FitLife Brands, Inc.

Good afternoon, and welcome to the FitLife Brands' third quarter 2025 financial results conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions and comments after the presentation. Should you wish to join the queue at any time, you may press star 1. Should you wish to remove yourself from queue, you may press star 2. It is now my pleasure to turn the floor over to your host, Dayton Judd, CEO of FitLife Brands. Dayton, the floor is yours.

Thank you, Tom. I would like to welcome everyone to FitLife's third quarter 2025 earnings call. We appreciate you taking the time to join us this afternoon. Joining me on the 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 the call up for Q&A. Before jumping into the numbers, let me begin by saying how excited we are about our previously announced acquisition of Erwin Naturals, which closed on August the 8th, 2025. FitLife's financial results for the third quarter of 2025 include Erwin's performance for the 53-day period from August 9th through September 30th. In addition, beginning with this quarter, the results of MRC are now reported as part of legacy FitLife. However, we will continue to provide more detailed disclosure about MRC when it makes sense to do so. For the company overall, for the third quarter of 2025, total revenue increased 47% year-over-year to $23.5 million. Revenue from Irwin accounted for $6.8 million of the $7.5 million revenue increased during the quarter. This means that our other brands collectively delivered 0.7 million of organic growth during the quarter. MRC declined, but Legacy FitLife excluding MRC delivered 8% organic growth during the quarter, and MusclePharm delivered 55% organic growth. On a year-to-date basis, MusclePharm and Legacy FitLife excluding MRC have delivered organic growth of 15% and 7% respectively. However, total organic growth for the company on a year-to-date basis is slightly negative due to the previously discussed MRC headwinds. Wholesale revenue for the quarter was $13.2 million, an increase of 156% compared to the third quarter of 2024. Excluding the $6.5 million of wholesale revenue generated by Erwin, wholesale revenue for the company's other brands increased 30% year-over-year, with wholesale revenue for Legacy FitLife and MusclePharm increasing 4% and 112% respectively. Online revenue was $10.3 million, or 44% of total revenue, a decrease of 5% compared to the third quarter of 2024. MRC online revenue declined 16%, while Legacy FitLife online revenue, excluding MRC, increased 14%, and MusclePharm online revenue declined 3%. Gross margin declined to 37.2% during the third quarter of 2025, compared to 43.8% during the same period in the prior year. Excluding the impact, of the amortization of the inventory step-up in the Irwin business, which I'll explain in more detail a bit later, gross margin for the company overall was 38.9%. The decline is due to lower gross margin in the Muscle Farm business, as well as the addition of Irwin during the quarter, which has historically generated a lower gross margin than FitLife. I'll provide more detail on margins for both of these businesses a bit later in my commentary. Contribution, which we define as gross profit, less advertising, and marketing expense, increased 25%, driven primarily by the addition of Erwin, partially offset by lower contribution from MRC and MusclePharm. Net income for the third quarter of 2025 was $0.9 million compared to $2.1 million during the third quarter of 2024. The decline is primarily due to elevated merger and acquisition-related expense associated with the acquisition of Irwin Naturals, but also due to lower gross margin and higher income tax expense. Income tax expense was unusually high during the third quarter due to a true-up of the company's 2024 tax provision and the amount actually owed when the company filed its 2024 tax return. With regard to brand level performance, I'll start with Legacy FitLife. Total Legacy FitLife revenue for the third quarter of 2025 was $12.9 million, of which 68% was from online sales and 32% was from wholesale customers. This represents a 4% year-over-year increase in wholesale revenue and an 8% year-over-year decrease in online revenue, or a 5% decrease in total revenue. Excluding MRC, online revenue for the other Legacy FitLife brands was up 14%. Gross margin for Legacy FitLife declined very slightly from 45.3% to 45.0%. Contribution declined 9% to 4.7 million and contribution as a percentage of revenue decreased to 36.2% compared to 37.9% in the same quarter last year. Excluding MRC, both contribution and contribution as a percentage of revenue for Legacy FitLife increased during the quarter. Moving on now to MusclePharm. Total MusclePharm revenue increased 55% during the third quarter, with wholesale revenue increasing 112% and online revenue declining slightly at 3%. MusclePharm's gross margin declined to 19.8%, which is a function of two primary factors. First, gross margin from wholesale revenue is lower than from online revenue, and due to our strong wholesale growth, total gross margin for the MusclePharm brand was lower. And second, the cost of whey protein continues to climb, and MusclePharm's product portfolio is heavily weighted to protein. Thus far, the company has elected to absorb these cost increases rather than increase prices to its customers. We anticipate that the cost of whey protein will continue to increase during the fourth quarter and early in 2026. We have begun communicating the potential for price increase to many of our MusclePharm customers effective January 1st. Now I will provide our report on the performance of Erwin Naturals. The numbers we are reporting for the third quarter reflect about seven and a half weeks of operations for Erwin. Irwin's revenue during the period from August 9th through September 30th was $6.8 million. Of this amount, roughly 95%, or $6.5 million, was from wholesale customers and $0.3 million was from online sales. The company did not start selling Irwin products on Amazon until October, so there is no Amazon revenue included in Irwin's third quarter numbers. There are a couple items worth calling out that impacted Erwin's revenue during the quarter. First, the previous owner pulled forward approximately 0.6 million of sales prior to the transaction closing. He did this by offering an aggressive discount to the customer along with extended payment terms. As a result, we didn't get the credit for the revenue, although we did get to collect the