Earnings Call Transcript - FTLF Q2 2025

Operator, Operator

Good day, and welcome to the FitLife Brands Second Quarter 2025 Financial Results Conference Call. It is now my pleasure to turn the floor over to your host, Dayton Judd, CEO at FitLife. Sir, the floor is yours.

Dayton Judd, CEO

Thank you, Paul. I'd like to welcome everyone to FitLife's Second Quarter 2025 Earnings Call. We appreciate you taking the time to join us this afternoon. Joining me on this call is FitLife's CFO, Jacob York; and FitLife's EVP, Ryan Hansen. As we typically do, I'll provide some opening commentary to get us started, and then we'll open up the call for Q&A. For the company overall, for the second quarter of 2025, total revenue declined 5% year-over-year to $16.1 million. Online sales were $10.4 million or 65% of total revenue. Gross profit declined 9% and gross margin declined from 44.8% in the second quarter of last year to 42.8% in the second quarter of 2025. Contribution, which we define as gross profit less advertising and marketing expense declined 9% to $5.7 million. Net income for the second quarter of 2025 was $1.7 million compared to $2.6 million during the second quarter of 2024. Most of the decline in net income is due to elevated merger and acquisition-related expense associated with the acquisition of Irwin Naturals and its affiliates, which transaction closed on August 8, 2025, subsequent to the second quarter. Basic earnings per share declined from $0.29 last year to $0.19 this year. Diluted earnings per share declined from $0.27 last year to $0.18 this year. Adjusted EBITDA for the second quarter was $3.3 million, a 13% decrease compared to the second quarter of 2024, bringing adjusted EBITDA for the trailing 12 months to $13.4 million. With regard to the balance sheet, the company ended the quarter with $10.9 million outstanding on its term loans and no balance on its revolving line of credit. Considering our cash of $6.6 million outstanding at the end of the second quarter, including the $5 million deposit related to the Irwin Naturals transaction. Net debt was $4.3 million, which is equivalent to approximately 0.3x the company's adjusted EBITDA. With regard to brand level performance, I'll start with Legacy FitLife. Total Legacy FitLife revenue for the second quarter of 2025 was $7.3 million, of which 59% was from wholesale customers and 41% was from online sales. This represents a 1% year-over-year increase in wholesale revenue and a 17% year-over-year increase in online revenue or a 7% increase in total revenue. Gross margin increased to 43.8% compared to 44.2% during the second quarter of 2024. Contribution increased 5% to $3.1 million and contribution as a percentage of revenue decreased to 42.0% compared to 42.8% in the same quarter last year. Moving on now to the brands acquired in the Mimi's Rock transaction or MRC. On our previous earnings call, I mentioned that we would start including MRC in Legacy FitLife going forward as we're now more than 2 years removed since the initial acquisition. However, given the challenges the brand has been experiencing, we decided to keep it separate in our disclosure for one more quarter. Total MRC revenue for the second quarter of 2025 was $6.3 million, down 16% from the previous year. MRC's gross margin declined to 46.5% for the second quarter of 2025 compared to 48.2% during the second quarter of 2024. The primary reasons for the gross margin decline are tariffs impacting the two skin care brands as well as product mix for the Dr. Tobias brand. With regard to tariffs, both skin care brands were subject to a 25% tariff applied to full product cost on the majority of the brand's revenue during the second quarter of 2025, which cut gross margin for those products by approximately half. Contribution declined 17% to $2.1 million with 33.9% last year to 33.4% during the second quarter of 2025. With regard to MusclePharm, total MusclePharm revenue declined 4% during the second quarter, with wholesale and online revenue declining 6% and 3%, respectively. MusclePharm's gross margin declined from 36.6% last year to 30.8% during the second quarter of 2025. As previously disclosed, in an effort to drive revenue growth, the company is making targeted investments in advertising and promotion in both the wholesale and online channels. Beginning in the fourth quarter of 2024, the company offered additional promotional incentives to certain wholesale partners in an effort to drive incremental growth for the MusclePharm brand, and those efforts are ongoing. Wholesale revenue for this brand is somewhat lumpy, so quarter-to-quarter wholesale revenue may not accurately reflect our progress. For example, monthly wholesale revenue for MusclePharm in July was the highest it has ever been since we bought the brand. In mid-March 2025, the company launched the MusclePharm Pro Series, a collection of premium sports nutrition products in a pilot in high-volume Vitamin Shoppe stores, consisting of approximately 60% of Vitamin Shoppe's nationwide store base. Certain items from the MusclePharm Pro Series line will remain in Vitamin Shoppe stores beyond the conclusion of the pilot. We have begun selling the MusclePharm Pro Series line online as well as through international wholesale partners. Now let me provide some additional comments, high level, and then we can move to Q&A. As is evident in the results, the second quarter of 2025 was strong for our legacy FitLife business, but somewhat challenged for MRC. Among our existing brands, the performance of the Dr. Tobias brand is our