MKTG INC Reports 27% Increase in Operating Income for Its Third Quarter Ended December 31, 2012
NEW YORK, Feb. 12, 2013 /PRNewswire/ — MKTG INC (OTC Bulletin Board: CMKG), a full service marketing agency, today announced its operating results for its third quarter ended December 31, 2012.
Operating Results – Third Quarter, Fiscal 2013
For its third quarter ended December 31, 2012, Operating Revenue increased $1.1 million or 12% to $10.6 million, compared to $9.5 million for the quarter ended December 31, 2011. Compensation and general and administrative expenses were $9.3 million for the quarter, compared to $8.5 million for the quarter ended December 31, 2011. Operating income for the quarter increased 27% to $1,286,000, compared to $1,015,000 for the third quarter of the previous year. Modified EBITDA for the quarter was $1,643,000, compared to $1,365,000 for the quarter ended December 31, 2011.
Operating Results – Nine Months Ended December 31, 2012
For the nine months ended December 31, 2012, Operating Revenue increased $4.3 million or 15% to $32.3 million, compared to $28.0 million for the nine months ended December 31, 2011. Compensation and general and administrative expenses were $28.3 million for the nine-month period, compared to $24.8 million for the nine months ended December 31, 2011. Operating income for the period increased 25% to $3,962,000, compared to $3,181,000 for the nine months ended December 31, 2011. Modified EBITDA for the period was $5.0 million, compared to $4.2 million for the nine months ended December 31, 2011.
“We intend to continue our strategy of preserving and growing our core client base. Our recent entry into multi-year agreements with three of our largest clients confirms our successful execution of this strategy. Our long-term plan also includes broadening our geographical and service offerings, and investing in new business efforts and other growth initiatives that build off of and accelerate expansion,” said Charlie Horsey, Chairman and Chief Executive Officer. Mr. Horsey concluded. “Our new business pipeline has never been stronger. The number of countries we are executing programs in is increasing, and the breadth of our services we offer to our clients is expanding.”
“This is our fifth consecutive quarter of year-over-year operating income growth. In addition, we achieved double digit percentage growth in Operating Revenue for both the three and nine-month periods as compared to a year ago, along with increasing operating income margins,” said Paul Trager, Chief Financial Officer. Mr. Trager continued, “Augmented by this financial performance, our financial condition has strengthened significantly, evidenced by the $6.9 million in working capital and $11.3 million of cash on hand at December 31, 2012, along with the renewal of our credit facility in November.”
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 nine months ended December 31, 2012, these adjustments amounted to $755,000 and ($53,000), respectively. For the three and nine months ended December 31, 2011, these adjustments totaled $588,000 and $1,018,000, 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 record 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 Nine Months Ended December 31, 2012 and 2011 (Unaudited) Three Months Ended Nine Months Ended December 31, December 31, ------------ ------------ 2012 2011 2012 2011 ---- ---- ---- ---- Sales $32,453,829 $36,177,898 $100,888,715 $95,914,022 Operating revenue $10,633,351 $9,503,941 $32,287,073 $27,975,836 Operating income $1,285,447 $1,014,582 $3,962,265 $3,180,557 Income before provision for $2,040,578 $1,562,474 $3,909,401 $3,964,944 income taxes Provision for income taxes $504,000 $60,000 $1,543,000 $150,000 Net income $1,536,578 $1,502,474 $2,366,401 $3,814,944 Earnings per share: Basic $0.19 $0.18 $0.29 $0.47 Diluted $0.09 $0.09 $0.15 $0.24
MKTG INC Condensed Consolidated Balance Sheets December 31, 2012 and March 31, 2012 December 31, March 31, 2012 2012 (Unaudited) ---------- Total assets $37,849,614 $38,233,217 =========== =========== Total liabilities $23,025,723 $26,110,262 =========== =========== Preferred stock $2,991,422 $2,569,347 ========== ========== Total stockholders' equity $11,832,469 $9,553,608 =========== ==========
MKTG INC Operating Revenue Schedule For The Three and Nine Months Ended December 31, 2012 and 2011 (Unaudited) Three Months Ended Nine Months Ended December 31, December 31, ------------ ------------ 2012 2011 2012 2011 ---- ---- ---- ---- Sales $32,453,829 $36,177,898 $100,888,715 $95,914,022 Reimbursable program 5,920,169 5,876,567 17,945,614 18,377,515 costs and expenses Outside production and 15,900,309 20,797,390 50,656,028 49,560,671 other program expenses Operating Revenue $10,633,351 $9,503,941 $32,287,073 $27,975,836
MKTG INC Modified EBITDA Schedule For The Three and Nine Months Ended December 31, 2012 and 2011 (Unaudited) Three Months Ended Nine Months Ended December 31, December 31, ------------ ------------ 2012 2011 2012 2011 ---- ---- ---- ---- Operating income $1,285,447 $1,014,582 $3,962,265 $3,180,557 Depreciation and amortization 246,620 235,451 730,526 713,021 Share based compensation 110,855 114,864 336,584 331,809 expense Modified EBITDA $1,642,922 $1,364,897 $5,029,375 $4,225,387
SOURCE MKTG INC