FitLife Brands, Inc.

Good day and welcome to the FitLife Brands fourth quarter and full year 2025 financial results conference call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation. Should you wish to join the Q&A at any time, please press star 1. If you wish to remove yourself from the Q&A, please press star 2. It's now my pleasure to turn the floor over to your host, Dayton Judd, CEO of FitLife Brands. Sir, the floor is yours.

Good afternoon. I'd like to welcome everyone to FitLife's fourth 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. Ryan Hansen, our EVP who typically joins these calls, is on vacation this week. The fourth quarter is the first full quarter that includes the financial results for Erwin Naturals, which we acquired on August 8, 2025. As has been our practice, we will provide summary financial results, including revenue, gross profit, and contribution for Erwin for approximately the first two years of our ownership. All of our previous acquisitions were completed more than two years ago. So the performance of all other brands is now reported under Legacy FitLife. That said, we will continue to provide commentary about individual brands when it makes sense to do so. I will start by providing some general commentary about the full year 2025, after which I will provide commentary about the fourth quarter more specifically. And at the end of my prepared remarks, I will provide some high-level commentary on what we are seeing in the business so far during 2026. So to begin, first for the full year 2025. 2025 was a strong year for all of our brand groupings other than MRC, whose challenges we have discussed previously. Legacy FitLife, excluding MRC and MusclePharm, delivered organic revenue growth of approximately 6%. Wholesale revenue was flat, although we did benefit during the first quarter of 2025 from the restocking of GNC's distribution centers. Online revenue for Legacy FitLife during 2025 increased approximately 16%. MusclePharm delivered organic revenue growth of approximately 5% during 2025, with revenue growth occurring in both the wholesale and online channels. MRC revenue declined approximately 15% during 2025. And obviously, we are excited about the Irwin acquisition, which happened in August of last year. Although we didn't own Irwin for the full year of 2025, let me provide some historical numbers and context for how we are thinking about this business. First, Erwin previously generated a significant portion of its revenue from Costco in the United States. However, Costco U.S. discontinued the final Erwin product in early 2025, several months before the acquisition. Second, Erwin historically sold a meaningful amount of CBD products with gross revenue from CBD during the 12 months prior to the acquisition, totaling approximately $4.8 million. Subsequent to our acquisition of the company, for a number of reasons, we made the decision to discontinue all CBD products. We have been selling our remaining inventory and expect to be completely out of CBD later in 2026. And third, Rite Aid, another major customer for Erwin, went into bankruptcy and liquidation prior to our acquisition of the company. If we remove Costco U.S., CBD, and Rite Aid from the financials, Erwin's net revenue for the full year of 2024 would have been $54 million, and its revenue for the full year of 2025 would have been $54 million. In other words, if you normalize the numbers to reflect the customers and products that represent the go-forward business, the brand was flat from 2024 to 2025. If you do the same math just for the fourth quarter of 2025, which was our first full quarter of ownership, Erwin delivered organic growth of approximately 6% compared to the fourth quarter of 2024. So to recap, all of our brand groupings experienced organic growth in 2025 with the exception of MRC. Now, regarding the fourth quarter of 2025, Total revenue was $25.9 million, an increase of 73%, primarily as a result of the acquisition of Erwin, partially offset by weakness in Legacy FitLife. Wholesale revenue was $15.5 million, or 60% of revenue, an increase of 213% compared to the fourth quarter of 2024. Online revenue was $10.5 million, or 40% of total revenue, an increase of 4% compared to the fourth quarter of 2024. Excluding the amortization of the inventory step-up related to the Irwin acquisition, gross margin was 37.0% compared to 41.4% during the fourth quarter of 2024. The decline in gross margin is primarily due to the acquisition of Irwin, which has historically operated at a lower gross margin than most of our other brands. We expect Irwin's margins to increase over time, and I'll provide more detailed commentary later in the call regarding the opportunities for improvement. Contribution, which we define as gross profit less advertising and marketing expense, increased 47%, driven primarily by the addition of Irwin, partially offset by lower contribution from Legacy FitLife. Net income for the fourth quarter of 2025 was $1.6 million, compared to $2.1 million during the fourth quarter of 2024, with the decline driven primarily by transaction-related expense and amortization of the inventory step-up associated with the acquisition of Irwin. Adjusted EBITDA was $3.5 million, a 14% increase compared to the fourth quarter of 2024. With regard to brand level performance, I'll start with legacy FitLife. We mentioned on our third quarter earnings call in mid-November that we were starting to see broad-based weakness across our portfolio of brands. That weakness accelerated late in the fourth quarter and into the first quarter. From a macro environment perspective, given the backdrop of economic and political volatility, we know there are broad-based consumer confidence concerns particularly for discretionary products. Consumer sentiment remains near all-time lows, and consumer discretionary spending has been declining since late last year and is at the lowest level it has been in the past four years. Total legacy FitLife revenue for the fourth quarter of 2025 was $13.3 million, of which 68% was from online sales and 32% was from wholesale customers. This represents a 14% year-over-year decrease in wholesale revenue and a 10% year-over-year decrease in online revenue, or a 12% decrease in total revenue. The declines were primarily attributable to MRC and MusclePharm, with the other Legacy FitLife brands delivering organic growth of 4% during the fourth quarter. Gross margin for Legacy FitLife declined slightly from 41.4% to 40.7%. Contribution declined 18% to 4.3 million, and contribution as a percentage of revenue decreased to 32.5% compared to 34.9% in the same quarter of 2024. Excluding MRC and MusclePharm, the other Legacy FitLife brands delivered higher revenue, higher gross margin, and higher contribution as a percentage of revenue compared to the fourth quarter of 2024. Moving on now to IRWIN. We don't report IRWIN's historical performance prior to the acquisition in our financials. But as mentioned previously, normalizing for the loss of Costco US and Rite Aid as customers and the decision to exit CBD, Irwin delivered organic growth of approximately 6% during the fourth quarter of 2025, compared to the same quarter in 2024. Total Irwin revenue was $12.6 million, of which $11.2 million, or 89%, came from wholesale customers, and 11% came from online sales. Gross margin for Irwin during the fourth quarter was 28.0%, and contribution as a percentage of revenue was 26.6%. Adjusting for the amortization of the inventory step-up, Irwin's gross margin and contribution as a percentage of revenue would have been 33.2% and 31.8% respectively. We mentioned on our third quarter earnings call in November of last year that we began selling Irwin products on Amazon in mid-October. I am pleased to report that Erwin's Amazon business scaled nicely throughout the fourth quarter, delivering approximately 60,000 of revenue in October, 300,000 of revenue in November, and almost 500,000 of revenue in December. Erwin's growth on Amazon has continued in the first quarter of 2026, but I'll provide more commentary on that shortly. 