Full Press Release Details
FitLife Brands Announces Fiscal First Quarter 2015 Results
OMAHA, NE - (BUSINESS WIRE) - May 14, 2015 - FitLife Brands, Inc. ("FitLife") (OTCBB: FTLF), an international provider of innovative and proprietary nutritional supplements for health conscious consumers marketed under the brand names NDS Nutrition Products ("NDS") (www.ndsnutrition.com), PMD (www.pmdsports.com), SirenLabs (www.sirenlabs.com) and CoreActive (www.coreactivenutrition.com) today announced results for its fiscal first quarter ended March 31, 2015.
Highlights for the quarter-ended March 31, 2015 include:
As previously announced, revenue for the first quarter ended March 31, 2015 was $3.8 million, as compared to $6.3 million for the first quarter of 2014. Year-over-year revenue comparisons were impacted by the transition during 2014 to the GNC centralized distribution platform. This transition resulted in accelerated inventory purchases from many franchisees during the first half of 2014 and lower average selling prices in the first quarter of 2015, as compared to the same period last year. In addition, the Company also experienced an unexpected short-term supply disruption at the end of the first quarter, which contributed to an aggregate backlog, or accepted purchase orders pending shipment, of $1.3 million as of the beginning of the second quarter. This backlog is substantially larger relative to other periods.
For the first quarter 2015, gross margin was 41.0 percent of sales, a 380 basis point improvement from the comparable period last year. The improvement was primarily related to lower overall direct costs associated with the transition away from shipping direct to the stores, and towards GNC's centralized distribution platform. Operating expenses were $1.6 million, as compared to $1.4 million during the same period last year. The increase was primarily due to substantially higher non-cash compensation expense of $402,411 related to the partial vesting of a previously issued stock grant, as well as an option grant for key employees. To a lesser extent, the increase was attributable to elevated expenses related to product rebates. Excluding non-cash compensation expense from both comparable periods, general and administrative expense decreased 26.3% year over year to $529,835, which was primarily related to lower credit card fees in connection with the Company's transition to GNC's centralized distribution platform. The Company posted a net loss of ($42,263), or ($0.01) per diluted share, during the first quarter of 2015 versus net income of $0.9 million, or $0.10 per diluted share, during the comparable period last year. Net income for the quarter, excluding non-cash stock compensation, which is a non-GAAP measure, was $360,148, or $0.04 per diluted share.
The Company ended the first quarter with $4.4 million in cash, which is unchanged compared to the beginning of the year. At the end of the first quarter 2015, total long-term debt including the current portion was $1.8 million, a decrease of greater than 6% from the beginning of 2015.
"Despite disappointing first quarter sales comparisons, we continued to see strong sell through volumes at retail during the first quarter, a trend that is more indicative of the strength of our brands and shows that we are outperforming our industry peers," said John Wilson, CEO of FitLife Brands. "We continue to provide innovative and differentiated premium products that drive strong brand loyalty and retail demand, a fact that is supported by our continued strong sell-through volumes at retail. The first SKU of our new product line for GNC Corporate stores, Metis Nutrition, is on schedule to be shipped in June with a second SKU scheduled to launch the following month. Additionally, we remain the leading third-party vendor measured by retail sales dollars within the GNC franchise system, and are enthusiastic about the opportunity to build on that success going forward."
Following the issuance of this release, the Company will provide recorded comments which can be accessed on the FitLife Brands' website under the "Investor Relations" section.
About FitLife Brands
FitLife Brands is a marketer and manufacturer of innovative and proprietary nutritional supplements for health conscious consumers. FitLife markets over 60 different dietary supplements to promote sports nutrition, improved performance, weight loss and general health primarily through domestic and international GNC franchise locations. FitLife is headquartered in Omaha, Nebraska. For more information please visit our new website at www.fitlifebrands.com.
Investor Relations Contact:
Three Part Advisors, LLC
David Mossberg, 817-310-0051
Jeff Elliott 972-423-7070
Forward-Looking Statement
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
This press release includes the following financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission: non-GAAP net income, non-GAAP earnings per share. 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 generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures will be provided upon the completion of the Company's annual audit.
Non-GAAP net income excludes items such as impairment charges, allowance for doubtful accounts, charges to consolidate and integrate recently acquired businesses, costs of closing corporate facilities, non-cash stock based compensation and other one-time cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash stock based compensation, charges to consolidate and integrate recently acquired businesses, costs for closing corporate facilities, amortization of acquired intangible assets and other one-time cash and non-cash charges. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses or net purchases of property and equipment, as the case may be, which may not be indicative of its core operation results and business outlook.
