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FitLife Brands(FTLF) - 2025 Q2 - Quarterly Results
FitLife BrandsFitLife Brands(US:FTLF)2025-08-14 11:30

Second Quarter 2025 Financial Highlights Overview of Q2 2025 Results FitLife Brands reported Q2 2025 financial results with total revenue decreasing 5% year-over-year to $16.1 million, online revenue down 7%, and wholesale revenue flat, while gross margin declined from 44.8% to 42.8% Q2 2025 Key Financial Data | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change (%) | | :---------------- | :-------------------- | :-------------------- | :------- | | Total Revenue | 16.1 | 16.9 | -5% | | Online Revenue | 10.4 | 11.2 | -7% | | Wholesale Revenue | 5.7 | 5.7 | 0% | | Gross Margin | 42.8% | 44.8% | -2.0 pp | Key Financial Metrics The company's Q2 2025 net income and Adjusted EBITDA both decreased, primarily due to increased M&A-related expenses from the Irwin Naturals acquisition, leading to reduced basic and diluted EPS Q2 2025 Key Financial Metrics | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change (%) | | :---------------- | :-------------------- | :-------------------- | :------- | | Net Income | 1.7 | 2.6 | -34.6% | | Basic EPS | 0.19 | 0.29 | -34.5% | | Diluted EPS | 0.18 | 0.27 | -33.3% | | Adjusted EBITDA | 3.3 | 3.8 | -13% | - The primary reason for the decline in net income and EPS was increased M&A-related expenses associated with the Irwin Naturals acquisition67 Balance Sheet and Debt Position As of Q2 2025, the company held $6.6 million in cash (including a $5 million Irwin acquisition deposit), with a term loan balance of $10.9 million, total net debt of $4.3 million, and a net debt to Adjusted EBITDA ratio of 0.3x Q2 2025 End-of-Period Debt Position | Metric | Amount ($ millions) | | :---------------- | :-------------- | | Term Loan Balance | 10.9 | | Cash | 6.6 | | Total Net Debt | 4.3 | | Net Debt/Adjusted EBITDA | 0.3x | - The cash balance includes a $5 million deposit related to the Irwin Naturals acquisition69 Performance of Acquired Brands Introduction to Contribution Metric Management uses 'Contribution,' a non-GAAP metric defined as gross profit less advertising and marketing expenses, to assess brand performance by effectively combining gross profit and related marketing spend - Contribution is defined as gross profit less advertising and marketing expenses, serving as management's primary metric for evaluating brand performance10 - The company plans to provide contribution disclosures for acquired brands for approximately two years post-transaction, after which they will be integrated into Legacy FitLife performance reports11 Legacy FitLife Performance Legacy FitLife's Q2 2025 revenue grew 7% year-over-year, driven by strong 17% online revenue growth, with gross profit and contribution also increasing by 7% and 5% respectively, despite slight declines in gross margin and contribution as a percentage of revenue Legacy FitLife Q2 2025 Performance | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Total Revenue | 7,303 | 6,802 | +7% | | Online Revenue | 3,021 | 2,578 | +17% | | Wholesale Revenue | 4,282 | 4,224 | +1% | | Gross Profit | 3,200 | 3,006 | +7% | | Gross Margin | 43.8% | 44.2% | -0.4 pp | | Contribution | 3,070 | 2,912 | +5% | | Contribution as % of Revenue | 42.0% | 42.8% | -0.8 pp | Mimi's Rock (MRC) Performance MRC's Q2 2025 revenue decreased 16% year-over-year, impacted by a 16% decline in Dr. Tobias and 20% in skincare brands, with gross profit and contribution down 19% and 17% respectively, and gross margin falling to 46.5% due to reduced Dr. Tobias listing page traffic and tariff effects on skincare Mimi's Rock (MRC) Q2 2025 Performance | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Total Revenue | 6,269 | 7,461 | -16% | | Dr. Tobias Revenue | - | - | -16% | | Skincare Brand Revenue | - | - | -20% | | Gross Profit | 2,916 | 3,597 | -19% | | Gross Margin | 46.5% | 48.2% | -1.7 pp | | Contribution | 2,093 | 2,526 | -17% | | Contribution as % of Revenue | 33.4% | 33.9% | -0.5 pp | - The decline in Dr. Tobias brand revenue was primarily due to reduced product listing page traffic, not decreased conversion rates18 - The decrease in skincare brand gross margin is partly due to a 25% tariff impacting most of its revenue18 MusclePharm Performance MusclePharm's Q2 2025 revenue decreased 4% year-over-year, with wholesale revenue down 6% and online revenue down 3%, as the company invests in targeted advertising and promotions and launched a new Pro Series line at Vitamin Shoppe in mid-March 2025 MusclePharm Q2 2025 