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 began paying scheduled amortization on our term loan during the fourth quarter. In total, we paid down approximately 1.9 million of debt during the fourth quarter, bringing our debt balance to 44.7 million. We further reduced the balance on our revolver by 1.4 million during the first quarter, and we made another scheduled amortization payment on our term loan of approximately $1.5 million yesterday. We are ahead of schedule on our debt reduction and will continue to deploy excess free cash flow to further reduce indebtedness. As mentioned previously, we have continued to experience weakness across most brands and channels during the first quarter. We have identified and are working on five priorities to address the recent soft performance that we expect will favorably impact revenue and cost in the future. First, we expect to be able to significantly improve Irwin's supply chain. Prior to the acquisition, we knew that Irwin's supply chain was one of its biggest challenges, but that also means it represents significant opportunity. I will highlight a couple specific areas. First, Irwin has historically had to dispose of approximately $2 million of obsolete inventory every year, which gets expensed through cost of goods sold. The primary driver of this is the combination of high MOQs, which are customary for soft-shell products, and a short selling window driven by two-year dating on Irwin's products. In the wholesale channel, retailers typically require a minimum of 12 months of shelf life for all products that are shipped to them. And if our products only have 24 months of shelf life at the time that they are manufactured, the selling window is only 12 months, and realistically a bit less than that when we take into account packaging time and shipping time. We are in the process of transitioning as many of our products as possible, particularly the slower moving products, to a three-year shelf life, which will double the amount of time we have to sell the products from 12 months to 24 months, and thereby significantly reduce the amount of obsolete inventory that the company has to write off. In addition, expanding online sales provides additional flexibility as most online marketplaces have less stringent requirements regarding shelf life for inbound products. As a result, continuing to ramp up on Amazon and other platforms will create additional flexibility for us in this regard. Dramatically reducing this inventory obsolescence has the potential to increase Erwin's gross margins by as much as 300 to 400 basis points with a corresponding dollar-for-dollar impact on EBITDA. Additionally, Erwin has historically faced and continues to face stockouts, the impact of which was particularly pronounced during the first quarter. We hired a new VP of Operations for Erwin in February, and we are confident that throughout the course of 2026, we will be able to meaningfully improve Erwin's supply chain. Second, we are increasing our focus on new product development at Erwin. New product launches are important to maintain relevance in the nutritional supplement industry. We have maintained a robust product development pipeline with our legacy FitLife brands, but Erwin lagged on this dimension during the company's financial distress and ultimate bankruptcy. We have three new products currently in production, which we expect to launch in the third quarter and are working to build out Erwin's longer range product development pipeline. Third, we are focused on driving awareness and demand generation for our products off Amazon, which we believe will also drive improved performance on Amazon. We have previously discussed the challenges we began experiencing in early 2025 on Amazon with Dr. Tobias. Beginning late in 2025 and into 2026, we have been experiencing weakness on Amazon for other brands as well. In general, our product listing pages continue to convert at above average rates, so the challenge is traffic and not conversion. We believe a significant part of the weakness we are experiencing on Amazon relates to continued evolution of the Amazon algorithms. It would take a long time to address this in detail in my prepared remarks, but for those of you who are interested in the evolving dynamics of e-commerce marketplaces, I would encourage you to Google the recent shift from Amazon's A9 algorithm to what the Amazon community refers to as the A10 algorithm. For obvious reasons, Amazon doesn't provide details about their algorithmic changes, but it is becoming increasingly clear that Amazon is now prioritizing listings that bring external traffic and organic engagement to their platform. In other words, until recently, success on Amazon was primarily the result of optimizing within the Amazon ecosystem, using tools such as pay-per-click and other on-platform advertising. Now, however, it is becoming increasingly clear that success on Amazon is primarily a function of driving incremental traffic to Amazon by building off Amazon awareness. We are seeing the correlation of this shift in the performance of our individual brands on Amazon. For example, our brand with the highest off Amazon awareness and distribution is Irwin. And the Irwin selling account is currently our fastest growing Amazon account. Additionally, some of our other brands with strong off Amazon distribution are showing growth on Amazon. At the other end of the spectrum, our worst performing Amazon account is Dr. Tobias, which has been an Amazon exclusive brand with almost no off Amazon exposure. In short, we are observing that the more dependent a brand is on Amazon, the more it is struggling on the platform. We've been working since last year to improve our off-Amazon awareness for the Dr. Tobias brand, primarily through TikTok via brand ambassadors and influencers. We also recently finalized a partnership between the Dr. Tobias brand and Joey Chestnut, the world record-holding competitive eater perhaps best known for his hot dog consumption on July 4th. We are excited about the partnership with Mr. Chestnut and believe it will resonate with potential consumers of Dr. Tobias's hero colon cleanse product. With the help of a new chief marketing officer that we hired in early February, we continue to expand our off Amazon efforts across our most important brands. This effort will take some time, but we expect it will bear fruit in the long run. Fourth, we continue to expect long-term revenue benefits from leveraging Erwin's sales team to cross-sell other FitLife products into the wholesale channel. The sales process in the wholesale channel generally takes time, as most retailers reset planograms once or potentially twice a year. However, our efforts are slowly beginning to bear fruit. We recently gained placement of six MusclePharm SKUs in a regional grocery chain beginning in the second quarter. In addition, conversations with other retailers are underway and we expect to announce additional distribution gains in future earnings calls. And fifth, as has traditionally been our practice, we will continue to look for ways to operate more efficiently with regard to our SG&A. As has been the case historically, this will be more the result of a number of small improvements over time as opposed to large one-time efforts. For example, We exited our office lease for MRC in the Toronto area when the lease expired this past January, since most employees were already working from home. In addition, our office lease for Irwin expires later this year, and we anticipate that the new lease will be for a smaller space and at a substantially lower cost per square foot due to softness in the office rental market in the Los Angeles area. None of these individual SG&A reduction opportunities is anticipated to be material on its own, but in total, we expect them to be compelling. I've talked a lot about some of the challenges we are facing and what we are doing to address them. Before closing, however, I want to touch on one bright spot in our business, which is Erwin's continued growth in online revenue. I mentioned earlier that monthly revenue increased to approximately $0.5 million by the end of the fourth quarter. We are encouraged that the growth has continued throughout the first quarter with monthly revenue now approximately $0.8 million. In other words, in a few short months, this has become a business with roughly $9 to $10 million of annual revenue on a run rate basis with higher margins than our traditional wholesale business. In addition, we think there is further upside, since some of our best-selling products in the wholesale channel are not yet on Amazon, and we have been hurt somewhat by the out-of-stock situations I previously mentioned. And although we continue to see declines in subscriber counts on Amazon across most of our other brands, as we mentioned on our third quarter earnings call, We are seeing very strong subscriber growth for the Erwin brand, with subscribers increasing from approximately 500 at the beginning of 2026 to over 3,600 today. In terms of outlook for the full year, we are going to hold off on providing any kind of formal guidance at this point in time, given the weakness in the first quarter and our uncertainty about how long the exogenous challenges will persist and how quickly our internal efforts will bear fruit. The online growth we are experiencing at Erwin is encouraging, but at this point, we just don't know whether it will fully or only partially offset the weakness we are experiencing elsewhere. So with that introduction, I will conclude my opening commentary, and we can go ahead and open it up for questions.

