FitLife Brands Announces Third Quarter 2022 Results

Rhea-AI Summary

FitLife Brands reported a 24% increase in total revenue for Q3 2022, reaching $8.3 million, driven by a 28% increase in online sales. Gross profit rose 10% to $3.2 million, although gross margin decreased to 39.0% due to higher product costs. Net income for the quarter was $1.2 million, up from $1.1 million year-over-year. Adjusted EBITDA increased to $1.9 million. For the nine-month period, total revenue rose 13% to $23.4 million but net income fell 5% to $4.0 million.

Positive

• Total revenue increased by 24% to $8.3 million in Q3 2022.
• Online revenue rose 28%, contributing 26% to total revenue.
• Gross profit increased by 10% to $3.2 million.
• Net income for Q3 2022 improved to $1.2 million from $1.1 million.
• Adjusted EBITDA increased to $1.9 million from $1.7 million.

Negative

• Gross margin decreased to 39.0% from 43.9% due to higher product costs.
• Net income for the nine-month period decreased by 5% to $4.0 million.

Omaha, Nov. 10, 2022 (GLOBE NEWSWIRE) -- FitLife Brands Announces Third Quarter 2022 Results

OMAHA, NE – November 10, 2022 -- FitLife Brands, Inc. (“FitLife” or the “Company”) (OTC: 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, 2022.

Highlights for the third quarter ended September 30, 2022 include:

• Total revenue increased 24% to $8.3 million.
• Online revenue increased 28% to $2.2 million and accounted for 26% of total revenue.
• Wholesale revenue increased 23% to $6.1 million and accounted for 74% of total revenue.
• Gross profit increased 10% to $3.2 million.
• The Company generated net income of $1.2 million compared to $1.1 million during the same quarter last year.
• Adjusted EBITDA increased to $1.9 million compared to $1.7 million during the third quarter of 2021.
• The Company generated $2.6 million of cash in the third quarter of 2022, resulting in a quarter-end cash balance of $14.9 million.
  
  

For the third quarter ended September 30, 2022, total revenue was $8.3 million compared to $6.7 million in the same quarter last year, an increase of 24%. The increase reflects increased demand from both wholesale and online channels.

Management expects the Company’s wholesale revenue trends to remain lumpy based on the ordering patterns of our customers. As a result, we encourage investors to evaluate revenue trends for the wholesale channel over periods of two or more quarters. Growth in consumer purchases of the Company’s products in the wholesale channel, which tends to be a more stable indicator of demand, was positive during the third quarter, and remains positive thus far in the fourth quarter.

After growing approximately 21% year-over-year during the first and second quarters of 2022, online revenue increased 28% during the third quarter. Online revenue growth has remained strong thus far during the fourth quarter, with a 31% growth rate during the month of October.

Gross profit for the three months ended September 30, 2022 increased 10% to $3.4 million. Gross margin decreased to 39.0% compared to 43.9% during the same period last year. The reduction in the gross margin percentage for the quarter is primarily attributable to higher product costs. We expect the recent margin pressure will be temporary as production costs decline and as higher-margin online sales become a larger percentage of the Company’s total revenue.

Net income for the third quarter of 2022 was $1.2 million compared to $1.1 million during the same quarter in 2021. Basic earnings per share was $0.27 and diluted earnings per share was $0.24, compared to $0.25 and $0.23 during the same quarter in 2021, respectively.

For the quarter ended September 30, 2022, adjusted EBITDA, was $1.9 million compared to $1.7 million in the same period last year. Please see the non-GAAP financial measures table below for a reconciliation of net income to adjusted EBITDA.

For the nine-month period ending September 30, 2022, total revenue was $23.4 million, an increase of 13% over the comparable period in 2021, with wholesale revenue increasing 10% and online revenue increasing 24%. Gross profit increased 5% to $9.8 million, and the gross margin decreased to 42.0% compared to 45.5% last year.

For the nine months ended September 30, 2022, net income decreased 5% to $4.0 million from $4.2 million, primarily due to the forgiveness of the Company’s PPP loan during 2021. Basic earnings per share for the same time period was $0.87 compared to $0.95 last year, and diluted earnings per share decreased to $0.79 from $0.87 last year.

For the nine months ended September 30, 2022, adjusted EBITDA was $5.8 million compared to $5.3 million in the same period last year. Please see the non-GAAP financial measures table below for a reconciliation of net income to adjusted EBITDA.

Dayton Judd, the Company’s Chairman and CEO, commented, “Despite a somewhat challenging operating environment, I am encouraged by the continued growth in our wholesale and online businesses. We continue to actively pursue 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, M&A/integration activities, restatement related expenses 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,
		2022				2021
	(Unaudited)
CURRENT ASSETS
Cash	$	14,929,000			$	9,897,000
Accounts receivable, net of allowance of doubtful accounts of $50,000 and $55,000, respectively		1,535,000				945,000
Inventories, net of allowance for obsolescence of $203,000 and $56,000, respectively		7,578,000				6,520,000
Prepaid expenses and other current assets		229,000				322,000
Total current assets		24,271,000				17,684,000
Property and equipment, net		53,000				70,000
Right of use asset, net of amortization of $363,000 and $322,000, respectively		117,000				158,000
Intangibles, net of amortization of $62,000 and $30,000, respectively		160,000				192,000
Goodwill		358,000				358,000
Deferred tax asset		1,992,000				3,045,000
TOTAL ASSETS	$	26,951,000			$	21,507,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	3,966,000			$	2,880,000
Accrued expense and other liabilities		625,000				491,000
Product returns		617,000				632,000
Lease liability - current portion		54,000				55,000
Total current liabilities		5,262,000				4,058,000
Long-term lease liability, net of current portion		63,000				103,000
TOTAL LIABILITIES		5,325,000				4,161,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding
as of September 30, 2022 and December 31, 2021
Common stock, $0.01 par value, 60,000,000 shares authorized; 4,555,957 and 4,552,485
issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		46,000				46,000
Treasury stock, 0 and 881,311 shares, respectively		-				(2,087,000	)
Additional paid-in capital		30,766,000				32,529,000
Accumulated deficit		(9,186,000	)			(13,142,000	)
TOTAL STOCKHOLDERS' EQUITY		21,626,000				17,346,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	26,951,000			$	21,507,000

