FITLIFE BRANDS, INC. Q1 FY2025 earnings call

• Tariffs: 90-day deescalation on China ingredients noted, inventory at all-time high due to pre-tariff stocking.
• Balance Sheet: Strong, net debt 0.4x adjusted EBITDA, lower now due to Q2 cash.
• M&A Spend: Elevated M&A-related expense, active in pursuing transactions.
• Subscriptions: ~104,000 active subscribers, ~30% of online revenue.
• Russell 2000 Index: Estimated to be added, market cap ~$140M, above index threshold; inclusion potential positive catalyst.
• MRC Disclosures: Last quarter for detailed MRC financial breakdown; will continue to provide certain metrics.
• MusclePharm Promotions: Intentional investment in promotions, accounting for marketing allowances as price reductions affecting revenue and margin.

For the overall company, total revenue in Q1 2025 declined 4% YOY to $15.9 million. Online sales were $10.6 million, accounting for 67% of total revenue. Gross profit declined 6% with gross margin dropping to 43.1% from 44% in Q1 2024. Contribution (gross profit less advertising and marketing expense) was $5.8 million, a 4% decline. Net income was $2 million compared to $2.2 million in Q1 2024. Basic EPS fell from $0.23 to $0.22, and diluted EPS from $0.21 to $0.20. Adjusted EBITDA was $3.4 million, a 6% decrease. Balance sheet: $12 million in term loans, $0 revolving line of credit, cash $6 million, net debt $6 million (0.4x adjusted EBITDA over past 12 months).

Legacy FitLife: Revenue $7.3 million, 63% from wholesale, 37% online. Wholesale revenue up 2%, online up 11%, total up 5%. Gross margin 44.6% (vs 42.1% Q1 2024). Contribution $3.2 million, up 11%, contribution % 43.4% (vs 40.9% Q1 2024).

Mimi's Rock (MRC): Revenue $6.7 million, down 11% YOY. Gross margin 45.4% (vs 47% Q1 2024). Contribution $2.2 million, down 9%, contribution % 33.5% (vs 32.8% Q1 2024). Dr. Tobias revenue down 11%, skin care brands down 14% (9% constant currency). Last quarter for detailed MRC financial disclosures.

MusclePharm: Revenue down 6%, wholesale down 41%, online up 33%. Gross margin 30.1% (vs 40% Q1 2024). Promotional investments in Q4 2024 led to marketing allowances lowering net revenue, gross profit, and margin. Wholesale decline due to one large customer not reordering much in Q1, but recent purchases up.

• No formal forward-looking guidance.
• April revenue and adjusted EBITDA up YOY despite Dr. Tobias decline.
• MusclePharm margin expected to stay around 30% with ongoing promotions.
• Legacy FitLife margin expected to expand as online revenue grows relative to wholesale.
• MRC margin fluctuates with product mix.

• Tariff Uncertainty: Impact on costs, with some products affected more than others.
• M&A Execution: Increased spend may not lead to successful transactions.
• MusclePharm Performance: Mixed results with promotional investments; some customers not showing desired unit movement.

Q: Any change in the situation with GNC corporate?

A: No change, resolved in January, shipments to distribution network ongoing, relationship positive.

Q: Status of new product launches (beverages, bars)?

A: Bars launched new flavors, sold into regional stores; beverages (RTD) launched end of March, picked up by major distributors, in gym coolers.

Q: Tariff exemptions on products?

A: Some products benefit (vitamins, minerals), others (e.g., Carnitine) not; impact varies by product, 0% to 10% cost increase possible.

Q: Long-term prospects for MusclePharm?

A: Disappointed in growth, fixed product portfolio, changed branding; hope to grow, M&A is big opportunity, valuation multiples around 6-7x for good businesses.

Q: Vitamin Shoppe pilot with MusclePharm Pro?

A: Going well but bumpy start, ads on streaming, product arrived on shelf early April, 2-month trial extended, formal readout in next earnings call.