FitLife Brands(US:FTLF)2025-05-15 21:32Financial Data and Key Metrics Changes - Total revenue for the first quarter of 2025 declined 4% year over year to $15.9 million, with online sales accounting for 67% of total revenue at $10.6 million [3][4] - Gross profit decreased by 6%, and gross margin fell from 44% in the first quarter of the previous year to 43.1% [4] - Net income for the first quarter was $2 million, down from $2.2 million in the same quarter last year, with basic earnings per share declining from 23¢ to 22¢ [4][5] - Adjusted EBITDA for the quarter was $3.4 million, a 6% decrease compared to the previous year [5] - The company ended the quarter with $12 million outstanding on term loans and no balance on its revolving line of credit, resulting in net debt of $6 million, approximately 0.4 times the company's adjusted EBITDA for the past twelve months [5][13] Business Line Performance Changes - Legacy FitLife revenue for the first quarter was $7.3 million, with wholesale customers contributing 63% and online sales 37%, representing a 5% increase in total revenue [6] - MRC revenue declined 11% year over year to $6.7 million, with gross margin decreasing to 45.4% [7][9] - Muscle Farm revenue declined 6%, with wholesale revenue down 41% and online revenue up 33%, leading to a gross margin drop from 40% to 30.1% [10][11] Market Data and Key Metrics Changes - The tariff environment remains uncertain, particularly concerning ingredients from China, although a recent 90-day de-escalation is seen as encouraging [12] - The company has increased inventory levels intentionally to pre-tariff prices, resulting in an all-time high inventory at the end of the first quarter [12] Company Strategy and Industry Competition - The company aims to be active in M&A, with increased spending on potential transactions, although it cautions that such spending may not always lead to successful acquisitions [13][14] - The company believes it will likely be added to the Russell 2000 index, which could serve as a positive catalyst for the stock [15] Management's Comments on Operating Environment and Future Outlook - Management expressed hope for organic revenue growth in 2025, despite not providing formal guidance [21] - April's performance showed year-over-year increases in total revenue and adjusted EBITDA, although caution was advised regarding the representativeness of these results for the second quarter [17] Other Important Information - The company reported approximately 104,000 active subscribers, accounting for about 30% of online revenue [14] - The company is focusing on new product launches, including bars and ready-to-drink protein beverages, with expectations for increased sales in the second quarter [49][53] Q&A Session Summary Question: Changes in revenue and EBITDA expectations - Management reiterated expectations for organic revenue growth in 2025, without providing specific numbers [20][21] Question: Margins outlook for the year - Management indicated that margins would fluctuate based on product mix and ongoing investments in Muscle Farm [22][24] Question: Performance of Muscle Farm at the wholesale level - Mixed results were reported, with some customers showing increased demand while others did not respond effectively to promotional support [30][33] Question: Update on major customer GNC - Management reported a positive relationship with GNC, with no significant changes since resolving previous issues [40] Question: Status of new product launches - New products are performing well, with expectations for increased sales in the second quarter [49][53] Question: Impact of tariffs on products - Some products benefit from tariff exclusions, while others do not, leading to a variable impact on costs [55][58] Question: Long-term prospects for Muscle Farm - Management expressed disappointment in growth but remains hopeful for future improvements, emphasizing the potential for M&A in the nutritional supplement space [64][75]