FitLife (FTLF) Q1 2026 Earnings Call Transcript

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DATE

Thursday, May 14, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Dayton Judd
• Executive Vice President — Ryan Hansen
• Chief Financial Officer — Jacob York

TAKEAWAYS

• Total Revenue -- $25.3 million, up 59%, reflecting the acquisition of Irwin and partially offset by a decline in Legacy FitLife sales.
• Wholesale Revenue -- $14.1 million (56% of total), a 166% increase, with growth attributed to Irwin’s contribution.
• Online Revenue -- $11.2 million (44% of total), up 6% with continued scaling on Amazon platforms.
• Gross Margin -- 37.6%, down from 43.1%, primarily due to Irwin operating at a structurally lower gross margin than Legacy FitLife.
• Gross Margin Sequential Change -- Increased for both Legacy FitLife and Irwin since the fourth quarter of 2025.
• Contribution -- Up 42% overall, with gains from Irwin offset by declines in Legacy FitLife contribution.
• Net Income -- $1.7 million, a decline from $2.0 million, due to higher amortization and interest expenses linked to the Irwin acquisition.
• Adjusted EBITDA -- $3.3 million, a 3% decrease, reflecting higher operating costs post-acquisition.
• Legacy FitLife Revenue -- $12.5 million in the fourth quarter of 2025, with 70% from online and 30% from wholesale; represents 28% and 18% declines in wholesale and online revenue, respectively, for a total decrease of 22%.
• Legacy FitLife Gross Margin -- Fell to 41.2% from 43.1% but improved sequentially from 40.7% in the fourth quarter of 2025.
• Legacy FitLife Contribution -- Down 27% to $4.3 million, with contribution margin decreasing to 34.1% from 36.5%.
• Irwin Revenue -- $12.8 million, 80% from wholesale and 20% from online channels.
• Irwin Gross Margin -- 34.0%, reflecting the historical profile of the brand.
• Irwin Contribution Margin -- 31.3% of revenue, indicating significant scale in marketing expenses.
• Irwin Organic Revenue -- Declined 13% after excluding lost Costco U.S., Rite Aid, and exited CBD business; more than half of the decline tied to out-of-stock issues.
• Amazon Revenue for Irwin -- Gained traction, reaching approximately $800,000 in March and $900,000 in April, with sequential growth continuing in May month-to-date.
• Subscriber Count for Irwin on Amazon -- Increased from 500 to 3,600 during the quarter and exceeded 5,700 by mid-May.
• Debt Reduction -- Term loan balance lowered to $37.6 million after a $1.5 million principal payment; revolving credit line reduced by $1.4 million to $4.2 million.
• MusclePharm Online Performance -- Described as improving, with CEO Judd noting, “it’s now back to barely being down kind of single digits.”
• MusclePharm Margins -- Management expects higher margin as more revenue comes from online versus less profitable international protein accounts.
• Kroger MusclePharm Launch -- Two new SKUs of liquid L-Carnitine to enter 700-800 Kroger stores nationwide in June, with targeted localized marketing support.
• Obsolescence Reserve for Irwin Inventory -- Inventory reserve now “maybe a hundred and something thousand dollars,” down from previous multi-million dollar write-offs, indicating successful transition to 3-year product dating.

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RISKS

• CEO Judd said, “we haven't fixed it. I think we are -- I think this will be a long fix” regarding challenges with Amazon platform changes, indicating ongoing operational hurdles in that channel.
• Organic Irwin revenue fell 13%, with “more than half of the decline is due to lost revenue from the out-of-stock situations,” highlighting unresolved supply chain disruptions.
• Legacy FitLife reported a 22% decline in total revenue, and management noted that the difficult year over year wholesale comparison stemmed from prior-period restocking rather than underlying growth.
• Gross margin fell by 5.5 percentage points, reflecting acquisition integration pressures and shifts to lower-margin revenue sources.

SUMMARY

Management described the first quarter as challenging but observed sequential monthly revenue improvement and positive indicators for the Irwin Amazon business. The debt load was actively reduced, with excess free cash flow targeted for further deleveraging. Irwin's Amazon subscriber base expanded sharply, and new Kroger distribution for MusclePharm SKUs is expected in June. The company continues to invest in advertising, particularly for Irwin and MusclePharm, with a strategic focus on growing online and retail visibility.

