GlobeNewswire Inc | May 14, 2021 08:00AM EDT

May 14, 2021

Omaha, NE, May 14, 2021 (GLOBE NEWSWIRE) -- FitLife Brands, Inc. (FitLife or the Company) (OTCQX: FTLF), a provider of innovative and proprietary nutritional supplements for health-conscious consumers marketed under the brand names NDS Nutrition, PMD, SirenLabs, Nutrology, CoreActive, Metis Nutrition, iSatori, Energize, and BioGenetic Laboratories, today announced results for the three months ended March 31, 2021.

Highlights for the quarter ended March31, 2021 include:

-- Total revenue was roughly flat at $6.2 million. -- Online sales increased 89.2% to $1.6 million, representing 26% of total revenue compared to 14% in the same quarter last year. -- Gross profit improved 12.4% to $3.1 million compared to $2.7 million last year. -- Gross margin increased to 50.0% compared to 44.5% in the same quarter last year. -- Net income increased 17.9% to $1.7 million compared to $1.4 million last year. -- Net income per basic share increased 14.7% to $1.56, and net income per diluted share increased 12.6% to $1.43. -- Adjusted EBITDA increased 23.6% to $1.7 million compared to $1.4 million last year. -- The Company ended the quarter with $6.6 million of cash and no borrowings on its line of credit.

For the first quarter ended March 31, 2021, total revenue was approximately flat at $6.2 million. As previously mentioned, the Company believes that a portion of the wholesale revenue that historically would have been received during the first quarter shifted into the fourth quarter of 2020. For the first quarter of 2021, online sales increased 89.2% to $1.6 million and accounted for approximately 26% of the Companys total revenue compared to 14% during the first quarter of 2020.

Gross profit improved to $3.1 million, an increase of 12.4% from the first quarter of 2020. Gross margin improved from 44.5% to 50.0% over the same time period. The improvement in gross margin was driven primarily by higher online sales volumes.

The Company generated net income of $1.7 million compared to $1.4 million during the first quarter of 2020. Basic earnings per share was $1.56 and diluted earnings per share was $1.43, compared to $1.36 and $1.27, respectively, during the same quarter last year.

Subsequent to releasing a substantial portion of the reserve against its deferred tax assets at the end of 2020, the Company now reports a provision for income taxes, which is largely non-cash. In an effort to provide a more cash-based earnings metric, and to allow better comparability to prior periods, the Company has begun reporting adjusted EBITDA, a non-GAAP measure. Please see the non-GAAP financial measures table below for a reconciliation of net income to adjusted EBITDA. For the quarter ended March 31, 2021, adjusted EBITDA was $1.7 million, an increase of 23.6% compared to $1.4 million in the same period last year.

Dayton Judd, the Companys Chairman and CEO, commented, I am pleased that we continue to experience organic growth in both our wholesale and our online businesses. And as our online revenue becomes a larger portion of our business, we benefit from higher margins, as evidenced by the 50% gross margins we achieved during the first quarter.

Mr. Judd continued, Over the past several months, the global supply chain for nutritional supplement ingredients and packaging has become increasingly challenging. Production lead times for many of our products have increased from two months to as much as six months in some cases. In an effort to ensure our products stay in stock, we are placing orders much earlier than usual and carrying larger quantities of inventory. We will continue to adapt our operations as necessary to compete effectively in the current environment.

About FitLife BrandsFitLife Brands is a developer and marketer of innovative and proprietary nutritional supplements for health-conscious consumers. FitLife markets over 130 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 StatementsStatements 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

The financial presentation below contains certain financial measures defined as non-GAAP financial measures by the SEC, including non-GAAP EBITDA and adjusted non-GAAP EBITDA. 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 this Annual Report in accordance with GAAP.

As presented below, non-GAAP EBITDA excludes interest, income taxes, and depreciation and amortization. Adjusted non-GAAP EBITDAexcludes, in addition to interest, taxes, depreciation and amortization, equity-based compensation and non-recurring gains or losses. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expense and other items that may not be indicative of its core operating results and business outlook. The Company believes that the inclusion of non-GAAP measures in the financial presentation below allows investors to compare the Companys financial results with the Companys historical financial results and is an important measure of the Companys comparative financial performance.

FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS: March 31, December 31, 2021 2020 (Unaudited) CURRENT ASSETS Cash $ 6,625,000 $ 6,336,000 Accounts receivable, net ofallowance of doubtful accounts of 2,372,000 2,044,000 $60,000 and $51,000, respectivelyInventories, net of allowance forobsolescence of $25,000 and 4,738,000 3,401,000 $56,000, respectivelyIncome tax receivable 40,000 40,000 Prepaid expenses and other current 22,000 52,000 assetsTotal current assets 13,797,000 11,873,000 Property and equipment, net 90,000 98,000 Right of use asset, net ofamortization of $285,000 and 195,000 208,000 $272,000, respectivelyGoodwill 225,000 225,000 Deferred tax asset 4,042,000 4,370,000 TOTAL ASSETS $ 18,349,000 $ 16,774,000 LIABILITIES AND STOCKHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 3,410,000 $ 3,246,000 Accrued expense and other 590,000 498,000 liabilitiesProduct returns 304,000 335,000 Lease liability - current 52,000 50,000 portionTotal current 4,356,000 4,129,000 liabilities Long-term lease liability, net of 144,000 158,000 current portionPPP loan - 453,000 TOTAL LIABILITIES 4,500,000 4,740,000 STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value,10,000,000 shares authorized, none outstandingas of March 31, 2021 and December 31, 2020Common stock, $.01 par value,15,000,000 shares authorized; 1,090,818 and 1,060,818issued and outstanding as of March31, 2021 and December 31, 2020, 12,000 12,000 respectivelyTreasury stock, 210,631 and (1,790,000 ) (1,790,000 ) 210,631 shares, respectivelyAdditional paid-in capital 32,335,000 32,204,000 Accumulated deficit (16,708,000 ) (18,392,000 ) TOTAL STOCKHOLDERS' 13,849,000 12,034,000 EQUITY TOTAL LIABILITIES AND $ 18,349,000 $ 16,774,000 STOCKHOLDERS' EQUITY The accompanying notes are an integral part of these condensed consolidated financial statements

FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Unaudited) Three months ended March 31, 2021 2020 Revenue $ 6,158,000 $ 6,152,000 Cost of goods sold 3,081,000 3,415,000 Gross profit 3,077,000 2,737,000 OPERATING EXPENSES: General and administrative 857,000 733,000 Selling and marketing 669,000 671,000 Depreciation and amortization 8,000 12,000 Total operating expenses 1,534,000 1,416,000 OPERATING INCOME 1,543,000 1,321,000 OTHER EXPENSES (INCOME) Interest expense (income) (6,000 ) 4,000 Gain on settlement - (70,000 ) Gain on debt forgiveness (453,000 ) - Total other expenses (income) (459,000 ) (66,000 ) PRE-TAX NET INCOME 2,002,000 1,387,000 PROVISION (BENEFIT) FOR INCOME TAXES 318,000 (41,000 ) NET INCOME 1,684,000 1,428,000 NET INCOME PER SHARE Basic $ 1.56 $ 1.36 Diluted $ 1.43 $ 1.27 Basic weighted average common shares 1,076,651 1,051,752 Diluted weighted average common shares 1,174,666 1,126,303 Theaccompanying notes are an integral part of these condensed consolidated financial statements

FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Unaudited) Three months ended March 31, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES:Net income $ 1,684,000 $ 1,428,000 Adjustments to reconcile netincome to net cash used in operating activities:Depreciation and 8,000 12,000 amortizationRight of use asset 14,000 16,000 amortizationAllowance for doubtful 9,000 6,000 accountsAllowance for inventory (31,000 ) - obsolescenceFair value of stock and 131,000 28,000 options issued for servicesForgiveness of PPP loan (453,000 ) - Changes in operating assets and liabilities:Accounts receivable - trade (337,000 ) (2,332,000 ) Inventories (1,307,000 ) (25,000 ) Deferred tax asset 328,000 - Prepaid expense 30,000 46,000 Accounts payable 164,000 737,000 Lease liability (12,000 ) (14,000 ) Accrued interest - 4,000 Accrued liabilities and 92,000 75,000 other liabilitiesProduct returns (31,000 ) 20,000 Net cash 289,000 1,000 provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES:Net cash - - provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from exercise of stock - 71,000 optionsProceeds from line of credit - 2,500,000 Repurchases of common stock - (171,000 ) Net cashprovided by (used in) financing - 2,400,000 activities CHANGE IN CASH 289,000 2,401,000 CASH, BEGINNING OF PERIOD 6,336,000 265,000 CASH, END OF PERIOD $ 6,625,000 $ 2,666,000 Supplemental disclosure operating activitiesCash paid for interest $ - $ - Cash paid (refunded) for income $ (10,000 ) $ - taxes The accompanying notes are an integral part of these condensed consolidated financial statements

FITLIFE BRANDS, INC. RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Unaudited) For the three months ended March 31, 2021 2020 Net income $ 1,684,000 $ 1,428,000 Interest expense (income) (6,000 ) 4,000 Provision for income taxes 318,000 (41,000 ) Depreciation and amortization 8,000 12,000 EBITDA 2,004,000 1,403,000 Non-cash and non-recurring adjustments Stock compensation expense 131,000 28,000 Non-recurring losses (gains) (453,000 ) (70,000 ) Adjusted EBITDA $ 1,682,000 $ 1,361,000



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