FitLife Brands Announces Fourth Quarter and Full Year 2020 Results


Omaha, NE, March 26, 2021 (GLOBE NEWSWIRE) — FitLife Brands Announces Fourth Quarter and Full Year 2020 Results

OMAHA, NE – March 26, 2021 — FitLife Brands, Inc. (“FitLife” or the “Company”) (OTC Pink: FTLF), a 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 twelve months ended December 31, 2020.

For the quarter ended December 31, 2020, 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 March 26, 2021.

Highlights for the quarter ended December 31, 2020 include:

  • Total revenue increased 60.9% to $5.9 million.
  • Direct-to-consumer online sales increased 107.7% to $1.3 million, representing 21% of total revenue compared to 18% in the same quarter last year.
  • Gross profit improved 75.5% to $2.5 million.
  • Gross margin increased to 41.8% compared to 38.3% in the same quarter last year.
  • Operating expense declined 15.9% to $1.1 million.
  • Net income increased to $5.7 million compared to $0.1 million last year, driven largely by a $4.4 million tax benefit resulting from the Company eliminating a substantial portion of the reserve against its deferred tax assets.
  • Excluding the effect of the non-recurring tax benefit, adjusted net income was $1.4 million compared to $0.1 million last year.

Highlights for the twelve months ended December 31, 2020 include:

  • Total revenue increased 11.5% to $21.7 million.
  • Direct-to-consumer online sales increased 82.2% to $4.5 million, representing 20% of total revenue compared to 12% in 2019.
  • Gross profit improved 16.5% to $9.4 million.
  • Gross margin increased to 43.2% in 2020 compared to 41.3% last year.
  • Operating expense declined 5.3% to $5.2 million in 2020, compared to $5.5 million in 2019.
  • Operating income increased 62.9% to $4.2 million in 2020, compared to $2.6 million last year.
  • Net income increased 223% to $8.7 million in 2020, compared to $2.7 million in 2019.
  • Excluding the effect of the non-recurring tax benefit, adjusted net income was $4.3 million in 2020 compared to $2.7 million last year, an increase of 61.0%.
  • Net income per share available to common shareholders in 2020 increased to $8.23 per share, or $7.66 per diluted share, compared to $2.57 per share and $2.41 per diluted share in 2019.
  • Excluding the effect of the non-recurring tax benefit, adjusted net income per share available to common shareholders was $4.11 per share, or $3.82 per diluted share, compared to $2.57 per share and $2.41 per diluted share in 2019.
  • The Company ended the year with $6.3 million of cash and no borrowings on the line of credit.
  • Subsequent to year-end, the Company was informed by its lender and the US Small Business Administration that the full balance of its PPP Loan, including accrued interest, was forgiven.  Following the forgiveness of this loan, the Company is debt-free.

For the fourth quarter ended December 31, 2020, total revenue was $5.9 million versus $3.7 million in the same quarter last year, an increase of 60.9%.  The increase was primarily attributable to continued growth in our wholesale and our online direct-to-consumer business.  In addition, the Company believes that a portion of the revenue growth for the fourth quarter represents an acceleration of purchasing by certain wholesale customers that would historically occur during the first quarter. 

For the fourth quarter of 2020, online sales increased 107.7% to $1.3 million and accounted for approximately 21% of the Company’s revenue compared to 18% during the fourth quarter of 2019.

Gross profit improved to $2.5 million, an increase of 75.5% from the fourth quarter of 2019.  Gross margin improved from 38.3% to 41.8% over the same time period.  The improvement in gross margin was driven primarily by higher online sales volumes. 

Total operating expenses decreased 15.9% from $1.3 million in the fourth quarter of 2019 to $1.1 million in the same quarter of 2020, driven by continued cost control and a reduction in sales-related travel expenses due to the ongoing impact of the COVID-19 pandemic.

During the fourth quarter, based on the Company’s improving profitability trends, management determined that it is more likely than not that the Company will be able to utilize most of its deferred tax assets, which had previously been fully reserved.  As of December 31, 2020, after taking into account the taxable income generated during the fiscal year, the Company had approximately $21.7 million of remaining federal net operating loss carryforwards (“NOLs”).  As long as no ownership change (as defined in section 382 of the US Internal Revenue Code) is triggered, the Company estimates that it will be able to utilize all but $2.6 million of the remaining $21.7 million NOLs.  The $2.6 million, which remains fully reserved, relates to iSatori NOLs that have usage limitations due to the ownership change that occurred when the Company acquired iSatori in 2015.  Subsequent to the end of the fiscal year, in February 2021 the Company implemented a rights plan in an effort to deter investors from triggering an ownership change of the Company that would substantially limit the Company’s ability to utilize its remaining NOLs.