• Advertising spend for Irwin increased from $72,000 in Q3 2025 to $358,000 in Q1 2026, with management anticipating measurable impact on both Amazon and other digital channels.
• “if we're out of stock on something, right, we prioritize the Walmarts and CVSs of the world, not Amazon,” signaling supply allocation choices are favoring wholesale partners over online retail when inventory is constrained.
• Company intends to launch Irwin’s Canadian product line on Amazon Canada later in the second quarter, addressing incremental growth opportunities.
• Obsolescence-related write-offs on Irwin inventory have substantially declined, and as 3-year dated products replace legacy stock, management expects margin improvement.

INDUSTRY GLOSSARY

• Contribution: Gross profit less advertising and marketing expenses, used internally to assess segment profitability.
• CTV (Connected TV): A digital advertising approach where video ads are served via streaming services, geolocated near specific retail locations.
• NPN (Natural Product Number): Regulatory identifier required by Health Canada for supplement products sold in Canada.
• SKU (Stock Keeping Unit): A unique identifier for each distinct product and service that can be purchased.

Full Conference Call Transcript

Dayton Judd: 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. to over 5,700 today. Last, we are excited to announce the launch of 2 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.

Operator: [Operator Instructions] And the first question today is coming from Ryan Meyers from Lake Street Capital Markets.

Ryan Meyers: 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?

Dayton Judd: Yes. So thanks for the question. The trend throughout the first quarter, so January was kind of tough. February was similar to January, although it obviously had 3 fewer days. So if you kind of look on a revenue per day basis, it was stronger than January. So both January and February were in the kind of low 8s range. March, we were kind of above 9% in terms of revenue. April is higher than January or February, but a bit lower or lower than March. April was actually our highest sales order month that we have had this year. We just had a lot of shipments at the end of the month of April.

And for most of our customers, we don't recognize revenue until the shipments have been received. So just to kind of put it in context, I think at the end of March, we had just under $1 million in transit that would have been adjusted out of March revenue and into April. At the end of April, we had about $1.65 million. So again, so April was decent, higher than January, February. And if you normalize or look based on shipments, it was actually a pretty strong month.

Ryan Meyers: 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 just kind of steadies out?

Dayton Judd: Yes. That's hard to say. I think we -- I don't see a reason why we wouldn't get to at least $1 million a month. I mentioned kind of 2 or 3 things that I think is still kind of wind at our backs. One of them is that there are still a number of products that's probably -- it's probably around 20 products that are still not set up to be sold on Amazon. I think I mentioned when we had our call last time, when you put up a new listing, most of the time Amazon flags it.

And before you can sell it, you have to get it tested by a third -- one of their third parties, and there's a -- I mean that process can take weeks. So the good news is when we get some of those SKUs up and we get 1 or 2 up kind of every week, we're getting some traction with those, especially if there are SKUs that have high wholesale presence. So that's one thing that I think will continue to help us. Another thing is out of stocks have hurt us. They've absolutely hurt us on the wholesale side.

But just so you all know, if we're out of stock on something, right, we prioritize the Walmarts and CVSs of the world, not Amazon. So there are some of our highest selling products. There's one product in particular, probably one of our biggest sellers in the wholesale space that we're hardly selling at all on Amazon, right, because it's been out of stock. So getting those back in stock and selling, I think, is additional tailwind. And then I think I mentioned Canada in my prepared remarks. We don't have a -- we have a number of SKUs, say, between 8 and 10 products that are sold in Canada. Canada is tricky because you can't just sell there.

You've got to get what's called NPN numbers. There's a whole process you have to go through Health Canada, can take a year to get products approved. So it's not going to be a huge number, but we do a decent amount of business in Canada, and we just, in the last 2 or 3 days, got that account opened. And now it's just a matter of getting kind of the inventory shipped in. So I would be surprised if we don't at least hit $1 million. The other thing I would say is initially, we ramp up without a lot of marketing push or advertising push.

We have turned on ads on Amazon for Irwin, and we're doing more off Amazon as well for Irwin. So as we continue to spend more on advertising, we would hope to see the impact -- the benefit of that on Amazon as well. I think if you look in the tables we provide, they give a breakdown of the spend for Irwin for advertising. If you just look at the trend, Q3, again, that was a partial quarter when we had just bought them, but we spent $72,000 advertising Irwin. In Q4, the first full quarter of our ownership, it was $182,000. And in Q1, it was $358,000, right?

