Fitlife Brands, Inc. Q1 FY2026 Earnings Call

Good day, and welcome to the FitLife Brands First Quarter 2026 Earnings Conference Call. The operator provided instructions. It is now my pleasure to turn the floor over to your host, Dayton Judd, CEO of FitLife Brands. Sir, please go ahead.

Good afternoon. I'd like to welcome everyone to FitLife's First Quarter 2026 Earnings Call. We appreciate you taking the time to join us this afternoon. Joining me on the call is FitLife's EVP, Ryan Hansen; and FitLife's CFO, Jacob York. I will start by providing some general commentary about the first quarter of 2026. For the first quarter of 2026, total revenue was $25.3 million, an increase of 59% compared to the same quarter last year, with the increase driven primarily by the acquisition of Irwin, partially offset by weakness in Legacy FitLife. Wholesale revenue was $14.1 million or 56% of revenue, an increase of 166% compared to the first quarter of 2025. Online revenue was $11.2 million or 44% of total revenue, an increase of 6% compared to the first quarter of 2025. Gross margin was 37.6% compared to 43.1% during the first quarter of 2025. The decline in gross margin is primarily due to the acquisition of Irwin, which has historically operated at a lower gross margin than Legacy FitLife. Gross margins increased sequentially for both Legacy FitLife and Irwin for the first quarter of 2026 compared to the fourth quarter of 2025. We expect Irwin's margins to continue to increase over time as we work through a number of supply chain and other initiatives. Contribution, which we define as gross profit less advertising and marketing expense, increased 42%, driven primarily by the addition of Irwin, partially offset by lower contribution from Legacy FitLife. Net income for the first quarter of 2026 was $1.7 million compared to $2.0 million during the first quarter of 2025, with the decline driven primarily by higher amortization expense and interest expense associated with the acquisition of Irwin. Adjusted EBITDA was $3.3 million, a 3% decrease compared to the first quarter of 2025. With regard to brand level performance, I'll start with Legacy FitLife. Total Legacy FitLife revenue for the fourth quarter of 2025 was $12.5 million, of which 70% was from online sales and 30% was from wholesale customers. This represents a 28% year-over-year decrease in wholesale revenue and an 18% year-over-year decrease in online revenue or a 22% decrease in total revenue. The declines were primarily attributable to lower online revenue for MRC and lower wholesale revenue from GNC. The year-over-year wholesale comparison for Legacy FitLife was particularly challenging due to the restocking of GNC's distribution centers during the first quarter of 2025 following the resolution of the previously disclosed commercial dispute that resulted in the company stopping shipments to GNC. Gross margin for Legacy FitLife declined from 43.1% in the first quarter of 2025 to 41.2% in the first quarter of 2026. However, gross margin for Legacy FitLife increased sequentially from 40.7% in the fourth quarter of 2025 to 41.2% in the first quarter of 2026. Contribution for Legacy FitLife declined 27% to $4.3 million and contribution as a percentage of revenue decreased to 34.1% compared to 36.5% in the same quarter of 2025. Sequentially, contribution was approximately flat from the fourth quarter of 2025 to the first quarter of 2026, with contribution as a percentage of revenue increasing from 32.5% to 34.1% over the same time period. Moving on now to Irwin. Total Irwin revenue for the first quarter was $12.8 million, of which $10.3 million or 80% came from wholesale customers and 20% came from online sales. Gross margin for Irwin for the first quarter was 34.0% and contribution as a percentage of revenue was 31.3%. As previously mentioned, we began selling Irwin products on Amazon in mid-October, and the business scaled nicely throughout the fourth quarter of 2025, reaching almost $500,000 of revenue in December of 2025. Amazon revenue continued to climb throughout the first quarter of 2026, reaching approximately $800,000 in March of 2026. Adjusting for the loss of Costco U.S. and Rite Aid as customers prior to our acquisition of Irwin and removing CBD for both periods due to the company's decision to exit the CBD market, organic revenue for Irwin during the first quarter of 2026 declined approximately 13% year-over-year. We estimate that approximately $1 million to $1.5 million or more than half of the decline is due to lost revenue from the out-of-stock situations discussed on our previous earnings call. Now let me provide a few additional high-level comments and some forward-looking remarks, and then we can move into Q&A. Regarding the balance sheet, we made a scheduled amortization payment of approximately $1.5 million during the first quarter, bringing our term loan balance to $37.6 million. We also paid down an additional $1.4 million on our revolving line of credit during the first quarter, bringing the balance to $4.2 million. We intend to continue to deploy excess free cash flow to further reduce indebtedness. Although the first quarter was challenging, we are encouraged that monthly revenue increased sequentially throughout the quarter. In addition, many of our Amazon selling accounts showed sequential improvement late in the quarter and into April. We are also encouraged by the continued growth of Irwin's Amazon business with revenue in April reaching approximately $900,000. Although the pace of growth is slowing, Irwin's Amazon account has continued to experience sequential growth in the May month-to-date period. We believe Irwin is positioned for further growth on Amazon as we continue to resolve the out-of-stock situations, successfully set up listings for the remaining products that have not yet been available for sale on Amazon and launch our portfolio of Canadian products on Amazon Canada later in the second quarter. The subscriber count for Irwin products on Amazon also continues to scale rapidly, increasing from approximately 500 at the beginning of the first quarter of 2026 to approximately 3,600 as of the end of the first quarter of 2026, and to over 5,700 today. Last, we are excited to announce the launch of two MusclePharm SKUs in several hundred Kroger stores nationwide beginning in June. So this concludes my opening commentary, and we can now go ahead and open the call up for questions.