primary concern. The brand is experiencing reduced session counts on Amazon. However, once customers access the brand product pages, they are converting at the same or higher percentages. So it is a traffic problem and not a product or conversion problem. We are focused on a number of initiatives to increase session counts, including targeted increases in advertising spend, improved SEO for our listings, and driving external traffic to our Amazon product pages. For many of our products, the decline in sessions during the third quarter of 2024 and session counts have been fairly stable sequentially throughout 2025 since that time. As long as session counts continue to remain stable, the year-over-year comparison should be more favorable later this year. We finished the quarter with a strong balance sheet. That enabled us to complete the acquisition of Irwin Naturals with no dilution to shareholders. With regard to Irwin, let me first say how excited we are to be stewards of the Irwin Naturals brands and to welcome the Irwin team to the FitLife family. Since announcing the acquisition, we have received a number of questions about Irwin, so I will provide some general commentary now and we will be happy to answer additional questions during the Q&A session. First, a bit of history. We have been working on the Irwin transaction for more than a year. We signed our first NDA with the company on August 2, 2024, a week before they filed bankruptcy. Navigating the bankruptcy was a circuitous process, which ultimately resulted in FitLife acquiring a claim from a creditor, submitting its own plan of reorganization for Irwin, and then ultimately participating in an organized sale process and becoming the stalking horse bidder for the assets. This lengthy and often litigious process is the reason for the elevated M&A expense you saw in the P&L during the first and second quarters, and there will be additional transaction-related expenses during Q3. One question several people have asked is why Irwin was in bankruptcy and whether that was an indication something was wrong with the brand. The company started in 1994 and was focused on nutritional supplements for most of its existence. Our understanding is that over the course of its existence, the company generated somewhere in the range of $200 million to $250 million of pretax profit for its owner and operated without debt. Then in 2022, the owner decided to expand into ketamine clinics, and the company did a couple of things to accommodate that strategic shift. First, the company did a small public offering in Canada to have a public currency to use as consideration in acquiring the ketamine clinics. And second, in 2023, the company borrowed a significant amount of money from a bank to provide cash consideration to use in acquiring the clinics. The strategy was ultimately unsuccessful, and the company fairly quickly fell into default with its bank. By early 2024, after being in default for some time, Irwin decided to exit the ketamine clinic business and refocus on its core nutritional supplement business. But by then, the damage was unfortunately done, and Irwin was unable to adequately address its debt burden, which is ultimately what led to the bankruptcy filing. In terms of the performance of the Nutritional Supplement business, revenue peaked in 2021 and then declined about 13% per year through 2024. Reasons for the decline were: first, the post-COVID pullback experienced by many supplement brands; second, distraction of the ketamine business; and third, the loss of Costco U.S. as a customer. The company had two SKUs in Costco U.S. stores and leading up to and during COVID, those SKUs did well and Costco became Irwin's largest customer. A couple of years ago, Costco discontinued one of the two SKUs and then it discontinued the second SKU in early 2025. For the trailing 12 months as of June 30, 2025, adjusting for the loss of distribution in Costco U.S. stores in early 2025, Irwin generated revenue of approximately $60 million at a gross margin of approximately 35%. We expect to generate improved gross margins over time as we increase the percentage of revenue generated from online sales and as we focus on making our supply chain more efficient. Irwin's SG&A for the trailing 12 months as of June 30, 2025, was approximately $14.5 million. As previously announced, we expect annual SG&A to be approximately $1.5 million lower based on the number of employees rehired by FitLife as part of the transaction. And we expect to identify further cost savings opportunities as we become more familiar with Irwin's operations. Irwin has an incredible brand with strong distribution. We look forward to updating our investors on Irwin's progress during our third quarter earnings call. For the first full year of operations, we expect the combined FitLife and Irwin businesses to generate in excess of $120 million of revenue and adjusted EBITDA of between $20 million to $25 million. But those of you who are good at math can figure out that just adding the numbers for the two businesses together already puts us at or above those thresholds. To be clear, we are not forecasting a decline, but there are uncertainties any time a new business is acquired, and we want to avoid overpromising and under-delivering. As our familiarity with Irwin increases and we become more aware of the improvement opportunities, we will continue to update investors with our outlook for the combined business. This concludes our opening commentary. So Paul, feel free to go ahead and poll for questions.

