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 2012 third quarter and nine months ended December 31, 2011.

Timothy M. Klusas, TMA’s President, stated, “We are very pleased with our growth during the period. As a result of more of our distributors utilizing more of the Company’s services, we saw double digit percentage increases in revenues, operating income, and net income. We also benefitted from the results at the earth-moving and excavating business we acquired last year. I’d like to focus on a few items that affected the quarter’s results:”

• Insurance Distribution Business: “We remain focused on offering our distributors a wide variety of different products from a diverse network of carriers. We were pleased to achieve a 9% increase in revenue for the period. As we mentioned in previous quarters, the timing of expenses paid to distributors and the receipt of corresponding revenues from our suppliers, or carriers, can occur in different calendar quarters or periods. Some of the factors that affect timing moderated with the calendar year-end. This is frequently due to annual schedules (revenue arrangements) with our carriers and more frequent compensation schedules (expenses) with our distributors. We continued to seek new initiatives to assist our distributors in their growth, which in doing so increases the cost-efficiency and leverage of TMA’s infrastructure. During this quarter we introduced the newest life insurance carrier in our network, Savings Bank Life Insurance, or SBLI.”
• Earth moving and excavating: “As we noted in previous quarters, the last three months of the calendar year are seasonally the strongest period for this business, as it undertakes a large portion of its agricultural work between the period of harvest and prior to winter. The Company also benefitted from an extended season due to warmer weather. Our acquisition of the assets of the excavating company was a result of our plan to allocate and deploy capital at attractive rates of return for shareholders.”
• Balance Sheet and Dividend: “Due to our cash position and balance sheet, the Board of Directors has elected to provide shareholders with a cash dividend of $0.38 per share dividend for shareholders of record on December 15, 2011, which was paid on January 31, 2012. This was the Company’s latest dividend payment, which was made at an increase of 22.9% over the 2010 cash dividend of $0.34 per share (before giving effect to the 10% stock split July 15, 2011). At an increase in dividends of $0.04 per share and a 10% stock split has lead to a total cash dividend increase of approximately 23% for TMA’s shareholders compared to prior year cash dividends.

Fiscal 2012 Third Quarter Financial Review

• Total revenues for the three-month period ended December 31, 2011, were $7,825,872, an increase of 27% from $6,179,063 for the prior-year period. The increase was partially due to an additional $1,069,033 received in construction revenue, as well as a 9% increase in insurance distribution revenue over the prior-year period.
• Operating income increased to $1,720,924, or 22% of revenues, from operating income of $916,431, or 15% of revenues, for the prior-year period, as mentioned above, in part due to timing and seasonality of agricultural construction projects.
• Investment Income (net) during the quarter was $281,980 compared to $393,933 in the prior year period.
• Net income for the fiscal 2012 third quarter increased to $1,279,837, or $0.61 per share, from net income of $827,776, or $0.40 per share, in the fiscal 2011 third quarter, due primarily to an increase in operating income.

Fiscal 2012 Nine Months Financial Review

• Total revenues for the nine months ended December 31, 2011, increased 22.7% to $19,588,467, from $15,960,180 in revenues for the prior-year nine-month period.
• Operating income increased to $2,340,275, from $2,001,158 for the prior-year nine-month period.
• Investment Income/loss (net) for the nine-month period of the fiscal 2012 year was a loss of $357,290 compared to a gain of $511,457 in the prior year period primarily due to a generally less favorable time for investments.
• Net income for the first nine months of fiscal 2012 was $1,297,869 or $0.62 per share, compared to $1,580,353, or $0.76 per share, in the prior-year period.

Balance Sheet Information

TMA’s balance sheet at December 31, 2011 reflected cash and cash equivalents of $4.6 million, working capital of $8.0 million, and shareholders’ equity of $9.7 million; compared to $3.5 million, $6.9 million, and $7.6 million.

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.

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   9 Months Ended 12/31/11 12/31/10 12/31/11 12/31/10   Commission revenue $ 6,756,839 $ 6,179,063 $ 17,963,576 $ 15,960,180 Construction revenue   1,069,033     -     1,624,891     -   Revenues $ 7,825,872   $ 6,179,063   $ 19,588,467   $ 15,960,180     Distributor Related Expenses Bonus & commissions 4,004,367 4,117,357 11,557,172 9,963,808 Benefits & processing   350,598     318,612     1,461,708     1,570,773   Total   4,354,965     4,435,969     13,018,880     11,534,581     Cost of Construction Direct and Indirect costs of construction   656,371     -     1,267,160     -   Net Operating Revenue 2,814,536 1,743,094 $ 5,302,427 4,425,599 % of Revenue 36 % 28 % 27 % 28 %   Operating Expenses   1,093,612     826,663     2,962,152     2,424,441     Operating Income 1,720,924 916,431 2,340,275 2,001,158 % of Revenue 22 % 15 % 12 % 13 %   Other Income (Expense) Other 19,216 (157 ) 84,964 10,346 Investment (loss) income, net 281,980 393,933 (357,290 ) 511,457 Interest expense   (14,605 )   (3,741 )   (32,075 )   (13,679 )   Income Before Provision for Income Tax 2,007,515 1,306,466 2,035,874 2,509,282   Provision for income taxes   727,678     478,690     738,005     928,929     Net Income $ 1,279,837   $ 827,776   $ 1,297,869   $ 1,580,353     Average Shares Outstanding 2,091,736 2,091,736 2,091,736 2,091,736   Operating Income per Share* $ 0.82 $ 0.44 $ 1.12 $ 0.96 Net Income per Share* $ 0.61 $ 0.40 $ 0.62 $ 0.76  

Note: * - Operating EPS and Net EPS stated after giving effect to the 10% stock split for shareholders of record as of June 15, 2011 and paid July 15, 2011 for all periods. Shares outstanding increased to 2,091,736 from 1,901,578 with this stock split.

    Consolidated Selected Balance Sheet Items As of   Assets 12/31/11 12/31/10 Current Assets Cash & Equivalents $ 4,597,784 $ 3,457,158 Receivables 6,738,181 5,683,203 Investments 3,558,660 3,311,243 Inventory 141,790 - Other   536,750   374,100 Total Current Assets 15,573,165 12,825,704   Property and Equipment, net 1,687,009 174,399   Other Non Current Assets   717,366   585,562   Total Assets $ 17,977,540 $ 13,585,665   Liabilities & Stockholders' Equity   Total Current Liabilities $ 7,561,706 $ 5,935,614   Long Term Liabilities Promissory Note 540,000 - Deferred Taxes 202,000 49,200   Total Liabilities $ 8,303,706 $ 5,984,814   Stockholders' Equity $ 9,673,834 $ 7,600,851   Liabilities & Stockholders' Equity $ 17,977,540 $ 13,585,665  

Note - The asset purchases of the earth-moving and excavating business were initiated in July, 2011, and are expected to be completed in April, 2012. For accounting purposes the entire asset purchase was treated as if it had occurred in July, 2011 to properly reflect assets and liabilities that have been acquired as of July, 2011 or expected to be acquired in April, 2012.