Reducing the reserve against the Company’s deferred tax assets resulted in a non-recurring tax benefit of $4.4 million.  Following this adjustment, in future quarters the Company will record a tax expense (or benefit) based on the taxable income generated during that period.  As a result, when positive taxable income is generated, the reported net income will be lower even though there will be minimal cash tax payments until the NOLs have been depleted.

The Company delivered record profitability during the historically slow fourth quarter, generating a net income of $5.7 million compared to $0.1 million during the fourth quarter of 2019.  Excluding the non-recurring tax benefit, adjusted net income was $1.4 million compared to $0.1 million in the same quarter last year.

For the full year, basic earnings per share available to common shareholders was $8.23 compared to $2.57 in 2019, and diluted earnings per share available to common shareholders was $7.66 compared to $2.41 in 2019.  Excluding the non-recurring tax benefit, for the full year, adjusted basic earnings per share available to common shareholders was $4.11 compared to $2.57 in 2019, and adjusted diluted earnings per share available to common shareholders was $3.82 compared to $2.41 in 2019.

Dayton Judd, the Company’s Chairman and CEO, commented “The Company’s performance continues to exceed expectations in both our wholesale and direct-to-consumer channels.  As a result, the Company has been able to achieve strong revenue growth and profitability, and our balance sheet continues to strengthen, despite the effects of the COVID-19 pandemic and the bankruptcy of the Company’s largest customer during 2020.  The Company continues to search for opportunities to deploy cash for prudent, immediately accretive acquisitions.” 

About FitLife Brands
FitLife Brands is a developer and marketer of innovative and proprietary nutritional supplements for health-conscious consumers.  FitLife markets over 100 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 17,000 additional domestic retail locations and, increasingly, online.  FitLife is headquartered in Omaha, Nebraska.  For more information please visit our 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.

FITLIFE BRANDS, INC.  
CONSOLIDATED BALANCE SHEETS  
           
ASSETS:   December 31,   December 31,  
      2020       2019    
           
CURRENT ASSETS          
   Cash   $ 6,336,000     $ 265,000    
   Accounts receivable, net of allowance of doubtful accounts, $51,000 and $27,000, respectively     2,044,000       2,366,000    
   Inventories, net of allowance for obsolescence of $56,000 and $130,000, respectively     3,401,000       2,998,000    
   Income tax receivable     40,000          
   Prepaid expenses and other current assets     52,000       72,000    
      Total current assets     11,873,000       5,701,000    
           
Property and equipment, net     98,000       136,000    
Right of use asset, net of amortization, $272,000 and $226,000, respectively     208,000       254,000    
Goodwill     225,000       225,000    
Deferred tax asset     4,370,000          
Security deposits           10,000    
    TOTAL ASSETS   $ 16,774,000     $ 6,326,000    
           
LIABILITIES AND STOCKHOLDERS’ EQUITY:          
           
CURRENT LIABILITIES:          
   Accounts payable   $ 3,246,000     $ 2,010,000    
   Accrued expense and other liabilities     498,000       464,000    
   Product returns     335,000       256,000    
   Lease liability – current portion     50,000       46,000    
      Total current liabilities     4,129,000       2,776,000    
           
Long-term lease liability, net of current portion     158,000       208,000    
PPP loan     453,000          
      TOTAL LIABILITIES     4,740,000       2,984,000    
           
STOCKHOLDERS’ EQUITY:          
   Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding          
      as of December 31, 2020 and December 31, 2019          
   Common stock, $.01 par value, 15,000,000 shares authorized; 1,060,818 and 1,054,516          
      issued and outstanding as of December 31, 2020 and December 31, 2019, respectively     12,000       12,000    
   Treasury stock, 210,631 and 198,731 shares, respectively     (1,790,000 )     (1,619,000 )  
   Additional paid-in capital     32,204,000       32,055,000    
   Accumulated deficit     (18,392,000 )     (27,106,000 )  
      TOTAL STOCKHOLDERS’ EQUITY     12,034,000       3,342,000    
           
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 16,774,000     $ 6,326,000    
           
The accompanying notes are an integral part of these consolidated financial statements  
           
