The Marketing Alliance, Inc. (OTC: MAAL) (“TMA” or the “Company”), announced its financial results today for its fiscal 2024 fourth quarter ended March 31, 2024.

FY 2024 Financial Key Items (all comparisons to the prior year period)

• Revenues were $19,585,772 compared to $17,940,089, the 9% increase was primarily due to growth in the insurance distribution business that was partially offset by a decrease in construction revenue
• Operating income from continuing operations of $1,099,267 compared to $1,542,958 in the prior year period. Operating income in the prior year period was increased by $325,114 due to a restatement of commission expense
• Net income from continuing operations was $1,043,214 or $0.13 per share compared to $815,338 or $0.10 per share in the prior year period

Management Comments

Timothy M. Klusas, TMA’s Chief Executive Officer, commented, “Our team was very pleased to report the growth of the insurance distribution business this year. While most of the growth could be attributed to organic growth in the business, we welcomed a few new relationships which also contributed to the increase in revenues. We continue to invest in this business, and as in prior years we hoped to see the positive results of these investments in future quarters and years. While our construction business revenue was off this year, we continued to be discerning about the projects we undertake and maintained our cost discipline as we executed these projects, which we believed positions us well in future quarters.”

Mr. Klusas added, “Getting back to our insurance business, our growth in the business was somewhat overshadowed by an adverse carrier mix associated with different commission levels among carriers whose payments fluctuate with the volume of business. Although an adverse carrier mix is expected with newer relationships, as these relationships mature and grow the business mix should improve, as it has with other new relationships in the past. We also experienced certain cost overruns in staffing connected to new initiatives which we started to address this quarter. While we made progress on costs, the staffing overruns affected our margins and profitability. We plan to continue to take measures to reduce these costs. The combination of an adverse business mix and costs over plan were large areas of focus for our team. Moving to construction, last quarter we announced a $143,629 charge - off at the end of a large job due to reconciling material bills on a job that spanned over multiple years. The billing of these materials in the prior year ($143,629) and reversal of these materials billings in this fiscal year (reversal of $143,629) account for a portion of the difference in financial performance in the construction business between fiscal years.”

Mr. Klusas continued, “We also took steps on our balance sheet to reduce our exposure to equities in our non-operating investment portfolio by liquidating securities and investing the proceeds into money market accounts. Subsequent to the end of the quarter, we also repaid our line of credit to a zero balance.”

Fiscal 2024 Financial Review

• Total revenues for the twelve-month period ended March 31, 2024, were $19,585,772, compared to $17,940,089 in the prior year. The increase was primarily due to growth in the insurance distribution business that was supplemented by new carrier and agency relationships. Construction revenue of $1,284,021 decreased compared to the prior year revenue of $2,016,248, due to a large job in the previous year where we were project manager with a large portion outsourced to subcontractors.
• Net operating revenue (gross profit) for the fiscal year was $4,655,172, compared to net operating revenue of $5,372,772 in the prior-year fiscal period, where the restatement of commission expense increased net operating revenue by $325,114 in the prior fiscal year.
• Operating expenses decreased to $3,555,905, compared to $3,829,814 for the prior year. The reduction was due to various cost reduction efforts throughout the company.
• The Company reported operating income from continuing operations of $1,099,267, compared to operating income of $1,542,958 in the prior-year period, due to a combination of the factors noted above, notably operating income in the prior year period was increased by $325,114 due to a restatement of commission expense.
• Operating EBITDA (excluding investment portfolio income) declined to $1,388,524 from $1,794,401 in the prior year. A note reconciling operating EBITDA to operating income can be found at the end of this release.
• Investment gain (loss), net (from non-operating investment portfolio) for the fiscal year was $493,334, as compared with ($304,488) during the previous fiscal year.
• Other income (expense) was ($67,390) at the end of the fiscal year due to a valuation allowance on a note receivable. The Company reported other income in its current year interim financial statements that was subsequently reclassified as reduced commission expense in the previous fiscal year (see operating income note above).
• Net income from continuing operations was $1,043,214 or $0.13 per share compared to $815,338 or $0.10 per share.

Balance Sheet Information

• TMA’s balance sheet on March 31, 2024, reflected cash and cash equivalents of $2.9 million; working capital of $7.6 million; and shareholders’ equity of 6.7 million; compared to cash and cash equivalents of $2.0 million, working capital of $7.3 million, and shareholders’ equity of $6.9 million as of March 31, 2023.

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 the timing of our receipt and recognition of fee revenues, our plan to reduce expenses and cost overruns associated with various business initiatives, and our ability to generate earnings from our construction 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; the ways that insurance carriers may react in their underwriting policies and procedures to the continuing risks they perceive from public health matters; the ability of our construction business to be engaged for projects and for those projects to commence on the anticipated timetable; our reliance on a limited number of insurance carriers and any potential termination of those relationships or failure to develop new relationships; privacy and cyber security matters and our ability to protect confidential information; 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; and weather and environmental conditions in the areas served by our construction business. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240701846209/en/