Thank you. At this time, we'll be conducting a question and answer session. If you have any questions or comments, please press stall 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Once again, that will be star one on your phone at this time if you wish to ask a question. Please hold while we poll for questions. The first question today is coming from Ryan Myers from Lake Street. Ryan, your line is live.

Hey, guys. Thanks for taking my questions. First one for me, and I realize this might be a bit of a difficult question to answer, but if we think about the revenue headwinds that you called out, Dayton, both Amazon and then just kind of the broader macro pressures, I mean, is there any way to think about which one of those two dynamics is maybe impacting the business more or it's just the best way to think about it is, well, these are headwinds and this is kind of where the softness and the revenue is coming from?

Yeah, so good question. I don't have a good answer. I don't know how to bifurcate them. I can give you some data points that may help. You know, we have access to POS data for the retailers. Depending on the retailer, it's not always perfectly up to date. But we saw, if you go back over the last six months, right, the growth rate, and this is for supplements overall as a category, has been declining for about six months. And it actually flipped negative here in the last several weeks. You know, if you look at that as just a raw percentage, it's much smaller than kind of the declines we've been seeing. So there's some other variables coming into play. You know, it's hard for me to, you know, our out of stocks are kind of hard to quantify. It's definitely in the hundreds of thousands. Yeah, so, you know, I guess I don't have a great answer for you, Ryan, other than, there clearly is some general weakness. And then there clearly are some areas where, you know, we're down and I probably can't blame kind of the market overall. So I don't know if that's helpful or not, but that's kind of what I got.

No, that's helpful. Appreciate the color there. And then, you know, thinking about gross margin, I think you guys gave the adjusted gross margin number of 37%. You know, is that the right way to think about the business going forward with Irwin, or do you think that, you know, given some of the priorities you guys laid out, do you think you guys can get back into that 40% margin, just how we should be thinking about the gross margins going forward?