receivable. And second, as part of our strategy to grow online revenue, we ceased wholesale sales of our products to the third party who has been the primary seller of Irwin products on Amazon. Pre-transaction wholesale revenue from this customer was roughly $0.5 million per quarter or approximately a $0.3 million impact for the seven and a half weeks we owned Irwin during the third quarter. So this is a situation where we are choosing to give up wholesale revenue in the short term in order to generate higher and more profitable online revenue in future quarters. Regarding margin, Irwin's gross margin was 32.2% during the third quarter, including the effects of 0.4 million of inventory step-up amortization. Under GAAP, when you acquire a company, the inventory has to be stepped up to its net realizable value. The effect of that is a lower reported gross margin, which although in accordance with GAAP, does not reflect the economic reality or the cash flow profile of the sale of the underlying inventory. Excluding the effect of the amortization of the inventory step-up, gross margin for Irwin during the quarter would have been 37.9%. We're actually pleased with that number for a couple of reasons. First, a gross margin in the mid to high 30s is very typical for a wholesale-oriented supplement company. If you go back in time and look at FitLife's margins before we began focusing on online sales, you'll see a similar margin profile. And second, Erwin's historical margins have been much lower. We filed abbreviated financial statements for Erwin with the SEC on October the 20th. And from those, you can see that Erwin's gross margin in 2023 was 24.7%. In 2024, it was 32.3%. and for the first half of 2025, it was 35.7%. We expect Erwin's gross margin to continue to slowly increase over time as we optimize supply chain and fulfillment and as our percentage of revenue from online sales increases. Regarding online sales trends, as previously mentioned, Following the consummation of the acquisition, we ceased wholesale sales to the customer who has been the primary seller of Erwin products on Amazon. As that customer sells through their remaining inventory, we expect to replace them as the primary seller of Erwin products on Amazon. Our first sales on Amazon were on October the 11th, and sales have grown steadily since then. We are currently generating approximately $10,000 of revenue daily from Amazon, or approximately $3.6 million on an annualized basis. And we are now actively selling on only 116 of our 242 product listings. So we expect online sales to continue to grow. Now let me provide a few additional high-level comments and some forward-looking remarks, and then we can move into Q&A. We continue to work on generating revenue from the Dr. Tobias brand off Amazon, as well as driving increased traffic to the brand's listings on Amazon. We have made some progress, but there's still a lot of work to do. We began to experience the Amazon revenue declines for Dr. Tobias during February of 2025, so we are nearing the point in time when the year-over-year comparisons will be easier and we are hopeful that we can achieve greater revenue stability for that brand in the near future. In terms of balance sheet, we did not pay down any debt during the third quarter, instead using our cash flow to pay expenses associated with the IRWIN acquisition. For example, we had accrued a very substantial legal bill over the several months leading up to the transaction. Much of this was paid during the third quarter, and the remainder was paid early during the fourth quarter. Going forward, we expect to incur additional non-recurring expense related to the transaction, but certainly not at the scale you saw during the third quarter. Our term loan balance begins amortizing at the end of December, so you will start to see debt reduction in the fourth quarter and beyond. Last, we referenced in the earnings press release a couple of exogenous factors we are seeing in the business. The first was the cost of whey protein, which I mentioned earlier in my remarks. If you have additional questions about this, I would be happy to answer them during the Q&A. And second, late in the third quarter, we began to see evidence of across the board general consumer weakness. For example, beginning in September, our subscriber counts on Amazon started to decline. Excluding the MRC brands, this is something that hasn't happened as long as we have been selling on Amazon. For pretty much seven years, every week, the chart of our Amazon subscriber count only went up and to the right. In fact, our first reaction when it happened was to let Amazon know that there was something wrong with their data. But in our discussions with our account executives at Amazon, who also support other supplement sellers, they indicated that other accounts are seeing the same trend. We are also seeing a reduced pace of replenishment orders from our wholesale customers which is corroborated by the reduced traffic counts many of them are experiencing in their brick and mortar locations. It is not unusual to see performance fluctuations within a specific brand, as each brand can have its ups and downs driven by a number of considerations. But what we are seeing now is across all brands and all channels, and we have heard similar commentary from other consumer-driven companies when they have reported their performance. We also note that consumer confidence, as measured by the widely accepted University of Michigan Consumer Sentiment Index, is close to the lowest level it has ever been since they started tracking the data in 1951. The government shutdown in the US certainly contributed to the consumer sentiment and weakness, so hopefully the fact that the bill was passed and signed yesterday will help. To be clear, the sky is not falling, but in the spirit of transparency and good disclosure, We just wanted to communicate what we are seeing in the business. The subscriber count declines are very small, but when you're used to seeing them only going up, it catches your attention. Total revenue for October came in a bit softer than we would have otherwise expected. Bottom line, we started to see cracks in September, and October was a bit soft, but if things pick up from here, it will be largely immaterial in the grand scheme of things. But of course, there's always the risk that the consumer weakness persists or accelerates. So that concludes my opening commentary. And operator, you can go ahead and poll for questions.

