FitLife Brands Announces First Quarter 2018 Results

First Profitable Quarter since June 2016; Ended Quarter Debt-Free

OMAHA, Neb.--()--FitLife Brands, Inc. (“FitLife”) (OTCPink: 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 the three months ended March 31, 2018.

For the first quarter ended March 31, 2018, total revenue was $4.6 million compared to $5.6 million reported in the first quarter of 2017. The decline in revenue was primarily attributable to declining foot traffic trends and lower unit sales in our primary distribution channel worsened by certain inventory adjustments by our largest customer in response to such trends. Moreover, continued general weakness at retail and the reduced effectiveness of our distribution partners outside GNC also contributed to revenue declines during the period. Despite lower revenue, gross profit was relatively flat for the three-month period ended March 31, 2018 at $1.9 million versus $1.9 million during the comparable period last year. Gross margin was 41.5% for the quarter versus 34.4% during the comparable period last year, which was negatively impacted by the $0.7 million non-recurring margin support agreement with our largest customer. Absent that charge, gross margin for the three-month period ended March 31, 2017 would have been 41.7%. Total operating expenses were down more than $0.5 million for the quarter ended March 31, 2018 versus the comparable period a year ago driven by the Company’s ongoing initiatives to reduce costs and maximize efficiency. We posted a net profit, our first since the second quarter of 2016, of $0.2 million for the quarter versus a loss of $(0.3) million during the same quarter last year. Adjusted EBITDA, which adds back interest, taxes, depreciation, amortization, and non-cash equity issuance costs for the three-month period ended March 31, 2018 was $0.3 million as compared to $(0.2) million for the comparable period last year. The Company ended the first quarter with $0.6 million in cash versus $1.3 million at the same time a year ago.

The first quarter saw the Company achieve several critical milestones. To begin, we posted our first quarterly profit since the second quarter of 2016, driven by more frequent and significant purchasing activity from our largest customer. We still have a long way to go, but I am optimistic that the recent improvement, in concert with our commitment to a strong partnership with our largest customer, will continue to positively impact the business throughout 2018 and beyond. Second, we began factoring select receivables during the quarter, which has provided the Company with enhanced liquidity and, perhaps more importantly, enabled the Company to pay-off all remaining debt obligations and end the quarter debt-free,” stated Dayton Judd, Interim Chief Executive Officer of FitLife Brands. “Finally, we successfully launched our first storefront on Amazon during the quarter. While still very early in the process, an enhanced emphasis on online sales is a major element of our new omni-channel strategy, which, if successful, will enable us to better support and protect all our brands while providing opportunities for revenue growth and margin expansion for the business. While significant challenges remain, we are beginning to see improving trends both at a macro-level and in the results of our largest customer. We remain committed to building on these trends to bring stability and growth potential back to the Company,” concluded Mr. Judd.

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 management and general health primarily through domestic and international GNC® franchise locations as well as through more than 25,000 additional domestic retail locations and online. FitLife is headquartered in Omaha, Nebraska. For more information please visit our 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 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 Adjusted 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 accordance with generally accepted accounting principles.

Non-GAAP Adjusted EBITDA excludes items such as interest, taxes, depreciation, amortization and non-cash stock based compensation and, when applicable, 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, which may not be indicative of its core operation results and business outlook.

 
FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
      (Unaudited)    
March 31, December 31,
2018 2017
 
CURRENT ASSETS
Cash $ 564,772 $ 1,261,933
Accounts receivable, net of allowance for sales returns and doubtful accounts of $1,177,157 and $1,263,674, respectively
- Trade 261,733 1,958,128
- Factored 2,209,964 -
Inventories, net of allowance for obsolescence of $81,524 and $48,730, respectively 2,384,942 2,873,831
Customer note receivable - 5,000
Prepaid expenses and other current assets   82,001     221,200  
Total current assets 5,503,412 6,320,092
 
PROPERTY AND EQUIPMENT, net 274,848 295,187
 
Goodwill 225,000 225,000
Security deposits   21,908     21,908  
TOTAL ASSETS $ 6,025,168   $ 6,862,187  
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
 