Yeah, 40% is probably a stretch. So Irwin has kind of historically been in the, you know, low 30s, so usually not 30%, but also not 35%. I think we can get Irwin up into the, you know, certainly mid, if not high 30s. If you look at historically the legacy FitLife business, we tended to be more low 40s. So I think for the combined business, you know, over time, again, not next quarter or, you know, the quarter after that, but as we're able to address some of these things like the supply chain and the, you know, two-year dating issues that I brought up, I think something closer to the high 30s is reasonable.

Okay. Got it. Thanks for taking my questions.

Yep.

Thank you. The next question is coming from Samir Patel from Ascalon Capital. Samir, your line is live.

Hey, Dayton. Thanks for taking the question. So, first off, you know, with the understanding that you're not providing guidance for the year, at the time of the acquisition, you kind of laid out, I think it was $120 million in revenue and $20 to $25 million in adjusted EBITDA. I guess when you're saying that you're not sure if the Irwin you know, the online sales are going to offset kind of the weakness you see elsewhere. Should we interpret that as, you know, obviously the most recent quarter, even if you account for seasonality, kind of puts us below the low end of that range? Are you basically saying that if or when online continues to go well, you know, then maybe that gets us back into that range, but if not, then we're below that range? Is that kind of how you were thinking about it?

Yeah, I mean, I'll characterize it maybe a bit differently. Look, if I knew, if I had any confidence in what 2026 would look like, you know, I would certainly tell you guys. But let me just give you the data points I have. So if you look at legacy fit life for 2025, you can look at our financials. And I think the number for the full year for revenue was 62 million. I kind of walked through the math for Irwin. Again, making the adjustments for losing Costco and Rite Aid, as well as taking out CBD and that number was 54. So at the end of 2025, the combined business was about 116 million. We've got an online business now that should add to that. Although some of that online business, as you recall, we were previously selling to some third parties who were then reselling the products on Amazon. you kind of have to back out, I don't know, a couple 3 million of the 116, right? And then to that, call it 113, you would add, again, the Amazon business. And this assumes everything else in the business is flat. The reality is right now, though, that everything in the business is not flat. The other data point I'll give you all is Q1 is not better than Q4. In fact, I'd say we're pacing a little bit down in Q1 compared to Q4. So I certainly hope and I would expect that the rest of the year doesn't look like Q4 and Q1, but I can't definitively say that it's going to be a certain amount higher in Q2, Q3, Q4. I don't know when things in the world will change. I don't know the exact timing of when we'll get everything back in stock that we need to get back in stock. So that's why I hold off on giving a number. So you know, if the online, the incremental online business, if it stays kind of right where it is, and you subtract, they call it 3 million of wholesale revenue that we gave up, you know, we're, you know, we'd be about 120. And, you know, again, I don't, I'm not saying I expect that because Q1, right, is proving to be, you know, as challenging, if not a bit more challenging than Q4. So those are the data points. And because I don't know, I don't want to tell you guys what's going to happen. I'd rather, you know, give guidance when I have a reasonable degree of confidence what that number is going to be.

Okay. And just to clarify a little bit further, when you refer to Q1 kind of tracking similar to Q4, are you saying, like, on a year-over-year basis, or are you saying, like, we're not seeing the typical, you know, I know that Q4 is typically the weakest quarter for supplements, and Q1, you know, New Year's resolution is stronger. So are you saying that sequentially you're expecting Q1 to be flat to down from Q4?

Yes. Q1 looks a whole lot like Q4.

Okay. Understood. And maybe talk a little bit more about the decision to exit CBD. Is that a margin decision or what went into that?

No. In fact, margin would be the reason to keep it. CBD is an incredibly complex as it relates to the legal environment. So Federally, there are very challenging guidelines about what you need to do in order to be able to sell CBD, stuff like the Farm Bill and whatnot. But then on top of that, the state-level regulations are even more complicated. And so if you're selling online and you're selling into 50 states, you have to be aware of and keep up with all of the regulations in the different states, which in and of itself was pretty challenging. Further compounding it, I would say we were undecided when we bought the business. We certainly didn't buy Irwin because of the CBD. But I think it was either October or November when the latest spending bill was passed again federally. That bill, in our interpretation, essentially makes it, I don't want to say impossible, but certainly very difficult to legally – sell CBD. And so it's just not worth the complexity. And so for that reason, we're choosing to get out. We've had CBD topicals and we've had CBD ingestibles. There is no retailer, because of the legal environment and some of the challenges out there, there's no retailer, no major retailer, I should say, brick and mortar or online that sells ingestible CBD. You can't buy it at Target, Walmart, you can't buy it on Amazon. You can buy it in, you know, local health food stores and whatnot. And so, you know, topical is the only place we sell CBD in kind of a major retailer is we sell topical CBDs in CVS. And so, you know, we're just – given just the legal environment and the fact that it wasn't growing for us anyway, it was declining – And it's particularly challenging to keep up with. We just decided to move on and focus on kind of what we know best.

Thanks. Makes sense. And the final one. You mentioned the various initiatives that you have ongoing, and thanks for kind of scoping those in terms of potential, you know, potential impact. What would you say on timing? I think you clarified on some of the leases and SG&A items and the distribution. But as far as, for example, the three-year shelf life, how long will that take to get done? You know, how long before you can kind of stop losing that $2 million a year off Irwin's P&L? And I guess more broadly, if you could go a little bit deeper into the demand generation side outside of TikTok maybe and the things that you're doing to try and get shelf placement for some of your legacy products and also drive more traffic to Amazon.