Certainly. Ladies and gentlemen, the floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star 1 on your telephone keypad. Once again, that'll be star 1 on your keypad at this time if you wish to join queue to ask a question. Please hold a moment while we poll for questions. And your first question today is coming from Ryan Myers from Lake Street Capital Markets. Ryan, your line is live. Please go ahead.

Hey, guys. Thanks for taking my questions. First one for me, Dayton, just want to kind of piggyback off of what you just had commented on as far as the consumer softness and the impact on the subscription side of the business. Can you remind us what percentage of the business is came from some of these recurring subscriptions. And then just so I understand it correctly, was it less new subscriber ads that you saw or was it also, you know, customers just turning off their subscription? Just want to make sure I understand all that correctly.

Yeah. So yeah, good question. So before we acquired Erwin, we were getting, I think Ryan can jump in and correct me, but it's somewhere between 20 and 25% of our online subscribers revenue was coming from subscribers. So our online revenue, again, pre-Irwin was two-thirds of our revenue, and then 20% to 25% of that was from subscriptions. So post-Irwin, it's very different because Irwin had very little online revenue and pretty much no subscribers. So as a percentage of our total revenue, it's a much lower number now. As far as your second question, we actually don't give visibility, at least on Amazon. We do to our subscribers on our websites. But on Amazon, we don't give visibility into additions and deletions or cancellations. All we get is a net number. So we couldn't tell you. I couldn't tell you whether people are signing up slower or turning faster. We just see the net effect. And again, I don't want to make a mountain out of a molehill. Like at this point, it really isn't a big deal. We're talking about like 1% declines. It's not anything dramatic. I just, you know, we knew we were having the call and just wanted to, you know, bring everyone up to date on what we're seeing in the business. So it's not like we're seeing a massive drop off in subscribers. It's just, like I said in my remarks, when for seven years every week it goes up and then that trend stops, you know, you notice. So just wanted to point it out.