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Unaudited)
		Three months ended								Nine months ended
		September 30								September 30
			2022				2021				2022				2021
Revenue		$	8,314,000			$	6,705,000			$	23,433,000			$	20,710,000
Cost of goods sold			5,070,000				3,760,000				13,587,000				11,289,000
Gross profit			3,244,000				2,945,000				9,846,000				9,421,000
OPERATING EXPENSES:
Selling, general and administrative			1,686,000				1,496,000				4,834,000				4,655,000
Depreciation and amortization			17,000				18,000				49,000				41,000
Total operating expenses			1,703,000				1,514,000				4,883,000				4,696,000
OPERATING INCOME			1,541,000				1,431,000				4,963,000				4,725,000
OTHER INCOME
Interest income			(43,000	)			(7,000	)			(59,000	)			(18,000	)
Gain on debt forgiveness			-				-				-				(453,000	)
Total other income			(43,000	)			(7,000	)			(59,000	)			(471,000	)
PRE-TAX NET INCOME			1,584,000				1,438,000				5,022,000				5,196,000
PROVISION FOR INCOME TAXES			364,000				313,000				1,066,000				1,034,000
NET INCOME		$	1,220,000			$	1,125,000			$	3,956,000			$	4,162,000
NET INCOME PER SHARE
Basic		$	0.27			$	0.25			$	0.87			$	0.95
Diluted		$	0.24			$	0.23			$	0.79			$	0.87
Basic weighted average common shares			4,555,957				4,422,760				4,555,347				4,374,212
Diluted weighted average common shares			4,988,271				4,818,096				4,978,828				4,808,708

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
		Nine months ended September 30
			2022				2021
		(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	3,956,000			$	4,162,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			49,000				41,000
Right of use asset amortization and lease liability			41,000				37,000
Allowance for doubtful accounts			(5,000	)			13,000
Allowance for inventory obsolescence			147,000				(19,000	)
Stock compensation expense			295,000				345,000
Forgiveness of PPP loan			-				(453,000	)
Changes in operating assets and liabilities:
Accounts receivable			(585,000	)			572,000
Inventories			(1,205,000	)			(2,786,000	)
Deferred tax asset			1,053,000				1,034,000
Prepaid expense and other current assets			93,000				(77,000	)
Accounts payable			1,086,000				354,000
Lease liability			(41,000	)			(37,000	)
Accrued expense and other liabilities			134,000				(39,000	)
Product returns			(15,000	)			53,000
Net cash provided by operating activities			5,003,000				3,200,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquistion of Nutrology			-				(529,000	)
Net cash used in investing activities			-				(529,000	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options			29,000				54,000
Repurchases of common stock and options			-				(444,000	)
Net cash provided by (used in) financing activities			29,000				(390,000	)
CHANGE IN CASH			5,032,000				2,281,000
CASH, BEGINNING OF PERIOD			9,897,000				6,336,000
CASH, END OF PERIOD		$	14,929,000			$	8,617,000

FITLIFE BRANDS, INC.
EBITDA AND ADJUSTED EBITDA
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
			For the three months ended September 30,								For the nine months ended September 30,
			2022				2021				2022				2021
			(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
	Net income		$	1,220,000			$	1,125,000			$	3,956,000			$	4,162,000
	Interest income, net			(43,000	)			(7,000	)			(59,000	)			(18,000	)
	Provision for income taxes			364,000				313,000				1,066,000				1,034,000
	Depreciation and amortization			17,000				18,000				49,000				41,000
	EBITDA			1,558,000				1,449,000				5,012,000				5,219,000
	Non-cash and non-recurring adjustments
	Stock compensation expense			91,000				107,000				295,000				345,000
	M&A/integration expenses			6,000				109,000				214,000				204,000
	Restatement-related costs			220,000				-				275,000				-
	Non-recurring gains			-				-				-				(453,000	)
	Adjusted EBITDA		$	1,875,000			$	1,665,000			$	5,796,000			$	5,315,000

 

FAQ

What were FitLife Brands' Q3 2022 total revenues?

FitLife Brands reported total revenues of $8.3 million for Q3 2022.

How did online sales perform for FitLife Brands in Q3 2022?

Online sales for FitLife Brands increased by 28% to $2.2 million in Q3 2022.

What is the gross profit for FitLife Brands in Q3 2022?

FitLife Brands achieved a gross profit of $3.2 million in Q3 2022.

What was the net income for FitLife Brands in Q3 2022?

FitLife Brands reported a net income of $1.2 million for Q3 2022.

How has the adjusted EBITDA changed for FitLife Brands in Q3 2022?

The adjusted EBITDA for FitLife Brands increased to $1.9 million in Q3 2022.

What are the key financial figures for FitLife Brands for the nine-month period ending September 30, 2022?

For the nine-month period, FitLife Brands reported total revenue of $23.4 million and net income of $4.0 million.