So we are investing in advertising and marketing for Irwin, not just on Amazon. In fact, most of that spend is not on Amazon, but we would hope and expect that some of that spend, the benefit will translate to Amazon as well.

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

Sean McGowan: 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?

Dayton Judd: Yes. So revenue is down, but what I would say is by choice, I think I mentioned this in our last call, like if you look across the board and you take out some of these international players that are very protein heavy and super, super kind of margin aggressive, like if I want to sell to them at a 10% margin, I can. We've just chosen not to. So revenue was down but if I were selling to them, or if I look at the other accounts that we're continuing to sell to, we see good traction there. Online is doing well. Online was up for MusclePharm in 2025 for the full year.

It started trailing off like many of our accounts late in '25 and actually hit a point where it was declining double digits kind of early this year, and it's now back to barely being down kind of single digits. So we're getting some momentum there back there, particularly online. So I guess what I would say is it's doing okay if we exclude the international customers that tend to be super, super price sensitive on protein.

Sean McGowan: Okay. And maybe you answered this partially, but if you kind of ex out those accounts that you decided not to sell to, are you seeing what kind of margin you'd like to see?

Dayton Judd: Yes. Yes. Sorry, I forgot that part. Yes, margin, we expect margin will be higher there, right? Because the biggest drag on margins, like the least profitable customers in the set for us are those large international buyers of protein. And so when I no longer sell to them, like well over half of our revenue in the quarter for MusclePharm was online, and that is where we get the best margins. So yes, margins, we expect to be better for MusclePharm going forward, right, unless or until we decide to get more aggressive with some of the large international accounts.

Sean McGowan: 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. And without asking you to just give away secrets that could turn around and bite you and we don't, could you talk about how you were able to address that and fix it? Is it fixed?

Dayton Judd: Yes, I would definitely say we haven't fixed it. I think we are -- I think this will be a long fix. I alluded to the fact or mentioned in the call, right, we are seeing some sequential improvement, right? But if an account had flipped negative, right like MusclePharm is a great example. It's probably our best-performing account in terms of -- it went from positive to flipping pretty negative and has made a pretty good turnaround. I think this is a multi-month process. We are doing a whole lot more on Google ads, Meta ads, TikTok. We've been doing TikTok for Dr.

Tobias for a while, but I think we started TikTok or we're starting TikTok this month for Irwin. We've talked before, I think I mentioned in our last earnings call, kind of an endorsement arrangement we have with Joey Chestnut for Dr. Tobias, particularly the colon cleanse product. So you'll start to see some stuff on social media, ours and his here in the next couple of few weeks. So our emphasis, right, we're spending less of our advertising and marketing dollars on Amazon and more off Amazon. And from everything we've heard and from both Amazon people and colleagues in the industry is that's kind of the new formula for success on Amazon is drive success off Amazon.

So I would -- we're absolutely not declaring victory. We've got a lot of work to do, but I think we've got some positive trends emerging.

Operator: [Operator Instructions] And our next question is coming from Samir Patel from Askeladden Capital.

Samir Patel: A couple of things. I guess the first is we talked a lot last quarter about the dating initiative with the bottles. And I think you mentioned that you kind of 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?

Dayton Judd: Yes. Good question. I think when we did the last call, I think right around the time we were doing the last call, we were just receiving our first shipment of product with 3-year dating. So we have received several products now with 3-year dating. We probably have somewhere between 15 and 20 products that are currently in production that when we receive them here in the next few weeks, we'll have 3-year dating. And then we have a whole number of other formulas that were ready to go with 3-year dating right next time we place a PO. So definitely making progress. We've whittled that obsolescence down quite a bit.

I think we're going to hit an inflection point here pretty soon where we've done all we can to salvage the inventory that we bought and when I say bought, at the time of the transaction. And as we get more and more 3-year dating in, then I think the reserve will come down and margins should go up as we write off less inventory. Does that answer your question?

Samir Patel: Yes. I mean, I guess to put a little finer point on it, if memory serves, you said it was about $2 million a year, I think, that you're basically writing off. I wonder if you can just provide some sort of cadence in terms of like are we still at kind of that $2 million a year level? And then I guess, when do you expect that to go to 0? And I think there's probably some slight incremental costs related to -- you talked about the overages that you need to hit that 3-year dating. So I guess just sort of the cadence of like are you expecting pretty slow and linear improvement over the next year?

Or is it a longer-term process, kind of a shorter-term process? Just any color would be helpful.

