FitLife Brands Announces First Quarter 2021 Results

Rhea-AI Summary

FitLife Brands reported its Q1 2021 results, showing total revenue of $6.2 million, remaining flat year-over-year. Online sales surged by 89.2% to $1.6 million, making up 26% of total revenue, up from 14% last year. Gross profit rose 12.4% to $3.1 million, with gross margin improving to 50%. Net income increased 17.9% to $1.7 million, with earnings per share at $1.56 (basic) and $1.43 (diluted). The company ended the quarter with $6.6 million in cash and no debt, despite challenges in the global supply chain.

Positive

• Online sales up 89.2% to $1.6 million, accounting for 26% of total revenue.
• Gross profit increased 12.4% to $3.1 million.
• Gross margin improved to 50%, up from 44.5% year-over-year.
• Net income rose 17.9% to $1.7 million.
• Adjusted EBITDA increased 23.6% to $1.7 million.
• Ended quarter with $6.6 million in cash and no debt.

Negative

• Total revenue flat year-over-year at $6.2 million.
• Global supply chain challenges have increased production lead times significantly.

Omaha, NE, May 14, 2021 (GLOBE NEWSWIRE) -- FitLife Brands, Inc. (“FitLife” or the “Company”) (OTCQX: FTLF), a provider of innovative and proprietary nutritional supplements for health-conscious consumers marketed under the brand names NDS Nutrition, PMD, SirenLabs, Nutrology, CoreActive, Metis Nutrition, iSatori, Energize, and BioGenetic Laboratories, today announced results for the three months ended March 31, 2021.

Highlights for the quarter ended March 31, 2021 include:

• Total revenue was roughly flat at $6.2 million.
• Online sales increased 89.2% to $1.6 million, representing 26% of total revenue compared to 14% in the same quarter last year.
• Gross profit improved 12.4% to $3.1 million compared to $2.7 million last year.
• Gross margin increased to 50.0% compared to 44.5% in the same quarter last year.
• Net income increased 17.9% to $1.7 million compared to $1.4 million last year.
• Net income per basic share increased 14.7% to $1.56, and net income per diluted share increased 12.6% to $1.43.
• Adjusted EBITDA increased 23.6% to $1.7 million compared to $1.4 million last year.
• The Company ended the quarter with $6.6 million of cash and no borrowings on its line of credit.

For the first quarter ended March 31, 2021, total revenue was approximately flat at $6.2 million. As previously mentioned, the Company believes that a portion of the wholesale revenue that historically would have been received during the first quarter shifted into the fourth quarter of 2020. For the first quarter of 2021, online sales increased 89.2% to $1.6 million and accounted for approximately 26% of the Company’s total revenue compared to 14% during the first quarter of 2020.

Gross profit improved to $3.1 million, an increase of 12.4% from the first quarter of 2020. Gross margin improved from 44.5% to 50.0% over the same time period. The improvement in gross margin was driven primarily by higher online sales volumes.  

The Company generated net income of $1.7 million compared to $1.4 million during the first quarter of 2020. Basic earnings per share was $1.56 and diluted earnings per share was $1.43, compared to $1.36 and $1.27, respectively, during the same quarter last year.

Subsequent to releasing a substantial portion of the reserve against its deferred tax assets at the end of 2020, the Company now reports a provision for income taxes, which is largely non-cash. In an effort to provide a more cash-based earnings metric, and to allow better comparability to prior periods, the Company has begun reporting adjusted EBITDA, a non-GAAP measure. Please see the non-GAAP financial measures table below for a reconciliation of net income to adjusted EBITDA. For the quarter ended March 31, 2021, adjusted EBITDA was $1.7 million, an increase of 23.6% compared to $1.4 million in the same period last year.

Dayton Judd, the Company’s Chairman and CEO, commented, “I am pleased that we continue to experience organic growth in both our wholesale and our online businesses.   And as our online revenue becomes a larger portion of our business, we benefit from higher margins, as evidenced by the 50% gross margins we achieved during the first quarter.”  

