FitLife Brands(US:FTLF)2025-11-13 22:30Financial Data and Key Metrics Changes - Total revenue for Q3 2025 increased by 47% year over year to $23.5 million, with Irwin Naturals contributing $6.8 million to the revenue increase [3][4] - Gross margin declined to 37.2% from 43.8% year over year, primarily due to lower margins in the MusclePharm business and the addition of Irwin, which has historically lower margins [4][5] - Net income for Q3 2025 was $0.9 million, down from $2.1 million in Q3 2024, attributed to elevated merger-related expenses and lower gross margins [5][6] Business Line Data and Key Metrics Changes - Legacy FitLife revenue for Q3 2025 was $12.9 million, with a 4% increase in wholesale revenue but an 8% decrease in online revenue [6][7] - MusclePharm revenue increased by 55% in Q3 2025, with wholesale revenue up 112% and online revenue down 3% [7][8] - Irwin Naturals generated $6.8 million in revenue during the 53-day period post-acquisition, with 95% from wholesale and 5% from online sales [8][9] Market Data and Key Metrics Changes - Wholesale revenue for the quarter was $13.2 million, a 156% increase compared to Q3 2024, with other brands' wholesale revenue increasing by 30% year over year [4][6] - Online revenue was $10.3 million, accounting for 44% of total revenue, a decrease of 5% compared to Q3 2024 [4][5] - The company noted a decline in Amazon subscriber counts starting in September 2025, indicating a broader consumer weakness [16][17] Company Strategy and Development Direction - The company is focused on optimizing online sales and has ceased wholesale sales to a primary Amazon seller to enhance future online revenue [9][11] - Management anticipates that Irwin's gross margin will improve over time as online sales increase and supply chain efficiencies are realized [11][12] - The company is considering a price increase for MusclePharm products effective January 1, 2026, to mitigate rising whey protein costs [7][15] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about general consumer weakness and its impact on subscription growth, noting that the decline in subscriber counts was unexpected [16][17] - The company is monitoring the rising costs of whey protein and anticipates further increases, which may pressure margins in the near term [15][18] - Management remains optimistic about future growth opportunities, particularly in online sales and brand optimization [12][14] Other Important Information - The company did not pay down any debt during Q3 2025, focusing cash flow on acquisition-related expenses [13][14] - The effective tax rate was unusually high due to a true-up of the 2024 tax provision, which is not expected to be a recurring issue [6][50] Q&A Session Summary Question: What percentage of the business came from recurring subscriptions? - Management indicated that prior to the Irwin acquisition, 20-25% of online revenue was from subscriptions, but this percentage has decreased post-acquisition due to Irwin's minimal online presence [20][21] Question: How much of MusclePharm's growth was from new versus existing customers? - Management estimated that the growth was primarily from existing customers, with a rough guess of 80% existing and 20% new [24][25] Question: What was the year-over-year performance of Irwin Naturals? - Management acknowledged that Irwin's performance would show a decline year-over-year due to lost sales from Costco but did not provide specific figures [26][28] Question: Have you worked through the stepped-up inventory? - Management confirmed that approximately 40% of the stepped-up inventory has been worked through, with the remaining expected to impact Q4 [33][34] Question: What is the ongoing issue with Dr. Tobias? - Management noted a significant drop in traffic to Dr. Tobias listings on Amazon, attributing it to potential changes in Amazon's algorithm [43][44] Question: How are competitors dealing with rising protein costs? - Management observed that while they have not raised prices, competitors are likely passing on costs, which has allowed the company to gain market share [72][73]