Performance | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Total Revenue | 2,555 | 2,667 | -4% | | Wholesale Revenue | 1,311 | 1,388 | -6% | | Online Revenue | 1,244 | 1,279 | -3% | | Gross Profit | 788 | 977 | -19.4% | | Gross Margin | 30.8% | 36.6% | -5.8 pp | | Contribution | 550 | 816 | -32.6% | | Contribution as % of Revenue | 21.5% | 30.6% | -9.1 pp | - The company is making targeted advertising and promotional investments in both wholesale and online channels to drive revenue growth19 - In mid-March 2025, the company piloted the new MusclePharm Pro Series product line in Vitamin Shoppe stores, with online sales and sales through other international partners also commencing21 FitLife Consolidated Performance FitLife's consolidated Q2 2025 revenue decreased 5% year-over-year, with gross profit and contribution both down 9%, and gross margin declining from 44.8% to 42.8%, while contribution as a percentage of revenue fell from 36.9% to 35.4% FitLife Consolidated Q2 2025 Performance | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Total Revenue | 16,127 | 16,930 | -5% | | Wholesale Revenue | 5,696 | 5,702 | -0.1% | | Online Revenue | 10,431 | 11,228 | -7.1% | | Gross Profit | 6,904 | 7,580 | -9% | | Gross Margin | 42.8% | 44.8% | -2.0 pp | | Contribution | 5,713 | 6,254 | -9% | | Contribution as % of Revenue | 35.4% | 36.9% | -1.5 pp | Acquisition of Irwin Naturals FitLife Brands completed the acquisition of Irwin Naturals and its affiliates on August 8, 2025, for a total consideration of $42.5 million, financed by $35.75 million from new term loans and revolving credit, with the remainder from existing cash - The company completed the acquisition of Irwin Naturals on August 8, 202523 Irwin Naturals Acquisition Details | Item | Amount ($ millions) | | :---------------- | :-------------- | | Total Consideration | 42.5 | | New Term Loan & Revolving Credit Financing | 35.75 | | Paid from Company's Existing Cash | 6.75 | Management Commentary CEO Remarks on Q2 Performance CEO Dayton Judd noted strong Legacy FitLife performance but challenges in MRC, with Dr. Tobias brand being a key concern due to reduced Amazon session volume, which the company addresses through increased ad spend, SEO optimization, and external traffic generation - Legacy FitLife business showed strong performance, benefiting from modest wholesale revenue growth and robust online revenue growth25 - The Dr. Tobias brand's performance is a primary concern due to reduced Amazon session volume, though conversion rates remain stable or higher26 - The company is implementing measures to increase Dr. Tobias brand session volume, including increased advertising spend, SEO optimization, and driving external traffic26 MusclePharm and Irwin Naturals Outlook MusclePharm's sales team achieved success with July wholesale revenue reaching a post-acquisition high, and management is confident in Irwin Naturals' brand and distribution, expecting improved gross margins through increased online sales and supply chain optimization, alongside annual SG&A savings from employee restructuring - MusclePharm's sales team continues to achieve results, with July wholesale revenue reaching its highest level since the brand's acquisition27 Irwin Naturals Expected Financial Data (Trailing Twelve Months Ended June 30, 2025) | Metric | Amount ($ millions) | | :---------------- | :-------------- | | Adjusted Revenue | ~60 | | Gross Margin | ~35% | | SG&A | ~14.5 | | Expected Annual SG&A Savings | ~1.5 | - The company expects to improve Irwin Naturals' gross margin by increasing the proportion of online sales and enhancing supply chain efficiency28 - Annual SG&A for Irwin Naturals is expected to decrease by approximately $1.5 million through employee restructuring, with potential for further cost-saving opportunities29 Company Information About FitLife Brands FitLife Brands develops and markets over 250 innovative and proprietary nutritional supplements and health products for health-conscious consumers, primarily sold through online channels, GNC franchises, and various retail stores - FitLife Brands develops and markets over 250 innovative and proprietary nutritional supplements and health products32 - Products are primarily sold through online channels, GNC franchise stores, and various retail outlets32 Forward-Looking Statements Forward-looking statements in this press release involve known and unknown risks and uncertainties that could cause actual future results to differ materially from expectations, including the company's ability to grow revenue, achieve positive cash