Operator, Operator

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

Ryan Meyers, Analyst

Congratulations on the acquisition. But just to kick things off, wondering if you can give us any commentary maybe on how you're thinking about the growth rate for the organic business in the second half of the year. I know you gave a little bit of commentary on that. But if we look at Q1 and Q2, it's kind of been this mid-single-digit decline. Just maybe curious if you've seen any stabilization here in the third quarter and kind of how we should be thinking about that in the second half?

Dayton Judd, CEO

Yes. This is Dayton. I've had a coughing fit. I'll do my best to talk, and Ryan can back me up. So look, I think we still are hoping to achieve organic growth in the legacy business, not counting the Irwin acquisition. I think if you look at the numbers, we're down about $1.4 million over the first half of last year. So we're optimistic we can make that up. The biggest challenge in the business is Mimi's Rock and in particular, Dr. Tobias. And I'm sure we'll talk more about that here in the Q&A. But if you take that out, again, and you look at the rest of the business, the rest of the business was up 4%, right? So it's not a problem that we're seeing across all brands. It's a problem we're seeing with one brand that is unfortunately dragging down the portfolio overall. So we're hopeful, we're optimistic that we can still deliver some organic revenue growth in 2025, although we also acknowledge that the challenges we've had with Dr. Tobias have not been ideal here for the first half of the year.

Ryan Meyers, Analyst

Okay. That's helpful. And then I just want to make sure I'm understanding this correctly. I think you guys said 35% gross margin for the Irwin business. So if we take the FitLife business and combine that, are we looking at high 30% or so blended gross margins for the two businesses?

Dayton Judd, CEO

Yes. I think if you just do the math, since the businesses are roughly equivalent sizes, yes, you're in the high 30s. A couple of things I would point out. So if you go back and look at FitLife before we made the online transition that we did, something in the high 30s was pretty typical. So that's not unusual for a business that is predominantly wholesale to be in the mid-to-high 30s. So we would expect that number, the Irwin number to increase as we sell more products online. But yes, if you just do the math, the other thing I will say is the numbers that we've given you are our best analysis with the numbers that we've been given and making adjustments on our part. And by that, I mean it's somewhat tricky sometimes to remove a customer. All of the math, all of the economics associated with a customer like we did with Costco U.S. And the other thing I would say is if you looked at Irwin's numbers when they were public, you'd see a very, very high gross margin. Different companies account for things differently. Irwin was including all distribution and logistics expense below the line in SG&A, whereas we include it above the line in COGS. And so we've had to try and normalize their numbers to ours or put the accounting on kind of an apples-to-apples basis. And so yes, that 35% is our best guess of where the business is adjusting for those items, standardizing their accounting to how we do the accounting as well as trying to strip out the effects of the Costco business. But yes, to answer your question, Ryan, directly, yes, we think somewhere in the high 30s, if you just merge the two businesses together or average the numbers across with the expectation that that number will increase over time.

