FitLife Brands, Inc.

Good day, and welcome to the FitLife Brands first quarter 2026 earnings conference call. At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions and comments after the presentation. Should you wish to join the queue to ask a question at any time, you may press star 1 on your telephone keypad. 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. Sir, please go ahead.

Good afternoon. I'd like to welcome everyone to FitLife's first quarter 2026 earnings call. We appreciate you taking the time to join us this afternoon. Joining me on the call is FitLife's EVP, Ryan Hansen, and FitLife's CFO, Jacob York. I will start by providing some general commentary about the first quarter of 2026. For the first quarter of 2026, total revenue was 25.3 million, an increase of 59% compared to the same quarter last year. With the increase driven primarily by the acquisition of Erwin, partially offset by weakness in legacy fit life. Wholesale revenue was $14.1 million, or 56% of revenue, an increase of 166% compared to the first quarter of 2025. Online revenue was $11.2 million, or 44% of total revenue, an increase of 6% compared to the first quarter of 2025. Gross margin was 37.6%, compared to 43.1% during the first quarter of 2025. The decline in gross margin is primarily due to the acquisition of Erwin, which has historically operated at a lower gross margin than Legacy FitLife. Gross margins increased sequentially for both Legacy FitLife and Erwin for the first quarter of 2026 compared to the fourth quarter of 2025. We expect Erwin's margins to continue to increase over time as we work through a number of supply chain and other initiatives. Contribution, which we define as gross profit, less advertising and marketing expense, increased 42% driven primarily by the addition of Erwin, partially offset by lower contribution from Legacy FitLife. Net income for the first quarter of 2026 was $1.7 million, compared to 2.0 million during the first quarter of 2025, with the decline driven primarily by higher amortization expense and interest expense associated with the acquisition of Irwin. Adjusted EBITDA was 3.3 million, a 3% decrease compared to the first quarter of 2025. With regard to brand level performance, I'll start with Legacy FitLife. Total legacy FitLife revenue for the fourth quarter of 2025 was $12.5 million, of which 70% was from online sales and 30% was from wholesale customers. This represents a 28% year-over-year decrease in wholesale revenue and an 18% year-over-year decrease in online revenue, or a 22% decrease in total revenue. The declines were primarily attributable to lower online revenue for MRC and lower wholesale revenue from GNC. The year-over-year wholesale comparison for Legacy FitLife was particularly challenging due to the restocking of GNC's distribution centers during the first quarter of 2025, following the resolution of the previously disclosed commercial dispute that resulted in the company stopping shipments to GNC. Gross margin for Legacy FitLife declined from 43.1% in the first quarter of 2025 to 41.2% in the first quarter of 2026. However, gross margin for Legacy FitLife increased sequentially from 40.7% in the fourth quarter of 2025 to 41.2% in the first quarter of 2026. Contribution for Legacy FitLife declined 27% to $4.3 million, and contribution as a percentage of revenue decreased to 34.1% compared to 36.5% in the same quarter of 2025. Sequentially, contribution was approximately flat from the fourth quarter of 2025 to the first quarter of 2026, with contribution as a percentage of revenue increasing from 32.5% to 34.1% over the same time period. Moving on now to Irwin, total Irwin revenue for the first quarter was $12.8 million, of which $10.3 million, or 80%, came from wholesale customers, and 20% came from online sales. Gross margin for Irwin for the first quarter was 34.0%, and contribution as a percentage of revenue was 31.3%. As previously mentioned, we began selling Erwin products on Amazon in mid-October, and the business scaled nicely throughout the fourth quarter of 2025, reaching almost $500,000 of revenue in December of 2025. Amazon revenue continued to climb throughout the first quarter of 2026, reaching approximately $800,000 in March of 2026. Adjusting for the loss of Costco US and Rite Aid as customers prior to our acquisition of Erwin, and removing CBD for both periods due to the company's decision to exit the CBD market, organic revenue for Erwin during the first quarter of 2026 declined approximately 13% year over year. We estimate that approximately 1 to 1.5 million, or more than half of the decline, is due to lost revenue from the out-of-stock situations discussed on our previous earnings call. Now, let me provide a few additional high-level comments and some forward-looking remarks, and then we can move into Q&A. Regarding the balance sheet, we made a scheduled amortization payment of approximately $1.5 million during the first quarter, bringing our term loan balance to $37.6 million. We also paid down an additional $1.4 million on our revolving line of credit during the first quarter, bringing the balance to $4.2 million. We intend to continue to deploy excess free cash flow to further reduce indebtedness. Although the first quarter was challenging, we are encouraged that monthly revenue increased sequentially throughout the quarter. In addition, many of our Amazon selling accounts showed sequential improvement late in the quarter and into April. We are also encouraged by the continued growth of Erwin's Amazon business, with revenue in April reaching approximately 900,000. Although the pace of growth is slowing, Erwin's Amazon account has continued to experience sequential growth in the May month-to-date period. We believe Erwin is positioned for further growth on Amazon as we continue to resolve the out-of-stock situations, successfully set up listings for the remaining products that have not yet been available for sale on Amazon, and launch our portfolio of Canadian products on Amazon Canada later in the second quarter. The subscriber count for Erwin products on Amazon also continues to scale rapidly. increasing from approximately 500 at the beginning of the first quarter of 2026 to approximately 3,600 as of the end of the first quarter of 2026 to over 5,700 today. Last, we are excited to announce the launch of two MusclePharm SKUs in several hundred Kroger stores nationwide beginning in June. So this concludes my opening commentary, and we can now go ahead and open the call up for questions.

Thank you. The floor is now open for questions. If you would like to join the queue to ask a question at this time, please press star 1 on your telephone keypad. We do ask if listening on speakerphone this afternoon that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star 1 on your keypad at this time if you wish to join the queue to ask a question. Please hold a moment while we poll for questions. And the first question today is coming from Ryan Myers from Lake Street Capital Markets. Ryan, your line is live. Please go ahead.