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FITLIFE BRANDS, INC. (FTLF)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered double‑digit growth and margin expansion: revenue $15.013M (+13% YoY), gross margin 41.4% (+110 bps YoY), net income $2.1M (+40% YoY), and adjusted EBITDA $3.1M (+31% YoY) .
  • Against Wall Street consensus, FTLF modestly beat on EPS ($0.21 vs $0.20*) and revenue ($15.013M vs $14.955M*); Q3 had missed both EPS ($0.215 vs $0.25*) and revenue ($15.977M vs $16.947M*) .
  • Management resolved a December dispute with GNC on Jan 23, restored distribution center POs, and shipped direct to franchisees interim; Q1 Legacy FitLife wholesale likely down YoY but online strong, with consolidated Q1 revenue guided -4% to -6% and adjusted EBITDA ~flat YoY .
  • MusclePharm wholesale surged (+37% seq) on promotional investment; gross margin compressed to 26.5% from mid‑30s, with continued intentional promotional spend to drive growth and new Pro Series pilot at Vitamin Shoppe (≈60% store base) .
  • Near‑term narrative catalysts: tariff cost risk (two 10% tranches on China imports), proactive raw material pre‑buy and alternative sourcing (India) to mitigate; M&A pipeline active with capacity given net debt $8.6M (~0.6x LTM adj. EBITDA) .

What Went Well and What Went Wrong

What Went Well

  • Consolidated performance: Q4 revenue +13% YoY to $15.013M, gross profit +16% YoY to $6.212M, contribution +18% YoY to $5.233M; gross margin up to 41.4% .
  • MRC optimization: gross margin up to 48.7% (+830 bps YoY), contribution up 31% YoY despite slight revenue decline; Dr. Tobias revenue +6% YoY, skin care rationalization improved profitability .
  • Management confidence and balance sheet strength: “Our balance sheet is strong… net debt… 0.6x adjusted EBITDA” and proactive tariff mitigation via forward‑buy/alternative sourcing (India) .

What Went Wrong

  • Legacy FitLife headwinds: Q4 revenue -13% YoY, wholesale -20% YoY, online -1% YoY; GNC dispute temporarily disrupted wholesale flow in December .
  • MusclePharm margin compression: gross margin fell to 26.5% on increased promotional allowances and elevated whey costs; contribution margin 22.3% .
  • Q1 2025 outlook softer: consolidated revenue guided down 4%–6% YoY, largely due to tough MRC compare and leap‑year day; while EBITDA ~flat, near‑term topline a headwind .

Financial Results

Consolidated Results vs Prior Quarters

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$16.930 $15.977 $15.013
Gross Margin %44.8% 43.8% 41.4%
Net Income ($USD Millions)$2.628 $2.126 $2.1
Diluted EPS ($USD)$0.53 (pre‑split) $0.43 (pre‑split) $0.21 (split‑adjusted)
Adjusted EBITDA ($USD Millions)$3.827 $3.588 $3.1

Note: Per-share amounts were retroactively adjusted in Q4 discussion; Q2/Q3 figures above reflect contemporaneous reporting. FitLife executed a 2‑for‑1 forward split effective Feb 7, 2025 .

Segment/Brand Group Breakdown

Segment KPIQ2 2024Q3 2024Q4 2024
Legacy FitLife – Total Revenue ($M)$6.802 $6.302 $5.322
Legacy FitLife – Gross Margin %44.2% 42.6% 39.7%
Legacy FitLife – Contribution ($M)$2.912 $2.614 $2.056
Legacy FitLife – Contribution Margin %42.8% 41.5% 38.6%
MRC – Total Revenue ($M)$7.461 $7.210 $6.872
MRC – Gross Margin %48.2% 47.7% 48.7%
MRC – Contribution ($M)$2.526 $2.512 $2.547
MRC – Contribution Margin %33.9% 34.8% 37.1%
MusclePharm – Total Revenue ($M)$2.667 $2.465 $2.819
MusclePharm – Gross Margin %36.6% 35.5% 26.5%
MusclePharm – Contribution ($M)$0.816 $0.782 $0.630
MusclePharm – Contribution Margin %30.6% 31.7% 22.3%

KPIs

KPIQ2 2024Q3 2024Q4 2024
Online Revenue ($M)$11.228 $10.816 $10.074
Online % of Total66% 68% 67%
Wholesale Revenue ($M)$5.702 $5.161 $4.939
Net Debt ($M)$11.7 $9.5 $8.6
Net Debt / Adj. EBITDA (x)~0.9x ~0.7x ~0.6x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025Not providedDown ~4%–6% YoY Lowered
Adjusted EBITDAQ1 2025Not provided~Flat YoY vs Q1 2024 Maintained
Revenue & EBITDAFY 2025Not providedOrganic revenue and EBITDA growth expected New directional
Tariff Impact (COGS)2025Not providedTwo 10% tariff tranches likely raise COGS; mitigation via pre‑buy/alternative sourcing Risk disclosed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Supply chain & tariffsNo tariff impact disclosed; margin tailwind from MRC optimization Shelf registration; balance sheet strength; no specific tariff view Two 10% China tariff tranches; pre‑buy and India sourcing to mitigate; no product cost increases yet flowed through Emerging headwind, proactively managed
Wholesale vs online mixLegacy wholesale -10% YoY; online +7% YoY; margins up Legacy wholesale -12% YoY; online +4% YoY; wholesale declines moderating Legacy wholesale -20% YoY; online -1% YoY on tough comp; GNC dispute resolved Wholesale challenged; online resilient
MusclePharm brandSequential revenue +27%; margin dip on promo investment Seasonal softness; orders slipped into Oct; Pro Series pilot planned Wholesale +37% seq; gross margin 26.5% on promo and whey costs; Pro Series pilot launched Growth focus with margin trade‑off
Amazon Subscribe & SaveAdvertising spend optimization at MRC; margin up Shelf put in place; MRC advertising reduced; strong Dr. Tobias Deep first‑purchase discount in Feb–Mar 2024 drove peak period; Q1 MRC down 10%–13% YoY on tough comp Lapping unusual strength
M&A capacity & liquidityBuilding cash; net debt ~0.9x adj. EBITDA Active deal review; shelf filed; non‑dilutive focus Bank capacity ~2x pro forma EBITDA; net debt reduced to $8.6M; pursuing larger deals patiently Capacity improving

