FitLife Brands Announces First Quarter 2024 Results

Rhea-AI Summary

FitLife Brands (NASDAQ: FTLF) reported a strong Q1 2024 with a 54% YoY increase in total revenue to $16.5 million. Online sales surged by 116% to $10.8 million, composing 65% of total revenue. Gross margin improved to 44.0%, up from 41.1% last year. Net income rose sharply to $2.2 million from $0.2 million. Basic and diluted EPS were $0.47 and $0.43, respectively. Adjusted EBITDA also grew by 62% to $3.6 million. The company ended the quarter with $16.5 million in outstanding term loans and $3.3 million in cash, equating to a net debt of $13.2 million. Despite facing challenges in wholesale revenue and lower-than-expected online growth for legacy FitLife, the company remains optimistic about its future product launches and growth opportunities.

Positive

• Total revenue increased by 54% YoY to $16.5 million.
• Online sales surged 116% YoY to $10.8 million, making up 65% of total revenue.
• Gross margin improved to 44.0% from 41.1% last year.
• Net income rose to $2.2 million from $0.2 million YoY.
• Basic and diluted EPS were $0.47 and $0.43, compared to $0.03 YoY.
• Adjusted EBITDA increased by 62% YoY to $3.6 million.
• The company paid down $2.5 million of its term loan, reducing net debt to $13.2 million.
• MRC's Dr. Tobias brand returned to growth despite a 39% reduction in advertising spend.
• New product launches in 2024, including MusclePharm Combat Sport protein bar, show potential for significant growth.

Negative

• Wholesale revenue remained flat YoY at $5.7 million.
• Legacy FitLife wholesale revenue decreased by 21% YoY.
• Challenges in wholesale channels due to declining foot traffic at brick-and-mortar retail partners.
• Online growth rate for legacy FitLife was lower than anticipated during Q1 2024.

Insights

Financial Analyst

FitLife Brands' first quarter results present a robust financial performance, signaling significant growth and potential sustainability. The key highlight here is the 54% increase in total revenue, emphasizing the company's strong market position. Revenue surges to $16.5 million compared to $10.7 million in the previous year's same period. A noteworthy detail is the 116% increase in online sales, constituting 65% of total revenue, up from 47% last year. This shift aligns with broader industry trends favoring e-commerce, reflecting the company's successful adaptation.

Additionally, the net income's leap to $2.2 million from $0.2 million and the jump in earnings per share to $0.47 (basic) and $0.43 (diluted) from $0.03 signifies effective cost management and operational efficiency. However, the flat wholesale revenue and decline in legacy FitLife wholesale revenue, down 21%, may pose concerns about the wholesale segment's future viability.

With $16.5 million in outstanding term loans and adjusted EBITDA up 62% to $3.6 million, FitLife's financial health appears solid, yet the dependence on online sales heightens vulnerability to market dynamics. Retail investors should monitor the company's ability to maintain this momentum and manage its debt efficiently.

Market Research Analyst

FitLife's performance this quarter underlines the pivotal role of online sales in their revenue model. The threefold increase in online sales, now making up 65% of the company's revenue, highlights the effective use of digital marketing and e-commerce strategies. This trend is indicative of a broader market shift towards online shopping in the nutritional supplements industry, which FitLife is capitalizing on effectively.

The growth of the Dr. Tobias brand, despite a 39% reduction in advertising spend, is particularly impressive. It suggests strong brand loyalty and product efficacy, which could drive sustained growth in the future. However, the decline in legacy FitLife wholesale revenue and slow online growth rate are areas to watch. The company’s reliance on a few strong-performing brands and channels could become a double-edged sword, making it vulnerable to market changes or competitive pressures.

Investors should consider the sustainability of this growth and the potential risks of market shifts. Continuous innovation and diversification in products and sales channels will be key to maintaining its competitive edge.

Omaha, May 14, 2024 (GLOBE NEWSWIRE) -- FitLife Brands, Inc. (“FitLife” or the “Company”) (NASDAQ: FTLF), a provider of innovative and proprietary nutritional supplements and wellness products, today announced financial results for the first quarter ended March 31, 2024.

Highlights for the first quarter ended March 31, 2024 include:

• Total revenue was $16.5 million, an increase of 54% compared to the first quarter of 2023.  
• Online sales were $10.8 million, representing 65% of total revenue and an increase of 116% compared to the first quarter of 2023.
• Gross margin was 44.0% compared to 41.1% during the first quarter of 2023.
• Net income for the first quarter of 2024 was $2.2 million compared to $0.2 million during the same period last year.
• Basic earnings per share and diluted earnings per share were $0.47 and $0.43, respectively, compared to $0.03 during the first quarter of 2023.
• Adjusted EBITDA was $3.6 million, a 62% increase compared to the first quarter of 2023.
• The Company ended the quarter with $16.5 million outstanding on its term loans and cash of $3.3 million, or total net debt of $13.2 million.
  
