FitLife Brands Announces Fourth Quarter and Full Year 2020 Results

About this update from Fitlife Brands, Inc.

Omaha, NE , March 26, 2021 (GLOBE NEWSWIRE) -- FitLife Brands Announces Fourth Quarter and Full Year 2020 Results OMAHA, NE – March 26, 2021 -- FitLife Brands, Inc. (“FitLife” or the “Company”) (OTC Pink: FTLF), a provider of innovative and proprietary nutritional supplements for health-conscious consumers marketed under the brand names NDS Nutrition™, PMD®, SirenLabs®, CoreActive®, Metis Nutrition™, iSatori™, Energize, and BioGenetic Laboratories , today announced results for the three and twelve months ended December 31, 2020 . For the quarter ended December 31, 2020 , the Company provides the following information, not subject to any procedures by our independent Registered Public Accounting Firm, regarding its performance and position as of March 26, 2021 . Highlights for the quarter ended December 31, 2020 include: Total revenue increased 60.9% to $5.9 million . Direct-to-consumer online sales increased 107.7% to $1.3 million , representing 21% of total revenue compared to 18% in the same quarter last year. Gross profit improved 75.5% to $2.5 million . Gross margin increased to 41.8% compared to 38.3% in the same quarter last year. Operating expense declined 15.9% to $1.1 million . Net income increased to $5.7 million compared to $0.1 million last year, driven largely by a $4.4 million tax benefit resulting from the Company eliminating a substantial portion of the reserve against its deferred tax assets. Excluding the effect of the non-recurring tax benefit, adjusted net income was $1.4 million compared to $0.1 million last year. Highlights for the twelve months ended December 31, 2020 include: Total revenue increased 11.5% to $21.7 million . Direct-to-consumer online sales increased 82.2% to $4.5 million , representing 20% of total revenue compared to 12% in 2019. Gross profit improved 16.5% to $9.4 million . Gross margin increased to 43.2% in 2020 compared to 41.3% last year. Operating expense declined 5.3% to $5.2 million in 2020, compared to $5.5 million in 2019. Operating income increased 62.9% to $4.2 million in 2020, compared to $2.6 million last year. Net income increased 223% to $8.7 million in 2020, compared to $2.7 million in 2019. Excluding the effect of the non-recurring tax benefit, adjusted net income was $4.3 million in 2020 compared to $2.7 million last year, an increase of 61.0%. Net income per share available to common shareholders in 2020 increased to $8.23 per share, or $7.66 per diluted share, compared to $2.57 per share and $2.41 per diluted share in 2019. Excluding the effect of the non-recurring tax benefit, adjusted net income per share available to common shareholders was $4.11 per share, or $3.82 per diluted share, compared to $2.57 per share and $2.41 per diluted share in 2019. The Company ended the year with $6.3 million of cash and no borrowings on the line of credit. Subsequent to year-end, the Company was informed by its lender and the US Small Business Administration that the full balance of its PPP Loan, including accrued interest, was forgiven. Following the forgiveness of this loan, the Company is debt-free. For the fourth quarter ended December 31, 2020 , total revenue was $5.9 million versus $3.7 million in the same quarter last year, an increase of 60.9%. The increase was primarily attributable to continued growth in our wholesale and our online direct-to-consumer business. In addition, the Company believes that a portion of the revenue growth for the fourth quarter represents an acceleration of purchasing by certain wholesale customers that would historically occur during the first quarter. For the fourth quarter of 2020, online sales increased 107.7% to $1.3 million and accounted for approximately 21% of the Company’s revenue compared to 18% during the fourth quarter of 2019. Gross profit improved to $2.5 million , an increase of 75.5% from the fourth quarter of 2019. Gross margin improved from 38.3% to 41.8% over the same time period. The improvement in gross margin was driven primarily by higher online sales volumes. Total operating expenses decreased 15.9% from $1.3 million in the fourth quarter of 2019 to $1.1 million in the same quarter of 2020, driven by continued cost control and a reduction in sales-related travel expenses due to the ongoing impact of the COVID-19 pandemic. During the fourth quarter, based on the Company’s improving profitability trends, management determined that it is more likely than not that the Company will be able to utilize most of its deferred tax assets, which had previously been fully reserved. As of