The Marketing Alliance Announces Financial Results for Quarter Ended September 30, 2023 and Declares Quarterly Dividend of $0.05 per share

The Marketing Alliance, Inc. (OTC: MAAL) (“TMA” or the “Company”), today announced that its Board of Directors has declared a $0.05 per share cash dividend for shareholders of record on December 29, 2023, to be paid on or about January 24, 2024.

The Company also announced its financial results for its fiscal 2024 second quarter ended September 30, 2023.

2Q 2024 Financial Key Items (all comparisons to the prior year period)

• Operating income from continuing operations of $594,792 compared to $452,731, driven by improved performance in both the insurance distribution and construction businesses.
• Revenues were $4,891,830 compared to $4,839,242, the increase due primarily to an increase in construction revenues.
• Net income from continuing operations was $492,416 or $0.06 per share compared to $130,557 or $0.02 per share.

Management Comments

Timothy M. Klusas, TMA’s Chief Executive Officer, commented, “Our second quarter 2024 results show a quarter in which, although very consistent to the prior year period, both businesses exceeded the prior year period on a gross profit basis. Our insurance distribution business benefited from some of the reversal of adverse timing of fee revenues mentioned in the last quarter, which is more comparable to what we would historically expect, and a slight improvement in performance overall through successful cost savings initiatives. Although not included in operating income, the Company also benefited from a reversal in a prior period holdback, which is listed as Other income.”

Mr. Klusas added, “Our construction business built upon its good start to the fiscal year through exceptional execution of a large job during the quarter. This business continued to grow and create more opportunities for future large jobs by its increasing penetration in the market and a growing reputation among customers and potential future clients. The geographic areas in which our construction business operates continued to see infrastructure investment, and we were well-positioned to benefit from this trend.”

Fiscal Second Quarter 2024 Financial Review

• Revenues were $4,891,830 compared to $4,839,242, with Construction revenues increasing modestly due to increasing activity levels. Insurance Commission and Fee revenues fell slightly, reflecting general period to period variances in activity levels and business mix.

• Net operating revenue (gross profit) for the quarter was $1,427,796, compared to net operating revenue of $1,256,385 in the prior-year fiscal period. The improvement in net operating revenue was due primarily to factors mentioned above, including the reversal of adverse timing of insurance fee revenue.

• Operating expenses increased to $833,004 compared to $803,654 for the prior year. Investments in technology and professional fees were areas that saw the largest expense increases on a year over year basis.

• The Company reported operating income from continuing operations of $594,792 compared to $452,731 in the prior year period, with differences due to factors discussed above.

• Operating EBITDA (excluding investment portfolio income) increased to $673,314 from $521,261 in the prior year period. 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 quarter was $22,949, as compared with ($33,756) during the same period the previous year.

• Net income from continuing operations was $492,416 or $0.06 per share compared to $130,557 or $0.02 per share.

Balance Sheet Information

• TMA’s balance sheet on September 30, 2023, reflected cash and cash equivalents of $1.8 million; working capital of $5.9 million; and shareholders’ equity of 6.3 million; compared to cash and cash equivalents of $1.7 million, working capital of $6.7 million, and shareholders’ equity of $6.7 million as of September 30, 2022.

