FitLife Brands, Inc. (OTCQB:FTLF), is an international provider of innovative and proprietary nutritional supplements for health conscious consumers. FitLife markets over 50 different dietary supplements to promote sports nutrition, improved performance, weight loss and general health primarily through domestic and international GNC® franchise locations. These products are marketed under the brand names:
- NDS Nutrition Products™ (ndsnutrition.com),
- PMD® (pmdsports.com)
- SirenLabs® (sirenlabs.com) and
- CoreActive® (coreactivenutrition.com).
Shares of FTLF are currently trading at a market cap of approximately $21 million, with an EV of approximately $20 million, representing a price-to-sales and EV-to-sales of 1x. It has a strong balance sheet, with a current ratio approaching 4x with $3.3 million in cash and only $2.75 million in debt. Officers and Directors have a significant equity ownership stake in shares of the Company, owning 11.8% of outstanding shares out of a total share count of 8.12 million.
On April 30, 2014 the Company announced its financial results for the first quarter ended March 31, 2014.
Highlights for the first quarter of 2014 include:
- Record revenue of $6.3 million, a 4.5% increase in comparison with the prior year.
- Quarterly results reflect annual revenue run-rate of $25.2 million.
- Operating income increased 53.6% to $0.9 million versus the prior year quarter.
- Operating margin increased by more than 450 basis points to 14.6% as compared to Q1 2013.
- Record quarterly net income of $1.0 million versus $0.6 million during the same period last year.
- Diluted earnings per share of $0.12 for the quarter versus $0.07 for the comparable quarter.
Commenting on the quarter, the company's CEO, John Wilson, made the following statements:
"We saw strong domestic demand particularly in the last month of the quarter, a portion of which was attributable to the inventory build-up by some of our customers in advance of our planned transition to GNC's centralized distribution platform. The move to this distribution platform is consistent with GNC's established vendor policies, reflecting our strong growth trend established over the last several years. We look forward to the continued expansion of this relationship," stated John Wilson, FitLife's Chief Executive Officer.
The Company also recently announced a new share repurchase program. At current levels, the program would enable the Company to purchase up to 5% of the public float over the next twelve months. "The initiation of a share repurchase program reflects our confidence in the fundamentals underlying our business, as well as the strength of our balance sheet and cash position," said John S. Wilson, Chief Executive Officer of FitLife Brands. "Management remains committed to maximizing shareholder value and the new repurchase program provides us with another means toward that goal," concluded Mr. Wilson.
We have been following FitLife Brands (f/k/a Bond Labs) for many years and have witnessed consistent growth trends and execution by management. The vitamin and supplement industry is a $13 billion industry growing at over 4% per annum, driven by the aging population and increasing concerns toward health. Over the past three years, cash flow from operations has increased from $105,000 to $582,000 to $2.6 million, representing a growth rate of 188% (OTCPK:CAGR). The company is currently trading at an attractive valuation and still has significant growth opportunities from international and corporate GNC stores. For aggressive investors seeking to participate in the surging health care/health supplements industry, shares of FTLF offer significant upside from current levels.
Paul Silver is the Managing Director of Research at Wall Street Resources. Previously he has been in auditing with a Big Four accounting firm in New York City, a sell-side research analyst for two global investment banks in New York City including Salomon Smith Barney and UBS Paine Webber. At Salomon Smith Barney he was a member of the firm's research team covering Real Estate Investment Trusts that was consistently ranked #1 by Institutional Investor magazine. Mr. Silver has written extensively on small cap equities and is a contributing writer to numerous publications is a co-manager of the WSR High Alpha model portfolio which has resulted in a 127.39% average annualized return from inception on March 13, 2009 through December 31, 2013. For more information visit: http://www.wallstreetresources.net/High_Alpha_Performance.aspx
Disclosure: The author is long FTLF.