Okay, got it. No, that's good to know. And then just kind of looking at the muscle farm business, you know, first off, congrats, kind of getting that business to where you guys were able to during the quarter. Just, you know, as you understand sort of the wholesale part of that business, you know, how much of that growth was new versus existing customers? It sounds like you saw positive, you know, signs from both those avenues, but is there any way to kind of unpack how much was new versus existing?

Not numerically. I just certainly don't have those numbers in front of me. If I had to guess, it's much more heavily weighted to existing customers. We had some customers that have been pushing the brand and selling a lot more. Again, if I had to guess, it's 80-20. The other consideration when you sell into a new customer, it's typically not – you're starting from the beginning. There's not a huge installed base, and they're making replenishment orders. Sell-in orders tend to be pretty small. So if I had to guess, I'd say 80-20. But again, I don't have the numbers in front of me. But it is primarily increased sales to existing customers. But we continue to have new sell-in. No major accounts yet, no kind of nationwide accounts, but a lot more regional chains, regional grocers, decent traction with our RTD proteins. In fact, we've made three flavors, chocolate, vanilla, salted caramel. We've sold out completely of the vanilla and salted caramel and are waiting to get more made. We still have a little bit of chocolate, but we're trying to keep up with demand on that front.

Okay, got it. And then last question for me is, And I don't think I saw this in the press release, but the Irwin business during the quarter, can you give us a sense of what the year-over-year business looked like for Irwin? Was it flat? Did it grow? Was it a decline? Just so we can get a sense of maybe how that business trended, at least during the third quarter.

Yeah, I don't have that. I can tell you it will be a decline. But if I did it on an apples-to-apples basis, I don't know. And maybe we can do that and look at it on a future call. The reason it would be a decline, I think we've referenced in previous press releases and conversations, Irwin used to sell a lot of product through Costco. And when they were in bankruptcy, actually before they went into bankruptcy, Costco discontinued one of their items. And while they were in bankruptcy – Costco discontinued the second one. So any year-over-year look I would do right now would show a decline because of the loss of the Costco business. What I haven't done is look at the period that we owned it, the same period last year when we didn't own it to the period this year when we did own it, take out Costco and then compare. So I would expect, I mean, the declines were down to low single digits when we did that math as of the time of the acquisition. And my best guess would be we're still in the same range, right? Like somewhere between stable and down low single digits.

Okay, got it. That's good to know. Thanks for taking my questions.

Yep, thanks, Ryan.

Thank you. Your next question is coming from Sean McGowan from Roth Capital Partners. Sean, your line is live. Please go ahead.

Thank you. Good afternoon. A couple of questions, if I can. First, have you worked through all or substantially all of the stepped up inventory? And if not, you know, what kind of an impact would you expect to see in the fourth quarter on that?

So, no, we have not. It ends up being, I think, about four months' worth of inventory. And I'm going to try and – I think we've worked through about 40% of it. The total inventory step-up amount was $1,045,000. And I think it was about 390-something thousand, if I recall, that came through during the third quarter. And the balance is about 650,000. And that will all flow through in the fourth quarter. So basically, we'll have one more quarter with that step-up and the amortization of the step-up. And after that, the numbers will be clean.

Okay, and you'll call that out, right?

Oh, yeah, we'll call that out. We include that as an add-back in the EBITDA table. It's non-cash, right? It's just, again, it's an accounting convention under GAAP.

Yeah, saw that. How much pressure would you expect to see beyond what we've seen already in muscle farm gross margin in the fourth quarter due to the way issue or any other issues? Is this a level we'll see or could it get worse?