Ryan Meyers, Analyst

Got it. And then last question for me. Makes sense on the surface just where you guys can gain scale, taking SG&A out as well as gross margin side. But just curious, any potential revenue synergies between the two companies that you think you've seen so far?

Dayton Judd, CEO

Yes, definitely. We mentioned this in our press release when we announced the transaction regarding revenue synergies. You might have a different perspective, but they don't sell anything directly online or specifically on Amazon; they sell through their own websites. They distribute products wholesale to third parties who then sell those products on Amazon. Similar to what we did with the MusclePharm transaction, we will bring those sales in-house. This will allow us to assist them in increasing their online revenue, which they wouldn't be able to achieve independently. That represents one potential source of revenue benefit. Additionally, they have a very strong commercial sales team focused on mass market sales. While I don’t recall the exact figure, I believe they have around 80 products listed in CVS, which is Irwin's largest customer. They have a strong presence in Walmart, Walgreens, and Costco in Canada as well. These are retailers where we have some connections, but not as substantial as the relationships that the Irwin team holds. We are optimistic about securing more brick-and-mortar distribution for MusclePharm products in the mass market channel; leveraging the existing Irwin sales force could enhance those efforts. We are hopeful that these complementary channel strengths can provide benefits to both organizations.

Operator, Operator

The next question will be from Sean McGowan from ROTH Capital Partners.

Sean McGowan, Analyst

I'm going to follow up with a couple of Irwin questions and then swings to something else. Can you comment on their seasonality of their business relative to the rest of yours? Is it comparable?

Dayton Judd, CEO

Yes, I would say the general trend is comparable, but the magnitude is maybe not as much. So all supplement companies are stronger in the first half of the year and weaker in the back half of the year. It's particularly pronounced though in sports nutrition, which is an area of focus for FitLife, but not at all for Irwin. So yes, you should expect the back half of the year to be not as strong as the front half, but not to the same extent that you would see it for our sports nutrition business. For example, in sports nutrition, it's not uncommon for November, December revenue to be 20% lower or 25% lower than January, February. Whereas with our general health brands and general health products, it tends to be about half of that. So does that answer your question, Sean?

Sean McGowan, Analyst

Yes, it does. And then looking at SG&A, you talked about expecting it to be lower than that $14.5 million. But kind of breaking that out a little bit more, do they spend a similar amount as a percentage of revenue on kind of marketing and advertising, the kind of numbers that you break out?

Dayton Judd, CEO

Yes. So the $14.5 million that we gave you excludes advertising, not because we took it out, but because they did during bankruptcy. They quit their advertising and marketing. I don't want to say they eliminated it entirely, but it's in the very low-kind of hundreds of thousands. So that is something that, again, as we get the company stabilized and on a good path going forward, we will be introducing additional advertising and marketing expense to benefit the brand. But our expectation is that will drive additional growth as opposed to being a cost drag on the business.

Sean McGowan, Analyst

Okay. Are you expecting additional transaction costs in the third quarter? Are you anticipating any significant restructuring costs as well?

Dayton Judd, CEO

No, no restructuring, right? So this was an asset transaction. And so there are costs. For example, we didn't hire all of the employees of Irwin, and any restructuring costs associated or layoff severance, whatever you want to call it, of employees we did not hire are not borne by us. So no, we don't anticipate any restructuring costs, so to speak, but there will be a number of initiatives, right? I mean, obviously, legal expenses that we still need to pay, audit work that we need to get done, valuation work that we need to get done. There will be incremental onetime expenses that we expect to incur largely in the third quarter and to a lesser extent, beyond that, but no restructuring costs, so to speak.

Sean McGowan, Analyst

Is there a banker you need to pay on this or a fighter or something?

Dayton Judd, CEO

No. There was a banker involved in the sale process in the court-supervised sale process, but the banker is paid out of the proceeds of the sale and not by us.

Sean McGowan, Analyst

Okay. And then two other questions on Irwin. Will we be filing any pro forma numbers with more detail?

