FitLife Brands Announces Fiscal First Quarter 2017 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 first quarter ended March 31, 2017.

“Facing a challenging retail environment, many of our customers are choosing to hold less inventory, which has led to some lumpiness in the year over year comparisons”

Highlights for the quarter-ended March 31, 2017 include:

  • Total revenue decreased 29% to $5.6 million for the quarter.
  • Net loss for the quarter was $0.3 million or ($0.03) per share, versus a gain of $0.8 million or $0.07 per share.

For the first quarter ended March 31, 2017, total revenue was $5.6 million, a 29% decrease over reported revenue of $7.9 million last year. During the quarter, the Company incurred a one-time non-recurring adjustment to revenue of $700,000 related to a credit memorandum with our largest customer. Excluding the one-time charge, total revenue would have been $6.3 million for the first quarter of 2017. Core FitLife revenue for the quarter was $4.1 million versus $5.3 million a year ago. Excluding the revenue adjustment, core FitLife revenue would have been $4.8 million, a decline of 8% from the prior period. iSatori generated $1.5 million in revenue compared to $2.6 million for the first quarter of 2016. In addition to the non-recurring credit, core FitLife and iSatori’s revenue declines were both primarily attributable to fewer new product introductions during the first quarter of 2017 as compared to the first quarter of 2016. On average we introduce approximately 8 to 10 new products every 6 months, but the timing of such product launches can vary from quarter to quarter.

Gross margin was 34.4% for the quarter compared to 45.9% in the same period a year ago. Excluding the revenue adjustment, gross margin would have been 46.9%. Operating expenses were 39.8% of revenue as reported and 35.4% excluding the revenue adjustment versus 34.3% last year.

First quarter net loss was $0.3 million or ($0.03) per share versus a gain of $0.8 million or $0.07 per share last year. Excluding the one-time revenue adjustment, net income would have been $0.4 million or $0.03 per share. The core FitLife business posted a net loss of $0.2 million relative to net income of $0.7 million in the first quarter of 2016. Absent the revenue adjustment, net income for the core FitLife business would have been $0.5 million. iSatori lost ($115,000) as a result of lower sales levels compared to a gain of $159,000 in the same period a year ago.

The Company ended the first quarter with $1.1 million in cash, down from $1.3 million at December 31, 2016. At quarter end, total debt decreased to $2.7 million from $2.9 million at the end of 2016.

“Facing a challenging retail environment, many of our customers are choosing to hold less inventory, which has led to some lumpiness in the year over year comparisons,” said John S. Wilson, Chief Executive Officer of FitLife Brands. “We also absorbed a non-recurring credit from our largest customer of $700,000 in the quarter, which further reduced our revenue in the first quarter. In fact, without the one-time adjustment to revenue we incurred during the quarter, we would have generated positive net income, which we feel is a testament to our strong fundamentals and conservative management of the business. We continue with our efforts to streamline the business and reduced our expenses in the quarter by almost $500,000 and our cash position remains solid with cash flow from operations essentially breakeven.”

Following the issuance of first 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)    
ASSETS: March 31, December 31,
2017 2016
 
CURRENT ASSETS
Cash $ 1,133,148 $ 1,293,041
Accounts receivable, net 4,385,965 2,792,649
Security deposits 24,956 24,956
Inventory 2,895,670 3,756,716
Note receivable, current portion 53,227 2,782
Prepaid income tax 120,000 120,000
Prepaid expenses and other current assets   48,549     136,014  
Total current assets 8,661,514 8,126,158
 
PROPERTY AND EQUIPMENT, net 157,166 171,004
 
Note receivable, net of current portion - 52,695
Deferred Taxes 689,000 689,000
Intangibles assets, net   6,402,006     6,507,505  
TOTAL ASSETS $ 15,909,686   $ 15,546,363  
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
 
CURRENT LIABILITIES:
Accounts payable $ 2,446,192 $ 1,596,748
Accrued expenses and other liabilities 494,769 539,765
Litigation Reserve - -
Income tax payable - -
Line of credit 1,950,000 1,950,000
Term loan agreement, current portion 549,743 544,825
Notes payable   9,860     12,700  
Total current liabilities 5,450,564 4,644,038
 
