- Insurance Distribution Business: "We continue to work with our current carriers and last quarter announced the addition of two new carrier relationships with John Hancock and One America. While we anticipated the decrease in our new insurance sales as our distributors adjust to new product offerings, the process is often drawn out as carriers come off line and new carriers' products are added to our portfolio. This is further complicated by the timing of revenues that become uneven, as a carrier going offline may have paid us monthly whereas a new carrier may pay annually. Once again, we always encourage investors to examine our results in four-quarter periods rather than 90-day increments. We commend our network of distributors as they adapt to changes and become acclimated to these new carriers and life insurance product offerings in a dynamic regulatory environment affecting products and selling practices. We remain focused on offering our distributors as much flexibility as possible by supporting a wide variety of products from a diverse network of carriers, and believe that in doing so we are able to help them remain competitive in today's environment.
- Earth Moving (Land Improvement - Construction): "During the quarter, we continued to pursue additional projects not dependent on agriculture, and therefore not impacted by cyclically low crop prices, which have resulted in reduced revenues for farmers to fund our land improvements for them. In previous years, we were also able to secure projects supported by products whose prices closely followed energy prices as fuel complements and substitutes such as ethanol and bio-fuel products. As energy and fuel prices were low this summer, these projects did not materialize or were deferred into the future as they became less economical to complete. As a result, our equipment often sat idle and we were unable to generate revenue. We remained focused on price discipline and using our assets efficiently, which this past quarter meant not taking work at near marginal cost. We continue to believe that these deferred projects were delayed - not cancelled, and we will undertake the projects that best fit our capabilities in future quarters, even if the timing of these projects is different than previous years, such as winter work.
- Family Entertainment: "We were pleased to report an increase in revenues in this business. The nine facilities acquired, starting in September 2012, have helped to diversify our revenues and offset challenges in the other portions of our operations. We continued to reinvest in this portion of our business and over the past several months, have shifted our focus towards improvements at our existing locations. In an effort to drive revenue and generate higher profits at these facilities, we have established cost savings initiatives that include inventory management and increased control of labor costs. We are focused on our intent to more efficiently operate our family entertainment business and over time for these facilities to provide more efficient operational performance due to increasing economies of scale for the Company by leveraging management across several locations."
- Total revenues for the three-month period ended September 30, 2016, were $6,240,833, as compared to $6,949,261 in the prior year quarter. The decrease was attributable to a decline in insurance and construction revenue which was partially offset by an increase in revenue for the family entertainment segment of the Company. Revenues were also affected in the insurance distribution business by downward adjustments to our deferred first year commission estimates caused by Genworth ceasing new life insurance and annuity product sales.
- Net operating revenue (gross profit) for the quarter was $1,918,772, compared to net operating revenue of $1,944,925 in the prior-year fiscal period. Net operating revenue decreased for the quarter largely as a result of decreases in insurance distribution and construction revenue for the three-month period.
- Operating expenses increased by $347,421 for the fiscal 2017 second quarter as compared to the prior year, due in part to increases in rent and occupancy expense with the addition of new family entertainment centers as well as increases in depreciation and amortization expenses relating to the Company's acquisition of four family entertainment centers and starting another one, for five total new stores, since September, 2015.
- Operating income (loss) was ($374,781), compared to operating income (loss) of ($1,207) reported in the prior-year period. The decrease in operating income for the fiscal 2017 second quarter was primarily attributable to the aforementioned increases in operating expenses and decreases in total revenue. Operating income was also impacted due to an increase in general and administrative expenses primarily related to the addition of four family entertainment facilities and decreases in commission and construction revenue reported for the quarter.
- Operating EBITDA (excluding investment portfolio income) for the quarter was ($128,022) loss compared to $205,711 in the prior-year period. A note reconciling operating EBITDA to operating income can be found at the end of this release.
- Investment gain, net (from investment portfolio) for the second quarter ended September 30, 2016 was $316,853, as compared to a net investment loss, net of ($649,086) loss, for the same quarter of the previous fiscal year.
- Net loss for the fiscal 2017 second quarter was ($59,682) loss, or ($0.01) per share, as compared to a net loss of ($423,097), or ($0.06) per share, in the prior year period. The increase in net income was largely due to investment gains and was offset by decreases in commission and construction revenue and an increase in operating expenses for the three-month period.
