The Marketing Alliance Announces Unaudited Financial Results for Its Fiscal 2015 Third Quarter & Nine Months Ended December 3...

FY 2015 Third Quarter Financial Highlights (all comparisons to the prior year period)

• Revenues were $7,399,580 compared to $6,869,504, due to increases in revenue for each business segment compared to the prior period
• Net operating revenue (gross profit) was $1,731,495, compared to $1,774,704
• Operating income was $340,528, compared to $222,699
• Operating EBITDA (excluding investment portfolio income) was $496,053, compared to $387,278
• Net income of $262,671, or $0.04 per share, as compared to net income of $252,145, or $0.04 per share
• Subsequent to the end of the quarter, the Company expanded its family entertainment business through the acquisition of two locations in Florida

The Marketing Alliance, Inc. (OTC:MAAL) (“TMA”), today announced unaudited financial results for its fiscal 2015 third quarter and nine months ended December 31, 2014.

Mr. Timothy M. Klusas, TMA’s Chief Executive Officer, provided additional details below on each of the Company’s operations for the third quarter of the fiscal 2015 year:

• Insurance Distribution Business: “We reported another quarterly gain in commission revenue (versus the prior year period) in our insurance business. We worked closely with our network of independent General Agents to ensure that they had both the access and information concerning the wide range of products offered by our carrier network. Our expenses increased due to additional marketing expenses necessary to grow the insurance business and establish new carrier relationships. We felt that this effort allowed each distributor to better compete in the marketplace by providing a more diversified offering to its customer base, which has been important given the rapid changes in product / carrier availability in the current low interest rate environment. Throughout this period of low interest rates, we have seen many life insurance products increase in price to non-competitive levels or even discontinue. We feel, over the long-term, our investments in a wide range of carrier relationships strengthen our value proposition to distributors by having a more diversified pool of carrier partners to ensure access to competitive life insurance products. However, in the short term, changes in product can lead to challenging business conditions for our distributors and create additional marketing expenses for TMA. We were pleased to see additional revenues this quarter, and our plans are to continue to assist our distribution partners to steadily improve production levels.”
• Earth Moving (Land Improvement – Construction): “We saw progress through increased sales during the fiscal third quarter, which is seasonally one of the Company’s strongest. We continued to focus on actively seeking projects that best utilize our assets and reinvigorated our marketing efforts to reach those customers and markets. I am particularly pleased that we accomplished this in the backdrop of challenged corn and soybean prices for our customers, which is their main source of revenue to pay for our services. We have worked diligently to explain to farmers, that, in the long-term, an improved crop field drainage scheme will ultimately yield a higher amount of harvestable bushels per acre. We continued to see progress in selling our value proposition of improved crop yields through our draining and tiling services. While this has been a long process, we felt our marketing efforts were much more productive than in the past.”
• Family Entertainment (including acquisition of new franchises): “We have been happy with the performance at our two existing family entertainment franchised locations in St. Louis. The improvements made to these facilities have increased revenues at each location. We felt this was a good platform to seek additional opportunities to build upon with what we have learned. As a result, we were happy to effectuate an opportunity to acquire additional existing Monkey Joe’s franchised locations in Florida at the beginning of 2015 (current fiscal 2015 fourth quarter). We felt comfortable with our ability to integrate these two additional locations into our current operations, which are managed in St. Louis.”

Fiscal 2015 Third Quarter Financial Review

• Total revenues for the three-month period ended December 31, 2014 were $7,399,580, as compared to $6,869,504 in the prior year quarter. The increase was due to improvements in revenue for each of the three business lines of the Company when compared to the prior year period.
• Net operating revenue (gross profit) for the quarter was $1,731,495, compared to net operating revenue of $1,774,704 in the prior-year fiscal period. Gross profit was adversely affected by additional marketing investments required to grow the Company’s insurance distribution business.
• Operating income was $340,528, compared to operating income of $222,699 reported in the prior-year period. The increase in operating income was primary due to reductions in operating expenses and increases in revenue for the fiscal 2015 third quarter as compared to the prior year.
• Operating EBITDA (excluding investment portfolio income) for the quarter was $496,053, compared to $387,278 in the prior-year period. A note reconciling operating EBITDA to operating income can be found at the end of this release. The increase in Operating EBITDA (excluding investment portfolio income) was driven by many of the same reasons as Operating income.
• Net income for the fiscal 2015 third quarter was $262,671, or $0.04 per share, as compared to net income of $252,145, or $0.04 per share, in the prior year period. (Operating EPS and Net EPS are stated after giving effect to the 100% stock split effective February 28, 2014 for all periods. Shares outstanding increased to 6,024,200 from 3,012,100 with this stock split, and per share information has been retroactively adjusted to account for the split.) Net income was adversely affected by investment loss, net (from investment portfolio), below.
• Investment loss, net (from investment portfolio) for the third quarter ended December 31, 2014 was $2,952, as compared to investment gain, net, of $227,105 for the same quarter of the previous fiscal year.
• Capital expenditures in the quarter were $116,126, of which most were for the Land Improvement-Construction business for the purchases of two new pieces of equipment to enhance our capabilities. One piece of equipment replaces a less-efficient older model of similar equipment and allows us to do more different types of projects, while a second purchase allows us to undertake projects that are more complex and greater in size than before.