So I think it might get a bit worse. And the reason is, again, the protein costs have continued to go up and we have not like, you know, what you're seeing in the reported numbers is for, you know, July, August and September. And protein costs were increasing in the background. So the inventory that we're selling now is at a slightly higher cost. And the inventory that we'll be selling in early 2026 is at even a higher cost. I don't have the numbers in front of me, but whey protein, we're happy if it's between $3 and $4 a pound. It's been below $3 a pound. Just to give you all a sense for the market, you cannot buy whey protein in the spot market today. You can't even buy whey protein for delivery during the first quarter. It's all been snatched up. Our most recent purchases, we have forward bought. Just to be clear, we're fine through the first quarter. We've locked in the supply that we need. but at prices going up to $6.30 a pound. We're working on locking in supply for the second quarter of 2026, and pricing is basically starting with a seven now. So it's a really strange dynamic, something that we've never seen. I'm happy to talk more about it if people want, but I think at a high level what's going on is there is a huge protein trend in the U.S. You go into Starbucks, people are putting protein in everything, whether it's coffee or chips or even desserts. So I think the food companies are buying a lot of that and they've got a lot higher demand and supply hasn't adjusted. So to answer your question, Sean, I would be surprised to see margins up for sure. I would not be surprised to see them a bit lower. But like I mentioned in my prepared remarks, we've already started communicating kind of a January 1st price increase at least for you know, big accounts. And so we're hoping to mitigate the effect of that going forward. We could have done it previously. Like this isn't something that caught us by surprise. This is an intentional decision we made, right? Knowing that we're trying to grow the brand, like you all have seen, you know, starting with the fourth quarter of last year, first quarter of this year, right? The intentional investment in promotions and advertising, right? We're trying to grow this brand. So the good news is that happened. and we're finding success, and now we're trying to find the balance between growth and fiscal responsibility.

Yeah, we talked about this earlier in the year, and maybe just the prices wind up or the costs wind up being higher, so it's a little bit more of an impact. That doesn't mean you would have gone and raised prices if you had known exactly where the cost would be because you'd make the same strategic decision, right?

Yeah. I mean, we know what our costs are going to be months in advance, right, because like I mentioned, we've locked in our protein for Q1. So protein, you know, muscle farm products that we are making and have ordered and are going to be delivered in Q1, we know exactly what the price is going to be. And so we have pretty good visibility into that, right? The decision we always have to make is at what point do we try and ratchet the price up? It's something we talk about every week. Okay.

A couple more questions. Can you remind us what the issue ongoing is with Dr. Tobias?

Yeah, the main issue, and I wish I could explain the root cause, but I can't. The main issue is that for reasons unknown to us, traffic to our Dr. Tobias listings on Amazon fell. And when I say fell, fell dramatically. Again, we can't tell you why. Our gut instinct is it's something internal to Amazon. Amazon's a black box. um you know we we if they change their algorithm or they do something like that it can be to your detriment and i will also add it can be to our benefit right you see strong online growth under legacy fit life excluding mrc we have some products that are up 50 year over year and have been for the whole year so there are areas where you win where you know we want to pat ourselves on the back when that happens and say didn't we do a great job but the reality is with amazon there is a a very significant amount of, call it luck, call it black box, whatever, right, that is going to determine the outcome. So something happened that resulted in much lower traffic to the Dr. Tobias listings. We can pull the data and we can see the traffic. We can pull the data and we can see the conversion. When people get to the listings, they convert at the same or actually higher rate than they were doing before. So the issue isn't once they are on the page, they find something they don't like and they leave. It's actually a very high conversion what we experience on Amazon relative to say the average listing. The issue is the top of funnel, right? Getting people to the listing. And again, we didn't do anything different. It just started happening. And so, you know, look, we blame Amazon or we say it's a black box, but that's really the issue. So we have tried, you can see in the numbers, I think we spent more on advertising during the third quarter i think across all of our brands um for for dr tobias that was largely on amazon we spend more money advertising on amazon and then we do the numbers and it it it doesn't like this is not something we can spend our way out of in terms of spending on amazon we're continuing to to try that but we're also spending time and effort trying to um grow off amazon Just to give you an example, if you bring a customer to the Amazon ecosystem, like through a website or through an ad, like we could run ads on Meta or Google, and if we're driving new traffic to Amazon, their algorithms prioritize it. They like that. So if they see you doing that, then the belief is or our understanding is that they will bolster your listing. So those are the types of things that we're doing. But, you know, I wish I could point to something we did or even something specific they did. But the reality is it started happening, you know, not quite a year ago, and we've been suffering the consequences since.