Dayton Judd, CEO

Yes, good question. We are required to file a Form 8-K with the SEC within 75 days of completing the transaction. This will include some audited historical financial statements for Irwin as well as pro forma financials. It's a unique situation since the historical audited financials for Irwin for 2023 and 2024 do not reflect the business we acquired. We did not purchase the ketamine business or any other parts of their operations, nor did we assume any related liabilities or inherit their tax or leverage profiles. In our filing, you will find abbreviated financial statements for 2023 and 2024, which will consist of a full-year income statement for the nutritional supplement business, detailing revenue and operating income, but not including anything below the line, such as taxes or interest. Instead of a historical balance sheet for those years, we will provide an audited opening balance sheet for the company that indicates the assets we acquired. This filing is due by October 22, if my calculations are accurate.

Sean McGowan, Analyst

Okay. And what would the pro forma financials be then?

Dayton Judd, CEO

We need to clarify this with the SEC as we are working with them on the required disclosure. Since we only need to produce abbreviated financial statements for Irwin, our expectation, which we still need to confirm with the SEC, is that the pro forma financials will also be abbreviated. This means that we will only include revenue down through operating income.

Sean McGowan, Analyst

So just to be clear, we should not consider those pro forma financials as an indication of what the business would have looked like if it had been purchased at that time. It merely reflects the previous state, which differs from your expectations, combined with your current situation. Is that correct?

Dayton Judd, CEO

Yes, it's not what it could have been if we had owned it as of 2023. But to clarify, the abbreviated financial statements for Irwin include only the nutritional supplement business. Irwin had a cannabis business, which we did not acquire. They also had ketamine clinics or what remained of that business, which we did not acquire. Therefore, the financial statements we will file will reflect only the revenue, the cost of goods, the gross profit, and the operating expenses related to the assets we acquired.

Sean McGowan, Analyst

Okay. Last question on Irwin. Do you have any insight on why Costco discontinued those two lines?

Dayton Judd, CEO

Yes. Again, I mean, we know what explanation we were given. Costco likes a lot of promotional support, and promotional support can be not ideal for margins. And sometimes companies if they're in bankruptcy, maybe aren't in a position to offer the promotional support that Costco wants. So we had the same kind of issue where they had very strong distribution in Costco Canada. They had been out of Costco for quite some time before we bought the brand, whereas this is a bit more recent. Our understanding is the products are still being sold online. And again, we've been told that Costco is open to resuming discussions once the company has exited bankruptcy. So certainly, that's on our list of follow-up conversations. I will also point out that Costco Canada has been a client, a customer of Irwin for some time. and a pretty big customer, and they continue to be a customer. So none of the products that were in Costco Canada have been discontinued at this point.

Sean McGowan, Analyst

Okay. My final question is regarding Dr. Tobias and MRC in general. Is Dr. Tobias the only area of weakness at MRC? It seems to be having a significant impact on overall sales.

Dayton Judd, CEO

Yes, it's around 90 percent, likely 92 or 93 percent of revenue comes from Dr. Tobias. We also have two skin care brands, which we've discussed are facing challenges since their acquisition. They are not central to our business, and we didn't intend to acquire them; they came with the acquisition. They continue to struggle, and we've mentioned the tariffs linked to that business. Specifically, our manufacturer for those products is based in the United States, but we mainly sell them in Canada. Since the tariff disputes began, we now face a 25% tariff to transport these products from the U.S. to Canada for sale. So, both the skin care brands and Dr. Tobias are encountering difficulties, but for different reasons. The skin care brands are hindered by economic factors and tariffs, while Dr. Tobias is affected by session numbers and page views on Amazon.

Sean McGowan, Analyst

Well, since you mentioned the tariffs, are there steps that you can take to mitigate that? I mean if you made the assumption that that's not going to change, risky assumption, of course, but are there steps you can take to source that product differently?

Dayton Judd, CEO

Yes, there are some challenges. Ironically, our manufacturer, which was based in Canada, decided to relocate to Florida. As a result of this move, we are now facing tariff issues. To put it in perspective, the financial impact is in the low tens of thousands. If you take our current revenue level and apply our gross margin percentage from the second quarter of last year, it results in approximately a 170 basis point decline in margin for MRC. I would like to address this issue, but with my recent acquisition of Irwin and other pressing priorities, such as Dr. Tobias, our focus remains on the most significant opportunities and pain points. If we were to add more resources, we would certainly look into a solution for this. However, in the broader context, we are discussing tens of thousands rather than millions.