Fiscal 2015 Nine Months Financial Review

• Total revenues for the nine months ended December 31, 2014 were $20,185,553, compared to $20,120,001 in revenues for the prior-year period.
• Net operating revenue (gross profit) was $5,479,046, which compares to net operating revenue of $5,605,937 in the prior-year fiscal period.
• Operating income was $1,266,121, compared to $977,639 for the prior-year period. The increase in operating income was primarily due to reductions in operating expenses versus the prior year period.
• Operating EBITDA (excluding investment revenue) for the nine months was $1,742,044 versus $1,455,271 in the prior-year period. A note reconciling Operating EBITDA to Operating income can be found at the end of this release. The increase in Operating EBITDA (excluding investment portfolio income) was driven by many of the same reasons as Operating income.
• Net income for the nine months ended December 31, 2014 was $753,496, or $0.13 per share, compared to $729,964 or $0.12 per share, in the prior-year period. (As noted above, per share information has been retroactively adjusted to account for the 100% stock split effective February 28, 2014.)

Balance Sheet Information

• TMA’s balance sheet at December 31, 2014 reflected cash and cash equivalents of approximately $5.9 million, working capital of $11.9 million, and shareholders’ equity of $13.6 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

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: the product lines, and the prices and other terms and characteristics of the product lines, offered by life insurance carriers; the desirability of carrier product lines the desirability of carrier product lines to our distributors and their customers; expectations of the economic environment; material adverse changes in economic conditions in the markets we serve and in the general economy; future regulatory actions and conditions in the states in which we conduct our 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 Statement of Operations

Three-months ended

Nine-months ended

December 31,

December 31,

(Unaudited)

(Unaudited)

2014

2013

2014

2013

        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Commission revenue
        
        
        
        
        
        
          $
        
        
          6,313,729
        
        
        
        
        
        
          $
        
        
          5,877,841
        
        
        
        
        
        
          $
        
        
          17,497,231
        
        
        
        
        
        
          $
        
        
          16,946,100
        
        
        
      
      
        
          Construction revenue
        
        
        
        
        
        
        
        
          680,517
        
        
        
        
        
        
        
        
          630,415
        
        
        
        
        
        
        
        
          1,596,438
        
        
        
        
        
        
        
        
          2,190,939
        
        
        
      
      
        
          Family entertainment revenue
        
        
        
        
        
        
           
        
        
          405,334
        
        
           
        
        
        
        
           
        
        
          361,248
        
        
           
        
        
        
        
           
        
        
          1,091,884
        
        
           
        
        
        
        
           
        
        
          982,962
        
        
           
        
      
      
        
          Total revenues
        
        
        
        
        
        
           
        
        
          

7,399,580

6,869,504

20,185,553

20,120,001

        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Distributor related expenses:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Distributor bonuses and commissions
        
        
        
        
        
        
        
        
          4,766,404
        
        
        
        
        
        
        
        
          4,210,579
        
        
        
        
        
        
        
        
          12,099,867
        
        
        
        
        
        
        
        
          11,680,431
        
        
        
      
      
        
          Business processing and distributor costs
        
        
        
        
        
        
        
        
          422,350
        
        
        
        
        
        
        
        
          343,556
        
        
        
        
        
        
        
        
          1,346,932
        
        
        
        
        
        
        
        
          1,156,763
        
        
        
      
      
        
          Depreciation
        
        
        
        
        
        
           
        
        
          2,736
        
        
           
        
        
        
        
           
        
        
          3,145
        
        
           
        
        
        
        
           
        
        
          8,114
        
        
           
        
        
        
        
           
        
        
          8,833
        
        
           
        
      
      
        
        
        
        
        
        
        
           
        
        
          

5,191,490

4,557,280

13,454,913

12,846,027

        
        
           
        
      
      
        
          Costs of construction:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Direct and indirect costs of construction
        
        
        
        
        
        
        
        
          334,359
        
        
        
        
        
        
        
        
          374,363
        
        
        
        
        
        
        
        
          796,614
        
        
        
        
        
        
        
        
          1,227,032
        
        
        
      
      
        
          Depreciation
        
        
        
        
        
        
           
        
        
          84,585
        
        
           
        
        
        
        
           
        
        
          86,712
        
        
           
        
        
        
        
           
        
        
          255,109
        
        
           
        
        
        
        
           
        
        
          265,744
        
        
           
        
      
      
        
        
        
        
        
        
        
           
        
        
          

418,944

461,075

1,051,723

1,492,776

Family entertainment costs of sales:

