FitLife Brands Announces Third Quarter 2021 Results

Rhea-AI Summary

FitLife Brands reported a 3% decrease in total revenue for Q3 2021, totaling $6.7 million, attributed to prior high wholesale purchases by GNC. However, online revenue surged by 40% to $1.7 million, accounting for 25% of total revenue. Gross profit rose 3% to $2.9 million, with a gross margin increase to 43.9%. Despite a dip in net income to $1.1 million from $1.6 million, year-to-date figures showed an impressive 33% revenue increase. The company ended the quarter debt-free with $8.6 million in cash.

Positive

• Online revenue increased 40% to $1.7 million.
• Gross profit rose 3% to $2.9 million, with a gross margin of 43.9%.
• Net income increased 45% to $4.3 million for the nine-month period.
• The company ended the quarter with no debt and $8.6 million in cash.
• Retail sales through GNC franchise increased approximately 22.5%.

Negative

• Total revenue decreased 3% compared to the same quarter last year.
• Adjusted EBITDA declined to $1.6 million compared to $1.7 million last year.

Omaha, Nov. 12, 2021 (GLOBE NEWSWIRE) -- FitLife Brands Announces Third Quarter 2021 Results

OMAHA, NE – November 12, 2021 -- FitLife Brands, Inc. (“FitLife” or the “Company”) (OTCQX: FTLF), an international 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 and nine months ended September 30, 2021.

Highlights for the third quarter ended September 30, 2021 include:

• Total revenue decreased 3% to $6.7 million.
• Online revenue increased 40% to $1.7 million and accounted for 25% of total revenue.
• Wholesale revenue declined 12% driven by higher-than-normal purchases by GNC during the third quarter of 2020 as it restocked following its bankruptcy filing.
• Gross profit increased 3% to $2.9 million.
• The Company generated net income of $1.1 million compared to $1.6 million during the same quarter last year.
• Adjusted EBITDA declined to $1.6 million compared to $1.7 million during the third quarter of 2020.
• The Company ended the quarter with no debt and $8.6 million of cash.
  
  

For the third quarter ended September 30, 2021, total revenue was $6.7 million compared to $6.9 million in the same quarter last year, a decrease of 3%. The decrease was attributable to higher-than-normal wholesale purchases by GNC during the three months ended September 30, 2020 as it restocked following its bankruptcy filing. The decline in wholesale revenue during the quarter was largely offset by a 40% increase in online revenue.

For the nine-month period ending September 30, 2021, total revenue was $21.0 million, an increase of 33% over the comparable period in 2020, with wholesale revenue increasing 27% and online revenue increasing 57%.

Although the Company experiences variability in its quarter-to-quarter wholesale revenue, long-term trends remain positive and retail demand for the Company’s products remains strong in our wholesale channels. For example, for the three months ended September 30, 2021, retail sales of the Company’s products through the GNC franchise channel increased approximately 22.5% compared to the same period in 2020.

Gross profit for the three months ended September 30, 2021 increased 3% to $2.9 million. Gross margin increased to 43.9% compared to 41.3% during the same period last year.

For the nine months ended September 30, 2021, gross profit increased 39% to $9.6 million, and the gross margin increased to 45.5% compared to 43.7% last year. The increase in gross profit and the margin expansion for the quarter and for the year-to-date period is primarily attributable to an increasing percentage of high-margin online sales.

Net income for the third quarter of 2021 was $1.1 million compared to $1.6 million during the same quarter in 2020. Basic earnings per share was $1.02 and diluted earnings per share was $0.93, compared to $1.55 and $1.45 during the same quarter in 2020, respectively.

For the nine months ended September 30, 2021, net income increased 45% to $4.3 million. Basic earnings per share for the same time period was $3.95 compared to $2.82 last year, and diluted earnings per share increased to $3.59 from $2.63 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 that is not subject to procedures by our Independent Registered Public Accounting Firm. Please see the non-GAAP financial measures table below for a reconciliation of net income to adjusted EBITDA. For the quarter ended September 30, 2021, adjusted EBITDA was $1.6 million compared to $1.7 million in the same period last year.