Yeah. So on the dating, I think you'll start to see the impact of that in Q2 and beyond. So we have received at this point now our first, some of our first products with the three-year dating. And just to give you a bit more color on how that works, you don't just get to decide to kind of change your expiration date on the bottle. You've got to be sure that the product, you know, when it hits the two-year mark or the three-year mark, if someone were to open it up and send it to a lab and test it, that it still meets the label claim. And so to go from two to three year dating, that entails revising, updating all of your formulas, making sure you have enough in there that it will not just get to two years, but we'll get to three years, right? So almost every single product we've had to kind of update the formula. And that takes time and it takes time to get our manufacturers on board, right? Because they are part of the process of approving kind of what they're making and stamping the three-year shelf life on it. So that said, we have started to receive our first products with three-year dating and we'll continue to do so. We're starting with the products that are slower movers for us where we're more likely to have to throw products away. We've got some very, very fast moving products where it doesn't matter. Like moving to three-year dating won't really help us because we turn it so quickly. It's just not a priority right now. So I think you'll start to see that flow through the P&L, hopefully in Q2. And what you'd see it in is certainly higher margin, but also just lower charge off to inventory, right, lower inventory reserve, and therefore higher COGS. Your second question on the off Amazon, you know, what we're doing there, it just varies across brands. We, you know, have been focused on Dr. Tobias first. because it has the biggest exposure to Amazon. But, you know, we've talked about TikTok, and I don't want to provide numbers that get people too excited because it's definitely slow going. But we continue to see increased engagement, increased kind of GMV, increased sales on TikTok. There clearly is some spill over value. So when you sell more on TikTok, you see more sales or you see more branded search, you know, and hopefully more sales on Amazon. So it just takes time to scale in some of these other channels. it's no different than kind of marketing 101, what we've been trying to do with all of our brands from the beginning, except again, something like Dr. Tobias, which has had an Amazon focus. So I think I mentioned in the comments, I don't think it's coincidental that if I graph percent of revenue coming off Amazon and the growth rate for that brand on Amazon, where it's like linear, where we're seeing the best growth is where we have the highest off Amazon distribution. So that said, it is still a black box, right? I wish I could do exactly what to do and exactly how the algorithms work, but you just kind of have to figure it out as you go. So I don't know if that answers your question. That's what our focus is right now.

Yeah, thanks. That's helpful. I'll leave it. I'll let others ask some questions. Thanks.

Thank you. And the next question is coming from Sean McGowan from Roth Capital. Sean, your line is live.

Thank you. A couple of questions here. Is the impact of the inventory step-up complete, largely complete? Where are we on that?

It is done. So that's been fully, the last expensing of that was in Q4. So in the Q1 numbers and beyond, you will not see any. Okay. Amortization of inventory step-up.

Okay. And circling back to an earlier question about the kind of the gross margin opportunity at Erwin, I think you ended that comment with something that you were talking about the high 30s, not right now, but, you know, eventually. Did you mean consolidated gross margin or just Erwin itself in the high 30s?

Yeah. I was thinking consolidated, right? I think Erwin can get, you know, FitLife has been, Legacy FitLife has been low 40s lately. I think Erwin, I can get 300, 400 basis points out of that, and I think they're roughly 50-50. So if Erwin is, call it 37, and Legacy FitLife is 41, you get to kind of a 39. Again, I've not modeled it out. I'm giving you approximate numbers. I know I can get it higher because of the biggest thing, the two-plus million of just throwing away product every year is – You know, shocking. We carry a similar amount of inventory on the FitLife side of the business. Our reserve on the FitLife side of the business is a fraction, like 10% of the reserve on the Erwin side of the business. And it's because of the shelf life flexibility that we have. Most of our products on the FitLife side, I can probably count on two or three fingers the number of products we have that is less than three-year shelf life. So that will create a bunch of flexibility. And then I think I mentioned it in my prepared remarks, but not in the response to the question. But the other thing is, as you sell more retail, right, as you sell more online, that also helps to kind of bolster the margins of it. So that's why we're confident that over time we can do better for gross margins for Erwin.

Okay. And on that shelf life issue, you know, at the risk of getting too much into the weeds, I'm just wondering, you've only had this business since August. If it was that easy for you to fix it, why wasn't it done before? They just didn't pay attention to it?

I don't know. I don't want to point fingers or cast blame. I think, you know, people have different priorities. And, you know, we – and look, the stock outs, I mentioned stock outs. That's related to the shelf life issue because I mentioned you've got about a 12-month sell-through period, right? And so if you want to avoid throwing inventory away, you try and time the delivery of your next, you know, purchase order for right around the time you run out. Because if you get it four months too early, you're still selling the old stuff. And then you only have eight months to sell the new stuff right before it expires. And so you get in this game of trying to time your inventory purchases. And then you've only got 12 months to sell it, right? If you order too early, your, you know, your reserve, your obsolescence goes up if you order too late, or if it shows up too late, I should say, because you always order on time, but there's variability in supply chains. If it shows up too late, then you're dealing with stock out. So we think kind of this transition, and, I mean, me talking about it makes it sound easy. Like this is not easy. This is, you know, lots and lots of people spending lots and lots of hours, right, and revising formulas and spending tens of thousands of dollars on testing. And, you know, it's a lot of work to get to that point, but it's unequivocally worth the effort.