Mr. Judd continued, “Over the past several months, the global supply chain for nutritional supplement ingredients and packaging has become increasingly challenging. Production lead times for many of our products have increased from two months to as much as six months in some cases. In an effort to ensure our products stay in stock, we are placing orders much earlier than usual and carrying larger quantities of inventory. We will continue to adapt our operations as necessary to compete effectively in the current environment.”

About FitLife Brands
FitLife Brands is a developer and marketer of innovative and proprietary nutritional supplements for health-conscious consumers. FitLife markets over 130 different dietary supplements to promote sports nutrition, improved performance, weight loss and general health primarily through domestic and international GNC franchise locations as well as through more than 17,000 additional domestic retail locations and, increasingly, online. FitLife is headquartered in Omaha, Nebraska. For more information please visit our website at www.fitlifebrands.com.

Forward-Looking Statements
Statements in this release that are forward looking involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance that may be suggested in this news release. Such factors may include, but are not limited to, the ability to of the Company to continue to grow revenue, and the Company's ability to continue to achieve positive cash flow given the Company's existing and anticipated operating and other costs. Many of these risks and uncertainties are beyond the Company's control. Reference is made to the discussion of risk factors detailed in the Company's filings with the Securities and Exchange Commission including its reports on Form 10-K and 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

Non-GAAP Financial Measures 
  
The financial presentation below contains certain financial measures defined as “non-GAAP financial measures” by the SEC, including non-GAAP EBITDA and adjusted non-GAAP EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in this Annual Report in accordance with GAAP. 
  
As presented below, non-GAAP EBITDA excludes interest, income taxes, and depreciation and amortization. Adjusted non-GAAP EBITDA excludes, in addition to interest, taxes, depreciation and amortization, equity-based compensation and non-recurring gains or losses. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expense and other items that may not be indicative of its core operating results and business outlook. The Company believes that the inclusion of non-GAAP measures in the financial presentation below allows investors to compare the Company’s financial results with the Company’s historical financial results and is an important measure of the Company’s comparative financial performance. 

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS:		March 31,				December 31,
			2021				2020
		(Unaudited)
CURRENT ASSETS
Cash		$	6,625,000			$	6,336,000
Accounts receivable, net of allowance of doubtful accounts of $60,000 and $51,000, respectively			2,372,000				2,044,000
Inventories, net of allowance for obsolescence of $25,000 and $56,000, respectively			4,738,000				3,401,000
Income tax receivable			40,000				40,000
Prepaid expenses and other current assets			22,000				52,000
Total current assets			13,797,000				11,873,000
Property and equipment, net			90,000				98,000
Right of use asset, net of amortization of $285,000 and $272,000, respectively			195,000				208,000
Goodwill			225,000				225,000
Deferred tax asset			4,042,000				4,370,000
TOTAL ASSETS		$	18,349,000			$	16,774,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable		$	3,410,000			$	3,246,000
Accrued expense and other liabilities			590,000				498,000
Product returns			304,000				335,000
Lease liability - current portion			52,000				50,000
Total current liabilities			4,356,000				4,129,000
Long-term lease liability, net of current portion			144,000				158,000
PPP loan			-				453,000
TOTAL LIABILITIES			4,500,000				4,740,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding
as of March 31, 2021 and December 31, 2020
Common stock, $.01 par value, 15,000,000 shares authorized; 1,090,818 and 1,060,818
issued and outstanding as of March 31, 2021 and December 31, 2020, respectively			12,000				12,000
Treasury stock, 210,631 and 210,631 shares, respectively			(1,790,000	)			(1,790,000	)
Additional paid-in capital			32,335,000				32,204,000
Accumulated deficit			(16,708,000	)			(18,392,000	)
TOTAL STOCKHOLDERS' EQUITY			13,849,000				12,034,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	18,349,000			$	16,774,000
The accompanying notes are an integral part of these condensed consolidated financial statements