Due to ongoing supply chain challenges caused initially by the COVID-19 pandemic and exacerbated by other variables, the Company has been proactively increasing its finished goods inventory balance over the past four quarters. As of September 30, 2021, the Company’s finished goods inventory balance was approximately $5.4 million, compared to $1.7 million on the same date in 2020. The Company continues to closely monitor its supply chain and intends to continue making adjustments to its business and operations accordingly.

Dayton Judd, the Company’s Chairman and CEO, commented, “Despite the increasingly difficult operating environment, I am encouraged by the ongoing growth in our wholesale and online businesses and by the continued strengthening of our balance sheet. We continue to actively review opportunities to deploy our strong and growing cash balance into accretive acquisitions.”

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:		September 30,				December 31,
			2021				2020
		(Unaudited)
CURRENT ASSETS
Cash		$	8,617,000			$	6,336,000
Accounts receivable, net of allowance of doubtful accounts of $64,000 and $51,000, respectively			1,846,000				2,044,000
Inventories, net of allowance for obsolescence of $37,000 and $56,000, respectively			6,121,000				3,401,000
Income tax receivable			-				40,000
Prepaid expenses and other current assets			169,000				52,000
Total current assets			16,753,000				11,873,000
Property and equipment, net			77,000				98,000
Right of use asset, net of amortization of $309,000 and $272,000, respectively			171,000				208,000
Intangibles, net of amortization of $20,000 and $0, respectively			202,000				-
Goodwill			358,000				225,000
Deferred tax asset			3,328,000				4,370,000
TOTAL ASSETS		$	20,889,000			$	16,774,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable		$	3,600,000			$	3,246,000
Accrued expense and other liabilities			424,000				498,000
Product returns			388,000				335,000
Lease liability - current portion			54,000				50,000
Total current liabilities			4,466,000				4,129,000
Long-term lease liability, net of current portion			117,000				158,000
PPP loan			-				453,000
TOTAL LIABILITIES			4,583,000				4,740,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding
as of September 30, 2021 and December 31, 2020
Common stock, $0.01 par value, 15,000,000 shares authorized; 1,125,690 and 1,060,818
issued and outstanding as of September 30, 2021 and December 31, 2020, respectively			12,000				12,000
Treasury stock, 219,654 and 210,631 shares, respectively			(2,050,000	)			(1,790,000	)
Additional paid-in capital			32,419,000				32,204,000
Accumulated deficit			(14,075,000	)			(18,392,000	)
TOTAL STOCKHOLDERS' EQUITY			16,306,000				12,034,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	20,889,000			$	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 AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Unaudited)
		Three months ended								Nine months Ended
		September 30								September 30
			2021				2020				2021				2020
Revenue		$	6,705,000			$	6,923,000			$	21,004,000			$	15,814,000
Cost of goods sold			3,760,000				4,061,000				11,421,000				8,896,000
Gross profit			2,945,000				2,862,000				9,583,000				6,918,000
OPERATING EXPENSES:
General and administrative			891,000				684,000				2,665,000				2,419,000
Selling and marketing			605,000				509,000				1,990,000				1,614,000
Depreciation and amortization			18,000				9,000				41,000				31,000
Total operating expenses			1,514,000				1,202,000				4,696,000				4,064,000
OPERATING INCOME			1,431,000				1,660,000				4,887,000				2,854,000
OTHER EXPENSES (INCOME)
Interest expense (income)			(7,000	)			(2,000	)			(18,000	)			7,000
Gain on settlement			-				-				-				(70,000	)
Gain on debt forgiveness			-				-				(453,000	)			-
Total other expenses (income)			(7,000	)			(2,000	)			(471,000	)			(63,000	)
PRE-TAX NET INCOME			1,438,000				1,662,000				5,358,000				2,917,000
PROVISION (BENEFIT) FOR INCOME TAXES			313,000				17,000				1,041,000				(64,000	)
NET INCOME		$	1,125,000			$	1,645,000			$	4,317,000			$	2,981,000
NET INCOME PER SHARE
Basic		$	1.02			$	1.55			$	3.95			$	2.82
Diluted		$	0.93			$	1.45			$	3.59			$	2.63
Basic weighted average common shares			1,105,690				1,060,350				1,093,553				1,057,389
Diluted weighted average common shares			1,204,524				1,134,379				1,202,177				1,132,764
The accompanying notes are an integral part of these condensed consolidated financial statements

