Q1 2025 FitLife Brands Inc Earnings Call

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Operator: Good day and welcome to the FitLife Brands first quarter 2025 financial results conference call. At this time, all participants have been placed on a listen only mode.

Speaker Change: Good day and welcome to the fit life Brands' first quarter 2025 financial results Conference call. At this time, all participants have been placed on listen only mode and the floor will be opened for questions and comments. Following the presentation. It is now my pleasure to turn the floor over to your host Dayton, Judd Chief Executive Officer asset life.

Operator: The floor will be open for questions and comments following the presentation.

Operator: It is now my pleasure to turn the floor over to your host, Dayton Judd, Chief Executive Officer at FitLife Brands.

Dayton Judd: Sir, the floor is yours. Thank you, Paul. I would like to welcome everyone to FitLife's first quarter 2025 earnings call. We appreciate you taking the time to join us this afternoon. Joining me on this call is FitLife's CFO, Jacob York, and FitLife's EVP, Ryan Hanson. 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.

Speaker Change: Friends, sorry, the floor is yours.

Dayton Judd: Thank you Paul I would like to welcome everyone to fit lifes first quarter 2025 earnings call.

Speaker Change: We appreciate you taking the time to join US this afternoon.

Dayton Judd: Joining me on this call is fit life's CFO, Jacob York and fit Life's E V P. Ryan Hansen.

Dayton Judd: As we typically do I will provide some opening commentary to get US started and then we'll open the call up for Q&A.

Dayton Judd: My opening remarks will be a bit more brief than on previous calls since we provided a fairly specific preview of our first quarter performance during our fourth quarter earnings call at the end of March. As a reminder, the company affected a two for one forward stock split on February the 7th 2025. All per share amount in our 10Q press release and discussion today have been retroactively adjusted. to account for the forward split. For the company overall for the first quarter of 2025, total revenue declined 4% year over year to $15.9 million. Online sales were $10.6 million or 67% of total revenue.

Dayton Judd: My opening remarks will be a bit more brief than on previous calls since we provided a fairly specific a preview of our first quarter performance during our fourth quarter earnings call at the end of March.

Dayton Judd: As a reminder, the company effected a two for one forward stock split on February the seventh 2025.

Dayton Judd: All per share amounts in our 10-Q press release and discussion today have been retroactively adjusted to account for the forward split.

Dayton Judd: For the company overall for the first quarter of 2025 total revenue declined 4% year over year to $15 9 million.

Dayton Judd: Online sales were $10 6 million or 67% of total revenue.

Dayton Judd: Gross profit declined 6% and gross margin declined from 44% in the first quarter of last year to 43.1% in the first quarter of 2025. Contribution, which we define as gross profit, less advertising and marketing expense, declined 4% to $5.8 million. Net income for the first quarter of 2025 was $2 million, compared to $2.2 million during the first quarter of 2024. basic earnings per share declined from 23 cents last year to 22 cents this year. Diluted earnings per share declined from 21 cents last year to 20 cents this year. As is evident in our income statement, the company incurred fairly significant M&A related expense during the first quarter of 2025.

Dayton Judd: Gross profit declined 6% and gross margin declined from 44% in the first quarter of last year to 43, 1% in the first quarter of 2025.

Dayton Judd: Contribution, which we define as gross profit less advertising and marketing expense declined 4% to $5 8 million.

Dayton Judd: Net income for the first quarter of 2025 was $2 million compared to $2 2 million during the first quarter of 2024.

Dayton Judd: Basic earnings per share declined from 23 cents last year to 22 cents this year.

Dayton Judd: Diluted earnings per share declined from 21 cents last year to 20 cents this year.

Dayton Judd: As is evident in our income statement the company incurred fairly significant M&A related expense during the first quarter of 2025.

Dayton Judd: including the impact of that M&A expansion. Net income and earnings per share would have been the same as or higher than the prior Adjusted EBITDA for the first quarter of 2025 was $3.4 million.

Dayton Judd: Excluding the impact of that M&A expense net income and earnings per share would have been the same as or higher than the prior year.

Dayton Judd: Adjusted EBITDA for the first quarter of 2025 was $3 4, million% to 6% decrease compared to the first quarter of 'twenty 'twenty four.