The first question today is coming from Ryan Meyers from Lake Street Capital Markets.

First one for me, Dayton, you had mentioned that monthly revenue improved sequentially through the quarter. Can you just talk a little bit about what you saw in April and then maybe what you're seeing here into the first couple of weeks of May?

Yes. Thanks for the question. The trend throughout the first quarter: January was tough. February was similar to January, although it had three fewer days, so on a revenue-per-day basis February was stronger than January. January and February were in the low $8 range per day. In March, we were above $9 in terms of daily revenue. April was higher than January or February but a bit lower than March. April was actually our highest sales order month that we have had this year. We had a lot of shipments at the end of April, and for most of our customers we don't recognize revenue until the shipments have been received. To put it in context, at the end of March we had just under $1 million in transit that was moved out of March revenue and into April. At the end of April, we had about $1.65 million in transit. So April was decent, higher than January and February. If you normalize based on shipments, it was a pretty strong month.

Okay. Got it. No, that's good to hear. And then thinking about the Irwin business, congrats on the strong success that you've seen there. I'm just curious, how much additional upside do you think remains in that business before you hit kind of a steady-state revenue rate, if you will, rather than growing from virtually nothing to close to $1 million? What is that number? What do you think that number is to where it kind of steadies out?

That's hard to say. I don't see a reason why we wouldn't get to at least $1 million a month. I mentioned two or three things that I think will remain tailwinds. One is there are still a number of products—probably around 20 SKUs—that are not yet set up to be sold on Amazon. When you put up a new listing, Amazon often flags it and before you can sell it you have to get it tested by one of their third parties, and that process can take weeks. When we get some of those SKUs up—one or two per week—we're getting traction, especially if those SKUs have high wholesale presence. Another factor is out-of-stocks have hurt us, particularly on the wholesale side. When we're out of stock on something we prioritize distribution to Walmart and CVS over Amazon. There are some of our highest-selling wholesale products that we're hardly selling on Amazon because of out-of-stock issues. Getting those back in stock will be an additional tailwind. Finally, Canada is an opportunity: we have between eight and ten products that are sold in Canada, but Canada requires NPN numbers and approval from Health Canada, which can take up to a year. It's not going to be a huge lift immediately, but we do a decent amount of business in Canada, and in the last two or three days we got that account opened; now it's a matter of getting inventory shipped in. I would be surprised if we don't at least hit $1 million. Another point: we initially ramped without much marketing push. We have turned on Amazon ads for Irwin and are doing more off-Amazon marketing as well. We expect advertising spend to help drive additional Amazon growth. If you look at our spend: in Q3 (a partial quarter after acquisition) we spent $72,000 advertising Irwin; in Q4 we spent $182,000; and in Q1 we spent $358,000. We are investing in advertising and marketing for Irwin, not just on Amazon; most of that spend is off-Amazon, but we expect some benefit to translate to Amazon as well.

Your next question is coming from Sean McGowan from ROTH Capital.

I know you don't break out MusclePharm in detail the way you used to, but can you give us some sense of how it's doing directionally, both in terms of revenue performance as well as the realized margins there?

Revenue is down, but that's by choice. If you look across the board and take out some international players that are very protein-heavy and aggressively margin-focused, we could sell to them at a 10% margin, but we've chosen not to. So revenue was down, but if I were selling to those customers, revenue would be higher. For the other accounts that we're continuing to sell to, we see good traction. Online is doing well. Online was up for MusclePharm in 2025 for the full year. It started trailing off late in 2025 and actually declined double digits early this year, but it's now back to being down only single digits. We're getting momentum back, particularly online. Excluding the international, highly price-sensitive customers, margins should be higher because the least profitable customers are those large international buyers of protein. When I no longer sell to them, over half of our revenue in the quarter for MusclePharm was online, and that is where we get the best margins. So we expect margins to be better for MusclePharm going forward unless or until we decide to be more aggressive with some large international accounts.