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Unaudited)
		Nine months ended September 30
			2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	4,317,000			$	2,981,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			41,000				32,000
Right of use asset amortization and lease liability			37,000				-
Allowance for doubtful accounts			13,000				375,000
Allowance for inventory obsolescence			(19,000	)			(62,000	)
Fair value of stock and options issued for services			345,000				69,000
Forgiveness of PPP loan			(453,000	)			-
Changes in operating assets and liabilities:
Accounts receivable - trade			312,000				(603,000	)
Inventories			(2,654,000	)			805,000
Deferred tax asset			1,041,000				-
Prepaid expense			(117,000	)			15,000
Income tax receivable			40,000				(40,000	)
Security deposit			-				10,000
Accounts payable			354,000				(189,000	)
Lease liability			(37,000	)			-
Accrued interest			-				1,000
Accrued liabilities and other liabilities			(73,000	)			61,000
Product returns			53,000				20,000
Net cash provided by operating activities			3,200,000				3,475,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquistion			(529,000	)			-
Net cash used ininvesting activities			(529,000	)			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options			54,000				71,000
Proceeds from PPP loan			-				450,000
Repurchases of common stock and options			(444,000	)			(171,000	)
Net cash provided by (used in) financing activities			(390,000	)			350,000
CHANGE IN CASH			2,281,000				3,825,000
CASH, BEGINNING OF PERIOD			6,336,000				265,000
CASH, END OF PERIOD		$	8,617,000			$	4,090,000
Supplemental disclosure operating activities
Cash paid for interest		$	-			$	7,000
Cash paid (refunded) for income taxes		$	(45,000	)		$	-
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 AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
		For the three months ended September 30,								For the nine months ended September 30,
			2021				2020				2021				2020
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Net income		$	1,125,000			$	1,645,000			$	4,317,000			$	2,981,000
Interest expense (income)			(7,000	)			(2,000	)			(18,000	)			7,000
Provision (benefit) for income taxes			313,000				17,000				1,041,000				(64,000	)
Depreciation and amortization			18,000				9,000				41,000				31,000
EBITDA			1,449,000				1,669,000				5,381,000				2,955,000
Non-cash and non-recurring adjustments
Stock compensation expense			107,000				19,000				345,000				69,000
Non-recurring losses (gains)			-				-				(453,000	)			(70,000	)
Adjusted EBITDA		$	1,556,000			$	1,688,000			$	5,273,000			$	2,954,000

 

FAQ

What were FitLife Brands' total revenues for Q3 2021?

FitLife Brands reported total revenues of $6.7 million for Q3 2021.

How much did online revenue grow for FitLife Brands in Q3 2021?

Online revenue grew by 40% to $1.7 million in Q3 2021.

What was the net income reported by FitLife Brands for Q3 2021?

FitLife Brands reported a net income of $1.1 million for Q3 2021.

What were the gross profit figures for FitLife Brands in Q3 2021?

The gross profit for FitLife Brands in Q3 2021 increased by 3% to $2.9 million.

Did FitLife Brands end Q3 2021 with any debt?

FitLife Brands ended Q3 2021 with no debt and $8.6 million in cash.