  

For the first quarter ended March 31, 2024, total revenue was $16.5 million, an increase of 54% compared to $10.7 million during the same period last year. Online revenue for the quarter was $10.8 million, an increase of 116% compared to the quarter ended March 31, 2023. Online sales for legacy FitLife increased 3% during the quarter compared to the same period last year. Online revenue accounted for 65% and 47% of the Company’s total revenue during the quarters ended March 31, 2024 and 2023, respectively.

Wholesale revenue for the quarter ended March 31, 2024 was $5.7 million, flat when compared to the same period last year.   The Company’s recent acquisitions contributed $1.2 million of wholesale revenue during the first quarter of 2024, while Legacy FitLife wholesale revenue was down $1.2 million, or 21%, compared to the same period last year.  

Gross margin for the quarter ended March 31, 2024 was 44.0% compared to 41.1% during the same period in the prior year. Excluding the impact of the inventory step-up resulting from the acquisition of Mimi’s Rock Corp (“MRC”), gross margin during the quarter ended March 31, 2023 would have been 42.1%.

Net income for the first quarter of 2024 was $2.2 million compared to $0.2 million during the quarter ended March 31, 2023. Basic earnings per share and diluted earnings per share were $0.47 and $0.43 respectively, compared to $0.03 during the first quarter of 2023. Net income during the first quarter of 2023 was adversely impacted by a number of acquisition-related items that did not recur in 2024 including transaction expenses of $1.4 million, amortization of the inventory step-up valuation of $0.1 million, and a loss on a currency hedge of $0.1 million.

Adjusted EBITDA for the quarter ended March 31, 2024 was $3.6 million, an increase of 62% compared to the same period in 2023.  

The Company ended the quarter with $16.5 million outstanding on its term loans and cash of $3.3 million, or total net debt of $13.2 million. As previously disclosed, the Company made a voluntary paydown on its term loan of $2.5 million during the first quarter of 2024 in addition to the scheduled amortization payment of $1.1 million.

Dayton Judd, the Company’s Chairman and CEO, commented “The Company is off to a solid start in 2024 and there are many bright spots in our business. At MRC, I am encouraged that the Dr. Tobias brand—which represents approximately 90% of the MRC business—returned to growth during the quarter despite advertising spend that was 39% lower than in the first quarter of 2023. And although the skin care brands continue to struggle on the top line, they are more profitable now than they were at the time of the acquisition. In total, MRC is significantly more profitable than when we made the acquisition.

“Our legacy FitLife brands continue to face headwinds in the wholesale channel due to declining foot traffic at our brick-and-mortar retail partners. Although the declines were partially offset by growth in the legacy FitLife online business, the online growth rate we experienced during the first quarter was lower than anticipated. We are encouraged, though, that the growth rate for legacy FitLife online sales was much stronger during April with a 13% year-over-year increase.

“In addition, I am excited about a number of new products that we will be introducing this year across several of our brands. Of note, we recently re-launched the MusclePharm Combat Sport protein bar in April 2024. We believe the MusclePharm brand is our most significant organic growth opportunity. Both online and wholesale revenue for MusclePharm ramped up throughout the quarter, and we hope to continue the momentum. Overall, our first quarter results demonstrate that we are continuing to execute our goal of profitably growing revenue and paying down debt.”

The Company will hold an investor conference call on Tuesday, May 14, 2024 at 4:30 pm ET. Investors interested in participating in the live call can dial (833) 492-0064 from the U.S. and provide the conference identification code of 629005. International participants can dial (973) 528-0163 and provide the same code.

About FitLife Brands
FitLife Brands is a developer and marketer of innovative and proprietary nutritional supplements and wellness products for health-conscious consumers. FitLife markets more than 250 different products primarily online, but also through domestic and international GNC® franchise locations as well as through approximately 16,000 additional domestic retail locations. 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 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 non-GAAP adjusted 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 accordance with GAAP. 
  
As presented below, non-GAAP EBITDA excludes interest, income taxes, and depreciation and amortization and foreign currency gain/loss. Adjusted non-GAAP EBITDA excludes—in addition to interest, taxes, depreciation and amortization—equity-based compensation, M&A/integration expense, restatement-related expense 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
(In thousands, except per share data)

		March 31, 2024				December 31, 2023
		(Unaudited)
ASSETS:
CURRENT ASSETS
Cash and cash equivalents		$	2,540			$	1,139
Restricted cash			750				759
Accounts receivable, net of allowance of doubtful accounts of $18 and $17, respectively			2,269				2,046
Inventories, net of allowance for obsolescence of $139 and $162, respectively			8,869				9,091
Sales tax receivable			113				1,019
Prepaid expense and other current assets			451				639
Total current assets			14,992				14,693
Property and equipment, net			121				137
Right of use asset			96				121
Intangibles, net of amortization of $124 and $113, respectively			26,325				26,309
Goodwill			13,340				13,294
Deferred tax asset			612				792
TOTAL ASSETS		$	55,486			$	55,346
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable		$	3,978			$	3,261
Accrued expense and other liabilities			1,397				1,026
Income taxes payable			1,356				892
Product returns			524				571
Term loan – current portion			4,500				4,500
Lease liability - current portion			73				87
Total current liabilities			11,828				10,337
Term loan, net of current portion and unamortized deferred finance costs			11,894				15,509
Long-term lease liability, net of current portion			34				51
Deferred tax liability			2,353				2,413
TOTAL LIABILITIES			26,109				28,310
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value, 10,000 shares authorized, none outstanding as of March 31, 2024 and December 31, 2023			-				-
Common stock, $0.01 par value, 60,000 shares authorized; 4,598 issued and outstanding as of March 31, 2024 and December 31, 2023			46				46
Additional paid-in capital			30,801				30,699
Accumulated deficit			(1,257	)			(3,417	)
Foreign currency translation adjustment			(213	)			(292	)
TOTAL STOCKHOLDERS' EQUITY			29,377				27,036
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	55,486			$	55,346

