FitLife Brands Announces Third Quarter 2019 Results
OMAHA, Neb., Nov. 11, 2019 (GLOBE NEWSWIRE) -- 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 and nine months ended September 30, 2019.
Highlights for the quarter ended September 30, 2019 include:
- Total revenue increased 16.0% to $5.3 million.
- Direct-to-consumer online sales increased to 12% of total revenue, compared to 6% in the same quarter last year, with Energize and select iSatori products achieving the strongest unit movement.
- Gross profit improved 28.6% to $2.3 million.
- Gross margin increased to 42.4% compared to 38.2% in the same quarter last year.
- Net income increased 144.1% to $0.9 million.
- Net income per share available to common shareholders increased to $0.87 per share, or $0.72 per diluted share, compared to $0.33 per share, or $0.31 per diluted share, in the same quarter last year.
- The Company ended the quarter with $0.6 million of cash and no borrowings under the credit facility.
- The Company repurchased 82,216 shares during the quarter, or 8.1% of the shares outstanding as of the beginning of the quarter.
- Year to date, including the effect of the reverse/forward split implemented in April, the Company has repurchased 181,454 shares, or 16.3% of the shares outstanding as of the beginning of 2019.
- Subsequent to the end of the quarter, the board of directors increased the share repurchase authorization to $2.5 million.
For the third quarter ended September 30, 2019, total revenue was $5.3 million versus $4.6 million in the same quarter last year, an increase of 16.0%. The increase was primarily attributable to increased wholesale purchases from our retail partners coupled with continued growth in our online direct-to-consumer business. During the third quarter of 2019, online sales accounted for approximately 12% of the Company’s revenue, compared to 6% during the third quarter of 2018.
Gross profit improved to $2.3 million, an increase of 28.6% from the third quarter of 2018. Gross margin improved from 38.2% to 42.4% over the same time period. The improvement in gross margin was driven by product mix and higher online sales volumes.
Total operating expenses increased slightly from $1.3 million to $1.4 million, driven by an increased investment in sales and marketing.
Net income for the third quarter of 2019 was $0.9 million, an increase of 144.1% over the same quarter in 2018. The Company delivered basic earnings per share available to common shareholders of $0.87 in the third quarter of 2019, compared to $0.33 in the same quarter last year. Diluted earnings per share available to common shareholders increased from $0.31 in the third quarter of last year to $0.72 this year. Year to date, basic earnings per share available to common shareholders is $2.46, and diluted earnings per share available to common shareholders is $2.08.
As previously announced, during the third quarter the Company entered into a new $2.5 million revolving line of credit with Mutual of Omaha Bank. Advances under the line of credit, which remains undrawn to date, will bear interest at an annual rate of the one-month LIBOR plus 2.75%. Upon entering into the line of credit, the Company fully repaid its outstanding notes payable, including accrued and unpaid interest, using cash on hand.
During the third quarter of 2019, the Company repurchased 82,216 shares of common stock at an average price of $9.96, representing 8.1% of the shares outstanding as of the beginning of the quarter. In total for the year to date, including the effects of the reverse/forward stock split implemented in April, the Company has repurchased 181,454 shares of common stock at an average price of $7.63, representing 16.3% of the shares outstanding as of the beginning of 2019.
Subsequent to the end of the quarter, on November 6, 2019, the Company’s board of directors amended the share repurchase program, increasing the amount of authorized repurchases from $1.0 million to $2.5 million.
Dayton Judd, the Company’s Chairman and CEO, commented “I continue to be pleased with the Company’s performance. After many quarters of decline, the Company’s wholesale business returned to growth with GNC as well as with other wholesale partners. And we are excited about the launch of our liquid L-Carnitine product in 3,700 Walmart stores throughout the US. In addition, we continue to experience growth in online revenue, and recently launched new online-exclusive products during the fourth quarter.”
