OMAHA, NE, May 15, 2023 (GLOBE NEWSWIRE) -- FitLife Brands, Inc. (“FitLife” or the “Company”) (OTC Pink: FTLF), a provider of innovative and proprietary nutritional supplements and wellness products, today announced financial results for the first quarter ended March 31, 2023.

Highlights for the first quarter ended March 31, 2023 include:

• The Company completed the acquisition of Mimi’s Rock Corp (“MRC”) on February 28, 2023. 
• Total revenue was $10.7 million, an increase of 47.2% compared to the first quarter of 2022. 
• Without giving effect to the acquisition of MRC (“Legacy FitLife”), Legacy FitLife revenue for the first quarter of 2023 was $8.1 million, an increase of 11.1% compared to the same period last year, driven by a 6.0% increase in wholesale revenue and a 25.6% increase in online revenue.  MRC contributed revenue of $2.6 million for the 32 days during the quarter that it was owned by the Company.
• Online revenue accounted for 47% of the Company’s total revenue during the first quarter of 2023 compared to 27% during the same period last year.
• Gross margin was 41.1% compared to 42.7% during the first quarter of 2022.  Excluding the impact of the purchase accounting valuation step-up for MRC inventory, gross margin for the first quarter of 2023 would have been 42.1%.
• Net income for the first quarter of 2023 was $0.2 million compared to $1.3 million during the same period last year.  Net income during the quarter was adversely affected by a number of acquisition-related items including transaction expenses of $1.4 million, amortization of the inventory step-up valuation of $0.1 million, and a loss on a currency hedge of $0.1 million.
• Adjusted EBITDA was $2.2 million, an increase of 30.4% compared to the first quarter of 2022.  Legacy FitLife adjusted EBITDA was $1.8 million, and MRC contributed $0.4 million of adjusted EBITDA for the 32 days during the quarter that it was owned by the Company.
• The Company ended the quarter with $12.5 million outstanding on its term loan and cash of $8.9 million, or total net debt of $3.6 million.

For the first quarter ended March 31, 2023, total revenue was $10.7 million, an increase of 47.2% compared to $7.3 million during the same period last year.  Online revenue for the quarter was $5.1 million, an increase of 160.1% compared to the quarter ended March 31, 2022.  Excluding the addition of MRC revenue, online sales for Legacy FitLife increased 25.6% during the quarter.  Wholesale revenue for the quarter ended March 31, 2023 was $5.6 million, an increase of 6.0% compared to the same period last year.  Online revenue accounted for 47% and 27% of the Company’s total revenue during the quarters ended March 31, 2023 and 2022, respectively.

Gross margin for the quarter ended March 31, 2023 was 41.1% compared to 42.7% during the same period in the prior year.  Purchase accounting requires inventory acquired in a business combination to be stepped up to its fair value at the time of acquisition, which includes a reasonable profit margin to be achieved upon sale of the inventory.  The total increase in the valuation of inventory acquired in the MRC business combination was $0.3 million, which amount is expensed through cost of goods sold as the inventory is sold.  Of this amount, approximately one third was expensed during the first quarter of 2023.  Management anticipates that almost all of the remaining stepped-up inventory will be sold during the second quarter of 2023.  Excluding the impact of the inventory step-up, gross margin during the quarter ended March 31, 2023 would have been 42.1%.

Net income for the first quarter of 2023 was $0.2 million compared to $1.3 million during the quarter ended March 31, 2022.  Net income was adversely impacted by a number of acquisition-related items including transaction expenses of $1.4 million, amortization of the inventory step-up valuation of $0.1 million, and a loss on a currency hedge of $0.1 million.  In addition, the effective tax rate for the quarter of 73% was substantially higher than usual, driven by taxation in international jurisdictions.  The Company has been working with international tax advisors since January to simplify and optimize the legal and tax structure of the Company’s newly acquired international subsidiaries.

Adjusted EBITDA for the quarter ended March 31, 2023 was $2.2 million, an increase of 30.4% compared to the same period in 2022.  Legacy FitLife adjusted EBITDA was $1.8 million, and MRC contributed $0.4 million of adjusted EBITDA for the 32 days during the quarter that it was owned by the Company. 

The Company ended the quarter with $12.5 million outstanding on its term loan and cash of $8.9 million, or total net debt of $3.6 million.  As previously disclosed, the Company intends to maintain a strong cash balance while it continues evaluating additional acquisition opportunities.  

Dayton Judd, the Company’s Chairman and CEO, commented “I am excited about the future potential for the FitLife and MRC businesses.  The combined business performed well during the first quarter, and we are making great progress on a number of initiatives to drive improvement in revenue and gross margins as well as reductions in SG&A and the effective tax rate.  Presently, although wholesale traffic is somewhat challenged, we continue to see strong growth in our online business.”

About FitLife Brands
FitLife Brands is a developer and marketer of innovative and proprietary nutritional supplements and wellness products for health-conscious consumers.  FitLife markets over 150 different products primarily online, but also through domestic and international GNC® franchise locations as well as through more than 17,000 additional domestic retail locations.  FitLife is headquartered in Omaha, Nebraska.  For more information, please visit our 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.

Non-GAAP Financial Measures 
  
The financial presentation below contains certain financial measures defined as “non-GAAP financial measures” by the SEC, including non-GAAP EBITDA and adjusted non-GAAP 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 GAAP. 
  
As presented herein, non-GAAP EBITDA excludes interest, income taxes, and depreciation and amortization. Adjusted non-GAAP EBITDA excludes, in addition to interest, taxes, depreciation and amortization, equity-based compensation, M&A/integration activities, restatement related expense and non-recurring gains or losses. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expense and other items that may not be indicative of its core operating results and business outlook. The Company believes that the inclusion of non-GAAP measures in the financial presentation herein allows investors to compare the Company’s financial results with the Company’s historical financial results and is an important measure of the Company’s comparative financial performance. 

investor@fitlifebrands.com