Okay. Thanks. Last question, a little nit and did here on taxes. Is the reason that the effective tax rate is so much higher that some of these expenses are not tax deductible?

No, so that's not it. The reason is, and this is all kind of new to me, I'm not a tax expert, but as you go through the course of a year, you estimate, you calculate a provision for income taxes. And just so you know, we don't do this ourselves, right? We use a very, very reputable firm. We use Grant Thornton. And at the end of the day, or when I say the end of the day, really at the end of the year and then several months after that, When you actually do your tax return and you figure out how much you owe, to the extent there were discrepancies between what you ran through the P&L for your taxes and what you actually owed, there has to be a true-up. So we filed our tax return for 2024 during the third quarter of 2023. Our provision had not expensed enough income tax, and so it's kind of a catch-up that's flowing through Q3, but it's not an ongoing thing.

Okay, so the rate we see then through the nine months is not indicative of what you expect the full year rate to be. It's just a true-up in the quarter that makes the quarter look weird and the nine months look weird.

Yeah, it might be higher for the full year than, say, a typical 24% or 25% rate again because some of it is really attributed because of 2024. But on a long-term steady-state basis, we would expect something closer to 24% or 25%. Okay.

All right. That's very helpful. All right. Thank you very much.

Appreciate it. Thank you.

Thank you. Your next question is coming from Samir Patel from Escaladon Capital. Samir, your line is live. Please go ahead.

Hey, Dayton. The first one, I'll start with Erwin, and congrats on the momentum there with the online sales. So you mentioned the 3.6 million and I think about half of SKUs, and you also mentioned that you're still competing with inventory overhang from other sellers. As you roll out those remaining listings and you become the primary seller, do you have some sort of vision for where you think the revenue might get to? Like, for example, I'm not sure if you did the high volume skews first, so if we can kind of extrapolate based on that figure of it being half, you know, and then you also can kind of quantify how much inventory might still be out there in the channel that you'd sold wholesale previously. So any thoughts there would be helpful.

Yes, I'll give you some additional details. So to your question of did we start with the highest volume SKUs first, no, not necessarily. What we do, this company, ironically, was the same company that was the primary seller of MusclePharm products, the exclusive seller of MusclePharm products on Amazon when we bought MusclePharm. So we know them. We have a working relationship with them. I'm not saying they like us because every time we show up, we take their business. But they cooperate with us. So they share with us their inventory. We know everything. we know which SKUs they're going to run out of first. And so we have prioritized our inventory and what we're shipping in on based on when they're going to run out of a particular SKU. So it's not like we picked the 112 or 116 highest volume and that's where we went first. So it's actually a mix of higher volume and lower volume. It's more a function of not wanting to run out. We want the customers to be able to buy the products on Amazon. In terms of how big it could be, I think, you know, I don't have the exact number in front of me, but we have some software tools that allow us to size on the total volume of sales that are happening for a listing on Amazon. If you add those up across the Erwin portfolio, it was somewhere in the range of, I think, 7 to 8 million. Again, I could be off, you know, plus or minus a million on that number. So the value of the inventory being sold by that 30 plus that third party is Plus, there's a lot of other smaller sellers that are buying the product through regular distribution that are showing up out there. Like if we just took it over from them, it would be, again, let's just say high single-digit millions. Incremental to that would be, are we able to grow more quickly? Are we able to launch new products? Are we able to gain more revenue through subscribers? So all those levers we will pull, but I think what you'll probably see is a ramp up to the high single-digit millions, and then we'll kind of see how things grow from there.

