The Marketing Alliance Announces Financial Results for Its Fiscal 2017 Fourth Quarter and Year Ended March 31, 2017Source: Business Wire
FY 2017 Fourth Quarter Financial Highlights (all comparisons to the prior year period)
Total revenues were
$7,348,410compared to $7,552,004, due in part to decreases in commission revenue in the insurance distribution business and revenue in the family entertainment business
Operating income decreased to
$838,688compared to operating income of $879,297in the prior year period
Operating expenses decreased to
$2,194,979for the fiscal 2017 fourth quarter as compared to $2,327,521for the prior year period
Operating EBITDA (excluding investment portfolio income) was
$1,044,148compared to $1,157,946in the prior year quarter
Net income for the fiscal 2017 fourth quarter was
$746,445, or $0.11per share, as compared to a net income of $587,099, or $0.08per share
FY 2017 Annual Financial Highlights (all comparisons to the prior year)
Revenues decreased to
$26,552,613, from $28,908,299the previous year
Operating income was
$516,592, compared to $1,006,593for the prior year, mostly due to a decrease in gross revenues in the insurance distribution and construction businesses and increases in operating expenses due to the inclusion of a new family entertainment center opened in April 2016in this fiscal year, and three stores for the full year as opposed to a partial year last year
Operating EBITDA (excluding investment portfolio income) was
$1,484,142compared to $1,923,192
Net income was
$1,063,149, or $0.15per share, as compared to net income of $312,542, or $0.04per share
The Company’s Board of Directors authorized a
$0.24per share cash dividend for shareholders of record on November 29, 2016, paid on or about January 31, 2017, representing an increase of 14.3% over the previous annual cash dividend of $0.21per share
“Commission revenue in our insurance distribution was affected by
changes in carriers’ product portfolios, as carriers who have been
historically significant to our distributors altered their products or
even ceased selling new policies. For example, Genworth’s decision to
discontinue the sale of new life insurance annuity policies in
“While overall weakness in the agricultural markets and crop prices has affected our construction and land improvement business by reducing farmer’s demand for our services, we were still able to grow our revenue for the quarter and have actively worked to reduce expenses for the quarter and fiscal year. We continued to pursue new projects outside of our traditional crop yield-improvement projects, and have scheduled some of these projects in subsequent quarters. While this business has not performed according to our expectations in a normal operating environment as evidenced by lack of revenue after the June quarter last year, we feel that the pursuit of new business opportunities outside of our traditional customer base could allow this business to be better positioned once the agricultural end markets recover and could offer an opportunity for our construction business to utilize its equipment more consistently throughout the year.
“In regard to our family entertainment business for the fiscal 2017 year, we shifted our focus from opening new locations to working to increase the profitability at our nine existing centers. This included capital improvements at our facilities such as new games and more attractive floor layouts, expense reduction efforts, and price changes at some of our locations. We felt in some cases we may not have attained the ideal balance between customer value and price changes, and are assessing these price changes to try to capture more revenue. In the months ahead, we intend to focus on growth and continued cost reduction through better relationships with vendors, improved inventory management and increased control of labor.”
Fiscal 2017 Fourth Quarter Financial Review
Total revenues for the three-month period ended
March 31, 2017, were $7,348,410, as compared to $7,552,004in the prior year quarter. The decrease in total revenue was attributable to decreases in both commission revenue and family entertainment revenue for the three-month period.
Net operating revenue (gross profit) for the quarter was
$3,033,667compared to net operating revenue of $3,206,818in the prior-year fiscal period.
Operating expenses decreased slightly for the fiscal 2017 fourth
$2,194,979as compared to $2,327,521for the prior year.
Operating income was
$838,688, a slight decrease compared to $879,297as reported for the prior-year period, due primarily to a decrease in total revenues that was offset by reduced operating expenses.
Operating EBITDA (excluding investment portfolio income) for the
$1,044,148, as compared to $1,157,946in the prior-year period. A note reconciling operating EBITDA to operating income can be found at the end of this release.
Investment gain, net (from investment portfolio) for the fourth
March 31, 2017was $412,977, as compared to $149,219, in the prior year quarter.
Net income for the fiscal 2017 fourth quarter was
$746,445, or $0.11per share, as compared to a net income of $587,099, or $0.08per share for the prior year period. Net Income was positively impacted by an Investment gain of $412,977for the quarter as compared to $149,219for the prior year period.
Fiscal 2017 Financial Review
Total revenues for the year ended
March 31, 2017decreased to $26,552,613from $28,908,299in the prior year period. Revenues in the Family Entertainmentbusiness increased while revenue decreased in the Construction business and in the Insurance Distribution business.
Net operating revenue (gross profit) was
$9,239,376, which compares to a net operating revenue of $9,109,952in the prior-year fiscal period.
