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FitLife Brands Announces Third Quarter 2021 Results

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  • FTLF

Omaha, Nov. 12, 2021 (GLOBE NEWSWIRE) -- FitLife Brands Announces Third Quarter 2021 Results

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, 2021 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 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.

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




CONTACT: investor@fitlifebrands.com