FITLIFE BRANDS, INC. Q2 FY2024 earnings call

• Provided detailed brand-level reporting, defining 'contribution' as gross profit less advertising and marketing expense for specific brands.
• Intends to provide detailed info for acquired brands for up to 2 years post-acquisition, after which they'll be part of legacy FitLife.
• Highlighted seasonality of business, with first half typically stronger than second half. Achieved over 100,000 Amazon subscribers as a company. Balance sheet strength: net debt reduced by $6.5 million (36%) in H1 2024, with $15.4 million term loan outstanding and $3.7 million cash at end of Q2 2024.

Consolidated Business

• Total revenue increased 15% year-over-year in Q2 2024, with wholesale revenue up 18% and online revenue up 13%. Gross profit increased 27%, and excluding inventory step-up impact from MRC acquisition, gross margin expanded from 41.9% to 44.8%. Contribution increased 39%. Net income rose 34%, basic and fully diluted EPS increased 30% and 33% respectively. Adjusted EBITDA for Q2 2024 was $3.8 million, with LTM adjusted EBITDA at $12.4 million.

Legacy FitLife

• Total revenue in Q2 2024 was $6.8 million, with ~62% from wholesale and 38% from online sales. Wholesale revenue declined 10% YOY, while online revenue increased 7% YOY. Gross profit slightly increased due to higher margin online revenue offsetting wholesale decline. Gross margin was 44.2% (vs 42.0% last year). Contribution down less than 1% due to increased advertising spend. Subscriber count for legacy FitLife products grew ~19% YOY.

MRC (Mimi's Rock)

• Total revenue in Q2 2024 was $7.5 million, almost all from online sales. Dr. Tobias brand revenue up 4%, while skin care brands declined 37%. Gross profit increased 21% YOY. Excluding inventory step-up impact, gross margin rose from 41.7% to 48.2%. Contribution increased 61% YOY driven by skin care brand optimization, product mix benefits in Dr. Tobias, and 23% YOY reduction in advertising spend. Amazon subscribers for MRC products grew 5% YOY, with Dr. Tobias subscribers up ~8% and skin care subscribers down due to optimization.

MusclePharm

• Revenue in Q2 2024 was ~$2.7 million, with 48% online and 52% wholesale sales. Revenue increased 27% QoQ, with wholesale up 24% QoQ and online up 31% QoQ. Gross profit increased 16% QoQ but margin declined due to promotional activity. Contribution increased 8% QoQ. Subscriber count on Amazon grew from 5 in Dec 2023 to over 3,700 in Q2 2024, continuing to grow.

• Expect to continue double-digit year-over-year revenue growth for the remainder of 2024.
• Capital allocation strategy prioritizes M&A; if no attractive acquisitions, will consider share buybacks and dividends. Goal to consolidate within the supplement industry through acquisitions.

Q: About MusclePharm rebuilding and gaining back vendor and store faith A: Dialogue with potential partners is ongoing. Had meetings with large national chains and others scheduled. Customers plan to bring in products, but waiting for purchase orders (POs) to declare success. Seeing encouraging uptake with some customers already bringing in products and increasing purchases Q: Synergies between FitLife and LifeVantage A: No synergies. They operate in different channels. Dayton is on LifeVantage's board as an investor, not related to FitLife's operations