FitLife Brands Announces Fourth Quarter and Full Year 2016 Results

OMAHA, Neb.--()--FitLife Brands, Inc. ("FitLife") (OTCBB:FTLF), an international provider of innovative and proprietary nutritional supplements for health conscious consumers marketed under the brand names NDS Nutrition Products™ ("NDS") (www.ndsnutrition.com), PMD® (www.pmdsports.com), SirenLabs® (www.sirenlabs.com), CoreActive® (www.coreactivenutrition.com), Metis Nutrition™ (www.metisnutrition.com), iSatori™ (www.isatori.com), Energize (www.tryenergize.com), and BioGenetic Laboratories, (www.biogeneticlabs.com), today announced results for its fiscal fourth quarter and full year 2016 ended December 31, 2016.

“We are encouraged by our revenue performance for the fourth quarter and full year given the industry headwinds we are currently facing”

Highlights for the fourth quarter and full year ended December 31, 2016 include:

  • Total revenue for the fourth quarter was $3.7 million.
  • Core FitLife revenue increased 16% to $2.8 million from $2.4 million in the fourth quarter of 2015.
  • Net loss for the fourth quarter was $1.2 million or ($0.11) per share.
  • For the full year ended December 31, total revenue increased 41% to $25.3 million versus $17.9 million for 2015.
  • Core FitLife revenue for the year was $18.3 million, an increase of 10.7% over $16.5 million in the same period a year ago.
  • iSatori contributed $7.1 million in revenue for the year.
  • Net income for the full year ended December 31, 2016 was $0.4 million or $0.03 per share compared to a loss of $1.1 million or ($0.13) per share last year.

For the fourth quarter ended December 31, 2016 total revenue was $3.7 million compared to $3.9 million for the fourth quarter of 2015. Core FitLife revenue was $2.8 million, an increase of approximately 16% over the $2.4 million in the same period a year ago. This increase was offset by a $0.5 million decline in iSatori sales from $1.4 million a year ago to $0.9 million in the fourth quarter of 2016. The decline in iSatori revenue is the result of management’s decision to reduce and eliminate unprofitable SKUs in the fourth quarter of 2015 following the closing of the acquisition on September 30, 2015.

Gross margin was 25.0% for the quarter compared to 31.6% in the same period a year ago. The reduction in gross margin is due to a non-cash charge for inventory adjustments of approximately $450,000. Operating expenses decreased to 60.3% of revenue in the fourth quarter from 78.4%. The decrease was the result of management’s continued rationalization of the Company’s cost structure and the absence of several one-time costs, including those related to the acquisition.

Net loss for the fourth quarter of 2016 was $1.2 million or ($0.11) per share compared to a loss of $1.8 million in the prior year period. The net loss for the core FitLife business is expected to be $0.8 million versus a net loss of $1.1 million last year. iSatori’s net loss was approximately $0.4 million, an improvement from a net loss of $0.7 million in the fourth quarter of 2015.

For the full year ended December 31, 2016, total revenue was $25.3 million versus $17.9 million in 2015. Core FitLife revenue for 2016 rose to $18.3 million from $16.5 million a year ago. The approximate 11% increase in core FitLife revenue is in line with our key metric for the health of the business, unit movement at retail. iSatori contributed $7.1 million in sales during 2016 versus $1.4 million in 2015, which represented only the fourth quarter following the acquisition closing.

Net income for the year ended December 31, 2016 totaled $0.4 million or $0.03 per share versus a net loss of $1.2 million or ($0.13) per share. The core FitLife business generated net income of $0.8 million compared to a net loss of $0.5 million a year ago. Partially offsetting the positive contribution from the core FitLife business, was the $0.4 million net loss at iSatori.

The Company ended the year with $1.3 million in cash versus $1.5 million at December 31, 2015. At year end, total debt decreased to $2.9 million from $3.4 million at the end of the first quarter and $3.0 million at December 31, 2015.

“We are encouraged by our revenue performance for the fourth quarter and full year given the industry headwinds we are currently facing,” said John S Wilson, CEO of FitLife Brands. “Our unit movement at retail remains strong, and we believe we are taking advantage of market conditions and gaining market share. Despite the inventory adjustment expense in the fourth quarter, our core FitLife business returned to profitability in 2016 after posting a loss in 2015. While we were not able to achieve our goal to generate positive contribution from iSatori this year, we have made significant strides to improve the business and will continue to work on ways to grow its revenue and reduce its cost structure.”

“Innovation and new product introductions remain a key element of our business. Revenue from new products, which includes new products, reformulated products and new flavors, consistently account for 25% of revenue on a trailing 12-month basis. That said, the number of new products introduced within any specific quarter can vary greatly. Case in point, during the first quarter of 2016 we introduced 36 new products as compared to only 6 new products during the first quarter of 2017. The timing of such introductions causes a degree of lumpiness to certain quarterly comparisons.”

Following the issuance of fourth quarter financial results, the company will provide recorded comments that can be accessed on the FitLife Brands' website under the "Investor Relations" section.

About FitLife Brands

FitLife Brands is a marketer and manufacturer 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. FitLife is headquartered in Omaha, Nebraska. For more information, please visit our new website at www.fitlifebrands.com.

Forward-Looking Statement

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

This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission: non-GAAP net income, non-GAAP earnings per share. 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 accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures will be provided upon the completion of the Company’s annual audit.

Non-GAAP net income excludes items such as impairment charges, allowance for doubtful accounts, charges to consolidate and integrate recently acquired businesses, costs of closing corporate facilities, non-cash stock based compensation and other one-time cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash stock based compensation, charges to consolidate and integrate recently acquired businesses, costs for closing corporate facilities, amortization of acquired intangible assets and other one-time cash and non-cash charges. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses or net purchases of property and equipment, as the case may be, which may not be indicative of its core operation results and business outlook.