CURRENT LIABILITIES:
Accounts payable $ 2,708,221 $ 2,974,165
Accrued expenses and other liabilities 379,566 611,548
Secured payable to factor 1,715,434 -
Line of credit - 1,950,000
Term loan   -     414,877  
Total current liabilities   4,803,220     5,950,590  
 
CONTINGENCIES AND COMMITMENTS - -
 
STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value, 10,000,000 shares authorized as of March 31, 2018 and December 31, 2017:

Preferred stock Series A; 10,000,000 shares authorized; none issued and outstanding as of March 31, 2018 and December 31, 2017

- -

Preferred stock Series B; 1,000 shares authorized; none issued and outstanding as of March 31, 2018 and December 31, 2017

- -

Preferred stock Series C; 500 shares authorized; none issued and outstanding as of March 31, 2018 and December 31, 2017

- -

Common stock, $.01 par value, 150,000,000 shares authorized; 10,955,099 and 10,681,710 issued and outstanding as of March 31, 2018 and December 31, 2017, respectively

109,551 106,819
Additional paid-in capital 31,103,272 31,013,043
Accumulated deficit   (29,990,875 )   (30,208,265 )
Total stockholders' equity

$

1,221,948

  $ 911,597  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,025,168   $ 6,862,187  
 
The accompanying notes are an integral part of these condensed consolidated financial statements
 
 
FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
         
(Unaudited)
2018 2017
 
Revenue $ 4,614,286 $ 5,589,354
 
Cost of Goods Sold   2,698,618     3,668,790  
Gross Profit   1,915,668     1,920,564  
 
OPERATING EXPENSES:
General and administrative 870,382 1,160,069
Selling and marketing 806,109 947,386
Depreciation and amortization   18,840     119,338  
Total operating expenses   1,695,331     2,226,793  
OPERATING INCOME (LOSS)   220,337     (306,229 )
 
OTHER (INCOME) AND EXPENSES
Interest expense 3,473 26,661
Gain on sale of assets   (526 )   -  
Total other expenses   2,947     26,661  
 
NET INCOME (LOSS) $ 217,390   $ (332,890 )
 
NET INCOME (LOSS) PER SHARE:
Net income (loss) per common share - basic and diluted $ 0.02   $ (0.03 )
 
Weighted average common shares outstanding - basic and diluted   10,726,710     10,385,890  
 
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, 2018 AND 2017
         
(Unaudited)
2018 2017
 
Net income (loss) $ 217,390 $ (332,890 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 18,840 119,338
Allowance for sales returns and doubtful accounts (86,517 ) 717,706
Allowance for inventory obsolescence 32,794 -
Common stock issued for services 82,501 17,500
Fair value of options issued for services 10,460 11,584
Gain on sale of assets (526 ) -
Changes in operating assets and liabilities:
Accounts receivable (427,052 ) (2,477,923 )
Inventories 456,095 861,046
Prepaid expenses and other current assets 139,199 87,465
Customer note receivable 5,000 2,251
Accounts payable (265,944 ) 849,445
Accrued liabilities and other liabilities   (231,983 )   121,905  
Net cash used in operating activities   (49,743 )   (22,573 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets   2,025     -  
Net cash provided by (used in) investing activities   2,025     -  
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of line of credit (1,950,000 ) -
Repayment of term loan (414,877 ) (137,320 )
Secured payable to factor   1,715,434     -  
Net cash used in financing activities   (649,443 )   (137,320 )
 
DECREASE IN CASH (697,162 ) (159,893 )
CASH, BEGINNING OF PERIOD   1,261,933     1,293,041  
CASH, END OF PERIOD $ 564,772   $ 1,133,148  
 
Supplemental disclosure operating activities
 
Cash paid for interest $ 3,473   $ 26,661  
 
The accompanying notes are an integral part of these condensed consolidated financial statements

Contacts

FitLife Brands, Inc.
Mike Abrams
mabrams@fitlifebrands.com

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