FitLife Brands (FTLF) investor relations material

Business model and growth history

• Owns 16 nutritional supplement and wellness brands; capital-light model owns brands and IP, outsources manufacturing, and sells through online, wholesale, retail, and GNC franchise channels.

• Online sales represent about half of revenue; major retail and wholesale outlets include Walmart, CVS, Walgreens, Costco Canada, Sprouts, Fresh Thyme, and Whole Foods.

• After revenue fell to $16.2 million and EBITDA turned negative, online sales growth helped restore revenue and positive EBITDA, repay debt, and build cash.

• Acquisitions included Nutrology in 2021, MRC in 2023, MusclePharm in 2023, and Irwin Naturals; Irwin roughly doubled the business.

• LTM revenue exceeded $100 million and LTM EBITDA exceeded $14 million, including almost a full year of Irwin Naturals.

Capital allocation and shareholder alignment

• Cash flow from existing brands funds acquisitions; deals are paid for in cash, with debt used for acquisitions and then aggressively repaid.

• No shares have been issued for acquisitions; 9.4 million shares were outstanding on a fully diluted basis, with total shares including options below 10 million.

• CEO ownership was 60% fully diluted and 56.4% of currently outstanding shares; other insiders also hold shares.

• The portfolio is a fragmented-market consolidation play; acquisitions are sought at 3x-6x cash flow, with synergy-adjusted cash flows targeted to rerate at 12x-14x EBITDA.

• Four deals closed after reviewing 75+ NDAs over roughly five years; recent targets presented were often declining, and none of the roughly two dozen deals reviewed in the past year was growing.

Margin and operating improvements

• Irwin Naturals lowered blended gross margin to the mid-30s to high-30s from low-40s before the acquisition; adjusted EBITDA margin had reached 20% previously.

• Irwin historically discarded over $1 million, near $2 million, of product annually; formulas were transitioned to three-year shelf life, extending sellable time from 12 to 24 months.

• Inventory benefits will build as old stock cycles through, with full monetization expected over the next one to two years.

• Fulfillment and transportation changes reduced costs, with impact expected beginning in Q3 and more in Q4; SG&A savings and headcount adjustments were also implemented.