MKTG INC Reports 41% Increase in Operating Income for Its First Quarter Ended June 30, 2012

NEW YORK, Aug. 9, 2012 /PRNewswire/ -- MKTG INC (OTC BB: CMKG), a full service marketing agency, today announced its operating results for its first quarter ended June 30, 2012.

Operating Results - First Quarter, Fiscal 2013

For its first quarter ended June 30, 2012, Operating Revenue increased $1.7 million or 18% to $11.0 million, compared to $9.3 million for the quarter ended June 30, 2011. Compensation and general and administrative expenses were $9.5 million for the quarter, compared to $8.2 million for the quarter ended June 30, 2011. Operating income for the quarter increased 41% to $1,514,000, compared to $1,074,000 for the first quarter of the previous year.  Modified EBITDA for the quarter was $1,865,000, compared to $1,418,000 for the quarter ended June 30, 2011.

"This marks our fifth consecutive quarter generating more than $1,000,000 of operating income and the third quarter in a row in which we show over 40% growth in operating income over comparable quarters," said Paul Trager, Chief Financial Officer.  Mr. Trager continued, "As a result our balance sheet continues to strengthen, evidenced by a $1.4 million increase in cash during the quarter and a 75% increase in working capital."

"The Q1 performance is a great start to Fiscal 2013 and begins to validate our recent investments in new business and geographic expansion initiatives. A majority of our Operating Revenue growth this quarter came from these two sources," said Charlie Horsey, President and Chief Executive Officer.  Mr. Horsey concluded, "As we build on the momentum generated this quarter, we will continue to invest in these and other areas that support and expand our long-term growth initiatives while simultaneously protecting our margins."

Fair Value Adjustment to Compound Embedded Derivatives

The Company's income statement for the current quarter includes an accounting adjustment of $612,000, shown below the operating income line.  This is a non-cash fair value adjustment to compound embedded derivatives generated from the Company's December 2009 financing.  The amount of this adjustment 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.

 

 

 

 

 

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