Loss from discontinued operations, net of income taxes |
|
(470,265) |
|
|
(248,813) |
|
|
(1,121,519) |
|
|
(774,973) |
|
Loss on disposal of discontinued operations, net of income taxes |
|
(8,416) |
|
|
(16,191) |
|
|
(10,833) |
|
|
(16,191) |
|
Net loss from discontinued operations |
|
(478,681) |
|
|
(265,004) |
|
|
(1,132,352) |
|
|
(791,164) |
|
|
|
|
|
|
|
|
|
|||||
Net income |
$ |
462,708 |
$ |
156,933 |
$ |
1,347,229 |
$ |
555,836 |
||||
Average Shares Outstanding |
|
8,032,266 |
|
8,032,266 |
|
8,032,266 |
|
8,032,266 |
||||
Operating Income from continuing operations per Share |
$ |
0.12 |
$ |
0.05 |
$ |
0.31 |
$ |
0.17 |
||||
Net Income per Share |
$ |
0.06 |
$ |
0.02 |
$ |
0.17 |
$ |
0.07 |
||||
CONSOLIDATED BALANCE SHEETS |
||||||
As of December 31, 2020 and March 31, 2020 |
||||||
Unaudited |
||||||
December 31, 2020 |
March 31, 2020 |
|||||
ASSETS |
||||||
|
||||||
Cash and cash equivalents |
$ |
1,771,280 |
$ |
2,130,973 |
||
Investments |
|
5,026,725 |
|
6,762,510 |
||
Restricted Cash |
|
516,583 |
|
- |
||
Receivables |
|
12,901,910 |
|
12,642,870 |
||
Other |
|
332,214 |
|
577,484 |
||
Assets related to discontinued operations |
|
34,108 |
|
|
139,092 |
|
Total current assets |
|
20,582,820 |
|
22,252,929 |
||
Property and Equipment, net |
|
850,323 |
|
582,512 |
||
Restricted Cash |
|
3,168,417 |
|
- |
||
Operating lease right-of-use assets |
|
135,704 |
|
|
261,535 |
|
Other assets related to discontinued operations |
|
- |
|
|
3,485,151 |
|
Other |
|
648,905 |
|
|
742,738 |
|
Total Non-Current Assets |
|
4,803,349 |
|
5,071,936 |
||
Total Assets |
$ |
25,386,169 |
$ |
27,324,865 |
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||
Current liabilities |
|
11,752,282 |
|
|
11,168,921 |
|
Current liabilities related to discontinued operations |
|
807,597 |
|
|
842,614 |
|
Total Current Liabilities |
|
12,559,879 |
|
|
12,011,535 |
|
|
|
|
|
|||
Other liabilities |
|
5,480,750 |
|
5,516,271 |
||
Other liabilities related to discontinued operations |
|
145,000 |
|
2,497,940 |
||
Total Long-term Liabilities |
|
5,625,750 |
|
|
8,014,211 |
|
Total Liabilities |
|
18,185,629 |
|
20,025,746 |
||
Total Shareholders' Equity |
|
7,200,540 |
|
7,299,119 |
||
Total Liabi
| ||||||