Dayton Judd: a 6% decrease compared to the first quarter of 2024. With regard to the balance sheet, the company ended the quarter with $12 million outstanding on its term loans and no balance on its $3.5 million revolving line of credit. Considering our cash of $6 million, outstanding at the end of the first quarter. Net debt was $6 million, which is equivalent to approximately 0.4 times the company's adjusted EBITDA of $13.9 million for the past 12 months.

Dayton Judd: With regard to the balance sheet. The company ended the quarter with 12 million outstanding on its term loans and no balance on its $3 $5 million revolving line of credit.

Dayton Judd: Considering our cash of 6 million outstanding at the end of the first quarter.

Dayton Judd: Net debt was $6 million, which is equivalent to approximately 0.4 times the company's adjusted EBITDA of $13 9 million for the past 12 months.

Dayton Judd: With regard to brand-level performance, I'll start with Legacy FitLife. Total Legacy FitLife revenue for the first quarter of 2025 was $7.3 million, of which 63% was from wholesale customers and 37% was from online sales. This represents a 2% year-over-year increase in wholesale revenue. and an 11% year-over-year increase in online revenue. or a 5% increase in total revenue. Gross margin increased to 44.6% compared to 42.1% during the first quarter of 2024. Contribution increased 11% to $3.2 million. contribution as a percentage of revenue increased to 43.4% compared to 40.9% in the same quarter last year.

Dayton Judd: With regard to brand level performance I'll start with legacy fit life.

Dayton Judd: Total legacy CIT life revenue for the first quarter of 2025 was $7 3 million of which 63% was from wholesale customers and 37% was from online sales.

Dayton Judd: This represents a 2% year over year increase in wholesale revenue and an 11% year over year increase in online revenue.

Dayton Judd: Or a 5% increase in total revenue.

Dayton Judd: Gross margin increased to 44, 6% compared to 42, 1% during the first quarter of 2024.

Dayton Judd: Contribution increased 11% to $3 2 million and contribution as a percentage of revenue increased to 43, 4% compared to 49% in the same quarter last year.

Dayton Judd: Moving on now to the brands acquired in the Mimi's Rock transaction or MRC. Total MRC revenue for the first quarter of 2025 was $6.7 million, down 11% from the previous MRC's gross margin declined to 45.4% for the first quarter of 2025 compared to 47% during the first quarter of 2024. The primary reason for the gross margin decline is product... Contribution declined 9% to $2.2 million, with contribution as a percentage of revenue increasing from 32.8% last year to 33.5% during the first quarter of 2025. Revenue for the largest brand, Dr. Tobias, declined 11%, while revenue for the skincare brands declined 14%, or 9% on a constant currency basis.

Dayton Judd: Moving on now to the brands acquired in the Mimi's rock transaction or MRC.

Dayton Judd: Total MRC revenue for the first quarter of 2025 was $6 7 million down 11% from the previous year.

Dayton Judd: <unk> gross margin declined to 45, 4% for the first quarter of 2025 compared to 47% during the first quarter of 2024.

Dayton Judd: The primary reason for the gross margin decline is product mix.

Dayton Judd: Contribution declined 9% to $2 2 million with contribution as a percentage of revenue increasing from 32, 8% last year to 33, 5% during the first quarter of 2025.

Dayton Judd: Revenue for the largest brand Doctor Tobias declined 11%, while revenue for the skincare brands declined 14% or 9% on a constant currency basis.

Dayton Judd: Last, when we begin breaking out the detailed financial performance of acquired brands in our 10 Qs, 10 Ks and press release. We indicated that the company intended to provide that level of disclosure for a period of no more than two years, after which the performance of acquired brands would be reported as part of Legacy FitLife. We completed the acquisition of MRC during the first quarter of 2023, so this is the last quarter we will provide the detailed financial breakdown. However, when relevant, we will continue to provide certain financial or operational metrics on the performance of specific brands.

Dayton Judd: Laughed when we began breaking out the detailed financial performance of acquired brands in our 10, Qs 10, Ks and press releases.

Dayton Judd: We indicated that the company intended to provide that level of disclosure for a period of no more than two years after which the performance of acquired brands would be reported as part of legacy fit life.

Dayton Judd: We completed the acquisition of MRC during the first quarter of 2023. So this is the last quarter, we will provide the detailed financial breakdown.

Dayton Judd: However, when relevant we will continue to provide certain financial or operational metrics on the performance of specific brands.

