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FitLife Brands(FTLF) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 increased by 15% year-over-year, with wholesale revenue up 18% and online revenue up 13% [4] - Gross profit increased by 27%, and gross margin expanded from 41.9% to 44.8% [4] - Contribution increased by 39%, driven by the addition of MusclePharm and gross margin expansion [4] - Net income rose by 34%, with basic earnings per share increasing by 30% and fully diluted earnings per share increasing by 33% [4] - Adjusted EBITDA for Q2 2024 increased by 29% to 3.8million,bringingLTMadjustedEBITDAto3.8 million, bringing LTM adjusted EBITDA to 12.4 million [5][14] Business Line Data and Key Metrics Changes - Legacy FitLife revenue for Q2 2024 was 6.8million,with626.8 million, with 62% from wholesale and 38% from online sales, representing a 10% decline in wholesale revenue and a 7% increase in online revenue [5][6] - MRC revenue for Q2 2024 was 7.5 million, with a 2% year-over-year decline; Dr. Tobias brand revenue increased by 4%, while skin care brands revenue decreased by 37% [7][8] - MusclePharm revenue was approximately 2.7millionforQ22024,withasequentialincreaseof272.7 million for Q2 2024, with a sequential increase of 27% from Q1 2024 [10][11] Market Data and Key Metrics Changes - Approximately two-thirds of total revenue now comes from online sales, a significant increase from less than 1% in 2018 [12] - Amazon subscribers for MRC products grew by 5% year-over-year, with Dr. Tobias subscribers increasing by approximately 8% [9][10] Company Strategy and Development Direction - The company aims to consolidate within the supplement industry, focusing on acquiring brands at attractive multiples [18] - The management plans to continue investing in growth through promotional offers and increased advertising [16][17] - The company expects to deliver double-digit year-over-year revenue growth for the remainder of 2024 [13] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing dialogue with potential wholesale partners for MusclePharm, indicating positive trends in customer engagement [20][21] - The company is focused on reducing net debt, which decreased by 36% during the first half of 2024 [14] Other Important Information - The company has a strong balance sheet with 15.4 million of term loan outstanding and no balance on its revolver [14] - The company surpassed over 100,000 subscribers on Amazon, indicating a significant milestone in customer acquisition [13] Q&A Session Summary Question: What are the goals management has for the company in five to ten years? - Management believes the biggest opportunity lies in consolidating within the supplement industry and is actively looking at potential acquisitions [18] Question: Will share buybacks be reinitiated? - Currently, the best use of capital is seen as acquiring other brands, with share buybacks considered only if there is a significant pullback in stock [16][17] Question: Is a dividend being considered? - Similar to share buybacks, dividends are not currently prioritized, with a focus on M&A instead [16][17] Question: What revenue can be expected from MusclePharm when it levels out? - Management is reluctant to provide specific revenue estimates but expects to double the run rate in the next 12 months [16]