Financial Data and Key Metrics Changes - Total revenue for Q2 2025 declined by 5% year over year to $16.1 million, with online sales accounting for 65% of total revenue at $10.4 million [3] - Gross profit margin decreased from 44.08% in Q2 2024 to 42.8% in Q2 2025 [3] - Net income fell to $1.7 million in Q2 2025 from $6 million in Q2 2024, primarily due to elevated merger and acquisition-related expenses [3] - Basic earnings per share decreased from $0.29 to $0.19, and diluted earnings per share dropped from $0.27 to $0.07 [4] - Adjusted EBITDA for Q2 2025 was $3.3 million, a 13% decrease compared to the previous year [4] Business Line Data and Key Metrics Changes - Legacy FitLife revenue for Q2 2025 was $7.3 million, with 59% from wholesale and 41% from online sales, representing a 1% increase in wholesale revenue and a 7% increase in online revenue year over year [5] - MRC revenue declined by 16% to $6.3 million, with gross margin decreasing from 48.2% to 45% due to tariffs impacting skin care brands [6] - MusclePharm revenue declined by 4%, with wholesale and online revenue decreasing by 63% respectively, and gross margin fell from 36.6% to 30.8% [7] Market Data and Key Metrics Changes - The performance of the Doctor Tobias brand within MRC is a primary concern, experiencing reduced session counts on Amazon, although conversion rates remain stable [11] - The decline in session counts began in 2024 and has remained stable throughout 2025, indicating potential for improvement later in the year [12] Company Strategy and Development Direction - The company is focused on stabilizing the Erwin Naturals acquisition and addressing challenges with the Doctor Tobias brand [12][20] - There is an emphasis on increasing online sales for Erwin, which currently does not sell on Amazon, and leveraging existing distribution relationships to enhance MusclePharm's market presence [31][75] - The company aims to achieve organic growth in the legacy business while acknowledging challenges with specific brands [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving organic growth despite challenges with the Doctor Tobias brand, which is dragging down overall performance [25] - The company expects to generate improved gross margins over time as it increases online sales and enhances supply chain efficiency for Erwin [19] - Management acknowledged the uncertainties associated with new acquisitions but remains committed to updating investors on progress [20] Other Important Information - The company ended Q2 2025 with $10.9 million outstanding on term loans and $6.6 million in cash, resulting in net debt of $4.3 million, approximately 0.3 times adjusted EBITDA [4] - The acquisition of Erwin Naturals is expected to generate over $120 million in revenue and adjusted EBITDA of $20 million to $25 million in the first full year of operations [20] Q&A Session Summary Question: Commentary on growth rate for the organic business in the second half of the year - Management is optimistic about achieving organic growth despite a mid-single-digit decline in the first half, attributing challenges primarily to the Doctor Tobias brand [22][24] Question: Blended gross margins for the combined businesses - Management indicated that blended gross margins for the combined businesses would be in the high 30s, with expectations for improvement as online sales increase [26] Question: Potential revenue synergies between the two companies - Management highlighted opportunities to grow online revenue for Erwin and leverage existing distribution relationships to enhance MusclePharm's market presence [29][33] Question: Seasonality of the business - Management noted that while the general trend is comparable, the magnitude of seasonality is less pronounced for Erwin compared to FitLife's sports nutrition business [38] Question: Expectations for SG&A expenses - Management expects SG&A expenses to be approximately $1.5 million lower post-acquisition, with plans to introduce additional advertising and marketing expenses to drive growth [40] Question: Future M&A activity - Management indicated that while they will focus on integrating the Erwin acquisition, they will continue to look for potential transactions in the future [88][90]