Yeah, but how, okay, and then looking at it from a different perspective, how can you be, how will you be able to be confident that it kind of stands the test of time, a three-year shelf life, if you haven't been able to actually experience that amount of time?

Well, so.

Is the testing accurate enough?

Yeah, and the reason is, again, most of these products we've been making for more than three years, and it's called retains. You have to keep a certain number of every production lot of every product you've ever made. So we can pull something off of our internal storage shelves that were made three years ago. We can test it, and we can see how it tests out, and we can know what the deficiency is. And then that tells you, you now know how much more you need to put in it when you make it. You know kind of the decay is the wrong word, but the extent to which certain products diminish over time. Vitamins are very, very tricky. Vitamins diminish more rapidly over time, and it's very hard to get you know, three- or four-year dating on a multivitamin that has a lot of ingredients, right? But on a lot of other products, you can get three-year dating. So you have to put in, you have to increase what's called the overages, right, in the initial production, which, by the way, can increase your cost a bit because you're putting more raw materials into the product. But you make up for it in not having to throw the product away over time.

Right. Okay, a couple more then. On my notes, Just tell me that Irwin in the first quarter of 25 before you owned it did around 18 million, but that would include some of the things that, you know, we should exclude on a pro forma basis. Can you share with us what that would have looked like?

Sure. Yeah, the adjusted net revenue. So if you, again, the same math I explained in the kind of commentary at the beginning of the call. adjusted net revenue taking out Costco, U.S., CBD, and Rite Aid was 14.3 million in Q1 of 2025. Okay.

That's very helpful. And then my last question, I feel like we have this question every time, but what's going on with MusclePharm, and what's the remedy there?

Yeah, yeah. I think we gave, or you can kind of figure, I don't have the revenue number in front of me, but I gave, you have 2024 revenue, and I gave you the organic growth number for 2025 of 5%. So again, growing online, growing in wholesale, slow going. I mentioned in the call, we've got some initial wins from this kind of cross selling effort that we've got going on and are in discussions on some others. The other thing though, I would say is MusclePharm continues to be impacted by the dynamics in the protein market. So again, MusclePharm is probably 80% protein. I spent a lot of time talking about protein in the third quarter, but you can't get protein now in the second quarter unless it's off spec. Third quarter protein is now $11 a pound for WPC, kind of whey protein concentrate. So, I mean, it's just astronomically gone up in terms of cost. You know, look, I turned down probably a million and a half muscle farm purchase order during the first quarter. you know, from an international customer we've done business with before that, you know, they're just bottom fishing and, you know, it would have been the lowest gross margin we would have ever kind of sold product. So, you know, part of what we've seen in the business too is trying to protect margin as opposed to, you know, I can give you guys higher revenue. I can deliver higher revenue, but it's going to come at a cost. So, you know, we're trying to be smart about kind of who we're selling it to and trying to protect margin somewhat. So, you know, continuing along and, you know, I'd say nothing dramatic to report in Q1 other than, you know, we're preferring to sell product to people willing to pay a bit more than some of our customers.

Okay. Thank you.

Yeah. Thanks, Sean.

Thank you. And once again, it will be star one if you wish to ask a question on today's call. The next question is coming from James Bogan from Legends Capital. James, your line is live.

Hi, thanks for taking my question. I also was going to just ask about MusclePharm. I'm not sure what you can add. When I initially invested, I remember that MusclePharm used to be a brand that sold like $150 million of stuff a year, more or less. And now it's down to single-digit millions or whatever. And so I considered your company kind of a a leverage plan muscle farm until your recent acquisition of Irwin, of course. And so I understand you have this problem with protein, and I'm just wondering, you know, assuming prices stay where they are, we live in a world of resurging inflation, I'm just wondering, what is the game plan? I mean, you can sell to the good customers for a while, but eventually you have to sell to everybody and push product. So I'm just wondering how this might play out or how you're gaming it or – or what sort of volumes you can generate or what you can do about passing this on to your customer without killing sales. I'm just wondering what the game plan is because I view MusclePharm as such an important brand that you're in the midst of rebuilding.

Yeah, thanks for the question, James. I think I may have commented on this somewhat in the third quarter call. You know, I think – not I think. You mentioned $150 million. I think at its peak it was about $175 million wholesale. Now, that was, you know, 10, 15 years. It was a long time ago, and then it was a consistent and steady decay until we bought it in bankruptcy. You know, I think what we've learned from MusclePharm is that it's been a really – it's been a challenge. And the reason it's been a challenge, and I contrast it with Irwin, which we also bought, you know, that was an asset purchase out of bankruptcy. When we bought MusclePharm, they had zero distribution. They weren't on a single store shelf in the United States anymore. We bought the intellectual property and about 120,000 of inventory, right? So this was literally buying a brand that was essentially dead, right? It had some online sales through a third party. And the goal was, can we revitalize this brand? Can we regain lost wholesale distribution? And we have been at it now for two and a half years. And we've gotten some, right? I can't, I mean, you can go look and see where it's sold, right? But there's some customers where we're growing 100% year over year, right? It's just not on any major store shelves, right? We got it in the vitamin shop with the Pro Series and did okay and some of them are still there and some of those SKUs are no longer there. We'll keep trying. We're going to keep trying to sell it. Anyone that has any expectation that this is going to be a $175 million brand again, I would just encourage you to temper your enthusiasm. I didn't mean that.

