FitLife Brands Announces Third Quarter 2021 Results

About this update from Fitlife Brands, Inc.

Omaha , Nov. 12, 2021 (GLOBE NEWSWIRE) -- FitLife Brands Announces Third Quarter 202 1 Resu l ts OMAHA, NE – November 12, 2021 -- FitLife Brands, Inc. (“FitLife” or the “Company”) (OTCQX: FTLF), an international provider of innovative and proprietary nutritional supplements for health-conscious consumers marketed under the brand names NDS Nutrition, PMD, SirenLabs, Nutrology, CoreActive, Metis Nutrition, iSatori, Energize, and BioGenetic Laboratories , today announced results for the three and nine months ended September 30, 2021 . Highlights for the third quarter ended September 30 , 202 1 include: Total revenue decreased 3% to $6.7 million . Online revenue increased 40% to $1.7 million and accounted for 25% of total revenue. Wholesale revenue declined 12% driven by higher-than-normal purchases by GNC during the third quarter of 2020 as it restocked following its bankruptcy filing. Gross profit increased 3% to $2.9 million . The Company generated net income of $1.1 million compared to $1.6 million during the same quarter last year. Adjusted EBITDA declined to $1.6 million compared to $1.7 million during the third quarter of 2020. The Company ended the quarter with no debt and $8.6 million of cash. For the third quarter ended September 30, 2021 , total revenue was $6.7 million compared to $6.9 million in the same quarter last year, a decrease of 3%. The decrease was attributable to higher-than-normal wholesale purchases by GNC during the three months ended September 30, 2020 as it restocked following its bankruptcy filing. The decline in wholesale revenue during the quarter was largely offset by a 40% increase in online revenue. For the nine-month period ending September 30, 2021 , total revenue was $21.0 million , an increase of 33% over the comparable period in 2020, with wholesale revenue increasing 27% and online revenue increasing 57%. Although the Company experiences variability in its quarter-to-quarter wholesale revenue, long-term trends remain positive and retail demand for the Company’s products remains strong in our wholesale channels. For example, for the three months ended September 30, 2021 , retail sales of the Company’s products through the GNC franchise channel increased approximately 22.5% compared to the same period in 2020. Gross profit for the three months ended September 30, 2021 increased 3% to $2.9 million . Gross margin increased to 43.9% compared to 41.3% during the same period last year. For the nine months ended September 30, 2021 , gross profit increased 39% to $9.6 million , and the gross margin increased to 45.5% compared to 43.7% last year. The increase in gross profit and the margin expansion for the quarter and for the year-to-date period is primarily attributable to an increasing percentage of high-margin online sales. Net income for the third quarter of 2021 was $1.1 million compared to $1.6 million during the same quarter in 2020. Basic earnings per share was $1.02 and diluted earnings per share was $0.93 , compared to $1.55 and $1.45 during the same quarter in 2020, respectively. For the nine months ended September 30, 2021 , net income increased 45% to $4.3 million . Basic earnings per share for the same time period was $3.95 compared to $2.82 last year, and diluted earnings per share increased to $3.59 from $2.63 last year. Subsequent to releasing a substantial portion of the reserve against its deferred tax assets at the end of 2020, the Company now reports a provision for income taxes, which is largely non-cash. In an effort to provide a more cash-based earnings metric, and to allow better comparability to prior periods, the Company has begun reporting adjusted EBITDA, a non-GAAP measure that is not subject to procedures by our Independent Registered Public Accounting Firm. Please see the non-GAAP financial measures table below for a reconciliation of net income to adjusted EBITDA. For the quarter ended September 30, 2021 , adjusted EBITDA was $1.6 million compared to $1.7 million in the same period last year. Due to ongoing supply chain challenges caused initially by the COVID-19 pandemic and exacerbated by other variables, the Company has been proactively increasing its finished goods inventory balance over the past four quarters. As of September 30, 2021 , the Company’s finished goods inventory balance was approximately $5.4 million , compared to $1.7 million on the same date in 2020. The Company continues to closely monitor its supply chain and intends to continue making adjustments to its business and operations accordingly. Dayton Judd , the Company’s Chairman and CEO, commented, “Despite the increasingly difficult operating environment, I am encouraged by the ongoing growth in our wholesale and online businesses and by the continued strengthening of our balance sheet. We continue to actively review opportunities to deploy our strong and growing cash balance into 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 130 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 Statement s 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. Non-GAAP Financial Measures The financial presentation below contains certain financial measures defined as “non-GAAP financial measures” by the SEC , including non-GAAP EBITDA and adjusted non-GAAP EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in this Annual Report in accordance with GAAP. As presented below, non-GAAP EBITDA excludes interest, income taxes, and depreciation and amortization. Adjusted non-GAAP EBITDA excludes, in addition to interest, taxes, depreciation and amortization, equity-based compensation and non-recurring gains or losses. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expense and other items that may not be indicative of its core operating results and business outlook. The Company believes that the inclusion of non-GAAP measures in the financial presentation below allows investors to compare the Company’s financial results with the Company’s historical financial results and is an important measure of the Company’s comparative financial performance. FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS: September 30 , December 31 , 2021 2020 (Unaudited) CURRENT ASSETS Cash $ 8,617,000 $ 6,336,000 Accounts receivable, net of allowance of doubtful accounts of $64,000 and $51,000 , respectively 1,846,000 2,044,000 Inventories, net of allowance for obsolescence of $37,000 and $56,000 , respectively 6,121,000 3,401,000 Income tax receivable - 40,000 Prepaid expenses and other current assets 169,000 52,000 Total current assets 16,753,000 11,873,000 Property and equipment, net 77,000 98,000 Right of use asset, net of amortization of $309,000 and $272,000 , respectively 171,000 208,000 Intangibles, net of amortization of $20,000 and $0 , respectively 202,000 - Goodwill 358,000 225,000 Deferred tax asset 3,328,000 4,370,000 TOTAL ASSETS $ 20,889,000 $ 16,774,000 LIABILITIES AND STOCKHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 3,600,000 $ 3,246,000 Accrued expense and other liabilities 424,000 498,000 Product returns 388,000 335,000 Lease liability - current portion 54,000 50,000 Total current liabilities 4,466,000 4,129,000 Long-term lease liability, net of current portion 117,000 158,000 PPP loan - 453,000 TOTAL LIABILITIES 4,583,000 4,740,000 STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding as of September 30, 2021 and December 31, 2020 Common stock, $0.01 par value, 15,000,000 shares authorized; 1,125,690 and 1,060,818 issued and outstanding as of September 30, 2021 and December 31, 2020 , respectively 12,000 12,000 Treasury stock, 219,654 and 210,631 shares, respectively (2,050,000 ) (1,790,000 ) Additional paid-in capital 32,419,000 32,204,000 Accumulated deficit (14,075,000 ) (18,392,000 ) TOTAL STOCKHOLDERS' EQUITY 16,306,000 12,034,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,889,000 $ 16,774,000 The accompanying notes are an integral part of these condensed consolidated financial statements FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (Unaudited) Three months ended Nine months Ended September 30 September 30 2021 2020 2021 2020 Revenue $ 6,705,000 $ 6,923,000 $ 21,004,000 $ 15,814,000 Cost of goods sold 3,760,000 4,061,000 11,421,000 8,896,000 Gross profit 2,945,000 2,862,000 9,583,000 6,918,000 OPERATING EXPENSES: General and administrative 891,000 684,000 2,665,000 2,419,000 Selling and marketing 605,000 509,000 1,990,000 1,614,000 Depreciation and amortization 18,000 9,000 41,000 31,000 Total operating expenses 1,514,000 1,202,000 4,696,000 4,064,000 OPERATING INCOME 1,431,000 1,660,000 4,887,000 2,854,000 OTHER EXPENSES (INCOME) Interest expense (income) (7,000 ) (2,000 ) (18,000 ) 7,000 Gain on settlement - - - (70,000 ) Gain on debt forgiveness - - (453,000 ) - Total other expenses (income) (7,000 ) (2,000 ) (471,000 ) (63,000 ) PRE-TAX NET INCOME 1,438,000 1,662,000 5,358,000 2,917,000 PROVISION (BENEFIT) FOR INCOME TAXES 313,000 17,000 1,041,000 (64,000 ) NET INCOME $ 1,125,000 $ 1,645,000 $ 4,317,000 $ 2,981,000 NET INCOME PER SHARE Basic $ 1.02 $ 1.55 $ 3.95 $ 2.82 Diluted $ 0.93 $ 1.45 $ 3.59 $ 2.63 Basic weighted average common shares 1,105,690 1,060,350 1,093,553 1,057,389 Diluted weighted average common shares 1,204,524 1,134,379 1,202,177 1,132,764 The accompanying notes are an integral part of these condensed consolidated financial statements FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (Unaudited) Nine months ended September 30 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,317,000 $ 2,981,000 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 41,000 32,000 Right of use asset amortization and lease liability 37,000 - Allowance for doubtful accounts 13,000 375,000 Allowance for inventory obsolescence (19,000 ) (62,000 ) Fair value of stock and options issued for services 345,000 69,000 Forgiveness of PPP loan (453,000 ) - Changes in operating assets and liabilities: Accounts receivable - trade 312,000 (603,000 ) Inventories (2,654,000 ) 805,000 Deferred tax asset 1,041,000 - Prepaid expense (117,000 ) 15,000 Income tax receivable 40,000 (40,000 ) Security deposit - 10,000 Accounts payable 354,000 (189,000 ) Lease liability (37,000 ) - Accrued interest - 1,000 Accrued liabilities and other liabilities (73,000 ) 61,000 Product returns 53,000 20,000 Net cash provided by operating activities 3,200,000 3,475,000 CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquistion (529,000 ) - Net cash used ininvesting activities (529,000 ) - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 54,000 71,000 Proceeds from PPP loan - 450,000 Repurchases of common stock and options (444,000 ) (171,000 ) Net cash provided by (used in) financing activities (390,000 ) 350,000 CHANGE IN CASH 2,281,000 3,825,000 CASH, BEGINNING OF PERIOD 6,336,000 265,000 CASH, END OF PERIOD $ 8,617,000 $ 4,090,000 Supplemental disclosure operating activities Cash paid for interest $ - $ 7,000 Cash paid (refunded) for income taxes $ (45,000 ) $ - The accompanying notes are an integral part of these condensed consolidated financial statements FITLIFE BRANDS, INC. RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 For the three months ended September 30 , For the nine months ended September 30 , 2021 2020 2021 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net income $ 1,125,000 $ 1,645,000 $ 4,317,000 $ 2,981,000 Interest expense (income) (7,000 ) (2,000 ) (18,000 ) 7,000 Provision (benefit) for income taxes 313,000 17,000 1,041,000 (64,000 ) Depreciation and amortization 18,000 9,000 41,000 31,000 EBITDA 1,449,000 1,669,000 5,381,000 2,955,000 Non-cash and non-recurring adjustments Stock compensation expense 107,000 19,000 345,000 69,000 Non-recurring losses (gains) - - (453,000 ) (70,000 ) Adjusted EBITDA $ 1,556,000 $ 1,688,000 $ 5,273,000 $ 2,954,000 [email protected] Source: FitLife Brands, Inc.

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