Okay, that's super helpful, and that's actually better than I was expecting. There's a couple areas I want to walk through. So one is just very, very simply, other than the half a million quarterly, two million annualized that you talked about from getting rid of the wholesale partner. I mean, is there any other trade-offs to those online sales? I mean, obviously indirectly, like if someone walks into a health store and they've already bought it online, I'm not talking about that. I'm talking about just like, if you're just trying to model where the business was and where it's going to be, is it reasonable to kind of take that, you know, add seven and then subtract two, or am I missing a piece of the math there?

No, I think that's, that's very reasonable. Like we're assuming that these changes don't affect our direct-to-consumer business, right? So that was about, I think, $0.3 million, right, $300,000 during the seven and a half weeks that we owned it. But that business has been coexisting with the other sellers on Amazon for years. So we don't think that would change either. So, no, I think it's the delta between the $7 million, $8 million, $9 million, and the $2 million we're giving up in wholesale sales.

Okay, that's really impressive actually. And then can you go a little bit more in depth? It sounds like there's people, did I hear it right, that there's people who are basically buying this product in a store and then reselling it on Amazon?

No, no, not buying it in the store. So we sell these products through like tens of thousands of doors in the U.S. So like Walmart, every single Walgreens, every single CVS. But in addition to that, It's in hundreds and hundreds of independent health food stores. So there may be a business owner. They may have one health food store. They may have 10. But they are able to buy the product through our fulfillment partners, through our distributors that sell to these smaller health food stores. They're buying the product. They're putting it on the shelf in their store. Some of them are kind of opportunistic and say, well, I'm just going to box some up and send it into Amazon and also sell on Amazon. So really what we see is one really big third-party seller, which is the one I talked about, the 2 million, and then a lot of these are a handful of these smaller, let's just say independent health food retailers. Some of them may be dedicated online retailers. Some of them may have physical stores who are buying primarily through distribution and then in addition to selling in their stores, they're selling online. So that's a dimension of... you know, sellers that we didn't have. For example, when we bought muscle farm, it really was just this one big third party. Um, but with Irwin, we do have a handful of smaller sellers that are also out there.

Okay. Okay. And then the final question on Irwin is, you know, you talked about expecting those margins to go up over time. I mean, you've outlined numerous times kind of the contribution margin Delta for the GNC business between someone buying that product online and buying it. Um, through the wholesale channel. I mean, do you have math that you want to share around if you sell one unit of an Erwin product, you know, through the wholesale channel versus through Amazon, what the kind of margin delta is? And then as a related issue, kind of both margin and operational, any progress on the glass bottle issue that I know you're dealing with with Amazon?

Yeah, sorry, did you say glass bottle? Is that what you said?

Yes, them wanting bottles level wrapped in your 3PL and all that.

So thanks for bringing that up. On your first question, I don't have the numbers in front of me. I know you and I and many others, we've talked through the economics of selling the brands that are exclusive to GNC on Amazon. That's very compelling financially, but pretty much every other part of our business, it's not as that compelling, right, where it's – such a big trade-off between a unit in-store and a unit online. The reason for that is that we don't advertise those brands. We spend literally $0 ever advertising any of those brands. Those are retail brands, and we're putting them online. We're putting them online at a premium price to where they're sold in the store, and whatever we pick up, we pick up. So obviously those economics are very compelling because A, there's no advertising, and B, it's a premium price. That's not the case with Erwin or with Isatory or with Mimi's Rock, Dr. Tobias, where we're having to spend money to advertise and get the product in front of customers. That said, we've seen this movie multiple times. That's why we deploy this strategy. We know when we sell online, A, the revenue is higher. Instead of selling a unit for $10 wholesale, let's say, you're selling it for $20 or $25 at retail. So the revenue number to the company is higher. and the margins that we generate are higher. So I don't have a unit-to-unit trade-off I could give you on that, but it's not as compelling as some of the GNC items. But again, we're not even pushing those. To your second question, just to maybe bring everyone up to speed, there's just a lot of nuances and complexity about Erwin and how they have the packaging that they use and the challenges that that presents as far as selling on Amazon. Very specifically, Amazon doesn't like glass, glass bottles. So you cannot sell anything on Amazon that's packaged in glass unless it's first bubble-wrapped. So we get product from our manufacturer. It's almost all in glass bottles. If we want to ship it into Amazon and sell it on Amazon, we have to have a third party open every single box, take out every single unit, wrap it in bubble wrap, label it with what it is, repack it, and then ship it into Amazon. And there's a not immaterial cost of doing that. And so right now we're just dealing with it. And by the way, that's the same thing the other sellers on Amazon are having to do as well. But it may make sense over time to, at least for maybe some of our higher volume SKUs, that maybe we do production runs in a plastic bottle. And that would save us, again, a very real kind of cost per unit that we wouldn't have to incur to package and prep for Amazon. So we're doing nothing on that yet, right? Everything right now is just managing through the transition, and we've had transitions in team and people, but we're kind of working on higher priority items right now. But over time, we think there's a ton of opportunity to further optimize this business from supply chain to packaging, like you talked about, to how products are fulfilled, to selling more on Amazon, et cetera. So lots of opportunity to come.