Mr. Judd continued, “Going forward, we intend to focus on driving continued organic growth. In addition, given our improved performance and strong balance sheet, the Company intends to explore opportunities to grow through prudent acquisitions. And, the Company intends to continue to repurchase shares as long as they remain an attractive investment option.”
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.
Contact: Dayton Judd [email protected]
| FITLIFE BRANDS, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| ASSETS: | September 30, | December 31, | ||||||
| 2019 | 2018 | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 557,000 | $ | 259,000 | ||||
| Accounts receivable, net of allowance of doubtful accounts, product returns, | ||||||||
| sales returns and incentive programs of $290,000 and $455,000, respectively | 3,170,000 | 1,433,000 | ||||||
| Inventories, net of allowance for obsolescence of $143,000 and $107,000, respectively | 2,482,000 | 3,523,000 | ||||||
| Prepaid expenses and other current assets | 63,000 | 223,000 | ||||||
| Total current assets | 6,272,000 | 5,438,000 | ||||||
| Property and equipment, net | 148,000 | 189,000 | ||||||
| Right of use asset, net of amortization of $203,000 | 277,000 | - | ||||||
| Goodwill | 225,000 | 225,000 | ||||||
| Security deposits | 10,000 | 10,000 | ||||||
| TOTAL ASSETS | $ | 6,932,000 | $ | 5,862,000 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 2,033,000 | $ | 2,628,000 | ||||
| Accrued expenses and other liabilities | 957,000 | 420,000 | ||||||
| Lease liability - current portion | 58,000 | - | ||||||
| Notes payable - related parties | - | 500,000 | ||||||
| Total current liabilities | 3,048,000 | 3,548,000 | ||||||
| LONG-TERM LEASE LIABILITY, net of current portion | 219,000 | - | ||||||
| TOTAL LIABILITIES | 3,267,000 | 3,548,000 | ||||||
| CONTINGENCIES AND COMMITMENTS | - | - | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding | ||||||||
| as of September 30, 2019 and December 31, 2018 | ||||||||
| Preferred stock Series A Preferred, $0.01 par value 1,000 shares authorized; 600 | ||||||||
| and 600 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | - | - | ||||||
| Common stock, $.01 par value, 15,000,000 shares authorized; 933,305 and 1,111,943 | ||||||||
| issued and outstanding as of September 30, 2019 and December 31, 2018 respectively | 11,000 | 11,000 | ||||||
| Treasury stock, 181,454 shares | (1,385,000 | ) | - | |||||
| Additional paid-in capital | 32,218,000 | 32,107,000 | ||||||
| Accumulated deficit | (27,179,000 | ) | (29,804,000 | ) | ||||
| Total stockholders' equity | $ | 3,665,000 | $ | 2,314,000 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 6,932,000 | $ | 5,862,000 | ||||
| FITLIFE BRANDS, INC. | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 | ||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30 | September 30 | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Revenue | $ | 5,316,000 | $ | 4,583,000 | $ | 15,812,000 | $ | 13,576,000 | ||||||
| Cost of goods sold | 3,063,000 | 2,831,000 | 9,163,000 | 8,102,000 | ||||||||||
| Gross profit | 2,253,000 | 1,752,000 | 6,649,000 | 5,474,000 | ||||||||||
| OPERATING EXPENSES: | ||||||||||||||
| General and administrative | 782,000 | 784,000 | 2,352,000 | 2,493,000 | ||||||||||
| Selling and marketing | 583,000 | 547,000 | 1,749,000 | 2,070,000 | ||||||||||
| Depreciation and amortization | 12,000 | 16,000 | 40,000 | 54,000 | ||||||||||
| Total operating expenses | 1,377,000 | 1,347,000 | 4,141,000 | 4,617,000 | ||||||||||
| OPERATING INCOME | 876,000 | 405,000 | 2,508,000 | 857,000 | ||||||||||
