Executive Summary

Q3 revenue fell to $12.0M with gross margin collapsing to 0.2% on elevated protein and freight costs, driving a net loss of $(3.9)M and diluted EPS of $(0.12); sequentially below Q2’s $14.9M and YoY below Q3 2020’s $16.1M .
Operating expenses declined 21% YoY to $3.5M, reflecting continued cost discipline despite supply chain challenges and mix pressure .
Commercial progress: first production run of MP Combat Energy sold 100%; company reiterates expectation to scale the energy segment to ~$30M annual sales starting in 2023, supported by a recent $7.0M senior secured notes offering .
Management guides to sequential revenue growth in Q4 2021 driven by new formulations (Combat 100% Whey, Combat Protein Powder) and MP Energy drink line; Street consensus was unavailable in S&P Global for MSLPQ, limiting beat/miss analysis .

What Went Well and What Went Wrong

What Went Well

Strong early traction in energy beverages: “First Production Run of MP Combat Energy Successfully Sold 100%; $30 Million of Annual Sales Expected in 2023,” indicating category expansion with distributor momentum .
Cost controls: Operating expenses down to $3.5M in Q3 (–21% YoY), consistent with restructuring focus and OpEx reduction strategy .
Product refresh: New formulations for Combat 100% Whey and Combat Protein Powder shipping in Q4; CEO expects these and energy drinks to drive sequential revenue growth in Q4 (“expected to drive sequential revenue growth in the fourth quarter of 2021”) .

What Went Wrong

Margin shock: Q3 gross margin was 0.2% as protein input and freight costs surged, severely compressing profitability (gross profit $0.03M on $11.97M revenue) .
Sequential and YoY revenue declines: Revenue dropped vs Q2 ($14.9M) and vs Q3 2020 ($16.1M), reflecting supply chain shortages and cost inflation that outpaced pricing/mix offsets .
Liquidity pressure and payables: Cash fell to $0.384M while accounts payable rose to $18.77M; net loss widened, underscoring near-term balance sheet stress despite recent notes financing .

Financial Results

Income Statement and Profitability (USD Millions unless noted)

Metric	Q1 2021	Q2 2021	Q3 2021
Revenue (USD Millions)	$13.121	$14.908	$11.971
Gross Profit (USD Millions)	$3.689	$2.180	$0.029
Gross Margin (%)	28.1%	14.6%	0.2%
Operating Expenses (USD Millions)	$3.417	$3.921	$3.465
EBIT (Income/Loss from Operations, USD Millions)	$0.272	$(1.743)	$(3.436)
Net Income (Loss) (USD Millions)	$0.094	$(2.251)	$(3.933)
Diluted EPS ($)	$0.00	$(0.07)	$(0.12)
Adjusted EBITDA (USD Millions)	$0.478	$(0.880)	$(2.843)

Notes: Adjusted EBITDA reconciliations are provided in the press releases. Q3 margin deterioration primarily tied to protein and freight cost inflation .

Balance Sheet and Liquidity KPIs (Quarter-End)

KPI	Q1 2021	Q2 2021	Q3 2021
Cash and Equivalents (USD Millions)	$0.592	$1.016	$0.384
Accounts Receivable, net (USD Millions)	$6.221	$5.564	$7.332
Inventory, net (USD Millions)	$1.353	$1.561	$1.589
Accounts Payable (USD Millions)	$13.759	$15.218	$18.770
Total Liabilities (USD Millions)	$34.274	$37.206	$41.124
Stockholders’ Deficit (USD Millions)	$(24.325)	$(26.266)	$(29.813)

