FitLife Brands(FTLF) - 2024 Q3 - Quarterly Report

Financial Performance - Revenue for Q3 2024 reached $15,977,000, a 15% increase from $13,902,000 in Q3 2023[7] - Gross profit for Q3 2024 was $7,001,000, up 23% from $5,696,000 in Q3 2023[7] - Operating income for Q3 2024 increased to $3,182,000, compared to $2,470,000 in Q3 2023, reflecting a 29% growth[7] - Net income for Q3 2024 was $2,126,000, a 25% increase from $1,696,000 in Q3 2023[7] - Basic net income per share for Q3 2024 was $0.46, up from $0.38 in Q3 2023, representing a 21% increase[7] - Comprehensive income for Q3 2024 was $2,161,000, compared to $1,378,000 in Q3 2023, reflecting a 57% increase[7] - Net income for the nine months ended September 30, 2024, was $6,914,000, compared to $3,816,000 for the same period in 2023, representing an increase of 81.5%[13] Operating Expenses - Total operating expenses for Q3 2024 were $3,819,000, compared to $3,226,000 in Q3 2023, an increase of 18%[7] - Advertising and marketing expenses decreased to $1,093,000 in Q3 2024 from $1,275,000 in Q3 2023, a reduction of 14%[7] - Stock-based compensation for the nine months ended September 30, 2024, was $344,000, compared to $94,000 in 2023, reflecting increased compensation expenses[13] - The Company recognized stock-based compensation of $141 million for the three months ended September 30, 2024, compared to $21 million for the same period in 2023, indicating a significant increase[78] Cash Flow and Assets - Cash provided by operating activities for the nine months ended September 30, 2024, was $8,653,000, up from $2,772,000 in 2023, indicating a significant improvement in cash flow[13] - Total cash and restricted cash at the end of the period on September 30, 2024, was $4,720,000, compared to $8,312,000 at the end of the same period in 2023[13] - The Company had total notes payable of $14,164 million as of September 30, 2024, down from $20,009 million as of December 31, 2023, a decrease of 29.5%[63] - The Company has approximately $56 million in short-term interest-earning accounts pledged as collateral for financing arrangements as of September 30, 2024[37] Revenue Sources - For the nine months ended September 30, 2024, revenue was $49,456,000, a 25% increase from $39,401,000 in the same period of 2023[7] - Online revenue accounted for approximately 68% of net revenue for the three months ended September 30, 2024 and 2023, compared to 32% for the wholesale channel[28] - Sales to customers in the U.S. represented approximately 95% and 93% of total sales during the three months ended September 30, 2024 and 2023, respectively[30] - Net sales to GNC accounted for 23% and 30% of total net revenue for the three-month periods ended September 30, 2024 and 2023, respectively[35] Inventory and Obsolescence - The total allowance for obsolescence for inventory items as of September 30, 2024, was $86 million, down from $162 million as of December 31, 2023, indicating a 46.3% reduction[59] - The Company's total inventory as of September 30, 2024, was $10,371 million, an increase from $9,091 million as of December 31, 2023, representing a 14.1% rise[59] Acquisitions and Investments - The company incurred $17,099,000 for the acquisition of Mimi's Rock Corp. during the nine months ended September 30, 2023[13] - The acquisition of Mimi's Rock Corp. was completed for a purchase price of $17.1 million, with recorded intangible assets of $7.63 million and goodwill of $12.76 million[79][80] - The Company acquired assets from MusclePharm for a total consideration of $18.79 million, including legal expenses, focusing on indefinite life intellectual property valued at $18.59 million[85][86] - The Company expects to achieve future synergies from the MRC acquisition, enhancing its product offerings in the nutritional supplement and wellness business[81] Tax and Compliance - The effective income tax rate was 25% for the nine months ended September 30, 2024, down from 28% for the same period in 2023[44] - The Company has determined no indicators of impairment for goodwill as of September 30, 2024[41] Financial Structure - The Company entered into a Second Amended and Restated Credit Agreement on October 10, 2023, which included an additional Term Loan B of $10,000 million[65] - As of September 30, 2024, the Company had $14.25 million outstanding on its Term Loans and no balance under its Line of Credit[172] Foreign Currency Impact - The company reported a foreign currency translation adjustment of $35,000 in Q3 2024, compared to a loss of $318,000 in Q3 2023[7] - The company experienced a foreign currency impact on cash of $54,000 for the nine months ended September 30, 2024, compared to a negative impact of $3,000 in 2023[13] - The Company entered into a foreign currency hedging transaction to purchase CAD $25 million to mitigate risks associated with the acquisition of MRC[171]