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 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, such as the COVID-19 pandemic; 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.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
			Three Months Ended								Six Months Ended
			September 30,								September 30,
			2023				2022				2023				2022
Insurance commission and fee revenue		$	3,915,691			$	4,110,728			$	7,814,835			$	8,112,812
Construction revenue			944,139				724,084				1,124,941				929,745
Other insurance revenue			32,000				4,430				61,800				179,530
Total revenues			4,891,830				4,839,242				9,001,576				9,222,087
Insurance distributor related expenses:
Distributor bonuses and commissions			2,598,684				2,782,060				5,158,737				5,100,854
Business processing and distributor costs			339,392				468,534				633,267				925,045
Depreciation			2,859				3,851				5,751				6,809
			2,940,935				3,254,445				5,797,755				6,032,708
Costs of construction:
Direct and indirect costs of construction			461,617				278,252				615,160				575,604
Depreciation			61,482				50,160				118,494				95,364
			523,099				328,412				733,654				670,968
Total costs of revenues			3,464,034				3,582,857				6,531,409				6,703,676
Net operating revenue			1,427,796				1,256,385				2,470,167				2,518,411
Total general and administrative expenses			833,004				803,654				1,823,184				1,681,870
Operating income from continuing operations			594,792				452,731				646,983				836,541
Other income (expense):
Investment gain (loss), net			22,949				(33,756	)			22,949				(704,374	)
Interest expense			(50,625	)			(48,218	)			(97,320	)			(101,102	)
Other income (expense):			100,000				0				100,000				0
Income (loss) from continuing operations before provision for income taxes			667,116				370,757				672,612				31,065
Income tax expense			174,700				240,200				192,900				183,000
Income (loss) from continuing operations			492,416				130,557				479,712				(151,935	)
Discontinued operations:
Income from discontinued operations, net of income taxes			(3,605	)			68,458				(3,605	)			82,876
Net income from discontinued operations			(3,605	)			68,458				(3,605	)			82,876
Net Income (Loss)		$	488,811			$	199,015			$	476,107			$	(69,059	)
Average Shares Outstanding			8,081,266				8,081,266				8,081,266				8,081,266
Operating Income from continuing operations per Share		$	0.07			$	0.06			$	0.08			$	0.10
Net Income per Share		$	0.06			$	0.02			$	0.06			$	(0.01	)

CONSOLIDATED BALANCE SHEETS
Unaudited
			September 30,			March 31,
			2023			2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	1,764,444		$	2,461,956
Equity securities			4,054,377			3,904,217
Restricted cash			613,932			536,212
Accounts receivable			7,091,640			9,710,905
Inventory			11,777			7,534
Current portion of notes receivable			120,921			146,645
Prepaid expenses			117,352			189,036
Assets related to discontinued operations			1,030			6,822
Total current assets			13,775,473			16,963,327
PROPERTY AND EQUIPMENT, net			965,129			817,945
OTHER ASSETS
Notes receivable, net due to the allowance			568,186			586,435
Restricted cash			1,893,097			2,369,036
Operating lease right-of-use assets			250,735			402,534
Total other assets			2,709,018			3,358,005
		$	17,449,620		$	21,139,277
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses			5,677,761			7,930,566
Dividends payable			404,663			566,949
Line of credit payable			675,000			400,000
Current portion of notes payable			920,898			811,223
Current portion of finance lease liability			35,509			67,276
Current portion of operating lease liability			130,285			131,851
Liabilities related to discontinued operations			677			87,194
Total current liabilities			7,844,793			9,995,059
LONG-TERM LIABILITIES
Notes payable, net of current portion and debt issuance costs			2,831,359			3,529,616
Finance lease liability, net of current portion			123,084			165,191
Operating lease liability, net of current portion			112,907			276,497
Deferred taxes			216,000			200,000
Total long-term liabilities			3,283,350			4,171,304
Total liabilities			11,128,143			14,166,363
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, no par value; 50,000,000 shares authorized, 8,081,266 shares issued and outstanding June 30, 2022 and June 30, 2023			1,025,341			1,025,341
Retained earnings			5,296,136			5,947,573
Total shareholders' equity			6,321,477			6,972,914
		$	17,449,620		$	21,139,277

Note – Operating EBITDA (excluding investment portfolio income)

			Three Months Ended						Six Months Ended
EBITDA Calculation			Sept 30,						Sept 30,
			2023			2022			2023			2022
Operating Income from Continuing Operations		$	594,792		$	452,731		$	646,983		$	836,541
Add:
Depreciation/Amortization Expense		$	78,522		$	68,530		$	151,283		$	131,200
EBITDA (Excluding Investment Portfolio Income)		$	673,314		$	521,261		$	798,266		$	967,741

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.

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The Marketing Alliance Stock at the time of publication of the news with a fall of -2,03 % to 1,813USD on Nasdaq OTC stock exchange (21. Dezember 2023, 02:10 Uhr).