FitLife Brands Announces Third Quarter 2022 Results

About this update from Fitlife Brands, Inc.

Omaha , Nov. 10, 2022 (GLOBE NEWSWIRE) -- FitLife Brands Announces Third Quarter 202 2 Resu l ts OMAHA, NE – November 10, 2022 -- FitLife Brands, Inc. (“FitLife” or the “Company”) (OTC: 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, 2022 . Highlights for the third quarter ended September 30 , 202 2 include: Total revenue increased 24% to $8.3 million . Online revenue increased 28% to $2.2 million and accounted for 26% of total revenue. Wholesale revenue increased 23% to $6.1 million and accounted for 74% of total revenue. Gross profit increased 10% to $3.2 million . The Company generated net income of $1.2 million compared to $1.1 million during the same quarter last year. Adjusted EBITDA increased to $1.9 million compared to $1.7 million during the third quarter of 2021. The Company generated $2.6 million of cash in the third quarter of 2022, resulting in a quarter-end cash balance of $14.9 million . For the third quarter ended September 30, 2022 , total revenue was $8.3 million compared to $6.7 million in the same quarter last year, an increase of 24%. The increase reflects increased demand from both wholesale and online channels. Management expects the Company’s wholesale revenue trends to remain lumpy based on the ordering patterns of our customers. As a result, we encourage investors to evaluate revenue trends for the wholesale channel over periods of two or more quarters. Growth in consumer purchases of the Company’s products in the wholesale channel, which tends to be a more stable indicator of demand, was positive during the third quarter, and remains positive thus far in the fourth quarter. After growing approximately 21% year-over-year during the first and second quarters of 2022, online revenue increased 28% during the third quarter. Online revenue growth has remained strong thus far during the fourth quarter, with a 31% growth rate during the month of October. Gross profit for the three months ended September 30, 2022 increased 10% to $3.4 million . Gross margin decreased to 39.0% compared to 43.9% during the same period last year. The reduction in the gross margin percentage for the quarter is primarily attributable to higher product costs. We expect the recent margin pressure will be temporary as production costs decline and as higher-margin online sales become a larger percentage of the Company’s total revenue. Net income for the third quarter of 2022 was $1.2 million compared to $1.1 million during the same quarter in 2021. Basic earnings per share was $0.27 and diluted earnings per share was $0.24 , compared to $0.25 and $0.23 during the same quarter in 2021, respectively. For the quarter ended September 30, 2022 , adjusted EBITDA, was $1.9 million compared to $1.7 million in the same period last year. Please see the non-GAAP financial measures table below for a reconciliation of net income to adjusted EBITDA. For the nine-month period ending September 30, 2022 , total revenue was $23.4 million , an increase of 13% over the comparable period in 2021, with wholesale revenue increasing 10% and online revenue increasing 24%. Gross profit increased 5% to $9.8 million , and the gross margin decreased to 42.0% compared to 45.5% last year. For the nine months ended September 30, 2022 , net income decreased 5% to $4.0 million from $4.2 million , primarily due to the forgiveness of the Company’s PPP loan during 2021. Basic earnings per share for the same time period was $0.87 compared to $0.95 last year, and diluted earnings per share decreased to $0.79 from $0.87 last year. For the nine months ended September 30, 2022 , adjusted EBITDA was $5.8 million compared to $5.3 million in the same period last year. Please see the non-GAAP financial measures table below for a reconciliation of net income to adjusted EBITDA. Dayton Judd , the Company’s Chairman and CEO, commented, “Despite a somewhat challenging operating environment, I am encouraged by the continued growth in our wholesale and online businesses. We continue to actively pursue 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, M&A/integration activities, restatement related expenses 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 , 2022 2021 (Unaudited) CURRENT ASSETS Cash $ 14,929,000 $ 9,897,000 Accounts receivable, net of allowance of doubtful accounts of $50,000 and $55,000 , respectively 1,535,000 945,000 Inventories, net of allowance for obsolescence of $203,000 and $56,000 , respectively 7,578,000 6,520,000 Prepaid expenses and other current assets 229,000 322,000 Total current assets 24,271,000 17,684,000 Property and equipment, net 53,000 70,000 Right of use asset, net