Segment Breakdown

Not disclosed in the Q1–Q3 2021 earnings materials; company reports consolidated results only .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue (sequential)	Q4 2021	None quantified previously; Q2 commentary focused on energy launch timing	Expects sequential revenue growth in Q4 driven by new formulations and MP Energy line	Raised qualitative outlook
Energy beverage annual sales	FY 2023	Target ~$30M annual MP and FitMiss Energy combined sales	Reiterated ~$30M annual sales; first production run sold 100%	Maintained target; confidence increased
Operating expenses	Ongoing	Focus on cost containment and restructuring	Continued focus; Q3 OpEx down 21% YoY	Maintained discipline; execution evident
Financing capacity	Near-term	Not highlighted in Q1/Q2 PRs	$7.0M senior secured notes to support energy market share capture	New financing disclosed

Earnings Call Themes & Trends

Transcript unavailable in our document system for Q3; themes inferred from press releases.

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Supply chain & input inflation	Industry-wide temporary supply shortage; protein prices increased, compressing GM	Protein and freight costs drove GM to 0.2%	Worsened
Product innovation	Preparing energy beverage launch; broadened distribution; omni-channel focus	New formulations shipping; energy line driving expected Q4 sequential revenue growth	Executing and scaling
Energy beverages	Launch planned; eight distributors signed; targeting ~$30M in 2023	First production run sold 100%; ~$30M 2023 reiterated; $7M notes to fund growth	Positive traction
Marketing & brand	Leveraging FitMiss; brand reach; omni-channel	Added T.J. Dillashaw for marketing partnerships aiding Q4 growth	Strengthening
Cost discipline	OpEx down ~20% in Q1; restructuring working	OpEx down 21% YoY in Q3	Sustained execution
Macro/logistics	Impacts acknowledged; caution on timing normalization	Continued logistics cost pressure	Persistent headwind

Management Commentary

CEO on Q3 pressures and Q4 setup: “Sales and margins in the third quarter were impacted by supply chain shortages… This new product formulation, along with the continued production of the MP Energy drink line, is expected to drive sequential revenue growth in the fourth quarter of 2021” .
CEO on energy scaling and financing: “Our recent $7.0 million senior secured notes offering has us well positioned to capture market share in the functional energy drink segment… $30.0 million in annual sales starting in 2023” .
CFO/President on strategy (Q1): “We will continue to focus on cost containment, while driving top line growth… growing the core MP brand… omni-channel… expanding into energy beverage sector” .

Q&A Highlights

The company hosted a conference call on Nov 15, 2021 (1:30 pm PT) with webcast and replay; however, the Q3 2021 transcript could not be retrieved from our document system, so Q&A details are unavailable .

Estimates Context

S&P Global consensus estimates for MSLPQ were unavailable in our data mapping during this period; as a result, we cannot provide revenue/EPS beat/miss analysis vs Street expectations. Coverage appears limited for this OTC name in standard consensus datasets (no CIQ mapping available).

Key Takeaways for Investors

Near-term margin recovery likely hinges on normalization of protein input costs and freight; Q3’s 0.2% GM underscores sensitivity to cost inflation .
Sequential revenue growth in Q4 is expected, driven by new formulations and early energy beverage traction; track sell-through and distribution breadth to validate scale-up .
Energy beverages present a tangible growth vector with proof-of-concept (100% sell-through on first run) and a reiterated $30M 2023 target; the $7M notes enhance funding capacity .
Balance sheet tightness (cash $0.384M; payables $18.77M; growing liabilities) warrants monitoring of working capital, cash generation, and vendor terms while scaling new categories .
Cost discipline continues to offset pressure (OpEx –21% YoY), but profitability remains challenged until gross margin improves; adjusted EBITDA moved to $(2.843)M in Q3 .
Without reliable Street estimates, price reaction may hinge on tangible Q4 revenue inflection, gross margin trajectory, and visibility into energy pipeline; watch subsequent 8-Ks and 10-Qs for hard data .
Marketing partnerships (e.g., T.J. Dillashaw) and omni-channel execution can accelerate brand awareness; sustained distribution expansion is critical for the energy strategy’s success .

MusclePharm Corp (MSLPQ)·Q3 2021 Earnings Summary