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| 8-K - CURRENT REPORT - FITLIFE BRANDS, INC. | ftlf8k_may152020.htm |
EXHIBIT 99.1
FitLife Brands Announces First Quarter 2020 Results
OMAHA,
NE – May 15, 2020 -- 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 months ended March 31,
2020.
Highlights for the quarter ended March 31, 2020
include:
●
Total revenue
increased 4.6% to $6.2 million.
●
Direct-to-consumer
online sales increased to 14% of total revenue, compared to 10% in
the same quarter last year.
●
Gross profit
improved 7.7% to $2.7 million.
●
Gross margin
increased to 44.5% compared to 43.2% in the same quarter last
year.
●
Net income
increased 20.3% to $1.4 million.
●
Net income per
share increased to $1.36 per share, or $1.27 per diluted share,
compared to $1.07 per share, or $0.94 per diluted share, in the
same quarter last year.
For the first quarter ended March 31, 2020, total revenue was $6.2
million versus $5.9 million in the same quarter last year, an
increase of 4.6%. The increase was primarily attributable to
continued growth in our online direct-to-consumer business. During
the first quarter of 2020, online sales accounted for approximately
14% of the Company’s revenue, compared to 10% during the
first quarter of 2019.
Gross profit improved to $2.7 million, an increase of 7.7% from the
first quarter of 2019. Gross margin improved from 43.2% to 44.5%
over the same time period. The improvement in gross margin was
driven by product mix and higher online sales volumes.
Total operating expenses increased 5.8% from $1.3 million to $1.4
million, driven by an increased investment in sales and
marketing.
Net income for the first quarter of 2020 was $1.4 million, an
increase of 20.3% over the same quarter in 2019. The Company
delivered basic earnings per share of $1.36 in the first quarter of
2020, compared to $1.07 in the same quarter last year. Diluted
earnings per share increased from $0.94 in the first quarter of
last year to $1.27 this year.
Dayton Judd, the Company’s Chairman and CEO, commented
“I am very pleased with the Company’s performance
during the first quarter, especially given the disruption that
began in mid-March due to the COVID-19 pandemic. That said, given
the uncertainty brought on by the current environment, I know our
stakeholders are more interested in how the business is performing
during the second quarter. Therefore, to be as transparent as
possible, the Company provides the following information, not
subject to any procedures by our Independent Registered Public
Accounting Firm, regarding its performance and position as of May
14, 2020.”
●
Total
accounts receivable outstanding is $1.1 million, of which
approximately 66% is due from GNC.
●
Most
of our customers continue to pay us timely in the ordinary course
of business. However, several customers owing a combined total of
$0.1 million are currently three or more weeks behind in making
payments, and roughly 30% of that amount has already been fully
reserved and is not included in the total accounts receivable
balance reported above.
●
The
Company repaid its line of credit in late April, and the full
balance of the $2.5 million facility is available to draw again in
the future as needed, subject to any borrowing base
limitations.
●
Total
cash on hand is $2.9 million.
●
The
Company continues to pay all of its vendors timely in the ordinary
course of business.
●
Thus
far during the second quarter, the Company’s
direct-to-consumer online revenue is pacing roughly 100% higher
than online revenue during the same time period last
year.
●
Retail
sales of the Company’s products through GNC franchise
locations experienced a year-over-year decline of 50-55% during
late March and early April, but have been improving consistently
each week since then, with recent declines in the 10-20% range
relative to the same time period last year.
●
The
Company generated no revenue from GNC during April, as the
warehouses and the franchisees worked through existing
inventory.
●
Beginning
in the first half of May, the Company received orders from and has
begun shipping products to GNC. Nevertheless, the Company
anticipates that its revenue from GNC will be materially lower
during the second quarter of 2020 compared to the same quarter last
year.
●
Due
to cost-cutting efforts, the Company anticipates that operating
expense for the second quarter of 2020 will be at least 7-10% lower
than the first quarter of 2020.
Mr. Judd continued, “While much uncertainty remains, I am
pleased with how our team is navigating this pandemic. The Company
will provide additional updates as warranted.”
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.