I thought even if you could achieve a fraction of that, a quarter of that, it would be a lot.

Our plan is to grow. We still want to grow it, but the thought that we could buy it and just get back into everyone that used to sell it from Walmart to Costco US to everybody else. It didn't happen, and not for lack of trying, right? So the world and buyers in particular move on. So once they kick you off the shelf, they're not very keen to bring you back.

I get it.

Yeah. So that's how I would characterize kind of the muscle farm. Now, that said, again, hopefully in the next earnings call, we'll have a couple of SKUs. We've been told we have a couple of muscle farm SKUs getting into a national grocery chain. It's not 100% confirmed. We've been told to, you know, expect POs and store counts, and we'll see if that comes through. I don't want to talk about it prematurely, but hopefully within the next month or two, right, there will be something like that that on the next earnings call we'll have something we can talk about. But also, those are singles. It's not a home run. It's not going to double the size of the business overnight.

And what can you do about the input cost? The protein is what it is.

It is what it is. Protein is a global commodity. Everyone's going to be paying the same price. In hindsight, I will never buy another brand that is IP only, and I will never buy another brand that is protein dominant, just given what we've seen and what we've experienced. That said, I'd probably stop short of saying MusclePharm was a bad acquisition or a horrible acquisition. but it certainly wasn't a great one. It's going to be okay in terms of the multiple what we paid, but it's not the type of acquisition we'd be looking for going forward. Got it. Okay.

All right. Thank you very much.

All right. Thanks, James.

Thank you. And the next question is coming from Mays Han from 2x2 Capital. Mays, your line is live.

Hey, guys. Thanks for taking my question. I had a couple questions on Erwin. First, I know Erwin lost two SKUs at US in early 2025. I wanted to ask just on that front, have you guys had any conversations about relisting? Is there anything kind of going on on that front? And then the second question is around online sales. I think we already mentioned you're running at $9 to $10 million in online sales and you still have some SKUs that you plan to list. Do you have an updated view on kind of online sales for everyone as well?

Yes. Let me take the first question was the Costco SKU. So they had, if I'm remembering correctly, two SKUs in Costco, U.S. I'm talking about Costco U.S. here. The first one was lost, you know, quite a while ago. The second one, the last one was lost in the, was discontinued in early 2025. Have we had discussions with Costco? Yes. We're not getting back in there anytime soon, which is why I gave you guys the numbers without the adjustments. Similarly, Rite Aid, right? We're not getting back into Rite Aid because it doesn't exist. There's a couple other retailers where Erwin lost distribution in the kind of bankruptcy period where there's a chance we might get them back. And so I didn't make any adjustments for those. But, you know, Costco US, you should not plan on us getting back in there anytime soon. and Rite Aid is obviously not going to happen. And I was mentioning this a bit with MusclePharm, but Costco is the extreme example of if you get kicked out of Costco, the likelihood of getting back in is incredibly low. And the reason why is they carry, I'll use protein as an example, they carry two or three powdered proteins, and they carry three or four ready-to-drink proteins. And so when they kick someone out and they give someone else that spot, It's going to take something miraculous for them to say, you know what, let me kick out somebody who's actually performing and take another shot with a brand that didn't perform. So we've learned through MusclePharm and now through Erwin that it is very unlikely to restore distribution in Costco, particularly in the U.S. Now, we do still sell in Costco Canada. and we haven't had any loss of distribution or any loss of SKUs in Costco Canada since we bought the company. So we're still optimistic about that, but Costco U.S. is kind of a different story. And then I think your second question was about online sales and the potential from kind of where we are. Is that right?

Yes, yes. Just you're kind of already hitting the $9 million to $10 million, and you still have some SKUs you haven't taken online yet.

Yeah, so there's – yeah, our focus has been, you know, obviously – Getting on the listings that were already set up so that there's a seamless transition from other people who are selling to us continuing to meet that need. Setting up new products on Amazon can take some time, and the main reason for that is Amazon, to their credit, actually, this is, I think, it's hard because we have to pay a lot of money, but it's a positive for the supplement industry as far as selling on Amazon. you have to get your products tested. You have to send them to a third party approved by Amazon. And then that third party sends the test results directly to Amazon, right? So that Amazon knows that what you say you're selling is actually what you're selling. So we have a number of products that are kind of in that testing phase and will hopefully be set up here pretty soon. Some of those products, again, have quite good wholesale distribution. So we're optimistic that that will see good uptake on Amazon. That said, in some cases, there are variations. So like Green Tea Fat Burner is a product we sell a lot of and, you know, across tens of thousands of stores in the United States. You know, some of the products we're setting up may be, you know, a size variation or a slight formula difference or something like that. We're out there selling Green Tea Fat Burner, but just not all of the different variations. You know, another potential upside, I have no idea how big it's going to be, is we're not yet selling on Amazon Canada. So Erwin has a number of products that are registered with Health Canada that are sold to retailers in Canada, a bunch of different retailers up in Canada. We're not selling anything up in Canada, but we're, I think, pretty close to being able to open a Canadian storefront. So I think there's still upside. I mean, the growth is slowing. I mentioned we went from kind of 500,000 or so in December Just kind of looking at the app here, it was kind of more than 600 in January and closer to 700 in February. And, you know, we'll probably be right around 800 for March. So we're still seeing growth, not as dramatic as we did in the early days. But I think, again, in the long run, we'll continue to see growth there. We are dealing with out-of-stocks on Amazon. We have, again, unfortunately some of our high-moving SKUs that we sell to very large retailers in the U.S. We're out of stock, and we don't send stock to Amazon if we're shorting kind of our biggest and most important customers. But in the long run, I think we'll get past that, and I think we'll see continued growth on Amazon, but I don't have a number that I can guide you to. Thank you. Yep. Thanks, Mace.