flow, and service debt, with investors advised to consult SEC filings for risk factors - Forward-looking statements involve known and unknown risks and uncertainties that could cause actual future results to differ materially from expectations33 - Risk factors include the company's ability to grow revenue, achieve positive cash flow, and service debt33 - Investors should refer to the risk factor discussions in the company's 10-K and 10-Q reports filed with the SEC33 Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2025, total assets were $62.847 million, an increase from December 31, 2024, with cash and cash equivalents decreasing but a $5 million increase in Irwin acquisition deposit, while total liabilities slightly decreased and stockholders' equity increased Condensed Consolidated Balance Sheets (As of June 30, 2025 and December 31, 2024) | Item | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :------------------------------------ | :----------------------- | :----------------------- | | ASSETS: | | | | Cash and Cash Equivalents | 1,530 | 4,468 | | Irwin Acquisition Deposit | 5,000 | - | | Total Current Assets | 22,177 | 18,143 | | Total Assets | 62,847 | 58,531 | | LIABILITIES: | | | | Total Current Liabilities | 12,968 | 11,311 | | Total Liabilities | 21,928 | 22,405 | | STOCKHOLDERS' EQUITY: | | | | Retained Earnings | 9,332 | 5,567 | | Total Stockholders' Equity | 40,919 | 36,126 | Condensed Consolidated Statements of Income In Q2 2025, total revenue decreased 5% year-over-year to $16.127 million, gross profit declined 9%, and operating income fell 31.4%, resulting in net income of $1.747 million, down 33.6%, primarily due to a significant increase in M&A-related expenses Condensed Consolidated Statements of Income (For the Three Months Ended June 30, 2025) | Item | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Revenue | 16,127 | 16,930 | -5% | | Cost of Sales | 9,223 | 9,350 | -1.4% | | Gross Profit | 6,904 | 7,580 | -9% | | Advertising and Marketing | 1,191 | 1,326 | -10.2% | | Selling, General and Administrative | 2,485 | 2,528 | -1.7% | | M&A-Related Expenses | 696 | 24 | +2800% | | Operating Income | 2,518 | 3,675 | -31.4% | | Net Income | 1,747 | 2,628 | -33.6% | | Basic EPS | 0.19 | 0.29 | -34.5% | | Diluted EPS | 0.18 | 0.27 | -33.3% | - M&A-related expenses significantly increased from $24 thousand in Q2 2024 to $696 thousand in Q2 2025, being the primary reason for the decline in net income37 Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities was $3.523 million, a significant decrease from the prior year, with net cash used in investing activities of $5.029 million primarily due to the Irwin acquisition deposit, and net cash used in financing activities of $1.568 million, resulting in total cash and restricted cash of $1.585 million at period-end Condensed Consolidated Statements of Cash Flows (For the Six Months Ended June 30, 2025) | Item | 2025 ($ thousands) | 2024 ($ thousands) | | :-------------------------- | :-------------- | :-------------- | | Net Cash from Operating Activities | 3,523 | 6,606 | | Net Cash Used in Investing Activities | (5,029) | (10) | | Net Cash Used in Financing Activities | (1,568) | (4,750) | | Cash and Restricted Cash, End of Period | 1,585 | 3,735 | - Net cash used in investing activities significantly increased, primarily due to the $5 million payment for the Irwin acquisition deposit39 Non-GAAP Financial Measures EBITDA and Adjusted EBITDA Reconciliation The company provided a reconciliation of EBITDA and Adjusted EBITDA, where Adjusted EBITDA excludes interest, foreign exchange gains/losses, income taxes, depreciation and amortization, stock-based compensation, and M&A-related expenses, with Q2 2025 Adjusted EBITDA at $3.327 million, down 13% year-over-year - EBITDA excludes interest, foreign exchange gains/losses, income taxes, depreciation, and amortization41 - Adjusted EBITDA further excludes stock-based compensation and M&A-related expenses from EBITDA41 EBITDA and Adjusted EBITDA Reconciliation (For the Three Months Ended June 30, 2025) | Item | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | | :-------------------------- | :------------------ | :------------------ | | Net Income | 1,747 | 2,628 | | Interest Expense | 225 | 345 | | Interest Income | (50) | (17) | | Foreign Exchange (Gain) Loss | (35) | (10) | | Income Tax Provision | 631 | 729 | | Depreciation and Amortization | 14 | 27 | | EBITDA | 2,532 | 3,702 | | Stock-Based Compensation Expense | 99 | 101 | | M&A-Related Expenses | 696 | 24 | | Adjusted EBITDA | 3,327 | 3,827 |