FitLife Brands(FTLF) - 2025 Q1 - Quarterly Results

Q1 2025 Financial & Operational Highlights The company reported a slight revenue decline in Q1 2025, with stable profitability metrics and a strengthened net debt position Key Financial Metrics | Financial Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $15.9 million | $16.5 million | -4% | | Online Revenue | $10.6 million | $10.8 million (approx) | -2% | | Wholesale Revenue | $5.3 million | $5.7 million (approx) | -7% | | Gross Margin | 43.1% | 44.0% | -0.9 p.p. | | Net Income | $2.0 million | $2.2 million | -9.1% | | Adjusted EBITDA | $3.4 million | $3.65 million | -6% | | Basic EPS | $0.22 | $0.23 | -4.3% | | Diluted EPS | $0.20 | $0.21 | -4.8% | - Online sales constituted 67% of total revenue in Q1 2025, an increase from 65% in Q1 2024[4] - The company ended the quarter with $6.0 million in cash and $12.0 million in outstanding term loans, resulting in a net debt of $6.0 million. This represents a leverage ratio of approximately 0.4x trailing twelve months adjusted EBITDA[6][8] - Excluding elevated merger and acquisition-related expenses in Q1 2025, net income and EPS would have been comparable or higher than the prior-year period[7] Performance by Brand Segment This section details the varied performance of the company's brand segments, including Legacy FitLife, Mimi's Rock, and MusclePharm Legacy FitLife Legacy FitLife demonstrated strong performance in Q1 2025, with a 5% increase in total revenue driven by an 11% growth in online sales. Both gross profit and contribution saw an 11% increase, and margins expanded compared to the prior year Legacy FitLife Segment Performance | (in thousands) | Q1 2024 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Total revenue | $6,961 | $7,299 | +5% | | Gross profit | $2,928 | $3,254 | +11% | | Gross margin | 42.1% | 44.6% | +2.5 p.p. | | Contribution | $2,848 | $3,169 | +11% | | Contribution as a % of revenue | 40.9% | 43.4% | +2.5 p.p. | - The revenue growth was driven by an 11% increase in online revenue and a 2% increase in wholesale revenue[12] Mimi's Rock (MRC) MRC's performance declined in Q1 2025, with an 11% decrease in revenue and a 14% drop in gross profit year-over-year. The decline was primarily driven by lower sales in its largest brand, Dr. Tobias, and changes in product mix, although contribution margin improved due to optimized advertising spend Mimi's Rock (MRC) Segment Performance | (in thousands) | Q1 2024 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Total revenue | $7,493 | $6,674 | -11% | | Gross profit | $3,520 | $3,030 | -14% | | Gross margin | 47.0% | 45.4% | -1.6 p.p. | | Contribution | $2,458 | $2,236 | -9% | | Contribution as % of revenue | 32.8% | 33.5% | +0.7 p.p. | - Revenue for the largest MRC brand, Dr. Tobias, decreased by 11%. The decline in gross margin was primarily due to a change in product mix within the Dr. Tobias brand[14][17] - The increase in contribution as a percentage of revenue was a result of continued optimization of advertising spend across all MRC brands[17] MusclePharm MusclePharm's revenue decreased by 6% in Q1 2025, as a 41% drop in wholesale revenue overshadowed a 33% increase in online sales. The wholesale decline was attributed to a large customer's inventory build-up from a Q4 2024 promotion. The company is making targeted investments and launched a new product line to drive future growth MusclePharm Segment Performance | (in thousands) | Q1 2024 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Total revenue | $2,095 | $1,963 | -6% | | Wholesale revenue | $1,117 | $658 | -41% | | Online revenue | $978 | $1,305 | +33% | | Gross margin | 40.0% | 30.1% | -9.9 p.p. | | Contribution as % of revenue | 35.9% | 21.2% | -14.7 p.p. | - The decrease in wholesale revenue was primarily due to one customer overstocking during a Q4 2024 promotion without a corresponding increase in sell-through, affecting Q1 2025 reorders[18] - In March 2025, the company launched the new MusclePharm Pro Series in a pilot program with Vitamin Shoppe, with plans for a 12-month exclusive rollout if successful[20] Consolidated Financial Performance The company's consolidated results show a slight decline in revenue, gross profit, and contribution, with margins remaining largely stable year-over-year Consolidated Performance Metrics | (in thousands) | Q1 2024 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Total revenue | $16,549 | $15,936 | -4% | | Gross profit | $7,287 | $6,874 | -6% | | Gross margin | 44.0% | 43.1% | -0.9 p.p. | | Contribution | $6,059 | $5,821 | -4% | | Contribution as % of