FitLife Brands Inc.’s Earnings Call Contradictions: Amortization Timeline Discrepancies and MusclePharm Margin Signals Clash

Date of Call: Apr 1, 2026

Financials Results

• Revenue: $25.9 million, up 73% compared to the fourth quarter of 2024 (primarily due to Irwin acquisition, partially offset by weakness in Legacy FitLife).
• Gross Margin: 37.0% compared to 41.4% during the fourth quarter of 2024 (decline primarily due to Irwin acquisition).

Business Commentary:

Revenue and Brand Performance:

• FitLife Brands reported total revenue of $25.9 million for Q4 2025, marking a 73% increase, primarily driven by the acquisition of Irwin Naturals.
• The growth was offset by a decline in Legacy FitLife brands, with MusclePharm and MRC experiencing challenges, contributing to a 12% decrease in total Legacy FitLife revenue.

Gross Margin and Contribution:

• The company's gross margin was 37.0% for Q4 2025, down from 41.4% in Q4 2024, due to the acquisition of Irwin Naturals, which operates at a lower margin.
• Despite this, contribution increased by 47%, driven by the addition of Irwin, although Legacy FitLife's contribution decreased by 18%.

Online and Wholesale Revenue Dynamics:

• Online revenue for Legacy FitLife increased by 16% during 2025, while wholesale revenue remained flat.
• Irwin's online revenue grew to $10.5 million, or 40% of total revenue, showcasing a 4% increase from Q4 2024, with significant growth on Amazon.

Challenges and Strategic Initiatives:

• FitLife Brands faced broad-based weakness across most brands and channels, attributed to economic and political volatility impacting consumer confidence and discretionary spending.
• The company identified five priorities, including improving Irwin's supply chain, increasing new product development, and driving off-Amazon awareness to address these challenges.

Debt Reduction and Financial Management:

• FitLife Brands made significant progress in debt reduction, paying down approximately $1.9 million in the fourth quarter and further reducing the revolver balance by $1.4 million in Q1 2026.
• The company aims to continue deploying excess free cash flow to reduce indebtedness and improve financial stability.

Sentiment Analysis:

Overall Tone: Neutral

• Management acknowledges 'weakness' across most brands and channels, declining revenue and margins, and 'uncertainty about how long the exogenous challenges will persist.' However, highlights 'bright spot' of Irwin's online growth and expresses confidence in internal improvement initiatives.

Q&A:

• Question from Ryan Meyers (Lake Street): Is there any way to think about which of the revenue headwinds (Amazon or macro pressures) is impacting the business more?
  Response: Management cannot bifurcate the two, noting general weakness but also specific areas where declines are not attributable to the overall market.

• Question from Ryan Meyers (Lake Street): Should we think of 37% as the new adjusted gross margin going forward, or can you get back to 40%?
  Response: Management believes 40% is a stretch; a more reasonable long-term target for the combined business is high 30s% as Irwin's margins improve.

• Question from Samir Patel (Askeladden Capital): Are you saying that if Irwin online continues to go well, it gets you back into the $120M revenue range, but if not, you're below it?
  Response: Partially confirms that interpretation, noting the company is close to the low end of the range and uncertain due to ongoing challenges in Q1 and lack of confidence in timing of recoveries.

• Question from Samir Patel (Askeladden Capital): What went into the decision to exit CBD?
  Response: Exit is due to the incredibly complex and challenging legal environment at both federal and state levels, not a margin decision, and CBD segment was declining.

• Question from Samir Patel (Askeladden Capital): What is the timing on the shelf life initiative and demand generation efforts?
  Response: Impact of 3-year shelf life change should start to flow through the P&L in Q2. Off-Amazon marketing (e.g., TikTok) is ongoing but takes time to scale, with early signs of increased engagement.

• Question from Sean McGowan (Roth Capital): Is the impact of the inventory step-up complete?
  Response: Yes, the amortization of the inventory step-up was completed in Q4 and will not be seen in Q1 or future periods.

• Question from Sean McGowan (Roth Capital): Did you mean consolidated gross margin or just Irwin itself in the high 30s%?
  Response: Referred to consolidated gross margin, believing the combined business can reach high 30s% over time as Irwin's margins improve.

• Question from Sean McGowan (Roth Capital): Can you share what Irwin's Q1 2025 revenue would have looked like pro forma?
  Response: Adjusted net revenue for Q1 2025, excluding Costco U.S., CBD, and Rite Aid, was $14.3 million.

• Question from Sean McGowan (Roth Capital): What's going on with MusclePharm and what's the remedy?
  Response: MusclePharm continues to face challenges reviving wholesale distribution and is impacted by high protein costs; the company is focused on protecting margins and gaining selective distribution, with some initial wins but no dramatic turnaround expected.

• Question from James Bogan (Legends Capital): What is the game plan for MusclePharm given high protein prices?
  Response: The plan is to grow the brand selectively, protecting margins by selling to customers willing to pay more, with no expectation of returning to its peak size, and ongoing efforts to regain some wholesale distribution.

