FITLIFE BRANDS, INC. Q2 FY2025 earnings call

• Second quarter 2025 was strong for Legacy FitLife but challenging for MRC.
• Concern about Dr. Tobias on Amazon: traffic problem, working on targeted advertising spend, improved SEO, driving external traffic to product pages.
• Strong balance sheet enabled Irwin Naturals acquisition with no shareholder dilution.
• Irwin Naturals: Acquired after bankruptcy; revenue declined due to post-COVID, ketamine distraction, loss of Costco. Trailing 12 months revenue ~$60M, gross margin ~35%. Expect improved gross margins via online sales and supply chain efficiency. SG&A for trailing 12 months ~$14.5M, expect $1.5M lower annual SG&A. Combined FitLife and Irwin expected to generate over $120M revenue and $20-25M adjusted EBITDA in first full year.

For the company overall, total revenue in Q2 2025 was $16.1 million, a 5% year-over-year decline. Online sales were $10.4 million, representing 65% of total revenue. Gross profit declined 9% to an unspecified amount, with gross margin at 42.8% compared to 44.8% in Q2 2024. Contribution was $5.7 million, a 9% decline. Net income was $1.7 million vs $2.6 million in Q2 2024. Basic earnings per share decreased from $0.29 to $0.19, and diluted earnings per share from $0.27 to $0.18. Adjusted EBITDA was $3.3 million, a 13% decrease year-over-year. Balance sheet: $10.9 million in term loans, $6.6 million cash, net debt $4.3 million.

Legacy FitLife: Revenue $7.3 million, 59% wholesale, 41% online. Wholesale revenue up 1%, online up 17%, total up 7%. Gross margin 43.8% (vs 44.2% Q2 2024). Contribution $3.1 million, up 5%, contribution % 42.0% (vs 42.8% Q2 2024).

MRC: Revenue $6.3 million, down 16% y/y. Gross margin 46.5% (vs 48.2% Q2 2024). Contribution $2.1 million, down 17%, contribution % 33.4% (vs 33.9% Q2 2024). Reasons: tariffs on skin care brands, product mix issues with Dr. Tobias.

MusclePharm: Revenue down 4%, wholesale down 6%, online down 3%. Gross margin 30.8% (vs 36.6% Q2 2024). Launched MusclePharm Pro Series in Vitamin Shoppe pilot and online.

• Combined FitLife and Irwin expected to generate over $120M revenue and $20-25M adjusted EBITDA in first full year.
• Expect improved gross margins for Irwin as online sales increase and supply chain efficiency improves.
• SG&A for Irwin expected to be $1.5M lower annually.

• Tariffs impacting MRC's skin care brands, reducing gross margin by ~1/2.
• Dr. Tobias experiencing reduced session counts on Amazon (traffic issue).
• Uncertainties in integrating Irwin Naturals, including potential challenges in aligning operations and performance.

Q: Commentary on growth rate for organic business in second half of 2025.

A: Optimistic about organic growth, but Dr. Tobias is a drag. Rest of business up 4% if MRC and Dr. Tobias are excluded.

Q: Blended gross margins for FitLife and Irwin.

A: High 30s, expected to increase as Irwin sells more online.

Q: Revenue synergies between FitLife and Irwin.

A: Irwin sells wholesale to third parties on Amazon; FitLife will internalize online sales. Irwin's strong mass market sales team can help MusclePharm with brick-and-mortar distribution.

Q: Seasonality of Irwin's business.

A: Comparable to FitLife, but not as pronounced as sports nutrition. Back half of year weaker but not as much as sports nutrition.

Q: SG&A for Irwin and marketing.

A: Irwin's SG&A excluded advertising during bankruptcy; expect to introduce advertising to drive growth.

Q: Restructuring costs for Irwin.

A: No restructuring costs; incremental onetime expenses in third quarter.

Q: Pro forma financials for Irwin.

A: Abbreviated financials to be filed by October 22, pro forma also abbreviated.

Q: Reason Costco dropped Irwin's products.

A: Costco wants promotional support, Irwin couldn't provide during bankruptcy.

Q: Revenue synergies with Irwin.

A: Irwin's strong distribution (except Costco) is growing; online sales potential for Irwin; MusclePharm can benefit from Irwin's sales team.

Q: Prioritization of brands.

A: Focus on overall business performance; Dr. Tobias is a priority as it's a cash cow but has traffic issues.

Q: Future M&A.

A: Focused on Irwin now, but will continue to look at tuck-ins and larger deals, staying in deal flow.