revenue | 36.6% | 36.5% | -0.1 p.p. | - On a consolidated basis, revenue, gross profit, and contribution all decreased by 4-6% compared to the first quarter of 2024, with gross margin and contribution margin remaining relatively stable[22] Management Commentary Management discusses brand performance, strategic initiatives, and financial flexibility for future growth and M&A opportunities - The CEO noted that the strong performance of the Legacy FitLife business helped offset challenges faced by the MRC and MusclePharm brands, demonstrating the benefit of a diversified brand portfolio[23][26] - The decline in MusclePharm's wholesale revenue was attributed to a large customer's reduced orders after a Q4 promotional buy-in; however, orders from this customer in Q2 2025 have already surpassed the entire Q1 volume[24] - MRC's online revenue faced challenging year-over-year comparisons, with the Dr. Tobias brand seeing a 16% decline in February and a 12% decline in March[25] - The company is encouraged by strong cash flow generation, which has reduced net debt leverage to approximately 0.4x adjusted EBITDA. This provides financial flexibility to pursue sizable M&A opportunities in a market with elevated deal flow[27] Financial Statements This section presents the company's condensed consolidated balance sheets, statements of income, and statements of cash flows Condensed Consolidated Balance Sheets As of March 31, 2025, the company's balance sheet shows an increase in total assets to $62.2 million, driven by higher cash and inventories. Total liabilities rose slightly to $23.3 million, while stockholders' equity increased to $38.9 million from $36.1 million at year-end 2024 Condensed Consolidated Balance Sheets (in thousands) | (In thousands) | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $5,941 | $4,468 | | Total current assets | $21,759 | $18,143 | | TOTAL ASSETS | $62,193 | $58,531 | | LIABILITIES & EQUITY | | | | Total current liabilities | $13,296 | $11,311 | | Term loan, net | $7,436 | $8,550 | | TOTAL LIABILITIES | $23,275 | $22,405 | | TOTAL STOCKHOLDERS' EQUITY | $38,918 | $36,126 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $62,193 | $58,531 | Condensed Consolidated Statements of Income For the first quarter of 2025, the company reported revenue of $15.9 million, a 4% decrease from the prior year. Operating income was $3.0 million, and net income was $2.0 million, resulting in diluted earnings per share of $0.20, compared to $0.21 in Q1 2024 Condensed Consolidated Statements of Income (in thousands) | (In thousands, except per share data) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $15,936 | $16,549 | | Gross profit | $6,874 | $7,287 | | Operating income | $2,958 | $3,381 | | Net income | $2,018 | $2,160 | | Basic EPS | $0.22 | $0.23 | | Diluted EPS | $0.20 | $0.21 | - Merger and acquisition related expenses increased to $332 thousand from $134 thousand in the prior-year quarter, impacting operating income[36] Condensed Consolidated Statements of Cash Flows The company generated $2.3 million in cash from operating activities in Q1 2025, a decrease from $5.0 million in Q1 2024, mainly due to changes in working capital. Cash was primarily used for $1.1 million in term loan repayments. The company ended the quarter with a net cash increase of $1.5 million Condensed Consolidated Statements of Cash Flows (in thousands) | (In thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,328 | $5,036 | | Net cash used in investing activities | ($24) | ($10) | | Net cash used in financing activities | ($866) | ($3,625) | | Change in cash and restricted cash | $1,474 | $1,392 | | Cash and restricted cash, end of period | $5,994 | $3,290 | Non-GAAP Measures Reconciliation This section provides a reconciliation of non-GAAP financial measures, including EBITDA and Adjusted EBITDA, to their most directly comparable GAAP measures - The company uses non-GAAP measures like EBITDA and Adjusted EBITDA to exclude items not indicative of core operating results, such as interest, taxes, depreciation, amortization, stock-based compensation, and M&A expenses[39][40] Reconciliation of Non-GAAP Measures (in thousands) | (In thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net income | $2,018 | $2,160 | | Interest expense/income, net | $218 | $409 | | Foreign exchange loss | $21 | $5 | | Provision for income taxes | $701 | $807 | | Depreciation and amortization | $19 | $36 | | EBITDA | $2,977 | $3,417 | | Stock compensation expense | $107 | $102 | | Merger and acquisition related expense | $332 | $134 | | Adjusted EBITDA | $3,416 | $3,653 |