57,651

76,445

199,871

175,261

Net operating revenue

1,731,495

1,774,704

5,479,046

5,605,937

Operating Expenses

1,390,967

1,552,005

4,212,925

4,628,298

Operating income

340,528

222,699

1,266,121

977,639

Other income (expense):

        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Investment gain, net
        
        
        
        
        
        
        
        
          (2,952
        
        
          )
        
        
        
        
        
        
          227,105
        
        
        
        
        
        
        
        
          (137,031
        
        
          )
        
        
        
        
        
        
          257,055
        
        
        
      
      
        
          Interest expense
        
        
        
        
        
        
        
        
          (27,084
        
        
          )
        
        
        
        
        
        
          (29,750
        
        
          )
        
        
        
        
        
        
          (85,475
        
        
          )
        
        
        
        
        
        
          (80,395
        
        
          )
        
      
      
        
          Gain on sale of assets
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          (3,184
        
        
          )
        
        
        
        
        
        
          8,541
        
        
        
        
        
        
        
        
          8,196
        
        
        
      
      
        
          Interest rate swap, fair value adjustment
        
        
        
        
        
        
           
        
        
          469
        
        
           
        
        
        
        
           
        
        
          4,265
        
        
           
        
        
        
        
           
        
        
          6,520
        
        
           
        
        
        
        
           
        
        
          19,570
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Income before provision for income taxes

310,961

421,135

1,058,676

1,182,065

        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Provision for income taxes
        
        
        
        
        
        
           
        
        
          48,290
        
        
           
        
        
        
        
           
        
        
          168,990
        
        
           
        
        
        
        
           
        
        
          305,180
        
        
           
        
        
        
        
           
        
        
          452,101
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Net income

$

262,671

$

252,145

$

753,496

$

729,964

Average Shares Outstanding

6,024,200

6,024,200

6,024,200

6,024,200

Operating Income per Share

$

0.06

$

0.04

$

0.21

$

0.16

Net Income per Share

$

0.04

$

0.04

$

0.13

$

0.12

Note: * - Operating EPS and Net EPS stated after giving effect to the 100% stock split for shareholders effective February 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.

Consolidated Selected Balance Sheet Items

As of

12/31/14

3/31/14

Assets

(Unaudited)

(Audited)

        
      
      
        
          Cash & Equivalents
        
        
        
        
        
        
          $ 5,926,647
        
        
        
        
          $ 5,531,060
        
      
      
        
          Investments
        
        
        
        
        
        
          5,157,790
        
        
        
        
          5,245,505
        
      
      
        
          Receivables
        
        
        
        
        
        
          7,770,170
        
        
        
        
          7,607,064
        
      
      
        
          Other
        
        
        
        
        
        
          1,401,409
        
        
        
        
          1,899,946
        
      
      
        
          

Total Current Assets

20,256,016

20,283,575

        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Property and Equipment, Net
        
        
        
        
        
        
          1,552,716
        
        
        
        
          1,490,381
        
      
      
        
          Intangible Assets, net
        
        
        
        
        
        
          763,233
        
        
        
        
          835,290
        
      
      
        
          Other
        
        
        
        
        
        
          664,973
        
        
        
        
          920,566
        
      
      
        
          

Total Non Current Assets

2,980,922

3,246,237

Total Assets

$ 23,236,938

$ 23,529,812

Liabilities & Stockholders' Equity

Total Current Liabilities

        
        
        
        
        
        
          $ 8,353,680
        
        
        
        
          $ 8,993,130
        
      
      
        
          

Long Term Liabilities

1,323,536

1,730,456

Total Liabilities

9,677,216

10,723,586

Stockholders' Equity

13,559,722

12,806,226

Liabilities & Stockholders' Equity

$ 23,236,938

$ 23,529,812

Note – Operating EBITDA (excluding investment portfolio income)

Fiscal year 2015 third quarter operating EBITDA (excluding investment portfolio income) was determined by adding fiscal year 2015 third quarter operating income of $340,528 and depreciation and amortization expense of $155,525 for a sum of $496,053. Fiscal year 2014 third quarter operating EBITDA (excluding investment portfolio income) was determined by adding fiscal year 2014 third quarter operating income of $222,699 and depreciation and amortization expense of $164,579 for a sum of $387,278. The Company elects not to include investment portfolio income because the Company believes it is non-operating in nature.

Fiscal year 2015 nine months operating EBITDA (excluding investment portfolio income) was determined by adding fiscal year 2015 nine month operating income of $1,266,121 and depreciation and amortization expense of $475,923 for a sum of $1,742,044. Fiscal year 2014 nine months operating EBITDA (excluding investment portfolio income) was determined by adding fiscal year 2014 nine months operating income of $977,639 and depreciation and amortization expense of $477,632 for a sum of $1,455,271. 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.

The Marketing Alliance, Inc.Timothy M. Klusas, (314) [e-mail] RelationsThe Equity Group Inc.Adam Prior, [phone]Senior Vice [e-mail] Downs, (212) [e-mail]