Dayton Judd: With regard to MusclePharm, total MusclePharm revenue declined 6% during the first quarter, with wholesale revenue declining 41% and online revenue increasing 33%. MusclePharm's gross margin declined from 40% last year to 30.1% during the first quarter of 2025. As previously disclosed in the fourth quarter of 2024, the company began investing in increased promotion in an attempt to drive increased sales of muscle farm products. This investment in increased promotions primarily consisted of increased marketing allowances to wholesale customers. Under GAAP, these marketing allowances are accounted for as a price reduction which lowers reported net revenue and gross profit, and therefore gross margin.

Dayton Judd: With regard to muscle farm total muscle farm revenue declined 6% during the first quarter with wholesale revenue declining, 41% and online revenue increasing 33%.

Dayton Judd: Muscle farms gross margin declined from 40% last year to 31% during the first quarter of 2025.

Dayton Judd: As previously disclosed in the fourth quarter of 2024. The company began investing in increased promotion in an attempt to drive increased sales of muscle farm products.

Dayton Judd: This investment and increased promotions, primarily consisted of increased marketing allowances to wholesale customers.

Dayton Judd: Under GAAP. These marketing allowances are accounted for as a price reduction, which lowers reported net revenue and gross profit and therefore gross margin.

Dayton Judd: In addition, the company has invested in higher marketing and advertising. support of the MusclePharm product. The company intends to continue investing in promotional support for the foreseeable future, although the timing and amounts may vary. As previously disclosed, the decline in wholesale revenue during the first quarter of 2025 was primarily due to a large wholesale customer that took advantage of the company's promotional investment during the fourth quarter of 2024 without increasing their sell through of the product, which affected their reorder volumes during the first quarter of 2025. As we indicated in the press release, purchases from this customer have increased more recently, with their purchase volumes thus far during the second quarter exceeding those of the entire first quarter.

Dayton Judd: In addition, the company has invested in higher marketing and advertising spend in support of the muscle form products.

Dayton Judd: The company intends to continue investing in promotional support for the foreseeable future.

Dayton Judd: Although the timing and amounts may vary.

Dayton Judd: As previously disclosed the decline in wholesale revenue during the first quarter of 2025 was primarily due to a large wholesale customer.

Dayton Judd: That took advantage of the company's promotional investment during the fourth quarter of 2024 without increasing their sell through of the product which affected their reorder volumes during the first quarter of 2025.

Dayton Judd: As we indicated in the press release purchases from this customer have increased more recently with their purchase volumes, thus far during the second quarter exceeding those of the entire first quarter.

Dayton Judd: Now let me provide a few additional high-level comments, and then we can move into Q&A. As you are likely aware, the tariff environment continues to be uncertain, with tariffs on ingredients from China being our primary concern. Fortunately, there was a 90-day de-escalation announced recently, which is obviously encouraging for us. As previously disclosed, when the tariff noise started, we opportunistically increased some of our finished goods and raw materials inventory. at pre-tariff prices. So you can see inventory at an all-time high as of the end of the first quarter of 2025. Again, I reiterate that these increases are intentional, and we expect to be able to free up some cash from our inventory balance.

Dayton Judd: Now let me provide a few additional high level comments and then we can move into Q&A.

Dayton Judd: As you are likely aware the tariff environment continues to be uncertain with tariffs on ingredients from China being our primary concern.

Dayton Judd: Fortunately there was a 90 day D escalation announced recently, which is obviously encouraging for us.

Dayton Judd: As previously disclosed when the tariff noise started we opportunistically increased some of our finished goods and raw materials inventories at pre tariff prices. So you can see inventory at an all time high as of the end of the first quarter of 2025.

Dayton Judd: Again, I reiterate that these increases are intentional and we expect to be able to free up some cash from our inventory balances once the dust settles.

Dayton Judd: once the dust settles. Our balance sheet is strong and continues to get stronger. As of quarter end, our total leverage net of cash was approximately 0.4 times adjusted EBITDA and it is lower now due to incremental cash generated thus far during the second quarter.

Dayton Judd: Our balance sheet is strong and continues to get stronger.

Dayton Judd: As of quarter end, our total leverage net of cash was approximately 0.4 times adjusted EBITDA and it is lower now due to incremental cash generated thus far during the second quarter.