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(In thousands, except per share data)
(Unaudited)

		Three months ended March 31,
		2024				2023
Revenue		$	16,549			$	10,738
Cost of goods sold			9,262				6,330
Gross profit			7,287				4,408
OPERATING EXPENSE:
Selling, general and administrative			3,736				2,344
Merger and acquisition related expense			134				1,372
Depreciation and amortization			36				19
Total operating expense			3,906				3,735
OPERATING INCOME			3,381				673
OTHER EXPENSE (INCOME)
Interest income			(5	)			(84	)
Interest expense			414				98
Foreign exchange (gain) loss			5				82
Total other expense (income)			414				96
INCOME BEFORE INCOME TAX PROVISION			2,967				577
PROVISION FOR INCOME TAXES			807				421
NET INCOME		$	2,160			$	156
NET INCOME PER SHARE
Basic		$	0.47			$	0.03
Diluted		$	0.43			$	0.03
Basic weighted average common shares			4,598				4,483
Diluted weighted average common shares			5,030				4,935
COMPREHENSIVE INCOME:
NET INCOME		$	2,160			$	156
Foreign currency translation adjustment			79				-
Comprehensive income		$	2,239			$	156

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(In thousands)
(Unaudited)

		Three months ended March 31,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	2,160			$	156
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			36				19
Allowance for doubtful accounts			1				(14	)
Allowance for inventory obsolescence			(23	)			2
Stock compensation expense			102				42
Amortization of deferred financing costs			10				1
Changes in operating assets and liabilities:
Accounts receivable - trade			(242	)			(917	)
Inventories			218				1,501
Deferred tax asset			180				251
Prepaid expense, other assets and sales tax receivable			1,067				(44	)
Right of use asset			21				16
Accounts payable			727				(1,045	)
Lease liability			(30	)			(16	)
Accrued liabilities, other liabilities and income taxes payable			856				289
Product returns			(47	)			(9	)
Net cash provided by operating activities			5,036				232
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(10	)			-
Cash paid for acquisition of Mimi’s Rock Corp.			-				(17,099	)
Net cash used in investing activities			(10	)			(17,099	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term loans			(3,625	)			-
Borrowings on term loan			-				12,500
Net cash provided by (used in) financing activities			(3,625	)			12,500
Foreign currency impact on cash			(9	)			17
CHANGE IN CASH AND RESTRICTED CASH			1,392				(4,350	)
CASH, BEGINNING OF PERIOD			1,898				13,277
CASH AND RESTRICTED CASH, END OF PERIOD		$	3,290			$	8,927

FAQ

What were FitLife Brands' total revenue and growth for Q1 2024?

FitLife Brands reported total revenue of $16.5 million, a 54% increase compared to the first quarter of 2023.

How much did FitLife Brands' online sales increase in Q1 2024?

Online sales increased by 116% to $10.8 million in Q1 2024, making up 65% of total revenue.

What was FitLife Brands' net income for Q1 2024?

FitLife Brands reported a net income of $2.2 million for Q1 2024, compared to $0.2 million in the same period last year.

What were FitLife Brands' basic and diluted EPS for Q1 2024?

Basic earnings per share were $0.47, and diluted earnings per share were $0.43 for Q1 2024.

How did FitLife Brands perform in terms of adjusted EBITDA in Q1 2024?

Adjusted EBITDA for FitLife Brands increased by 62% to $3.6 million in Q1 2024.

What was the gross margin for FitLife Brands in Q1 2024?

The gross margin for FitLife Brands was 44.0% in Q1 2024, up from 41.1% during the same period last year.

What was the state of FitLife Brands' debt at the end of Q1 2024?

FitLife Brands had $16.5 million outstanding on its term loans and $3.3 million in cash, resulting in a net debt of $13.2 million at the end of Q1 2024.

What challenges did FitLife Brands face in Q1 2024?

FitLife Brands faced challenges in wholesale revenue, which remained flat, and declining foot traffic at brick-and-mortar retail partners.

What are FitLife Brands' plans for future growth?

FitLife Brands plans to introduce new products in 2024, including the MusclePharm Combat Sport protein bar, which shows potential for significant growth.