| OTHER EXPENSES (INCOME) | ||||||||||||||
| Interest expense | 14,000 | 39,000 | 47,000 | 104,000 | ||||||||||
| Other income | - | 1,000 | - | - | ||||||||||
| Gain on settlement | (29,000 | ) | - | (171,000 | ) | - | ||||||||
| Total other expense (income) | (15,000 | ) | 40,000 | (124,000 | ) | 104,000 | ||||||||
| NET INCOME BEFORE INCOME TAXES | 891,000 | 365,000 | 2,632,000 | 753,000 | ||||||||||
| INCOME TAXES | - | - | 7,000 | - | ||||||||||
| NET INCOME | 891,000 | 365,000 | 2,625,000 | 753,000 | ||||||||||
| PREFERRED STOCK DIVIDEND | (19,000 | ) | - | (37,000 | ) | - | ||||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 872,000 | $ | 365,000 | $ | 2,588,000 | $ | 753,000 | ||||||
| NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS: | ||||||||||||||
| Basic | $ | 0.87 | $ | 0.33 | $ | 2.46 | $ | 0.69 | ||||||
| Diluted | $ | 0.72 | $ | 0.31 | $ | 2.08 | $ | 0.65 | ||||||
| Basic weighted average common shares | 1,001,715 | 1,100,796 | 1,053,292 | 1,089,659 | ||||||||||
| Diluted weighted average common shares | 1,207,024 | 1,173,642 | 1,241,875 | 1,166,602 | ||||||||||
| FITLIFE BRANDS, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 | ||||||||
| (Unaudited) | ||||||||
| 2019 | 2018 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 2,625,000 | $ | 753,000 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 40,000 | 54,000 | ||||||
| Decrease in allowance for sales returns and doubtful accounts | (166,000 | ) | (557,000 | ) | ||||
| Increase (decrease) in allowance for inventory obsolescence | 36,000 | (42,000 | ) | |||||
| Common stock issued for services | 55,000 | 136,000 | ||||||
| Fair value of options issued for services | 94,000 | 85,000 | ||||||
| Gain on disposal of assets | - | 34,000 | ||||||
| Right of use asset - amortization | 66,000 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable - trade | (1,572,000 | ) | 1,829,000 | |||||
| Accounts receivable - factored | - | (2,458,000 | ) | |||||
| Inventories | 1,005,000 | (33,000 | ) | |||||
| Prepaid expenses | 160,000 | (14,000 | ) | |||||
| Customer note receivable | - | 5,000 | ||||||
| Security deposits | - | 12,000 | ||||||
| Accounts payable | (595,000 | ) | (103,000 | ) | ||||
| Accrued liabilities and other liabilities | 41,000 | (19,000 | ) | |||||
| Right of use asset - lease liability | (65,000 | ) | - | |||||
| Net cash provided by (used in) operating activities | 1,724,000 | (318,000 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from the sale of assets | - | 4,000 | ||||||
| Net cash provided by investing activities | - | 4,000 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of notes payable | 300,000 | - | ||||||
| Dividend payments on preferred stock | (37,000 | ) | - | |||||
| Secured payable to factor | - | 1,950,000 | ||||||
| Repurchases of common stock | (889,000 | ) | - | |||||
| Repayment of line of credit | - | (1,950,000 | ) | |||||
| Repayments of term loan | - | (415,000 | ) | |||||
| Repayments of note payable | (800,000 | ) | - | |||||
| Net cash used in financing activities | (1,426,000 | ) | (415,000 | ) | ||||
| INCREASE IN CASH | 298,000 | (729,000 | ) | |||||
| CASH, BEGINNING OF PERIOD | 259,000 | 1,262,000 | ||||||
| CASH, END OF PERIOD | $ | 557,000 | $ | 533,000 | ||||
| Supplemental disclosure operating activities | ||||||||
| Cash paid for interest | $ | 47,000 | $ | 104,000 | ||||
| Non-cash investing and financing activities | ||||||||
| Recording of lease asset and liability upon adoption of ASU-2016-02 | $ | 343,000 | $ | - | ||||
| Accrued liability for stock buyback | $ | 496,000 | $ | - | ||||