of amortization of $363,000 and $322,000 , respectively 117,000 158,000 Intangibles, net of amortization of $62,000 and $30,000 , respectively 160,000 192,000 Goodwill 358,000 358,000 Deferred tax asset 1,992,000 3,045,000 TOTAL ASSETS $ 26,951,000 $ 21,507,000 LIABILITIES AND STOCKHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 3,966,000 $ 2,880,000 Accrued expense and other liabilities 625,000 491,000 Product returns 617,000 632,000 Lease liability - current portion 54,000 55,000 Total current liabilities 5,262,000 4,058,000 Long-term lease liability, net of current portion 63,000 103,000 TOTAL LIABILITIES 5,325,000 4,161,000 STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding as of September 30, 2022 and December 31, 2021 Common stock, $0.01 par value, 60,000,000 shares authorized; 4,555,957 and 4,552,485 issued and outstanding as of September 30, 2022 and December 31, 2021 , respectively 46,000 46,000 Treasury stock, 0 and 881,311 shares, respectively - (2,087,000 ) Additional paid-in capital 30,766,000 32,529,000 Accumulated deficit (9,186,000 ) (13,142,000 ) TOTAL STOCKHOLDERS' EQUITY 21,626,000 17,346,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,951,000 $ 21,507,000 FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (Unaudited) Three months ended Nine months ended September 30 September 30 2022 2021 2022 2021 Revenue $ 8,314,000 $ 6,705,000 $ 23,433,000 $ 20,710,000 Cost of goods sold 5,070,000 3,760,000 13,587,000 11,289,000 Gross profit 3,244,000 2,945,000 9,846,000 9,421,000 OPERATING EXPENSES: Selling, general and administrative 1,686,000 1,496,000 4,834,000 4,655,000 Depreciation and amortization 17,000 18,000 49,000 41,000 Total operating expenses 1,703,000 1,514,000 4,883,000 4,696,000 OPERATING INCOME 1,541,000 1,431,000 4,963,000 4,725,000 OTHER INCOME Interest income (43,000 ) (7,000 ) (59,000 ) (18,000 ) Gain on debt forgiveness - - - (453,000 ) Total other income (43,000 ) (7,000 ) (59,000 ) (471,000 ) PRE-TAX NET INCOME 1,584,000 1,438,000 5,022,000 5,196,000 PROVISION FOR INCOME TAXES 364,000 313,000 1,066,000 1,034,000 NET INCOME $ 1,220,000 $ 1,125,000 $ 3,956,000 $ 4,162,000 NET INCOME PER SHARE Basic $ 0.27 $ 0.25 $ 0.87 $ 0.95 Diluted $ 0.24 $ 0.23 $ 0.79 $ 0.87 Basic weighted average common shares 4,555,957 4,422,760 4,555,347 4,374,212 Diluted weighted average common shares 4,988,271 4,818,096 4,978,828 4,808,708 FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 Nine months ended September 30 2022 2021 (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,956,000 $ 4,162,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 49,000 41,000 Right of use asset amortization and lease liability 41,000 37,000 Allowance for doubtful accounts (5,000 ) 13,000 Allowance for inventory obsolescence 147,000 (19,000 ) Stock compensation expense 295,000 345,000 Forgiveness of PPP loan - (453,000 ) Changes in operating assets and liabilities: Accounts receivable (585,000 ) 572,000 Inventories (1,205,000 ) (2,786,000 ) Deferred tax asset 1,053,000 1,034,000 Prepaid expense and other current assets 93,000 (77,000 ) Accounts payable 1,086,000 354,000 Lease liability (41,000 ) (37,000 ) Accrued expense and other liabilities 134,000 (39,000 ) Product returns (15,000 ) 53,000 Net cash provided by operating activities 5,003,000 3,200,000 CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquistion of Nutrology - (529,000 ) Net cash used in investing activities - (529,000 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 29,000 54,000 Repurchases of common stock and options - (444,000 ) Net cash provided by (used in) financing activities 29,000 (390,000 ) CHANGE IN CASH 5,032,000 2,281,000 CASH, BEGINNING OF PERIOD 9,897,000 6,336,000 CASH, END OF PERIOD $ 14,929,000 $ 8,617,000 FITLIFE BRANDS, INC. EBITDA AND ADJUSTED EBITDA FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 For the three months ended September 30 , For the nine months ended September 30 , 2022 2021 2022 2021 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net income $ 1,220,000 $ 1,125,000 $ 3,956,000 $ 4,162,000 Interest income, net (43,000 ) (7,000 ) (59,000 ) (18,000 ) Provision for income taxes 364,000 313,000 1,066,000 1,034,000 Depreciation and amortization 17,000 18,000 49,000 41,000 EBITDA 1,558,000 1,449,000 5,012,000 5,219,000 Non-cash and non-recurring adjustments Stock compensation expense 91,000 107,000 295,000 345,000 M&A/integration expenses 6,000 109,000 214,000 204,000 Restatement-related costs 220,000 - 275,000 - Non-recurring gains - - - (453,000 ) Adjusted EBITDA $ 1,875,000 $ 1,665,000 $ 5,796,000 $ 5,315,000 [email protected] Source: FitLife Brands, Inc.

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