Perfect. And then I'll just ask a couple on MusclePharm that, you know, let other people ask, but the, on the whey protein, basically two questions. I mean, the first is I was trying to look around at some data sources this morning. I found like a USDA index for, I think 34% whey protein, but from the numbers you quoted per pound, it sounds like you're using a different one. So this question one is like, is there kind of a good public data source or benchmark that you would have us look at to keep track of that? And then the second is just, you know, on the pricing, and obviously understanding what you're doing to try and grow that brand, but just maybe how you're seeing other competitors out there dealing with this issue if they're pushing through price increases as well. So that's all for me. Thanks.

So first of all, on protein, I don't know if I could point you to a data source specifically. I will ask kind of our operations team because I know they have data and they've pulled together charts that we've reviewed and I've shared with the board and whatnot. So So we get it from somewhere. The other thing I will point out, though, is protein, it's not like protein. There's tons and tons of different kind of protein from whey protein, milk protein, casein, gelatin. There's all kinds of different protein. And even within whey, which is what I'm talking about, there's what's called WPC80, which is whey protein concentrate with a minimum of 80% protein content. So that's what we tend to watch because that's what we use MusclePharm's biggest selling product is our five-pound chocolate 100% whey. So we're buying that WPC80, and that's the reference protein that I'm talking about. So it may be I'm looking at a different protein than you are, but there are sources out there, but I just couldn't tell you off the top of my head kind of what we use or if we get it from our manufacturers or straight from the protein suppliers. I think your second question was about what we're seeing other people doing. Look, we gained share. during the third quarter because we didn't raise price. It's very apparent to us, going back to the question of how much of it was incremental volume from existing customers versus selling into new. The bulk of what we gained was gaining share, and we attribute that to not raising price. So we think that others are choosing to pass it along, and we have chosen at least for a period of time not to. So that said, the protein is the least profitable and most competitive part of the supplement market. It's one of those things where everybody's got one, right? It's expensive. Again, the protein's expensive. They're big. They're bulky. They're expensive to ship. So if you get 30% gross margins in a protein business, you're killing it. You're if you want to be in sports nutrition, you have to have a protein, right? There's not too many companies that are targeting the athletes and the, you know, bodybuilders and they don't have a protein. So it's kind of, if you want to be in the space, you got to have a protein and it's just not a super attractive product to sell. So those are some of the dynamics that we're dealing with. But yeah, it was, I think it was share gain driven by the fact that we did not, at least partially because we did not increase our price.

Great. Thanks so much. All right. Thanks, Samir.

Thank you. That concludes our Q&A session. I'll now hand the conference back to management for closing remarks. Please go ahead.

All right. Thank you all very much for participating in the call. If you have other questions, feel free to reach out to us. Otherwise, we will speak to you all again towards the end of March. Thank you.

Thank you. Everyone, this concludes Have a wonderful day. Thank you for your participation.