Full Press Release Details
FitLife Brands Announces Second Quarter 2020 Results
NE August 13, 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 and six months ended June 30,
Highlights for the second quarter ended June 30, 2020
decreased 40.7% to $2.7 million driven by the impact of COVID-19 on
foot traffic in our wholesale partners' retail locations and
reduced shipments to GNC in anticipation of its bankruptcy
online sales increased to 41% of total revenue, compared to 13% in
the same quarter last year.
declined 28.9% to $1.3 million.
increased to 48.1% compared to 40.1% in the same quarter last
quarter, the Company wrote off $354,000 of receivables related to
generated a net loss of ($0.1) million compared to net income of
$0.5 million during the same quarter last year.
income, excluding the write-off of the GNC receivables, was $0.3
For the second quarter ended June 30, 2020, total revenue was $2.7
million compared to $4.6 million in the same quarter last year, a
decrease of 40.7%. The decrease was primarily attributable to the
impact of the COVID-19 pandemic as well as a reduction in shipments
to GNC in anticipation of its bankruptcy filing, partially offset
by continued growth in our online direct-to-consumer business. For
the second quarter of 2020, online sales accounted for
approximately 41% of the Company's revenue, compared to 13%
during the second quarter of 2019.
Gross profit declined to $1.3 million, a decrease of 28.9% from the
second quarter of 2019. Gross margin improved from 40.1% to 48.1%
over the same time period. The improvement in gross margin was
driven by a greater proportion of higher-margin online revenue
relative to wholesale revenue.
During the quarter, total operating expenses increased 1.5%.
Excluding the $354,000 of receivables written off through bad debt
expense related to the GNC bankruptcy, total operating expense
declined 23.1% during the quarter.
Net income for the second quarter of 2020 was ($0.1) million
compared to net income of $0.5 million during the same quarter in
2019. The Company delivered a basic and fully diluted loss per
share of ($0.09) for the second quarter of 2020, compared to $0.51
of basic earnings per share and $0.43 of diluted earnings per share
in the same quarter last year. Despite the revenue decline during
the quarter, adjusted net income excluding the effect of the
write-off of the GNC receivables was $0.3 million.
Revenue trends during the quarter
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, before beginning a steady recovery. By
late May, retail sales of the Company's products had returned
to experiencing low single-digit percentage growth on a
year-over-year basis, which growth continued through the end of the
quarter. The Company's wholesale revenue increased
sequentially each month throughout the quarter as
The Company's largest customer, GNC, filed for Chapter 11
bankruptcy protection on June 23, 2020. At the time of the filing,
GNC owed the Company approximately $1.2 million.
Under US bankruptcy law, payment for product received by a customer
in the 20 days preceding a bankruptcy filing is eligible for a
priority administrative claim under Section 503(b)(9) of the US
Bankruptcy Code. Generally, as long as the debtor company
successfully emerges from Chapter 11, those claims are paid in full
at the time the debtor emerges from bankruptcy. Claims associated
with product received more than 20 days pre-petition are typically
considered general unsecured claims and are subject to impairment
through the bankruptcy process.
The majority of the Company's receivables from GNC as of the
petition date relate to product that was delivered in the 20 days
leading up to the bankruptcy filing. As a result, the Company
expects to be paid in full for those claims upon GNC's
emergence from bankruptcy, which is currently estimated to occur
within the next two months.
However, approximately $354,000 of the Company's receivables
relate to product delivered to GNC more than 20 days pre-petition
and is therefore subject to impairment. While a partial recovery on
such receivables is possible, the Company elected to write off the
full amount of those receivables during the quarter ended June 30,
Subsequent to the GNC bankruptcy filing, the Company made the
decision to continue to sell product to GNC on terms more favorable
to the Company. Payment for all post-petition orders is paid in the
ordinary course of business and is not subject to the bankruptcy
Almost all of the Company's revenue from GNC relates to
product sold in GNC franchise locations. As part of the bankruptcy
process, GNC has announced plans to close a significant number of
its corporate stores. While a small number of franchisees have also
elected to close their stores as part of the bankruptcy process,
the Company believes that the closure of a significant number of
corporate locations may drive increased traffic to the remaining
franchise locations, benefitting our franchise-exclusive
Preliminary Report on Third Quarter
Given the rapidly changing retail environment, the Company
understands the importance of transparency to its shareholders and
other stakeholders. Therefore, as it has done in the past, 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 August 12,
for the month of July 2020 was among the strongest of any months in
the Company's history and was roughly equivalent to the total