FTLF - FitLife Brands Announces First Quarter 2019 Results
FitLife Brands, Inc. (“FitLife” or the “Company”) (OTC Pink: FTLF), an international 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 months ended March 31, 2019.
Highlights for the quarter ended March 31, 2019 include:
- Total revenue increased 27.4% to $5.9 million.
- Direct-to-consumer online sales increased to 10% of total revenue, compared to 1% in the same quarter last year, with Energize and select iSatori products achieving the strongest unit movement.
- Gross profit improved 32.7% to $2.5 million.
- Gross margin increased to 43.2% compared to 41.5% in the same quarter last year.
- Operating expense declined 21.0% to $1.3 million.
- Net income improved to $1.2 million compared to $0.2 million in the same quarter last year.
- EPS increased to $1.07 per share, or $0.94 per diluted share, compared to $0.20 per share in the same quarter last year
For the first quarter ended March 31, 2019, total revenue was $5.9 million versus $4.6 million in the same quarter last year, an increase of 27.4%. The increase was primarily attributable to increased wholesale purchases from our retail partners coupled with a significant increase in online direct-to-consumer sales. During the first quarter of 2019, online sales accounted for approximately 10% of the Company’s revenue, compared to 1% during the first quarter of 2018.
Gross profit improved to $2.5 million, an increase of 32.7% from the first quarter of 2018. Gross margin improved from 41.5% to 43.2% over the same time period. The improvement in gross margin was driven by higher total sales volume, reduced returns, and the increase in online revenue, which delivers a substantially higher gross margin for the Company.
Total operating expenses declined 21% to $1.3 million, driven by ongoing cost reduction initiatives and budgetary controls.
Net income for the first quarter of 2019 was $1.2 million, which represents the largest quarterly profit the company has ever achieved. The Company delivered basic earnings per share of $1.07—or $0.94 per diluted share—in the quarter, compared to $0.20 per share in the same quarter last year.
As previously announced, subsequent to the end of the first quarter of 2019, the Company implemented a 1-for-8,000 reverse stock split, which was followed immediately thereafter by an 800-for-1 forward stock split (the “Reverse/Forward Split”). As a result of the Reverse/Forward Split, holders of fewer than 8,000 pre-split shares of the Company’s common stock received cash in lieu of fractional shares at a value of $0.57 per pre-split share. The Reverse/Forward Split resulted in the repurchase of fractional shares equivalent to 992,659 pre-split shares, or approximately 8.9% of our shares of common stock outstanding prior to the Reverse/Forward Split. Following the Reverse/Forward Split, there are 1,014,740 shares of the Company’s common stock outstanding.
Dayton Judd, the Company’s Chairman and CEO, commented, “I am pleased with the Company’s performance during the first quarter of 2019. Our team has improved the performance of almost all of our brands, and our efforts to diversify into online revenue sources are off to a good start. The combination of stronger top-line performance, expanding margins due to online sales, and lower operating costs resulted in a record quarter for the Company.”
Mr. Judd continued, “Our online strategy varies by brand. For our GNC-exclusive brands, our focus is on eliminating unauthorized online resellers in order to protect our GNC franchise partners. For our other brands, we are pricing our products competitively to drive revenue and unit growth. Given this strategy, our top-selling products online include Energize as well as some of our iSatori products. Going forward, we intend to continue executing our strategy. With our improved performance and stronger balance sheet, we also intend to invest more money into marketing in an effort to continue to drive profitable top-line growth for all of our brands.”
About FitLife Brands
FitLife Brands is a developer and marketer of innovative and proprietary nutritional supplements for health-conscious consumers. FitLife markets over 80 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 25,000 additional domestic retail locations and, increasingly, online. FitLife is headquartered in Omaha, Nebraska. For more information please visit our new 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. |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 |
| Three Months Ended |
| March 31 |
| (Unaudited) |
| 2019 |
| 2018 |
| Revenue |
| $ |
| 5,878,000 |
| $ |
| 4,614,000 |
| Cost of Goods Sold |
| 3,337,000 |
| 2,699,000 |
| Gross Profit |
| 2,541,000 |
| 1,915,000 |
| OPERATING EXPENSES: |
| General and administrative |
| 774,000 |
| 870,000 |
| Selling and marketing |
| 550,000 |
| 806,000 |
| Depreciation and amortization |
| 15,000 |
| 19,000 |
| Total operating expenses |
| 1,339,000 |
| 1,695,000 |
| OPERATING INCOME |
| 1,202,000 |
| 220,000 |
| OTHER INCOME (EXPENSES) |
| Interest expense |
| 15,000 |
| 3,000 |
| Other |
| - |
| (1,000 |
| ) |
| Total other expense |
| 15,000 |