Operating expenses increased to
$8,722,784for the 2017 fiscal year when compared to $8,103,359for prior year period due, in part to increases in rent and occupancy expense (approximately $440,000) relating to the addition of new family entertainment centers coupled with increases in depreciation and amortization expenses (approximately $250,000) versus the prior year period.
Operating income for the fiscal 2017 year was
$516,592compared to $1,006,593for the prior-year period. The decrease in operating income for twelve-month period was partially due to a decline in the Company’s commission and construction revenues for the 2017 fiscal year, which was partially offset by an increase in revenue for TMA’s family entertainment business.
Operating EBITDA (excluding investment portfolio income) for the year
March 31, 2017was $1,484,142versus $1,923,192in the prior-year period. The decrease in Operating EBITDA for the fiscal year ended March 31, 2017was the result of a decrease in operating income. A note reconciling operating EBITDA to operating income can be found at the end of this release.
Investment gain, net (from investment portfolio) for the year ended
March 31, 2017was $1,324,211as compared to an investment loss of ($300,078)for the prior year period. Of the investment gain, net for the twelve months ending March 31, 2017, approximately $969,560was unrealized, $257,485was realized and the balance was interest and dividend income and investment management fees. For the prior year period net investment loss of ($300,078), unrealized losses were approximately ($245,881)and realized losses were approximately ($148,759)with the remaining balance being interest and dividend income and investment management fees.
Net income for the year ended
March 31, 2017increased to $1,063,149, or $0.15per share, compared to $312,542, or $0.04per share, in the prior-year period. Net Income was positively impacted by, as noted above, an investment gain of $1,324,211for the 2017 fiscal year as compared to an investment loss of ($300,078)for the prior year period, which offset a decline in operating profit.
Balance Sheet Information
TMA’s balance sheet at
March 31, 2017reflected cash and cash equivalents of approximately $4.5 million, working capital of $10.4 million, and shareholders’ equity of $10.8 million; compared to $5.5 million, $10.5 million, and $11.4 million, respectively, at March 31, 2016.
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 during fiscal 2017 and future periods and the production of favorable returns to shareholders, the effects of reconciliation of distributor commissions on our expenses, our ability to obtain new carriers and more economical and faster ways for carrier products to be distributed, our ability to diversify our earth moving and excavating business and increases in revenue from our family entertainment 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; future regulatory actions and conditions in the states in which we conduct our business; pricing and other payment decisions and policies of the carriers in our insurance distribution business, 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 Statement of Operations|
|Three-months ended||Twelve-months ended|
|March 31,||March 31,|
|Family entertainment revenue||1,358,649||1,424,976||5,189,950||4,121,913|
|Other operating income||191,586||226,500||389,820||293,850|
|Distributor related expenses:|
|Distributor bonuses and commissions||3,647,899||3,437,885||14,216,912||15,862,934|
|Business processing and distributor costs||275,286||296,317||1,322,465||1,493,112|
|Costs of construction:|
|Direct and indirect costs of construction||59,321||119,737||342,401||913,457|
|Family entertainment costs of sales:||317,729||404,063||1,272,350||1,170,781|
|Net operating revenue||3,033,667||3,206,818||9,239,376||9,109,952|
|Other income (expense):|
|Investment (loss) gain, net||412,977||149,219||1,324,211||(300,078||)|
|(Loss) Gain on disposal of assets||(577||)||-||(13,100||)||23,537|
|Swap settlement (expense) income||(8,926||)||(15,624||)||(49,267||)||(36,032||)|
|Interest rate swap, fair value adjustment||15,485||(71,569||)||117,115||(97,177||)|
|Income (loss) before provision for income taxes||1,190,086||890,887||1,662,424||447,892|
|Provision for income taxes (benefit)||443,641||303,788||599,275||135,350|
|Average Shares Outstanding||7,028,233||7,028,233||7,028,233||7,028,233|
|Operating Income per Share||$||0.12||$||0.12||$||0.07||$||0.14|
|Net Income per Share||$||0.11||$||0.08||$||0.15||$||0.04|
|Consolidated Selected Balance Sheet Items|
|Cash & Equivalents||$||
|Total Current Assets||21,152,644||21,050,551|
|Property and Equipment, Net||2,629,719||3,088,588|
|Intangible Assets, net||1,316,807||1,502,004|
Total Non Current Assets
|Liabilities & Stockholders' Equity|
|Total Current Liabilities||$||10,784,318||$||10,561,554|
|Long Term Liabilities||
|Liabilities & Stockholders' Equity||$||25,906,443||$||26,619,926|
Note – Operating EBITDA (excluding investment portfolio income)
Q4FY2017 Operating EBITDA (excluding investment portfolio income) was
determined by adding Q4FY 2017 Operating Income of
Fiscal 2017 year-end Operating EBITDA (excluding investment portfolio
income) was determined by adding FY2017 year-end Operating Income of
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, 314-275-8713
The Equity Group Inc.
Adam Prior, 212-836-9606
Senior Vice President
Terry Downs, 212-836-9615