Management Commentary

  • “Overall, I am pleased with the Company’s progress in 2024… revenue, gross profit, gross margin, contribution… all increased compared to the same period in 2023.” — Dayton Judd, CEO .
  • “On February 4, 2025… 10% tariff… followed by an additional 10%… Unless withdrawn, these tariffs will increase the Company’s cost of goods sold… we have been opportunistically acquiring certain raw materials at pre‑tariff prices.” .
  • “As of December 31, 2024… net debt… $8.6 million, representing 0.6x the Company’s adjusted EBITDA. Our balance sheet is strong…” .
  • On MusclePharm promotions: “Marketing allowances… accounted for as a price reduction… lowers reported net revenue and gross profit… we intend to continue investing in promotional spend” .
  • On GNC dispute: “On January 23, GNC and FitLife settled the commercial dispute… began accepting POs… shipments back into distribution centers occurring a couple of weeks after that.” .

Q&A Highlights

  • Tariffs and sourcing: Ingredients often originate from China; FitLife is forward‑buying (e.g., glutamine) and pursuing India sourcing; portfolio‑level COGS impact range estimated mid‑single to low double digits for select SKUs if not mitigated .
  • MRC Q1 dynamic: Feb–Mar 2024 deep Subscribe & Save discounts drove an unusually strong six‑week period; Q1 2025 MRC online guided -10% to -13% on lapping that surge; subscribers trend generally growing week‑over‑week .
  • MusclePharm margins/promotions: Promotional allowances lower reported margins; Q4 gross margin compressed; plan to keep promo spend near‑term with ROI focus; whey cost pressures easing recently .
  • GNC resolution and fulfillment: Direct ship to franchisees during dispute; profitability of direct vs corporate DC uncertain, but pricing to franchisees higher; DC restocking underway .
  • M&A capacity: Illustrative debt capacity ~2x pro forma EBITDA with ability to flex; preference for larger, accretive, non‑dilutive deals; deal flow increasing amid debt market dislocations .

Estimates Context

  • Q4 2024: EPS actual $0.21 vs consensus $0.20*; revenue actual $15.013M vs consensus $14.955M* — beat. Q3 2024: EPS actual $0.215 vs consensus $0.25* — miss; revenue actual $15.977M vs consensus $16.947M* — miss. Fewer estimates in coverage (EPS: 2 for Q4, 1 for Q3; Revenue: 2 for Q4, 1 for Q3)*.
  • Expect near‑term estimate revisions: Q1 2025 revenue guided -4% to -6% YoY and EBITDA ~flat; tariffs could raise COGS; MusclePharm margins likely below 30% near‑term .
MetricQ2 2024Q3 2024Q4 2024
Revenue Actual ($USD Millions)$16.930 $15.977 $15.013
Revenue Consensus ($USD Millions)—$16.947*$14.955*
EPS Actual ($USD)—$0.215*$0.21*
EPS Consensus ($USD)—$0.25*$0.20*
# of Estimates (Revenue / EPS)—1 / 1*2 / 2*

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q4 print was clean with beats vs modest consensus and YoY margin expansion; the primary caution is management’s Q1 guide (revenue -4% to -6%) on MRC lapping and leap year effects .
  • MusclePharm is now a topline growth lever (highest revenue quarter since acquisition) but near‑term margin drag is intentional given promotional investment; watch Vitamin Shoppe Pro Series pilot outcomes .
  • Legacy FitLife wholesale is structurally pressured by brick‑and‑mortar traffic; the GNC dispute was resolved, and direct franchisee fulfillment capability is now validated if needed .
  • Tariff risk is real but mitigation plans are in motion (pre‑buy, India sourcing); monitor COGS mix and gross margin trajectory through 1H25 .
  • Balance sheet supports opportunistic, non‑dilutive M&A; net debt $8.6M (~0.6x) and rising cash enhance strategic flexibility .
  • Liquidity/float considerations improved via 2‑for‑1 split; per‑share comps in Q4 are split‑adjusted — align estimate frameworks accordingly .
  • Trading setup: Near‑term sentiment may focus on Q1 revenue guide and MusclePharm margin trade‑offs; execution on Pro Series and stabilized GNC flow are positive swing factors .