• Question from Mays Han (Two by Two Capital): Have you had conversations about relisting SKUs at Costco U.S.?
  Response: Discussions have occurred, but getting back into Costco U.S. is not expected soon; focus remains on other opportunities like Canada.

• Question from Mays Han (Two by Two Capital): What is the updated view on Irwin's online sales potential?
  Response: Online sales are running at a $9M-$10M annualized run rate with continued growth, but slower than initial dramatic increases, and there is still upside from adding more SKUs and potentially expanding to Amazon Canada.

• Question from Tyler Hill (Private Investor): Given traffic headwinds, how is the company pivoting its social/media strategy? Are you seeing any improvement in LTV/retention for MRC?
  Response: Pivoting includes more off-Amazon marketing (TikTok, email, Shopify, social ads) to drive traffic; no recent updates on LTV/retention for MRC, with the main challenge being traffic declines due to Amazon algorithm changes affecting subscriber counts.

Contradiction Point 1

Amortization Timeline and Financial Impact of Irwin Inventory Step-Up

Contradiction on when the inventory step-up impact ends, affecting financial forecasting and transparency.

Sean McGowan (Roth Capital) - Sean McGowan (Roth Capital)

2025Q4: The inventory step-up amortization is complete and will not appear in Q1 or future periods. - Dayton Judd(CEO)

Has the inventory step-up impact been fully realized in Irwin's Q1 2025 revenue excluding Costco, CBD, and Rite Aid? - Sean McGowan (ROTH Capital Partners)

20251114-2025 Q3: About 40% of the $1.045M inventory step-up was amortized in Q3; the remaining ~$650K will flow through in Q4. After Q4, no further step-up impact will remain. - Dayton Judd(CEO)

Contradiction Point 2

MusclePharm Gross Margin Outlook and Strategic Pricing

Contradiction on the direction of MusclePharm's gross margins, impacting strategic pricing and cost management narratives.

Sean McGowan (Roth Capital) - Sean McGowan (Roth Capital)

2025Q4: The strategy is to protect margins by being selective on orders... and regaining wholesale distribution slowly. - Dayton Judd(CEO)

Has the impact of the inventory step-up been fully realized, and what was Irwin's Q1 2025 revenue excluding Costco, CBD, and Rite Aid, along with the strategy for MusclePharm amid high protein costs? - Sean McGowan (ROTH Capital Partners)

20251114-2025 Q3: Margins may get slightly worse in Q4 and early 2026 as whey protein costs continue to rise... The company has locked in supply for Q1 2026 but will absorb costs for growth. - Dayton Judd(CEO)

Contradiction Point 3

Dr. Tobias Brand Performance and Traffic Recovery

Contradiction on the cause of Dr. Tobias' traffic decline and the expected recovery timeline, affecting brand strategy and performance expectations.

Tyler Hill (Private Investor) - Tyler Hill (Private Investor)

2025Q4: The focus is on increasing off-Amazon awareness via TikTok, email marketing, Shopify, social ads, and a new CMO. The hypothesis is that this will improve Amazon performance... Amazon rewards brands that drive external traffic with lower referral fees. - Dayton Judd(CEO)

How is the company pivoting its social/organic media strategy to drive direct engagement amid Amazon traffic headwinds, and are there improvements in LTV/retention for MRC compared to legacy brands? - Sean McGowan (ROTH Capital Partners)

20251114-2025 Q3: Amazon traffic to Dr. Tobias listings fell dramatically for unknown reasons (suspected algorithm changes). The decline began ~1 year ago, and year-over-year comparisons will improve soon. - Dayton Judd(CEO)

Contradiction Point 4

Expectations for Overall Business Performance and Guidance

Contradiction on providing formal guidance and business performance outlook, affecting investor confidence and strategic clarity.

What are your key insights from the earnings call, Samir Patel of Askeladden Capital? - Samir Patel (Askeladden Capital)

2025Q4: The company is not providing formal guidance due to Q1 weakness. - Dayton Judd(CEO)

Does current weakness suggest acquisition targets may fall below the $120M revenue and $20-25M EBITDA range? - Ryan Meyers (Lake Street Capital Markets)

2025Q2: Management is optimistic about making up for it [the first-half decline]... The goal is to deliver organic revenue growth for 2025. - Dayton Judd(CEO)

Contradiction Point 5

Strategic Outlook for the MusclePharm Brand

Contradiction on the brand's recovery potential and strategic importance, impacting long-term brand valuation and investor expectations.

James Bogan (Legends Capital) - James Bogan (Legends Capital)

2025Q4: The goal is to grow it, but expectations should be tempered; it will not return to its ~$175M peak. - Dayton Judd(CEO)

What is the game plan for MusclePharm given high protein costs and the need to sell to all customers, and can it recover significantly? - Samir Patel (Askeladden Capital Management)

2025Q2: The brands themselves are not declining; the challenge is regaining distribution (as seen with MusclePharm). - Dayton Judd(CEO)