December 31, 2020 , after taking into account the taxable income generated during the fiscal year, the Company had approximately $21.7 million of remaining federal net operating loss carryforwards (“NOLs”). As long as no ownership change (as defined in section 382 of the US Internal Revenue Code) is triggered, the Company estimates that it will be able to utilize all but $2.6 million of the remaining $21.7 million NOLs. The $2.6 million , which remains fully reserved, relates to iSatori NOLs that have usage limitations due to the ownership change that occurred when the Company acquired iSatori in 2015. Subsequent to the end of the fiscal year, in February 2021 the Company implemented a rights plan in an effort to deter investors from triggering an ownership change of the Company that would substantially limit the Company’s ability to utilize its remaining NOLs. Reducing the reserve against the Company’s deferred tax assets resulted in a non-recurring tax benefit of $4.4 million . Following this adjustment, in future quarters the Company will record a tax expense (or benefit) based on the taxable income generated during that period. As a result, when positive taxable income is generated, the reported net income will be lower even though there will be minimal cash tax payments until the NOLs have been depleted. The Company delivered record profitability during the historically slow fourth quarter, generating a net income of $5.7 million compared to $0.1 million during the fourth quarter of 2019. Excluding the non-recurring tax benefit, adjusted net income was $1.4 million compared to $0.1 million in the same quarter last year. For the full year, basic earnings per share available to common shareholders was $8.23 compared to $2.57 in 2019, and diluted earnings per share available to common shareholders was $7.66 compared to $2.41 in 2019. Excluding the non-recurring tax benefit, for the full year, adjusted basic earnings per share available to common shareholders was $4.11 compared to $2.57 in 2019, and adjusted diluted earnings per share available to common shareholders was $3.82 compared to $2.41 in 2019. Dayton Judd , the Company’s Chairman and CEO, commented “The Company’s performance continues to exceed expectations in both our wholesale and direct-to-consumer channels. As a result, the Company has been able to achieve strong revenue growth and profitability, and our balance sheet continues to strengthen, despite the effects of the COVID-19 pandemic and the bankruptcy of the Company’s largest customer during 2020. The Company continues to search for opportunities to deploy cash for prudent, immediately accretive acquisitions.” About FitLife Brands FitLife Brands is a developer and marketer of innovative and proprietary nutritional supplements for health-conscious consumers. FitLife markets over 100 different dietary supplements to promote sports nutrition, improved performance, weight loss and general health primarily through domestic and international GNC® franchise locations as well as through more than 17,000 additional domestic retail locations and, increasingly, online. FitLife is headquartered in Omaha, Nebraska . For more information please visit our website at www.fitlifebrands.com . Forward-Looking Statements Statements in this release that are forward looking involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance that may be suggested in this news release. Such factors may include, but are not limited to, the ability to of the Company to continue to grow revenue, and the Company's ability to continue to achieve positive cash flow given the Company's existing and anticipated operating and other costs. Many of these risks and uncertainties are beyond the Company's control. Reference is made to the discussion of risk factors detailed in the Company's filings with the Securities and Exchange Commission including its reports on Form 10-K and 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. FITLIFE BRANDS, INC. CONSOLIDATED BALANCE SHEETS ASSETS: December 31 , December 31 , 2020 2019 CURRENT ASSETS Cash $ 6,336,000 $ 265,000 Accounts receivable, net of allowance of doubtful accounts, $51,000 and $27,000 , respectively 2,044,000 2,366,000 Inventories, net of allowance for obsolescence of $56,000 and $130,000 , respectively 3,401,000 2,998,000 Income tax receivable 40,000 - Prepaid expenses and other current assets 52,000 72,000 Total current assets 11,873,000 5,701,000 Property and equipment, net 98,000 136,000 Right of use asset, net of amortization, $272,000 and $226,000 , respectively 208,000 254,000 Goodwill 225,000 225,000 Deferred tax asset 4,370,000 - Security deposits - 10,000 TOTAL ASSETS $ 16,774,000 $ 6,326,000 LIABILITIES AND STOCKHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 3,246,000 $ 2,010,000 Accrued expense and other liabilities 498,000 464,000 Product returns 335,000 256,000 Lease liability - current portion 50,000 46,000 Total current liabilities 4,129,000 2,776,000 Long-term lease liability, net of current portion 158,000 208,000 PPP loan 453,000 - TOTAL LIABILITIES 4,740,000 2,984,000 STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding as of December 31, 2020 and December 31, 2019 Common stock, $.01 par value, 15,000,000 shares authorized; 1,060,818 and 1,054,516 issued and outstanding as of December 31, 2020 and December 31, 2019 , respectively 12,000 12,000 Treasury stock, 210,631 and 198,731 shares, respectively (1,790,000 ) (1,619,000 ) Additional paid-in capital 32,204,000 32,055,000 Accumulated deficit (18,392,000 ) (27,106,000 ) TOTAL STOCKHOLDERS' EQUITY 12,034,000 3,342,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,774,000 $ 6,326,000 The accompanying notes are an integral part of these consolidated financial statements FITLIFE BRANDS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended Years ended December 31 December 31 , 2020 2019 2020 2019 Revenue $ 5,930,000 $ 3,686,000 $ 21,744,000 $ 19,497,000 Cost of goods sold 3,454,000 2,275,000 12,350,000 11,436,000 Gross profit 2,476,000 1,411,000 9,394,000 8,061,000 OPERATING EXPENSES: General and administrative 628,000 697,000 3,047,000 3,049,000 Selling and marketing 491,000 630,000 2,105,000 2,379,000 Depreciation and amortization 7,000 12,000 38,000 52,000 Total operating expenses 1,126,000 1,339,000 5,190,000 5,480,000 OPERATING INCOME 1,350,000 72,000 4,204,000 2,581,000 OTHER EXPENSES (INCOME) Interest expense 1,000 - 15,000 47,000 Interest income (2,000 ) - (9,000 ) - Gain on settlement - - (70,000 ) (171,000 ) Total other expenses (income) (1,000 ) - (64,000 ) (124,000 ) PRE-TAX NET INCOME 1,351,000 72,000 4,268,000 2,705,000 PROVISION (BENEFIT) FOR INCOME TAXES (4,382,000 ) - (4,446,000 ) 7,000 NET INCOME 5,733,000 72,000 8,714,000 2,698,000 PREFERRED STOCK DIVIDEND - (19,000 ) - (63,000 ) NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 5,733,000 $ 53,000 $ 8,714,000 $ 2,635,000 NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS: Basic $ 5.41 $ 0.05 $ 8.23 $ 2.57 Diluted $ 4.98 $ 0.04 $ 7.66 $ 2.41 Basic weighted average common shares 1,060,497 1,001,715 1,058,207 1,026,204 Diluted weighted average common shares 1,150,889 1,207,024 1,137,349 1,092,312 The accompanying notes are an integral part of these consolidated financial statements FITLIFE BRANDS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31 , 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 8,714,000 $ 2,698,000 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 38,000 52,000 Allowance for doubtful accounts 25,000 17,000 Allowance for inventory obsolescence (74,000 ) 23,000 Common stock issued for services 49,000 71,000 Fair value of options issued for services 29,000 111,000 Right of use asset net of amortization and lease liability - (2,000 ) Changes in operating assets and liabilities: Accounts receivable - trade 297,000 (505,000 ) Inventories (329,000 ) 502,000 Deferred tax asset (4,370,000 ) - Prepaid expense 20,000 151,000 Income tax receivable (40,000 ) - Security deposit 10,000 - Accounts payable 1,236,000 (618,000 ) Accrued liabilities and other liabilities 37,000 (50,000 ) Product returns 79,000 (189,000 ) Net cash provided by operating activities 5,721,000 2,261,000 CASH FLOWS FROM INVESTING ACTIVITIES: Net cash provided by investing activities - - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of notes payable - 300,000 Proceeds from exercise of stock options 71,000 - Proceeds from Paycheck Protection Program 450,000 - Dividend payments on preferred stock - (63,000 ) Repurchases of common stock (171,000 ) (1,524,000 ) Repurchases of preferred stock - (168,000 ) Repayments of note payable - (800,000 ) Net cash provided by (used in) financing activities 350,000 (2,255,000 ) CHANGE IN CASH 6,071,000 6,000 CASH, BEGINNING OF PERIOD 265,000 259,000 CASH, END OF PERIOD $ 6,336,000 $ 265,000 Supplemental disclosure operating activities Cash paid for interest $ 12,000 $ 47,000 Non-cash investing and financing activities Recording of lease asset and liability upon adoption of ASU-2016-02 $ - $ 343,000 Conversion of Series A preferred stock into common stock $ - $ 567,000 The accompanying notes are an integral part of these consolidated financial statements [email protected] Source: FitLife Brands, Inc.

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