Okay. And then switching to a question about Amazon. So you've talked in the past about some changes that they've made, and we're hearing that from some other people. Without asking you to give away secrets that could turn around and hurt you, could you talk about how you were able to address that and fix it? Is it fixed?

I would not say it's fixed. I think this will be a long fix. We are seeing sequential improvement, but it's a multi-month process. Some accounts flipped negative—MusclePharm is a good example—and it has made a pretty good turnaround. We're doing a lot more on Google ads, Meta ads, and TikTok. We've been doing TikTok for Dr. Tobias for a while, and we're starting TikTok this month for Irwin. We have an endorsement arrangement with Joey Chestnut for Dr. Tobias, particularly the colon cleanse product, so you'll start to see some content on social media in the next few weeks. Our emphasis is spending less of our advertising and marketing dollars on Amazon and more off-Amazon. From everything we've heard in the industry, that's becoming the new formula for success on Amazon: drive demand off-Amazon. We're not declaring victory; we have a lot of work to do, but positive trends are emerging.

Our next question is coming from Samir Patel from Askeladden Capital.

A couple of things. First, we talked a lot last quarter about the dating initiative with the bottles, and I think you mentioned that you expected shrink to start improving in Q2. Maybe just an update on how that's going and how you expect that to play out over the course of the year?

Good question. Around the time of our last call we were just receiving our first shipment of product with three-year dating. We have received several products now with three-year dating. We probably have between 15 and 20 products currently in production that, when we receive them in the next few weeks, will have three-year dating. We also have a number of other formulas that are ready to go with three-year dating the next time we place a purchase order. We've made progress and have reduced obsolescence significantly. I think we'll hit an inflection point soon where we've done all we can to salvage inventory purchased at the time of the transaction. As we get more three-year dating in, the reserve will come down and margins should go up as we write off less inventory. Much of it is behind us: we're not expensing anything close to $2 million a year now. At the time of the acquisition, a reserve of approximately $2.4 million to $2.7 million was taken out of gross inventory and recorded, which we cannot retroactively change. To the extent we improve and extend dating or sell inventory that had been reserved, the benefit would show up in higher margins because the inventory was already written down. The transaction was about nine months ago and we are working through that inventory. The amount expensed to obsolescence in Q1 was very small, so we're much closer to resolution and will continue to see marginal improvement over time.

Okay. That's helpful. Second, I'd love more color on the new MusclePharm placement: anything you can share about that customer? If that goes well, that customer has a lot more stores that could roll out to. And compare and contrast: last year we had the Vitamin Shoppe pilot that didn't go as well. Any learnings from that as you try to get more wholesale distribution for MusclePharm?

The two products going into Kroger are two flavors of a liquid L-Carnitine. It's a relatively new product for MusclePharm and one we developed and launched after acquisition. We, as a company, do a lot of liquid L-Carnitine; it's a very big SKU for our iSatori brand, where we sell thousands of units a week on Amazon and also have distribution in places like Vitamin Shoppe. We also sell liquid L-Carnitine under other brands in GNC. So it's a product type we know well. We're going into between 700 and 800 Kroger stores nationwide across multiple banners—Kroger, Fred Meyer, Smith's—so it's not regionally concentrated. We will be shipping later this month and expect product on shelf in June. We're applying learnings from the Vitamin Shoppe launch and other initiatives. We'll use CTV advertising geolocated to the stores that will carry the product so we can reach anyone living within three miles of those stores on streaming services. We may do direct mail and the launch will include a neck-band coupon—$5 off to encourage trial. This is a big initiative for our new CMO and consolidated marketing team, and we're doing everything we can to make it successful.

Is that something that was already in the works from your team or did the Irwin team help with it? Do they have a wholesale relationship that helped you win that customer?

This was actually more of a hybrid. The sales process for major brick-and-mortar chains can take months or years because they do resets once or twice a year. This particular opportunity started before we acquired Irwin: we had already met with Kroger, done a presentation, and gotten initial traction. The Irwin team has a number of products in Kroger and we use the same broker to approach Kroger, so there are synergies from the acquisition that benefit us, but this effort began prior to acquiring Irwin.

There are no further questions in queue at this time. I would now like to hand the floor back to Dayton Judd for closing remarks.

Thank you all for joining us on the call. We appreciate it and look forward to speaking with you all again in the middle of August. Thank you very much.

Thank you. This does conclude today's conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.