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(Unaudited)
		Three months ended
		March 31,
			2021				2020
Revenue		$	6,158,000			$	6,152,000
Cost of goods sold			3,081,000				3,415,000
Gross profit			3,077,000				2,737,000
OPERATING EXPENSES:
General and administrative			857,000				733,000
Selling and marketing			669,000				671,000
Depreciation and amortization			8,000				12,000
Total operating expenses			1,534,000				1,416,000
OPERATING INCOME			1,543,000				1,321,000
OTHER EXPENSES (INCOME)
Interest expense (income)			(6,000	)			4,000
Gain on settlement			-				(70,000	)
Gain on debt forgiveness			(453,000	)			-
Total other expenses (income)			(459,000	)			(66,000	)
PRE-TAX NET INCOME			2,002,000				1,387,000
PROVISION (BENEFIT) FOR INCOME TAXES			318,000				(41,000	)
NET INCOME			1,684,000				1,428,000
NET INCOME PER SHARE
Basic		$	1.56			$	1.36
Diluted		$	1.43			$	1.27
Basic weighted average common shares			1,076,651				1,051,752
Diluted weighted average common shares			1,174,666				1,126,303
The accompanying notes are an integral part of these condensed consolidated financial statements

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(Unaudited)
		Three months ended March 31,
			2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	1,684,000			$	1,428,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			8,000				12,000
Right of use asset amortization			14,000				16,000
Allowance for doubtful accounts			9,000				6,000
Allowance for inventory obsolescence			(31,000	)			-
Fair value of stock and options issued for services			131,000				28,000
Forgiveness of PPP loan			(453,000	)			-
Changes in operating assets and liabilities:
Accounts receivable - trade			(337,000	)			(2,332,000	)
Inventories			(1,307,000	)			(25,000	)
Deferred tax asset			328,000				-
Prepaid expense			30,000				46,000
Accounts payable			164,000				737,000
Lease liability			(12,000	)			(14,000	)
Accrued interest			-				4,000
Accrued liabilities and other liabilities			92,000				75,000
Product returns			(31,000	)			20,000
Net cash provided by operating activities			289,000				1,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities			-				-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options			-				71,000
Proceeds from line of credit			-				2,500,000
Repurchases of common stock			-				(171,000	)
Net cash provided by (used in) financing activities			-				2,400,000
CHANGE IN CASH			289,000				2,401,000
CASH, BEGINNING OF PERIOD			6,336,000				265,000
CASH, END OF PERIOD		$	6,625,000			$	2,666,000
Supplemental disclosure operating activities
Cash paid for interest		$	-			$	-
Cash paid (refunded) for income taxes		$	(10,000	)		$	-
The accompanying notes are an integral part of these condensed consolidated financial statements

FITLIFE BRANDS, INC.
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(Unaudited)
		For the three months ended
		March 31,
			2021				2020
Net income		$	1,684,000			$	1,428,000
Interest expense (income)			(6,000	)			4,000
Provision for income taxes			318,000				(41,000	)
Depreciation and amortization			8,000				12,000
EBITDA			2,004,000				1,403,000
Non-cash and non-recurring adjustments
Stock compensation expense			131,000				28,000
Non-recurring losses (gains)			(453,000	)			(70,000	)
Adjusted EBITDA		$	1,682,000			$	1,361,000

 

FAQ

What were the Q1 2021 results for FitLife Brands (FTLF)?

FitLife Brands reported total revenue of $6.2 million for Q1 2021, with online sales increasing 89.2% to $1.6 million.

How did FitLife Brands' net income change in Q1 2021?

Net income increased by 17.9% to $1.7 million in Q1 2021.

What is the gross margin reported by FitLife Brands for Q1 2021?

FitLife Brands reported a gross margin of 50% for Q1 2021, an improvement from 44.5% the previous year.

What challenges did FitLife Brands face in Q1 2021?

The company faced difficulties in the global supply chain, with production lead times increasing from two months to as much as six months.

What is the adjusted EBITDA for FitLife Brands in Q1 2021?

Adjusted EBITDA for Q1 2021 was $1.7 million, an increase of 23.6% compared to the same period last year.