Thank you. And the next question is coming from Tyler Hill. Tyler is a private investor. Tyler, your line is live.

Hey, David. Thank you for taking me to this question. So, given the recent traffic headwinds for brands like Dr. Spias, how is the company pivoting its social or organic media strategy to guide, to help drive direct engagement outside of paid affiliates alone? Specifically, are you seeing any shift in improvements in the LVT or retention rates of the MRC portfolio compared to legacy brands?

I missed part of that last question. Have you seen any improvement in what?

Improvements in the customer lifetime value or retention rates within the MRC portfolio compared to the legacy brands.

Yeah, I haven't seen recent updates on that. Our challenge has not been... retention, although let me come back and talk about subscribers here in just a bit, because I think that might be an interesting point for some of you. It's really just, it's traffic, right? Like our conversion is the same or up almost across the board on our listings. So the challenge is traffic. But to your first question about, so what are we doing off Amazon? I've talked about TikTok. You know, I mentioned we've hired a new CMO. We've completely kind of restructured our kind of marketing team, actually centralized marketing because it was kind of embedded in kind of different brands and different kind of acquisitions that we've done. But, you know, we've got someone now, a couple people that are – we're doing a whole lot more on email marketing. We're doing a whole lot more on kind of Shopify, you know, our own websites. We're going to do a lot more. Erwin, we're doing a lot on social media advertising, right, if you're out there on Instagram or Facebook. Hopefully you're seeing Erwin ads. And if you're not, go to our website and then go back to Instagram and you'll probably start seeing ads, SMS. So it's still early days on a lot of that, but it's again, marketing 101, it's just stuff that we historically never had to do with Dr. Tobias, because it was an Amazon focused brand. I don't have anything to report, but if our hypothesis is correct, that off Amazon distribution will help on Amazon, then it would behoove us to be talking to some of the big retailers that we know about some of the Dr. Tobias products. We sell 10,000 plus units, probably more than that a week of Dr. Tobias and some Dr. Tobias products on Amazon. That's pretty good movement that some wholesale retailers may be interested in. Again, nothing to report. kind of given us any indication that they're bringing it in, but it's that type of stuff that we're looking at as we work to kind of get that brand back on track. You talked about kind of customer retention, so subscribers, I want to give maybe an update on that. I think I mentioned subscriber growth, at least for Erwin, right, is strong. It's scaling, in fact, very nicely, but I mentioned subscriber counts are down across the rest of the portfolio. I talked on our third quarter earnings call about that, right, that we had seen starting in late September subscribers across the board, literally every account declining. What we've kind of discovered since then is Amazon made a change where, you know, previously before the change, if you went to a product listing page on Amazon, much of the time the buy box defaulted to subscribe and save. In other words, the consumer didn't actively select, I want to subscribe to this product. Amazon, if they clicked add to cart and buy, they were subscribed. Amazon flipped the switch in, we think it was again, late September. And now if you go to any listing on Amazon, you will see that the default is kind of one-time purchase. So they were effectively, I'm not sure the right word to use. I don't want to say duping people, but they were People were unknowingly subscribing to products. And so that was resulting in, you know, as Amazon, as the platform was growing, as brands were growing, your subscriber count was growing. So that, and by the way, we've talked to a number of brands, lots of brands who sell on Amazon, and everyone is seeing kind of declines. You know, with Erwin, we're seeing increases, which is good. But, you know, that all went on to the platform after that change was made in September. So just kind of give you all an update on subscribers. So, Tyler, did that answer your question or do you have a follow-up? Yes.

So that was kind of the main question there and I wasn't sure, you know, how different the shift from the, you know, Amazon, you know, changes in their algorithm versus, you know, Google itself actually changing and how it's being addressed in multiple ways.

Yeah. I'm less familiar with any recent changes in Google and meta or social. just because we haven't done, we have advertised there in years past with other brands that it hasn't been a focus. But yet, you know, to the extent you see more ads from us on, on those platforms, they will either drive to our website or in some cases they will push to Amazon. Cause again, that's what Amazon is looking for is people that are bringing traffic to them and, and they'll reward you for that. In fact, they have a, I think it's called a brand referral bonus or something like that, where if the traffic is coming from off the Amazon platform, it's normally like a 15% for supplements, a 15% referral fee, a commission that you pay to Amazon. They'll give you a discount off of that if you bring traffic to them from off Amazon. So those are the dynamics at play right now. Thanks so much. Thank you.

Thank you. And there were no other questions from the lines at this time. I would now like to hand the call back to Dayton Judd for closing remarks.

Well, thank you all for joining the call and for your interest in FitLife. If you have any follow-up questions, feel free to reach out to us. Otherwise, we will talk to you all again here in a few weeks for our first quarter earnings call. Thank you.

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.