FitLife Brands (FTLF) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose 15% year-over-year to $16 million, with online sales comprising 68% and growing 14% year-over-year, driven by acquisitions and offset by a decline in Legacy FitLife revenue.

• Net income increased 25% year-over-year to $2.13 million, with basic EPS at $0.46 and diluted EPS at $0.43, reflecting higher gross profit and reduced advertising spend.

• Gross margin improved to 43.8% from 41.0% in Q3 2023, with gains from both MRC and Legacy FitLife brands.

• Adjusted EBITDA increased 41% to $3.6 million, and contribution as a percentage of revenue rose to 37.0% from 31.8%.

• Recent acquisitions of MRC and MusclePharm expanded product offerings and contributed to revenue and profit growth.

Financial highlights

• Q3 2024 gross profit was $7.0 million, up 23% year-over-year, with adjusted EBITDA at $3.6 million and margin at 22.4%.

• Ended Q3 with $4.7 million cash, net debt of $9.5 million, and leverage at 0.7x LTM adjusted EBITDA.

• Net debt reduced by $2.2 million since Q2 and $8.7 million since year-end 2023; $8.25 million of term loans repaid since 2023.

• Operating cash flow for the nine months ended September 30, 2024 was $8.7 million, up from $2.8 million in the prior year.

• No balance outstanding on $3.5 million revolving line of credit.

Outlook and guidance

• Double-digit year-over-year revenue and EBITDA growth expected in Q4, with continued cash generation and deleveraging.

• Management expects continued growth from recent acquisitions, ongoing optimization of acquired brands, and further improvement in retail sales declines.

• Launch of MusclePharm Pro Series in Q1 2025, with potential for nationwide Vitamin Shoppe rollout.

• Q4 is typically the slowest quarter for both wholesale and online channels.

• No specific guidance provided; M&A activity remains selective and focused on non-dilutive, accretive deals.