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, 2011.

Timothy M. Klusas, TMA’s President, stated, “We are very pleased with our growth and progress during the quarter and year, where we achieved double-digit percentage increases in operating income and revenue. As we stated a year ago, the volatile business conditions for financial companies presented many challenges for our company and our customers. In response to this environment, we prioritized flexibility to alleviate rapidly changing market conditions, which included TMA’s implementation of new supplier (carrier) relationships. Our progress on these initiatives contributed to the improvement in our results this year, as these efforts took hold.”

Mr. Klusas continued, “We concentrated on keeping our distributors informed and helping them to grow profitably. As economic conditions settled over the last fiscal year, we saw our projects from the last few years translate into results that were probably delayed due to economic conditions in prior periods.”

Fiscal 2011 Fourth Quarter Financial Review

• Total revenues for the three-month period ended March 31, 2011, were $5,575,051, up 15% from $4,828,716 for the prior-year period. The increase was in part due to initiatives to add products to existing distributors’ practices in TMA’s network, which resulted in expanded sales of the company’s products and use of the company’s services.
• Net operating revenue (gross profit) for the quarter grew 31% to $3,022,190, which compares to net operating revenue of $2,304,135 in the prior-year fiscal period. TMA’s gross profit margins improved in part due to a more favorable mix of business, distributors that utilized more of the company’s services, and improved economies of scale. Historically, TMA’s fiscal fourth quarter has a higher gross margin than prior quarterly periods due to the timing of bonus and commission payouts.
• Operating income increased to $2,106,887 from operating income of $1,648,052 for the prior-year period due to increases in revenue and gross profit that offset an increase in operating expenses. The Company is achieving more favorable economies of scale as existing distributors expand their sales of TMA’s carrier products.
• Realized and unrealized gains on investments during the period totaled $27,861 compared to realized and unrealized gains of $168,629 for the prior-year period.
• Net income for the fiscal 2011 fourth quarter increased to $1,569,975, or $0.83 per share, from net income of $1,483,641, or $0.78 per share, in the fiscal 2010 fourth quarter, primarily as a result of improved operating income, offset by lower realized and unrealized gains on investments and higher provision for income taxes.

Fiscal 2011 Financial Review

• Total revenues for the year ended March 31, 2011, increased 10% to $21,535,235, from $19,640,944 in revenues for the prior year.
• Net operating revenue (gross profit) grew 33% to $7,447,794, from net operating revenue of $5,587,023 in the prior year.
• Operating income increased 48% to $4,119,136 from $2,778,844 for the prior year.
• Realized and unrealized gains on investments for fiscal 2011 totaled $444,805, compared to realized and unrealized gains of $747,764 for the prior year.
• Net income for fiscal 2011 was $3,150,323, or $1.66 per share, compared to $2,532,864, or $1.33 per share, in the prior year. Net income increased due to higher operating income, offset by lower realized and unrealized gains on investments and higher taxes.

Subsequent to the end of the quarter, TMA acquired certain assets and inventory of JDC Construction, Inc., formerly doing business as Empire Construction & Trenching, Inc., which was a firm that provided erosion control, conservation services, and other construction services for farms, cities, counties, states and general contractors. The benefits of these services for agriculture include increases in crop yields, usable acreage, and improvements in soil conservation efforts. The founder and prior management of JDC Construction will continue to manage and operate the business as an employee of a newly formed entity utilizing the purchased assets. Terms of the transaction were not disclosed, although it does include an option to acquire the remainder of the assets of the business.

Mr. Klusas stated, “We are pleased to be able to put cash on the Company’s balance sheet to work with an impressive entrepreneur in a business outside of financial services. This transaction, to purchase assets and form a new operating company with the existing management, provided a new and diverse revenue stream outside of the insurance distribution business and our non-operating investment activities. This transaction met our criteria as one that would have been accretive, could have been fully funded from cash on hand, and whose expected return exceeded what we currently earn on cash.”

Mr. Klusas concluded, “Because this is a separate company with its own management, we do not expect any distractions in our insurance distribution business and feel a more diversified set of revenue streams adds to our capabilities.” Due to the timing of the transaction, it will not be included in the quarter ended June 30, 2011, but will be included in the quarter ending September 30, 2011.

 

Balance Sheet Highlights

                    3/31/2011 3/31/2010 % Increase Cash and Cash Equivalents $ 3,982,330 $ 3,802,842 4.7% Investments 3,398,229 2,414,856 40.7% Working Capital 8,352,287 6,163,146 35.5% Total Long-term Debt 0 0 N/A Stockholders’ Equity 9,170,825 6,667,039 37.6%  

Five-year History of Growth

                      FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Revenues $ 15,002,688 $ 16,592,849 $ 22,694,490 $ 19,640,944 $ 21,535,235 Operating Income 1,348,184 2,063,810 2,741,384 2,809,897 4,119,136 Net Income 888,032 522,440 1,205,604 2,532,864 3,150,323 Operating EPS 0.66 1.06 1.43 1.47 2.17 Net EPS 0.44 0.27 0.63 1.33 1.66  

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 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 3/31/11     3/31/10 3/31/11 3/31/10   Revenues $ 5,575,051   $ 4,828,716   $ 21,535,235   $ 19,640,944     Distributor Related Expenses Bonus & commissions 1,910,103 1,785,126 11,828,909 11,444,157 Benefits & processing   642,758     739,455     2,258,532     2,609,764  

Total

  2,552,861     2,524,581     14,087,441     14,053,921     Net Operating Revenue 3,022,190 2,304,135 7,447,794 5,587,023     Operating Expenses   915,303     656,083     3,328,658     2,808,179     Operating Income 2,106,887 1,648,052 4,119,136 2,778,844   Other Income (Expense) Interest & dividend income [net] 31,376 21,313 125,139 101,417 Realized & unrealized gains on investments (net) 27,861 168,629 444,805 747,764 - - Interest expense   (6,233 )   (5,278 )   (19,912 )   (28,086 )   Income Before Provision for Income Tax 2,159,891 1,832,716 4,669,168 3,599,939   Provision for income taxes   (589,916 )   (349,075 )   (1,518,845 )   (1,067,075 )  

Net Income

  1,569,975   $ 1,483,641   $ 3,150,323   $ 2,532,864     Average Shares Outstanding 1,901,578 1,908,754 1,901,578 1,909,651   Operating Income per Share $ 1.11 $ 0.86 $ 2.17 $ 1.46 Net Income per Share $ 0.83 $ 0.78 $ 1.66 $ 1.33     Consolidated Selected Balance Sheet Items           As of   Assets 3/31/11 3/31/10 Current Assets Cash & Equivalents $ 3,982,330 $ 3,802,842 Receivables 6,160,868 5,548,948 Investments 3,398,229 2,414,856 Other   412,477   513,531 Total Current Assets 13,953,904 12,280,177   Other Non Current Assets   818,538   503,893   Total Assets $ 14,772,442 $ 12,784,070   Liabilities & Stockholders' Equity   Total Current Liabilities $ 5,601,617 $ 6,117,031   Total Liabilities 5,601,617 6,117,031   Stockholders' Equity   9,170,825   6,667,039   Liabilities & Stockholders' Equity $ 14,772,442 $ 12,784,070