Dayton Judd: Yes. I think -- I don't have any specific numbers to give you. I would say it's -- much of it is behind us. Like we're not expensing anything close to $2 million a year, right? So when we bought it, when we bought the company, if you look at our inventory reserve, right, in the 10-Q, I don't have it in front of me, and I can probably look it up here really quick. But the amount that's in the reserve is not significant. It's maybe a hundred and something thousand dollars. The reason for that is when you buy a company, you have to record the inventory at its net realizable value.

And so there was like a $2.4 million or $2.7 million reserve that effectively was taken out of gross inventory, right, at the time we booked it. And so we can't go back and claw that back. To the extent we improve things it would be reflected in higher margin, right? We kind of wrote off the inventory. And if we're able to date, extend it or sell it or something, right, that's one of the ways you can see higher margins, right, because you've already written off the inventory. But again, that was -- the transaction was now, what, 9 months ago, and we are working our way through that inventory.

The amount that was expensed to obsolescence in Q1, again, I don't have the number in front of me, but it would have been very small, right? So we're kind of there or we're getting much closer. So I think we're doing better, and I think we'll continue to do marginally better over time.

Samir Patel: Okay. That's helpful. And then second, maybe I'd love some more color on the new MusclePharm placement, anything you can share about that customer? And maybe if that goes well, if that's going to -- obviously, that customer has a lot more stores that could roll out to. And then maybe compare and contrast, I know last year, we had the Vitamin Shoppe pilot that I guess, didn't end up working out so well. So just any learnings from that as you continue to try to get more wholesale distribution for MusclePharm?

Dayton Judd: Yes. So yes, the 2 products that are going in there, it's 2 flavors of a liquid L-Carnitine. It's a relatively new product. So this was not a product that MusclePharm had when we bought them. It's one that we developed and launched after we bought them. We, as a company, do a lot of liquid L-Carnitine. It's a very big SKU for us in iSatori, our iSatory brand, where we sell thousands of units a week on Amazon and also has distribution in places like Vitamin Shoppe. We also sell liquid Carnitine under some of our other brands that are sold in GNC. So it's a product type that we're very familiar with.

So it's 2 flavors of Liquid L-Carnitine going into Kroger. I don't know the exact store count that Kroger has nationwide. I think there are 2,000-plus stores across all of their banners, so Fred Meyer, Smith's, Kroger, et cetera. We're going into between 700 and 800 stores nationwide. So it's not like concentrated in one region. And I know it's multiple banners as well. So we're going to be in some Kroger stores, some Fred Meyer stores, some Smith's stores. The product should be on shelf. I think we're shipping it kind of later this month and product should be on shelf in June.

We're doing some of the same things we did with the Vitamin Shoppe launch, but doing a lot of other things. We do what's called CTV. We did this with Vitamin Shoppe too, but had obviously a bad outcome there in terms of some of the products being discontinued. Some of those MusclePharm Pro products are still in Vitamin Shoppe, just to be clear, but not all of them. The CTV is where you can put an ad at the beginning of streaming services and it's geolocated. So we know the physical store address, street address for every one of the stores that is going to have the product.

And anybody living within 3 miles of that store, right, we can run ads on streaming services. We may do some direct mail. They're going to launch with a neck band coupon, right? So $5 like instantly like the day you buy it, right, here's $5 off to encourage trial. So this has been a big initiative and a big focus for our new CMO and our new kind of consolidated marketing team, and we're going to do everything we can to make it successful.

Samir Patel: Yes. And I'll drop off after this one. Just is that something that was kind of already in the works from your own team? Or is that something that the Irwin team helped with? Like do they have a wholesale relationship? Or how did that kind of come -- how did you kind of win that customer?

Dayton Judd: Yes. So this one was a bit of a hybrid or actually more -- this one actually started. I've talked before about the sales process for these types of sell-ins really to any major brick-and-mortar chain. It takes months if you're lucky and years, right, if it is more the normal case because they'll do a reset once or twice a year. This is one we actually started before we bought Irwin, right, in terms of going and meeting with Kroger and doing the presentation and getting some initial traction. Now it just so happens that the Irwin team, we have a number of products, right, in Kroger on the Irwin side. We use the same broker to approach Kroger.

So there's a lot of synergies there that benefit us after the acquisition, but this one actually started with meetings before we even acquired Irwin.

Operator: And 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.

Dayton Judd: 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.

Operator: 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.

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