 
FITLIFE BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
   
2016 2015
 
Revenue $ 25,313,601   $ 17,931,464  
Total 25,313,601 17,931,464
 
Cost of Goods Sold   15,242,537     11,653,057  
Gross Profit 10,071,064 6,278,407
 
OPERATING EXPENSES:
General and administrative 5,002,149 4,141,937
Selling and marketing 4,118,414 2,926,063

Depreciation and amortization

  478,235     300,141  
Total operating expenses   9,598,798     7,368,141  
OPERATING INCOME (LOSS)   472,265     (1,089,734 )
 
OTHER (INCOME) AND EXPENSES
Interest expense 109,391 90,410
Other expense (income)   (5,204 )   13,768  
Total other (income) expense 104,187 104,178
 
INCOME TAXES (BENEFIT) - (27,972 )
   
NET INCOME (LOSS) $ 368,078   $ (1,165,940 )
 
NET INCOME (LOSS) PER SHARE:
Basic $ 0.04   $ (0.13 )
 
Diluted $ 0.03   $ (0.13 )
 
Basic   10,429,452     8,677,433  
 
Diluted   11,521,344     8,677,433  
 

The accompanying notes are an integral part of these consolidated financial statements

 
 
FITLIFE BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
   
ASSETS: December 31, December 31,
2016 2015
 
CURRENT ASSETS
Cash $ 1,293,041 $ 1,532,550
Accounts receivable, net 2,792,649 2,684,567
Security deposits 24,956 26,077
Inventory 3,756,716 4,790,301
Note receivable, current portion 2,782 16,517
Prepaid income tax 120,000 152,000
Prepaid expenses and other current assets   136,014     334,483  
Total current assets 8,126,158 9,536,493
 
PROPERTY AND EQUIPMENT, net 171,004 226,804
 
Note receivable, net of current portion 52,695 52,695
Deferred Taxes 689,000 812,879
Intangibles assets, net   6,507,505     6,929,505  
TOTAL ASSETS $ 15,546,363   $ 17,558,378  
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
 
CURRENT LIABILITIES:
Accounts payable $ 1,596,748 $ 3,363,906
Accrued expenses and other liabilities 539,765 1,003,832
Litigation Reserve - 95,775
Line of credit 1,950,000 1,490,305
Term loan agreement, current portion 544,825 525,589
Notes payable   12,700     54,036  
Total current liabilities 4,644,038 6,533,443
 
LONG-TERM DEBT, net of current portion 369,177 914,138
   
TOTAL LIABILITIES 5,013,215 7,447,581
 
CONTINGENCIES AND COMMITMENTS - -
 
STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value, 10,000,000 shares authorized as of December 31, 2016 and 2015:

Preferred stock Series A; 10,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2016 and 2015

-

-

Preferred stock Series B; 1,000 shares authorized; 0 shares issued and outstanding as of December 31, 2016 and 2015

-

-

Preferred stock Series C; 500 shares authorized; 0 shares issued and outstanding as of December 31, 2016 and 2015

-

-

Common stock, $.01 par value, 150,000,000 shares authorized; 10,449,520 and 8,198,516 issued and outstanding as of December 31, 2015 and December 31, 2014, respectively

104,495

104,443

Subscribed common stock: 33,869 and 9,688 shares pending issuance as of December 31, 2016 and December 31, 2015, respectively

339

97

Treasury stock (44,417 ) (142,228 )
Additional paid-in capital 30,919,289 30,963,122
Accumulated deficit   (20,446,559 )   (20,814,637 )
Total stockholders' equity $ 10,533,147   $ 10,110,797  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 15,546,363   $ 17,558,378  
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
FITLIFE BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
   

2016

2015
 
Net income $ 368,078 $ (1,165,940 )

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization 478,235 300,141
Capitalization of select merger costs - (57,507 )
Common stock issued (cancelled) for services 40,508 453,779
Warrants and options issued (cancelled) for services 58,178 -
Gain on write-up of investment - -
Intercompany transfer - (746,784 )
Changes in operating assets and liabilities:
Accounts receivable (108,082 ) (116,269 )
Inventory 1,033,585 (1,559,392 )
Deferred tax asset 123,879 (66,565 )
Prepaid income tax 32,000 (152,000 )
Prepaid expenses 198,469 195,430
Note receivable 13,735 4,074
Deposits - 1,060
Accounts payable (1,767,159 ) 522,591
Accrued liabilities (464,067 ) (123,814 )
Litigation reserve (95,775 ) 95,775
Income tax payable   -     (40,000 )
Net cash provided by (used in) operating activities   (88,416 )   (2,455,421 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (23,405 ) (12,833 )
Proceeds from sale of assets (3,177 ) -
Repurchases of common stock   (44,413 )   (398,209 )
Net cash provided by (used in) investing activities   (70,995 )   (411,042 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 459,695 -
Payments for redemption of preferred stock - -
Repayments of note payable   (539,794 )   (660,201 )
Net cash provided by (used in) financing activities   (80,099 )   (660,201 )
 
INCREASE (DECREASE) IN CASH (239,510 ) (3,526,665 )
CASH, BEGINNING OF PERIOD   1,532,551     5,059,215  
CASH, END OF PERIOD $ 1,293,041   $ 1,532,550  
 
Supplemental disclosure operating activities
 
Cash paid for interest $ 109,391   $ 90,410  
 
The accompanying notes are an integral part of these consolidated financial statements
 

Contacts

Three Part Advisors, LLC
Jeff Elliott, 972-423-7070
or
David Burtzlaff, 817-527-8837
CFA

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