MKTG INC Reports $1.5 Million in Operating Income for Its Second Quarter Ended September 30, 2012 Leading to a 23% Increase of Operating Income for the First Six Months of the Year
NEW YORK, Nov. 13, 2012 /PRNewswire/ — MKTG INC (OTC BB: CMKG), a full service marketing agency, today announced its operating results for its second quarter ended September 30, 2012.
Operating Results – Second Quarter, Fiscal 2013
For its second quarter ended September 30, 2012, Operating Revenue increased $1.5 million or 16% to $10.6 million, compared to $9.1 million for the quarter ended September 30, 2011. Compensation and general and administrative expenses were $9.5 million for the quarter, compared to $8.1 million for the quarter ended September 30, 2011. Operating income for the quarter increased 7% to $1,163,000, compared to $1,092,000 for the second quarter of the previous year. Modified EBITDA for the quarter was $1,521,000, compared to $1,443,000 for the quarter ended September 30, 2011.
Operating Results – Six Months Ended September 30, 2012
For the six months ended September 30, 2012, Operating Revenue increased $3.2 million or 17% to $21.7 million, compared to $18.5 million for the six months ended September 30, 2011. Compensation and general and administrative expenses were $19.0 million for the six-month period, compared to $16.3 million for the six months ended September 30, 2011. Operating income for the period increased 24% to $2,677,000, compared to $2,166,000 for the six months ended September 30, 2011. Modified EBITDA for the period was $3.4 million, compared to $2.9 million for the six months ended September 30, 2011.
“We are very pleased with our operating results highlighted by record breaking six-month Operating Revenue, the highest level in Company history,” said Charlie Horsey, Chairman and Chief Executive Officer. Mr. Horsey concluded, “Our recent expansion into London significantly exceeded expectations, which validates our strategy and bolsters our confidence as we continue to identify, evaluate and invest in areas that maintain and drive our business”
“We continue to experience strong profitability with sales, operating revenue and operating income for the three and six-month periods all increasing versus a year ago,” said Paul Trager, Chief Financial Officer. Mr. Trager continued, “Our working capital increased to $5 million and together with our credit facility provides us the liquidity and flexibility required to take advantage of business opportunities.”
Fair Value Adjustment to Compound Embedded Derivatives
The Company’s income statements for the periods include accounting adjustments shown below the operating income line. These are non-cash fair value adjustments to compound embedded derivatives generated from the Company’s December 2009 financing. For the three and six months ended September 30, 2012, these adjustments amounted to ($197,000) and ($809,000), respectively. For the three and six months ended September 30, 2011, these adjustments totaled $272,000 and $430,000, respectively. The amount of these adjustments is driven by a number of factors, most importantly, by the value of the Company’s stock. As its stock price fluctuates, the Company is required to book adjustments, with increases in stock price reducing net income, and declines in stock price increasing net income. Consequently, the Company believes it is most appropriate to focus on its operating income as the basis for assessing operating performance.
Operating Revenue and Modified EBITDA
The Company believes Operating Revenue and Modified EBITDA are key performance indicators. The Company defines Operating Revenue as sales less reimbursable program costs and expenses and outside production and other program expenses. Operating Revenue is the net amount derived from sales to customers that management believes is available to fund compensation, general and administrative expenses and capital expenditures. The Company defines Modified EBITDA as income before interest, income taxes, depreciation and amortization plus other non-cash expenses. The Company uses Modified EBITDA as a supplemental measure to evaluate operational performance. Operating Revenue and Modified EBITDA are Non-GAAP financial measures disclosed by management to provide additional information to investors in order to provide them with alternative methods for assessing the Company’s financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP and may be different from or inconsistent with Non-GAAP financial measures used by other companies. Reconciliations of Operating Revenue to sales and Modified EBITDA to operating income are provided at the end of this press release.
About MKTG INC
MKTG INC is a full service marketing agency headquartered in New York with full service offices in San Francisco, Los Angeles, Chicago, Cincinnati and London, England. The Company currently serves a variety of the world’s most recognizable brands. Its services include experiential marketing, digital marketing, retail promotions and strategic research and planning. The firm’s programs help its clients profitably connect with consumers and create networks of brand advocates to generate brand awareness and higher sales for its customers. For more information, please visit www.mktg.com.
This press release includes statements which constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. These statements are based on management’s current expectations and assumptions and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements. Actual results may vary materially from those expressed or implied by the statements herein. Factors that could cause actual results to differ materially from the Company’s expectations are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012 under “Risk Factors,” and include the risk that projected business opportunities will fail to materialize or will be delayed. The Form 10-K may be obtained by visiting the Company’s website or by accessing the database maintained by the Securities and Exchange Commission at http://www.sec.gov.
MKTG INC Condensed Consolidated Statements of Operations For The Three and Six Months Ended September 30, 2012 and 2011 (Unaudited) Three Months Ended Six Months Ended September 30, September 30, ------------- ------------- 2012 2011 2012 2011 ---- ---- ---- ---- Sales $32,998,359 $28,407,439 $68,434,886 $59,736,124 Operating revenue $10,613,058 $9,143,493 $21,653,722 $18,471,895 Operating income $1,162,804 $1,091,746 $2,676,818 $2,165,975 Income before provision for income taxes $966,255 $1,266,571 $1,868,823 $2,402,470 Provision for income taxes $393,000 $45,000 $1,039,000 $90,000 Net income $573,255 $1,221,571 $829,823 $2,312,470 Earnings per share: Basic $0.07 $0.15 $0.10 $0.28 Diluted $0.04 $0.08 $0.05 $0.15
MKTG INC Condensed Consolidated Balance Sheets September 30, 2012 and March 31, 2012 September 30, 2012 March 31, 2012 (Unaudited) ---------- Total assets $39,345,514 $38,233,217 Total liabilities $26,160,248 $26,110,262 Preferred stock $2,845,669 $2,569,347 Total stockholders' equity $10,339,597 $9,553,608
MKTG INC Operating Revenue Schedule For The Three and Six Months Ended September 30, 2012 and 2011 (Unaudited) Three Months Ended Six Months Ended September 30, September 30, ------------- ------------- 2012 2011 2012 2011 ---- ---- ---- ---- Sales $32,998,359 $28,407,439 $68,434,886 $59,736,124 Reimbursable program costs and expenses 5,748,872 5,353,501 12,025,445 12,500,948 Outside production and other program expenses 16,636,429 13,910,445 34,755,719 28,763,281 Operating Revenue $10,613,058 $9,143,493 $21,653,722 $18,471,895
MKTG INC Modified EBITDA Schedule For The Three and Six Months Ended September 30, 2012 and 2011 (Unaudited) Three Months Ended Six Months Ended September 30, September 30, ------------- ------------- 2012 2011 2012 2011 ---- ---- ---- ---- Operating income $1,162,804 $1,091,746 $2,676,818 $2,165,975 Depreciation and amortization 245,467 236,158 483,906 477,570 Share based compensation expense 113,094 114,864 225,729 216,945 Modified EBITDA $1,521,365 $1,442,768 $3,386,453 $2,860,490
SOURCE MKTG INC