| FITLIFE BRANDS, INC. | ||||||||
| CONDENSED CONS O LIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| ASSETS: | March 31, | December 31, | ||||||
| 2015 | 2014 | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 4,377,646 | $ | 4,353,699 | ||||
| Accounts receivable, net | 2,385,357 | 1,685,623 | ||||||
| Inventory | 1,654,116 | 2,284,922 | ||||||
| Deferred tax asset | 689,000 | 689,000 | ||||||
| Prepaid expenses and other current assets | 55,921 | 47,202 | ||||||
| Total current assets | 9,162,040 | 9,060,446 | ||||||
| PROPERTY AND EQUIPMENT, net | 4,981 | 3,107 | ||||||
| Intangible assets, net | 982,432 | 1,037,369 | ||||||
| Long-term investments | - | - | ||||||
| Deposits | 3,048 | 3,048 | ||||||
| TOTAL ASSETS | $ | 10,152,502 | $ | 10,103,970 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 857,445 | $ | 813,600 | ||||
| Accrued expenses and other liabilities | 172,504 | 152,736 | ||||||
| Income tax payable | 46,000 | 40,000 | ||||||
| Line of Credit | 437,089 | 437,089 | ||||||
| Current portion of term loan agreement | 511,608 | 507,031 | ||||||
| Redemption of preferred stock payable | - | - | ||||||
| Total current liabilities | 2,024,646 | 1,950,456 | ||||||
| LONG-TERM DEBT | 1,309,975 | 1,439,799 | ||||||
| TOTAL LIABILITIES | 3,334,621 | 3,390,255 | ||||||
| CONTINGENCIES AND COMMITMENTS | - | - | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Common stock, $.01 par value, 150,000,000 shares authorized; 8,082,008 and 8,198,516 issued and outstanding as of March 31, 2015 and December 31, 2014, respectively | 80,821 | 81,985 | ||||||
| Subscribed common stock | 380 | 38 | ||||||
| Additional paid-in capital | 26,427,641 | 26,280,388 | ||||||
| Accumulated deficit | (19,690,960 | ) | (19,648,697 | ) | ||||
| Total stockholders' equity | $ | 6,817,881 | $ | 6,713,714 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 10,152,502 | $ | 10,103,970 |
| FITLIFE BRANDS, INC. | ||||||||
| CONDENSED CONSOLIDATED STA TE MENTS OF OPERATIONS | ||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 | ||||||||
| (Unaudited) | ||||||||
| 2015 | 2014 | |||||||
| Revenue | $ | 3,842,422 | $ | 6,333,076 | ||||
| Total | 3,842,422 | 6,333,076 | ||||||
| Cost of Goods Sold | 2,266,711 | 3,976,400 | ||||||
| Gross Profit | 1,575,711 | 2,356,677 | ||||||
| OPERATING EXPENSES: | ||||||||
| General and administrative | 932,246 | 805,228 | ||||||
| Selling and marketing | 603,804 | 568,366 | ||||||
| Depreciation and amortization | 55,277 | 56,448 | ||||||
| Total operating expenses | 1,591,326 | 1,430,042 | ||||||
| OPERATING INCOME | (15,614 | ) | 926,636 | |||||
| OTHER (INCOME) AND EXPENSES | ||||||||
| Interest expense | 20,648 | 25,018 | ||||||
| Other income | - | (87,500 | ) | |||||
| Gain on extinguishment of debt | - | - | ||||||
| Loss on the sale of assets | - | - | ||||||
| Total other (income) expense | 20,648 | (62,482 | ) | |||||
| INCOME TAXES (BENEFIT) | 6,000 | 95,771 | ||||||
| NET INCOME | $ | (42,263 | ) | $ | 893,346 | |||
| NET INCOME PER SHARE: | ||||||||
| Basic | $ | (0.01 | ) | $ | 0.11 | |||
| Diluted | $ | (0.01 | ) | $ | 0.10 | |||
| Basic | 8,184,126 | 8,138,018 | ||||||
| Diluted | 8,184,126 | 8,527,826 |
| FITLIFE BRANDS, INC. | ||||||||
| CONDENSED CONSOLI DA TED STATEMENTS OF CASH FLOWS | ||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 | ||||||||
| (Unaudited) | ||||||||
| 2015 | 2014 | |||||||
| Net income | $ | (42,263 | ) | $ | 893,346 | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 55,277 | 56,448 | ||||||
| Common stock and options issued for services | 402,411 | 86,335 | ||||||
| Gain on write-up of investment | - | (137,500 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (699,734 | ) | (1,415,659 | ) | ||||
| Inventory | 630,806 | 826,634 | ||||||
| Prepaid expenses | (8,719 | ) | (988 | ) | ||||
| Deposits | - | - | ||||||
| Accounts payable | 43,845 | (189,003 | ) | |||||
| Accrued liabilities | 19,768 | (91,371 | ) | |||||
| Income tax payable | 6,000 | 44,000 | ||||||
| Net cash provided by / (used in) operating activities | 407,391 | 72,242 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (2,214 | ) | - | |||||
| Long-term investment | - | 50,000 | ||||||
| Repurchases of common stock | (255,981 | ) | - | |||||
| Net cash provided by / (used in) investing activities | (258,196 | ) | 50,000 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayments of note payable | (125,247 | ) | (120,862 | ) | ||||
| Net cash provided by / (used in) financing activities | (125,247 | ) | (120,862 | ) | ||||
| INCREASE (DECREASE) IN CASH | 23,948 | 1,380 | ||||||
| CASH, BEGINNING OF PERIOD | 4,353,699 | 3,305,179 | ||||||
| CASH, END OF PERIOD | $ | 4,377,646 | $ | 3,306,559 | ||||
| Supplemental disclosure operating activities | ||||||||
| Cash paid for interest | $ | 20,648 | $ | 25,018 |
Non-GAAP Net Income (Loss) and EPS
(In $000's, except per share)
| Three Months Ended March 31, | ||||||||
| 2015 | 2014 | |||||||
| Net Income (loss) | $ | (42 | ) | 893 | ||||
| Non-GAAP Net Income (Loss) Reconciliation Adjustments: | ||||||||
| Stock based compensation | 402 | 86 | ||||||
| Non-GAAP Net Income | $ | 360 | $ | 979 | ||||
| Weighted average shares, diluted | 8,184,126 | 8,527,826 | ||||||
| Non-GAAP EPS, diluted | $ | 0.04 | $ | 0 . 10 |