LONG-TERM DEBT, net of current portion 229,779 369,177
   
TOTAL LIABILITIES 5,680,344 5,013,215
 
CONTINGENCIES AND COMMITMENTS - -
 
STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value, 10,000,000 shares authorized as of March 31, 2017 and December 31, 2016:

Preferred stock Series A; 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2017 and December 31, 2016

- -

Preferred stock Series B; 1,000 shares authorized; 0 shares issued and outstanding as of March 31, 2017 and December 31, 2016

- -

Preferred stock Series C; 500 shares authorized; 0 shares issued and outstanding as of March 31, 2017 and December 31, 2016

- -

Common stock, $.01 par value, 150,000,000 shares authorized; 10,441,469 and 10,449,520 issued and outstanding as of March 31, 2017 and December 31, 2016, respectively

104,415 104,495
Subscribed common stock 287 339
Treasury stock - (44,416.17 )
Additional paid-in capital 30,904,089 30,919,289
Accumulated deficit   (20,779,449 )   (20,446,559 )
Total stockholders' equity $ 10,229,342   $ 10,533,148  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 15,909,686   $ 15,546,363  
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
       
(Unaudited)
2017 2016
 
Revenue $ 5,589,354   $ 7,882,953  
Total 5,589,354 7,882,953
 
Cost of Goods Sold   3,668,790     4,264,691  
Gross Profit 1,920,564 3,618,262
 
OPERATING EXPENSES:
General and administrative 1,160,069 1,378,859
Selling and marketing 947,386 1,196,629
Depreciation and amortization   119,338     124,756  
Total operating expenses   2,226,793     2,700,244  
OPERATING INCOME (LOSS)   (306,229 )   918,018  
 
OTHER (INCOME) AND EXPENSES
Interest expense 26,661 29,429
Other expense (income)   -     (565 )
Total other (income) expense 26,661 28,864
 
INCOME TAXES (BENEFIT) - 75,000
   
NET INCOME (LOSS) $ (332,890 ) $ 814,154  
 
NET INCOME (LOSS) PER SHARE:
Basic $ (0.03 ) $ 0.08  
 
Diluted $ (0.03 ) $ 0.07  
 
Basic   10,441,469     10,385,890  
 
Diluted   11,472,013     11,398,715  
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
       
(Unaudited)
2017 2016
 
Net income $ (332,890 ) $ 814,154

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

Depreciation and amortization 119,338 124,756
Capitalization of select merger costs - -
Common stock issued (cancelled) for services 17,500 43,831
Warrants and options issued (cancelled) for services 11,585 15,166
Gain on write-up of investment - -
Intercompany transfer - (0 )
Changes in operating assets and liabilities:
Accounts receivable (1,593,316 ) (2,533,242 )
Inventory 861,047 1,253,518
Deferred tax asset - 123,879
Prepaid income tax - 75,000
Prepaid expenses 87,466 37,470
Note receivable 2,250 3,936
Deposits - -
Accounts payable 849,444 (1,053,510 )
Accrued liabilities (44,996 ) (102,222 )
Litigation reserve - (5,775 )
Income tax payable   -     -  
Net cash provided by (used in) operating activities   (22,573 )   (1,203,040 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - (9,772 )
Long-term investment - 2,027
Repurchases of common stock   -     -  
Net cash provided by (used in) investing activities   -     (7,745 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt - 520,000
Payments for redemption of preferred stock - -
Repayments of note payable   (137,320 )   (134,166 )
Net cash provided by (used in) financing activities   (137,320 )   385,834  
 
INCREASE (DECREASE) IN CASH (159,893 ) (824,951 )
CASH, BEGINNING OF PERIOD   1,293,041     1,532,550  
CASH, END OF PERIOD $ 1,133,148   $ 707,599  
 
Supplemental disclosure operating activities
 
Cash paid for interest $ 26,661   $ 29,429  
 
The accompanying notes are an integral part of these consolidated financial statements
 

Contacts

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

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