FITLIFE BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                 
    Three months ended   Years ended
    December 31   December 31,
      2020       2019       2020       2019  
                 
                 
 Revenue   $ 5,930,000     $ 3,686,000     $ 21,744,000     $ 19,497,000  
 Cost of goods sold     3,454,000       2,275,000       12,350,000       11,436,000  
 Gross profit     2,476,000       1,411,000       9,394,000       8,061,000  
                 
OPERATING EXPENSES:                
     General and administrative     628,000       697,000       3,047,000       3,049,000  
     Selling and marketing     491,000       630,000       2,105,000       2,379,000  
     Depreciation and amortization     7,000       12,000       38,000       52,000  
         Total operating expenses     1,126,000       1,339,000       5,190,000       5,480,000  
OPERATING INCOME     1,350,000       72,000       4,204,000       2,581,000  
                 
OTHER EXPENSES (INCOME)                
      Interest expense     1,000             15,000       47,000  
      Interest income     (2,000 )           (9,000 )      
Gain on settlement                 (70,000 )     (171,000 )
        Total other expenses (income)     (1,000 )           (64,000 )     (124,000 )
                 
PRE-TAX NET INCOME     1,351,000       72,000       4,268,000       2,705,000  
                 
PROVISION (BENEFIT) FOR INCOME TAXES     (4,382,000 )           (4,446,000 )     7,000  
                 
NET INCOME     5,733,000       72,000       8,714,000       2,698,000  
                 
PREFERRED STOCK DIVIDEND           (19,000 )           (63,000 )
                 
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS   $ 5,733,000     $ 53,000     $ 8,714,000     $ 2,635,000  
                 
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:                
  Basic   $ 5.41     $ 0.05     $ 8.23     $ 2.57  
  Diluted   $ 4.98     $ 0.04     $ 7.66     $ 2.41  
  Basic weighted average common shares     1,060,497       1,001,715       1,058,207       1,026,204  
  Diluted weighted average common shares     1,150,889       1,207,024       1,137,349       1,092,312  
                 
                                             The accompanying notes are an integral part of these consolidated financial statements
                 
FITLIFE BRANDS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
           
    Years ended December 31,  
      2020       2019    
           
CASH FLOWS FROM OPERATING ACTIVITIES:          
  Net income   $ 8,714,000     $ 2,698,000    
  Adjustments to reconcile net income to net cash used in operating activities:          
  Depreciation and amortization     38,000       52,000    
Allowance for doubtful accounts     25,000       17,000    
  Allowance for inventory obsolescence     (74,000 )     23,000    
  Common stock issued for services     49,000       71,000    
  Fair value of options issued for services     29,000       111,000    
  Right of use asset net of amortization and lease liability           (2,000 )  
  Changes in operating assets and liabilities:          
    Accounts receivable – trade     297,000       (505,000 )  
    Inventories     (329,000 )     502,000    
    Deferred tax asset     (4,370,000 )        
    Prepaid expense     20,000       151,000    
    Income tax receivable     (40,000 )        
    Security deposit     10,000          
    Accounts payable     1,236,000       (618,000 )  
    Accrued liabilities and other liabilities     37,000       (50,000 )  
    Product returns     79,000       (189,000 )  
          Net cash provided by operating activities     5,721,000       2,261,000    
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
          Net cash provided by investing activities              
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
   Proceeds from issuance of notes payable           300,000    
Proceeds from exercise of stock options     71,000          
Proceeds from Paycheck Protection Program     450,000          
   Dividend payments on preferred stock           (63,000 )  
   Repurchases of common stock     (171,000 )     (1,524,000 )  
   Repurchases of preferred stock           (168,000 )  
   Repayments of note payable           (800,000 )  
          Net cash provided by (used in) financing activities     350,000       (2,255,000 )  
           
CHANGE IN CASH     6,071,000       6,000    
CASH, BEGINNING OF PERIOD     265,000       259,000    
CASH, END OF PERIOD   $ 6,336,000     $ 265,000    
           
Supplemental disclosure operating activities          
Cash paid for interest   $ 12,000     $ 47,000    
           
Non-cash investing and financing activities          
Recording of lease asset and liability upon adoption of ASU-2016-02   $     $ 343,000    
Conversion of Series A preferred stock into common stock   $     $ 567,000    
           
           
The accompanying notes are an integral part of these consolidated financial statements