Operator, Operator

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

Samir Patel, Analyst

Hey, Dayton, congrats on the Irwin deal. I've got two questions. So the first is if you could dig in a little bit more on what you put in the press release and what the previous caller asked about the revenue synergies. I mean, what do you think kind of the low-hanging fruit is over the next 6, 12, 18 months with Irwin? Is it kind of regaining some of those doors that were lost due to the bankruptcy and the distraction? Or is it taking MusclePharm or Dr. Tobias or kind of one of your other brands and trying to get more distribution through those retail doors? That's the first one.

Dayton Judd, CEO

In terms of lost distribution, the brands are quite strong. The only distribution loss we are aware of is with Costco, which I have mentioned before. We utilize IRI data, and it shows that the sales of the Irwin brand through other mass market stores, drug stores, and grocery stores are actually growing. This situation is quite different from MusclePharm, which we acquired when it had lost most of its distribution. To grow that brand, we needed to regain that distribution, which has proven more challenging than we anticipated. What we appreciate about this acquisition is that, aside from Costco, there has been no loss of distribution, and where distribution still exists, growth is occurring. We also noted in our press release about the transaction that the first quarter revenue was approximately $33 million. Comparing that to the first half of 2024, even without adjusting for Costco, shows a slight, single-digit decline. When we do adjust for Costco for both the first halves of 2024 and 2025, the decline remains minor and in the single digits. We are encouraged that the brand does not seem to be in decline. As mentioned, it experienced a decline of 13% per year from 2021 to 2024, but the first half numbers indicate a much more stable situation. This is not a gamble like MusclePharm was, which required us to regain distribution for success. In this case, we simply need to continue from where they left off, aiming to improve incrementally. Does that answer your question, Samir?

Samir Patel, Analyst

Yes. I mean the second part of it, I guess, was what do you see as the biggest opportunity in terms of taking those brands online, but then also taking some of your existing, we'll call it Legacy FitLife brands, including MRC and MusclePharm and getting those into those doors that they're already in.

Dayton Judd, CEO

Yes. Taking Irwin online, they currently do not sell anything directly on Amazon, instead relying on third-party sales. Their direct-to-consumer sales through platforms like Shopify and their own website range from $2 million to $3 million annually. We believe Amazon and other platforms should be able to achieve at least that, if not more. Our experience in transitioning brands from offline to online shows significant growth potential, and while I hesitate to give a specific figure on how big this could be, we see it as a tremendous opportunity. Even if we’re talking about low single-digit millions, selling directly to consumers offers the highest gross margin potential for a supplement company. This could provide a substantial increase in revenue as well as a meaningful boost to gross margin and profitability. Regarding other brands, we have several, but MusclePharm is our focus as we work to regain brick-and-mortar distribution. We have established relationships with various companies, and having an experienced sales team with long-standing connections could help in promoting products like MusclePharm’s ready-to-drink protein. While I can't quantify the impact, it won't harm the business and could be beneficial.

Samir Patel, Analyst

Perfect. Okay. Second question with regards to MRC is just philosophically now that you have a larger portfolio of brands, I mean, how much do you really care about optimizing for any individual brand at an individual point in time vis-a-vis just kind of looking across the business and seeing where your highest ROI is? I mean, you mentioned kind of priorities and things like that, right? So not just in terms of cost, but in terms of time. So I guess, would you ask investors to kind of focus on the performance of the individual sub-brands or just kind of focus on the overall top line EBITDA cash flow if you're choosing to kind of just invest where you're getting the highest ROI even if that means that some brands are being run more as cash cows versus growth engines, like in the classic quadrant analysis.