- Total revenues for the six months ended September 30, 2016 were $12,512,502, compared to $13,694,415 for the prior-year period. Increases in family entertainment revenue helped to offset some of the decreases in commission and construction revenue for the six-month period.
- Net operating revenue (gross profit) was $4,053,235, which compares to net operating revenue of $3,552,107 in the prior-year fiscal period.
- Operating expenses increased in the first six months of this fiscal year compared to the same period last year due, in part, to increases in operating expenses such as compensation, rent and occupancy, amortization and depreciation expense relating to the Company's addition of five family entertainment centers since September, 2015.
- The Company reported an operating loss of ($532,160) for the six months ended September 30, 2016, compared to an operating loss of ($77,467) for the prior-year period due to the aforementioned factors discussed above.
- Operating EBITDA (excluding investment revenue) for the six months was $5,859 versus $322,724 in the prior-year period. A note reconciling Operating EBITDA to Operating Income can be found at the end of this release.
- Net income (loss) for the six months ended September 30, 2016 was ($40,684), or ($0.01) per share, an increase of $442,832 compared to ($483,516), or ($0.07) per share, for the prior-year period. The year over year increase was the result of investment gains offset by decreases in commission and construction revenue and higher general and administrative expenses relating to the growth of the Company family entertainment business. The net loss for the six months ended September 30, 2015, was the result of investment losses and an operating loss of ($77,467).
- TMA's balance sheet at September 30, 2016 reflected cash and cash equivalents of approximately $5.3 million, working capital of $11.1 million, and shareholders' equity of $11.4 million; compared to $5.5 million, $10.5 million, and $11.4 million, respectively, at March 31, 2016.
|Consolidated Statement of Operations|
|Quarter Ended||Year to Date|
|3 Months Ended||6 Months Ended|
|Family entertainment revenue||1,345,435||843,773||2,622,863||1,560,274|
|Other operating income||$||60,058||$||24,950||$||102,058||$||29,850|
|Distributor Related Expenses|
|Bonus & commissions||3,512,182||3,998,331||6,828,242||8,218,113|
|Processing & distribution||328,532||381,367||688,270||819,410|
|Cost of Construction|
|Direct and Indirect costs of construction||101,037||307,706||179,331||502,623|
|Family entertainment cost of sales||340,493||226,629||636,684||421,715|
|Net Operating Revenue||1,918,772||1,944,925||4,053,235||3,552,107|
|Other Income (Expense)|
|Investment gain, (loss) net||316,853||(649,086||)||592,173||(643,602||)|
|Swap settlement (expense) income||(13,547||)||9,318||(28,319||)||6,098|
|Interest rate swap, fair value adjustment||31,055||(174||)||9,543||1,806|
|Income (Loss) Before Provision for Income Tax||(91,205||)||(681,244||)||(62,320||)||(784,701||)|
|Income tax (benefit) expense||(31,523||)||(258,147||)||(21,636||)||(301,185||)|
|Net Income (loss)||$||(59,682||)||$||(423,097||)||$||(40,684||)||$||(483,516||)|
|Average Shares Outstanding||7,028,233||7,028,233||7,028,233||7,028,233|
|Operating Income per Share||$||(0.05||)||$||0.00||$||(0.08||)||$||(0.01||)|
|Net Income per Share||$||(0.01||)||$||(0.06||)||$||(0.01||)||$||(0.07||)|
|Consolidated Selected Balance Sheet Items|
|Cash & Equivalents||$||5,282,539||$||5,535,256|
|Total Current Assets||20,850,528||21,050,551|
|Property and Equipment, Net||2,807,513||3,088,588|
|Intangible Assets, net||1,399,655||1,502,004|
|Total Non-Current Assets||5,137,112||5,569,375|
|Liabilities & Stockholders' Equity|
|Total Current Liabilities||$||9,765,376||$||10,561,554|
|Long Term Liabilities||4,847,962||4,643,386|
|Liabilities & Stockholders' Equity||$||25,987,640||$||26,619,926|
Fiscal year 2016 six months operating EBITDA (excluding investment portfolio income) was determined by adding fiscal year 2016 six month operating income (loss) of ($532,160) and depreciation and amortization expense of $538,019 for a sum of $5,859. Fiscal year 2015 six months operating EBITDA (excluding investment portfolio income) was determined by adding fiscal year 2015 six month operating loss of ($77,467) and depreciation and amortization expense of $400,191 for a sum of $322,724. 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.