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FITLIFE BRANDS, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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ASSETS:
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March 31,
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December 31,
|
|
|
2020
|
2019
|
|
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(Unaudited)
|
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CURRENT
ASSETS
|
|
|
|
Cash
|
$2,666,000
|
$265,000
|
|
Accounts
receivable, net of allowance of doubtful accounts, $33,000 and
$27,000 respectively
|
4,692,000
|
2,366,000
|
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Inventories,
net of allowance for obsolescence of $130,000 and $130,000,
respectively
|
3,023,000
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2,998,000
|
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Prepaid
expenses and other current assets
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25,000
|
72,000
|
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Total
current assets
|
10,406,000
|
5,701,000
|
|
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|
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Property
and equipment, net
|
124,000
|
136,000
|
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Right
of use asset, net of amortization, $241,000 and $226,000
respectively
|
239,000
|
254,000
|
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Goodwill
|
225,000
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225,000
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Security
deposits
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10,000
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10,000
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TOTAL
ASSETS
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$11,004,000
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$6,326,000
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LIABILITIES
AND STOCKHOLDERS' EQUITY:
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CURRENT
LIABILITIES:
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Accounts
payable
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$2,747,000
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$2,010,000
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Accrued
expense and other liabilities
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543,000
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464,000
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Product
returns
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276,000
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256,000
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Lease
liability - current portion
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44,000
|
46,000
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Line
of credit
|
2,500,000
|
-
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Total
current liabilities
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6,110,000
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2,776,000
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LONG-TERM
LEASE LIABILITY, net of current portion
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196,000
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208,000
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TOTAL
LIABILITIES
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6,306,000
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2,984,000
|
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STOCKHOLDERS'
EQUITY:
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Preferred
stock, $0.01 par value, 10,000,000 shares authorized, none
outstanding
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as
of March 31, 2020 and December 31, 2019
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Common
stock, $.01 par value, 15,000,000 shares authorized; 1,060,033 and
1,054,516
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issued
and outstanding as of March 31, 2020 and December 31, 2019
respectively
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12,000
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12,000
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Treasury
stock, 210,631 and 198,731 shares, respectively
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(1,790,000)
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(1,619,000)
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Additional
paid-in capital
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32,154,000
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32,055,000
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Accumulated
deficit
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(25,678,000)
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(27,106,000)
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Total
stockholders' equity
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$4,698,000
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$3,342,000
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TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
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$11,004,000
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$6,326,000
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The
accompanying notes are an integral part of these condensed
consolidated financial statements
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FITLIFE BRANDS, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019
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Three months ended
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March 31
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2020
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2019
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(Unaudited)
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Revenue
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$6,151,000
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$5,878,000
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Cost
of goods sold
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3,414,000
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3,337,000
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Gross
profit
|
2,737,000
|
2,541,000
|
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OPERATING
EXPENSES:
|
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General
and administrative
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733,000
|
774,000
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Selling
and marketing
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671,000
|
550,000
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Depreciation
and amortization
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12,000
|
15,000
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Total
operating expenses
|
1,416,000
|
1,339,000
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OPERATING
INCOME
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1,321,000
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1,202,000
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OTHER
EXPENSES (INCOME)
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Interest
expense
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4,000
|
15,000
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Gain
on settlement
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(70,000)
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-
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Total
other expenses (income)
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(66,000)
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15,000
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NET
INCOME
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1,387,000
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1,187,000
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PROVISION
FOR INCOME TAXES
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(41,000)
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-
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NET
INCOME
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1,428,000
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1,187,000
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NET
INCOME AVAILAB LE TO COMMON SHAREHOLDERS
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$1,428,000
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$1,187,000
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NET
INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:
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Basic
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$1.36
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$1.07
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Diluted
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$1.27
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$0.94
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Basic
weighted average common shares
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1,051,752
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1,111,943
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Diluted
weighted average common shares
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1,126,303
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1,268,526
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The
accompanying notes are an integral part of these condensed
consolidated financial statements
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FITLIFE BRANDS, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019
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Three months ended March 31
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2020
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2019
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(Unaudited)
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
income
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$1,428,000
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$1,187,000
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Adjustments
to reconcile net income to net cash used in operating
activities:
|
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Depreciation
and amortization
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12,000
|
15,000
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Allowance
for doubtful accounts
|
6,000
|
(4,000)
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Allowance
for inventory obsolescence
|
-
|
12,000
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Common
stock issued for services
|
16,000
|
23,000
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Fair
value of options issued for services
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12,000
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26,000
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Right
of use asset net of amortization and lease liability
|
2,000
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3,000
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Changes
in operating assets and liabilities:
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Accounts
receivable - trade
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(2,332,000)
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(2,244,000)
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Inventories
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(25,000)
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1,173,000
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Prepaid
expense
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46,000
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110,000
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Accounts
payable
|
737,000
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(321,000)
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Accrued
interest
|
4,000
|
15,000
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Accrued
liabilities and other liabilities
|
75,000
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20,000
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Product
returns
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20,000
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(136,000)
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Net
cash provided by (used in) operating activities
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1,000
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(121,000)
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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Net
cash provided by investing activities
|
-
|
-
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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Proceeds
from issuance of notes payable
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-
|
300,000
|
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Proceeds
from exercise of stock options
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71,000
|
-
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Proceeds
from line of credit
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2,500,000
|
-
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Repurchases
of common stock
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(171,000)
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-
|
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Net
cash provided financing activities
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2,400,000
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300,000
|
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CHANGE
IN CASH
|
2,401,000
|
179,000
|
|
CASH,
BEGINNING OF PERIOD
|
265,000
|
259,000
|
|
CASH,
END OF PERIOD
|
$2,666,000
|
$438,000
|
|
|
|
|
|
Supplemental disclosure operating activities
|
|
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|
Cash
paid for interest
|
$-
|
$15,000
|
|
|
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|
Non-cash investing and financing activities
|
|
|
|
Recording
of lease asset and liability upon adoption of
ASU-2016-02
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$-
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$343,000
|
|
|
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The
accompanying notes are an integral part of these condensed
consolidated financial statements
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