Dayton Judd, CEO

Yes, that's a great question. Clearly, the overall performance of the business is crucial. As an investor participating in this call, I would have questions about Mimi's Rock, which has been a strong performer for us but is currently facing some challenges. This brand is significant to our business. However, there’s no need to worry about our skin care brands. Dr. Tobias, however, accounts for about 40% of our business and is a reliable source of cash flow for us, so we prioritize it and will keep working on it. That said, this brand isn't designed for high growth; it functions more as a cash cow, and generally, cash cows should maintain stability. Historically, the revenue from this brand has been relatively consistent, though it has seen fluctuations, possibly around $3 million between its highest and lowest points, and we're currently at a lower point. We hope that what we are experiencing now is simply part of a normal cycle. Rest assured, we will put considerable effort into understanding the situation and addressing it.

Samir Patel, Analyst

Okay. Perfect. And then just a final question about your future mergers and acquisitions, which are core to your strategy. You just completed a significant one recently. At what point do you plan to focus on that? I understand you have a leverage limit of 2.5x, which brings a financial aspect into play, but operationally, I assume you would want to dedicate some time following a deal like this to ensure the integration is truly successful.

Dayton Judd, CEO

Yes. I think we may have lost you there. I think I got most of that. I think the question was about leverage and how comfortable we are with that and what our priorities are. Is that correct?

Samir Patel, Analyst

No, the question was more around just operationally. I mean, like we can do the math on kind of when you delever, say, 1x and you have financial ability, but I'm just asking from an operational perspective since this is so transformational. I mean I assume it's going to be a while before you're back in the market on M&A.

Dayton Judd, CEO

Yes, I would say that this is indeed our largest transaction to date and is transformative for us. We're very excited and will be dedicating our time to it. Both Ryan and I are currently in Los Angeles at Irwin Naturals, which shows our commitment; our top priority is Irwin Naturals, followed by Mimi's Rock and Dr. Tobias. Regarding your question about whether we'll be out of the market for a while, I would say yes, you shouldn't expect us to finalize another transaction in the next quarter. However, it's important to note that many of these deals have lengthy lead times. If we want to pursue potential transactions in the next 6, 12, or 18 months, we need to keep an eye on the market. For example, it took just over a year from when we signed the NDA for Irwin to when we closed the deal. MusclePharm took almost a full year from NDA signing to closing. Similarly, Mimi's Rock took more than a year. To continue engaging in significant transactions in the future, we need to remain active in market opportunities. We have evaluated other transactions simultaneously with Irwin and have adjusted our focus accordingly based on developments. While we're currently not positioned to close another deal, we aim to stay involved in potential opportunities so that we can consider our next transaction when the timing is right in the coming months.

Samir Patel, Analyst

Okay. And if I can sneak in just one more. I mean, at this point, kind of given your new scale, is there a minimum threshold for a deal size that makes sense for you now? Or would you still be willing to consider really small tuck-ins if there was no integration effort really was financially attractive?

Dayton Judd, CEO

Yes. No, we would definitely still do tuck-ins. So I don't think we'd be looking at tuck-ins that don't provide at least call it, 10% or so of EBITDA, maybe $1.5 million minimum, maybe $2 million minimum EBITDA, right? Just as we get bigger, it doesn't make sense to do a bunch of small deals. They take a similar amount of work, similar amount of effort, similar legal fees. So as we get bigger, certainly, our preference is to do bigger deals, but we love tuck-ins. The reason we love tuck-ins is MusclePharm is one example. We bought that brand, and we brought on one person. So if it's a smaller deal, it's very easy to bolt on to our existing platform and incur very little incremental SG&A. Whereas a deal like Irwin, obviously is substantial and does not just bolt on to our platform and doesn't bring incremental SG&A. Their SG&A is higher than ours. So yes, we're looking at both. We will continue to look at both as we go forward.

Operator, Operator

And that does conclude today's Q&A session. I will now hand the call back to Dayton Judd for closing remarks.

Dayton Judd, CEO

Thank you all for your interest in FitLife. If you have any questions between now and our next earnings call, feel free to reach out to us. You can e-mail us at [email protected], and we'll be happy to answer your questions. Otherwise, we look forward to speaking with you next quarter. Thank you.

Operator, Operator

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