FITLIFE BRANDS, INC. Q3 FY2025 earnings call

• The acquisition of Irwin Naturals closed on August 8, 2025, with results included for the 53-day period from August 9 to September 30.
• Total revenue grew 47% Y/Y to $23.5 million, with Irwin contributing $6.8 million to the $7.5 million revenue increase. Other brands had $0.7 million organic growth.
• Legacy FitLife (excluding MRC) had 8% organic growth, MusclePharm 55% organic growth. MRC declined.
• Gross margin was 37.2% (vs 43.8% prior) due to Irwin's lower margin and MusclePharm's cost pressures. Excluding Irwin's inventory step-up, gross margin was 38.9%.
• Irwin's revenue was $6.8 million, 95% wholesale, 5% online. Gross margin 32.2% including inventory step-up; excluding that, 37.9%. Online sales on Amazon started Oct 11, ~$10k daily, annualized ~$3.6M.
• MusclePharm's wholesale growth was primarily from existing customers, with RTD proteins in high demand. Whey protein costs continue to rise, with price increases planned for Jan 1, 2026.
• Consumer softness noted across brands/channels, with Amazon subscriber counts declining and reduced replenishment orders from wholesale customers.

Total revenue for the third quarter of 2025 increased 47% year-over-year to $23.5 million. Revenue from Irwin Naturals accounted for $6.8 million of the $7.5 million revenue increase during the quarter. Other brands collectively had $0.7 million of organic growth. Legacy FitLife, excluding MRC, delivered 8% organic growth, and MusclePharm delivered 55% organic growth. For Legacy FitLife, total revenue was $12.9 million, 68% from online sales and 32% from wholesale; wholesale revenue up 4%, online down 8%. Gross margin declined slightly to 45.0%. MusclePharm revenue increased 55%, with wholesale up 112% and online down 3%; gross margin 19.8% due to lower wholesale margin and rising whey protein costs. Irwin Naturals had revenue of $6.8 million during the quarter, 95% from wholesale and 5% from online; gross margin 32.2% including inventory step-up amortization, expected to rise as online sales increase.

• MusclePharm anticipates whey protein costs to continue rising and has begun communicating price increases to customers effective January 1, 2026.
• Irwin's gross margin is expected to slowly increase over time as supply chain and online sales are optimized.
• The term loan balance begins amortizing in December, leading to debt reduction in the fourth quarter of 2025 and beyond.

• Consumer weakness across brands and channels, including declining Amazon subscriber counts and reduced wholesale replenishment orders.
• Continued rise in whey protein costs, impacting MusclePharm's gross margin.
• Changes in Amazon's algorithm affecting Dr. Tobias listings, with traffic to listings falling and difficulty in reversing the trend through advertising.
• Remaining stepped-up inventory in Irwin's business will impact gross margin in the fourth quarter due to noncash amortization.

Q: What percentage of the business came from subscriptions and what about subscriber changes?

A: Before acquiring Irwin, ~20-25% of online revenue was from subscriptions. On Amazon, we can't track additions/deletions, only the net effect, which is small.

Q: How much of MusclePharm's wholesale growth was new vs existing customers?

A: Primarily existing customers, likely an 80-20 split, with RTD proteins in high demand.

Q: What was Irwin's year-over-year business trend in Q3?

A: It was a decline, primarily due to the loss of the Costco business, but Q3 results include 53 days of ownership.

Q: Impact of Irwin's inventory step-up in Q4?

A: ~$650k of remaining stepped-up inventory will flow through in Q4, with the effect being noncash accounting.

Q: Outlook for MusclePharm's margin?

A: Likely to be lower due to rising protein costs, but price increases are planned.

Q: Issue with Dr. Tobias on Amazon?

A: Traffic to Dr. Tobias listings fell with no clear cause, high conversion once on page, but difficult to reverse through Amazon advertising alone.

Q: High effective tax rate?

A: Due to a true-up of the 2024 tax provision when filing the 2024 tax return, not due to non-deductible expenses, expected steady-state rate ~24-25%.

Q: Projection for Irwin's online sales potential?

A: Estimated $7-8M potential, offsetting ~$2M lost wholesale sales from discontinuing a primary Amazon seller.

Q: Irwin's margin and packaging issues?

A: Margin expected to rise as online sales increase; Amazon dislikes glass bottles, requiring bubble wrapping, which is cost-intensive but being managed.