FitLife Brands 2025 Q1 Earnings Misses Targets as Net Income Falls 6.6%

FitLife Brands (FTLF) announced its fiscal 2025 Q1 earnings on May 15th, reporting a 4% decrease in total revenue to $15.94 million compared to Q1 2024. The company's net income also fell to $2.02 million, a 6.6% drop from the previous year. No formal guidance was provided, but the company remains hopeful for organic revenue growth in 2025. The earnings results were below analyst expectations, and there was no update on potential guidance adjustments.

Revenue

FitLife Brands reported a decline in total revenue, driven by decreases across several business segments. The Legacy FitLife segment showed resilience with $7.30 million in revenue, marking a 5% increase. MRC contributed $6.67 million, reflecting an 11% decrease year-over-year, while MusclePharm's revenue fell 6% to $1.96 million. Overall, the company's revenue dropped to $15.94 million for the quarter.

Earnings/Net Income

The company's earnings per share (EPS) decreased by 4.3% to $0.22 from $0.23 the previous year. Net income also experienced a decline, falling to $2.02 million from $2.16 million. Despite the decrease, FitLife Brands has maintained profitability over the past four years, reflecting stable business performance. The EPS results were disappointing for investors.

Price Action

The stock price of FitLife Brands edged down 2.76% during the latest trading day, has tumbled 8.83% during the most recent full trading week, and has surged 19.80% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing FitLife Brands stock after a revenue miss and holding for 30 days is speculative, relying on the potential for stock price recovery following the initial market reaction. This approach presumes that the market may overreact to revenue shortfalls, thus creating a buying opportunity. The core assumption is that despite the revenue miss, the company's fundamentals remain strong, and future events, such as improved sales or strategic initiatives, could boost the stock price within a short period. However, this strategy carries risks, including the possibility that continued negative market sentiment could prevent stock recovery within 30 days. Additionally, if the company's financial performance fails to improve as anticipated, further declines in stock price may occur. Market conditions and investor sentiment can also influence the stock independently of the company’s performance. In summary, while the strategy has theoretical merit, investors must carefully consider the risks and uncertainties involved and have a robust plan for managing potential losses.

CEO Commentary

Dayton Judd, Chief Executive Officer, noted the company's 4% revenue decline to $15.9 million for Q1 2025, with online sales comprising 67% of total revenue. Despite a 6% drop in gross profit, Legacy FitLife's revenue increased by 5%. Judd highlighted challenges in MusclePharm's wholesale segment, contributing to a 6% revenue decrease, but expressed optimism about promotional investments aimed at growth. He also mentioned the potential addition to the Russell 2000 Index as a positive catalyst for the stock and emphasized FitLife Brands' strong balance sheet and ongoing M&A activities.

Guidance

No formal forward-looking guidance was provided, but CEO Dayton Judd expressed hope for organic revenue growth in 2025. He pointed out that total company revenue and adjusted EBITDA were up year-over-year in April 2025, despite a decline in the Dr. Tobias brand. Judd mentioned that margin expectations would vary based on brand performance and product mix, with overall gross margins historically ranging between 42% and 45%.

Additional News

FitLife Brands remains active in mergers and acquisitions, with CEO Dayton Judd emphasizing the company’s financial flexibility to complete substantial acquisitions should opportunities arise. This is supported by FitLife's low leverage, with net debt at 0.4x adjusted EBITDA, allowing for significant strategic moves in the current market environment. Additionally, insider trading activity has seen positive engagement, with insiders such as Matthew Lingenbrink and Todd Ordal making multiple stock purchases over the past six months, signaling confidence in the company's prospects. Although the company didn't announce any dividend or buyback plans, the focus remains on growth through strategic acquisitions.