| 2,000 |
| NET INCOME |
| $ |
| 1,187,000 |
| $ |
| 218,000 |
| NET INCOME PER SHARE |
| Basic |
| $ |
| 1.07 |
| $ |
| 0.20 |
| Diluted |
| $ |
| 0.94 |
| $ |
| 0.20 |
| Basic weighted average common shares |
| 1,111,943 |
| 1,072,671 |
| Diluted weighted average common shares |
| 1,268,526 |
| 1,072,671 |
| The accompanying notes are an integral part of these condensed consolidated financial statements |
| FITLIFE BRANDS, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| ASSETS: |
| March 31, |
| December 31, |
| 2019 |
| 2018 |
| (Unaudited) |
| CURRENT ASSETS |
| Cash |
| $ |
| 438,000 |
| $ |
| 259,000 |
| Accounts receivable, net of allowance of doubtful accounts, product returns, sales returns and incentive programs of $315,000 and $455,000, respectively |
| 3,817,000 |
| 1,433,000 |
| Inventories, net of allowance for obsolescence of $119,000 and $107,000, respectively |
| 2,338,000 |
| 3,523,000 |
| Prepaid expenses and other current assets |
| 113,000 |
| 223,000 |
| Total current assets |
| 6,706,000 |
| 5,438,000 |
| Property and equipment, net |
| 174,000 |
| 189,000 |
| Right of use asset |
| 320,000 |
| - |
| Goodwill |
| 225,000 |
| 225,000 |
| Security deposits |
| 10,000 |
| 10,000 |
| TOTAL ASSETS |
| $ |
| 7,435,000 |
| $ |
| 5,862,000 |
| LIABILITIES AND STOCKHOLDERS' EQUITY: |
| CURRENT LIABILITIES: |
| Accounts payable |
| $ |
| 2,307,000 |
| $ |
| 2,628,000 |
| Accrued expenses and other liabilities |
| 440,000 |
| 420,000 |
| Lease liability - current portion |
| 83,000 |
| - |
| Notes payable - Related Parties |
| 815,000 |
| 500,000 |
| Total current liabilities |
| 3,645,000 |
| 3,548,000 |
| LONG-TERM LEASE LIABILITY, net of current portion |
| 240,000 |
| - |
| TOTAL LIABILITIES |
| 3,885,000 |
| 3,548,000 |
| STOCKHOLDERS' EQUITY: |
| Preferred Stock, $0.01 par value, 10,000,000 shares authorized, none outstanding as of March 31, 2019 and December 31, 2018: |
| Preferred Stock Series A Preferred, $0.01 par value 1,000 shares authorized; 600 and 0 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively |
| - |
| - |
| Common stock, $0.01 par value, 15,000,000 shares authorized; 1,113,952 and 1,111,943 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively |
| 111,000 |
| 111,000 |
| Additional paid-in capital |
| 32,056,000 |
| 32,007,000 |
| Accumulated deficit |
| (28,617,000 |
| ) |
| (29,804,000 |
| ) |
| Total stockholders' equity |
| 3,550,000 |
| $ |
| 2,314,000 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ |
| 7,435,000 |
| $ |
| 5,862,000 |
| The accompanying notes are an integral part of these condensed consolidated financial statements |
| FITLIFE BRANDS, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 |
|
|
| Three Months Ended |
|
|
| March 31 |
| (Unaudited) |
| 2019 |
| 2018 |
| CASH FLOWS FROM OPERATING ACTIVITIES: |
| Net income |
| $ |
| 1,187,000 |
| $ |
| 218,000 |
| Adjustments to reconcile net income to net cash used in operating activities: |
| Depreciation and amortization |
| 15,000 |
| 19,000 |
| Allowance for doubtful accounts and product returns |
| (140,000 |
| ) |
| (87,000 |
| ) |
| Allowance for inventory obsolescence |
| 12,000 |
| 33,000 |
| Common stock issued for services |
| 23,000 |
| 83,000 |
| Fair value of options issued for services |
| 26,000 |
| 10,000 |
| Gain on disposal of assets |
| - |
| (1,000 |
| ) |
| Right of use asset - Amortization |
| 23,000 |
| - |
| Right of use asset - Lease Liability |
| (20,000 |
| ) |
| - |
| Changes in operating assets and liabilities: |
| Accounts receivable - trade |
| (2,244,000 |
| ) |
| (427,000 |
| ) |
| Inventories |
| 1,173,000 |
| 456,000 |
| Prepaid expense |
| 110,000 |
| 139,000 |
| Customer note receivable |
| - |
| 5,000 |
| Accounts payable |
| (321,000 |
| ) |
| (266,000 |
| ) |
| Accrued interest on notes |
| 15,000 |
| - |
| Accrued liabilities and other liabilities |
| 20,000 |
| (232,000 |
| ) |
| Net cash used in operating activities |
| (121,000 |
| ) |
| (50,000 |
| ) |
| CASH FLOWS FROM INVESTING ACTIVITIES: |
| Proceeds from the sale of assets |
| - |
| 2,000 |
| Net cash provided by investing activities |
| - |
| 2,000 |
| CASH FLOWS FROM FINANCING ACTIVITIES: |
| Proceeds from issuance of Notes Payable - related party |
| 300,000 |
| - |
| Repayment of line of credit |
| - |
| (1,950,000 |
| ) |
| Repayments of term loan |
| - |
| (415,000 |
| ) |
| Repayments of note payable |
| - |
| 1,715,000 |
| Net cash provided by (used in) financing activities |
| 300,000 |
| (650,000 |
| ) |
| CHANGE IN CASH |
| 179,000 |
| (698,000 |
| ) |
| CASH, BEGINNING OF PERIOD |
| 259,000 |
| 1,262,000 |
| CASH, END OF PERIOD |
| $ |
| 438,000 |
| $ |
| 564,000 |
| Supplemental disclosure operating activities |
| Cash paid for interest |
| $ |
| 15,000 |
| $ |
| 3,000 |
| Non-cash investing and financing activities |
| Recording of lease asset and liability upon adoption of ASU-2016-02 |
| $ |
| 343,000 |
| $ |
| - |
| The accompanying notes are an integral part of these condensed consolidated financial statements |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190515006032/en/
FitLife Brands
Dayton Judd
Chief Executive Officer
djudd@fitlifebrands.com