Dayton Judd: Earlier in my remarks, I mentioned some elevated M&A related expense. We have frequently and regularly indicated that we will be active in this regard. Spend has increased substantially in our pursuit of one or more possible transactions. I obviously cannot comment further on this other than to acknowledge the expense. And I caution everyone that increased spend may not always result in a successful transaction.

Dayton Judd: Earlier in my remarks, I mentioned, some elevated M&A related expense.

Dayton Judd: We have frequently and regularly indicated that we will be active in this regard.

Dayton Judd: Spend has increased substantially in our pursuit of one or more possible transactions.

Dayton Judd: I, obviously cannot comment further on this other than to acknowledge the expense and I caution everyone that increased spend may not always result in a successful transaction.

Dayton Judd: Yeah.

Dayton Judd: Another question we frequently receive from investors relates to the number of customers that have active subscriptions to the company's product. As of about a week ago, we had approximately 104,000 active subscribers. and customers on subscription presently account for approximately 30% of the company's online revenue. with the amount ranging between 25% and 35% depending on the brand.

Dayton Judd: Another question, we frequently receive from investors relates to the number of customers that have active subscriptions to the company's products.

Dayton Judd: As of about a week ago, we had approximately 104000 active subscribers.

Dayton Judd: And customers on subscription presently account for approximately 30% of the company's online revenue with the amount ranging between 25% and 35% depending on the brand.

Dayton Judd: Last, based on analysis and commentary we have received from a number of investment banks We believe that FitLife will likely be added to the Russell 2000 Index next month. April 30th was the ranking day for purposes of the Russell 2000 Index Reconstitution. On that day, our market capitalization was around $140 million. and according to the analysis communicated to us by multiple investment banks. The estimated market cap threshold for inclusion in the Russell 2000 Index ranges from $95 million to $118 million. This is obviously outside of our control, but we wanted to share the perspectives of the investment bank.

Dayton Judd: Last based on analysis and commentary we have received from a number of investment banks.

Dayton Judd: We believe that fit life will likely be added to the Russell 2000 Index next month.

Dayton Judd: April 30th was the ranking day for purposes of the Russell 2000 Index reconstitution.

Dayton Judd: On that day, our market capitalization was around $140 million.

Dayton Judd: And according to the analysis communicated to us by multiple investment banks, the estimated market cap threshold for inclusion in the Russell 2000 index ranges from 95 million to $118 million.

Dayton Judd: This is obviously outside of our control, but we wanted to share the perspectives of the investment banks since inclusion in the index would potentially be a positive catalyst for the stock.

Dayton Judd: since inclusion in the index would potentially be a positive catalyst for the stock. Russell is scheduled to formally announce the preliminary index additions and deletions the evening of May the 23rd. with possible revisions happening prior to the actual rebalance. occurring on June the 27th.

Dayton Judd: Russell is scheduled to formally announce the preliminary index additions and deletions the evening of May the 23rd.

Dayton Judd: With possible revisions happening prior to the actual rebalancing occurring on June 27th.

Dayton Judd: Last, as has historically been our practice, we will not be providing formal, forward-looking guidance. However, I do want to take a moment to briefly comment on what we've seen since the end of the first quarter. Total company revenue and adjusted EBITDA were up year over year in the month of April. despite the Dr. Tobias brand declining at a similar rate year over year as we observed in the first quarter. While we are encouraged by April's performance, those results may not be representative of the rest of the second quarter due to the timing of POs from certain wholesale customers as well as other factors.

Dayton Judd: Last as it has historically.

Dayton Judd: Storage <unk> been our practice, we will not be providing formal forward looking guidance.

Dayton Judd: However, I do want to take a moment to briefly comment on what we've seen since the end of the first quarter.

Dayton Judd: Total company revenue and adjusted EBITDA were up year over year in the month of April Despite the Doctor Tobias brand declining at a similar rate year over year as we observed in the first quarter.

Dayton Judd: While we were and are encouraged by April's performance. Those results may not be representative of the rest of the second quarter due to the timing of P. OS from certain wholesale customers as well as other factors.

Operator: So that concludes my opening commentary, and Paul, you can go ahead and poll for questions. Certainly, at this time we will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your telephone 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, please press star 1 on your phone at this time if you wish to ask a question. Please hold while we poll for questions.

Dayton Judd: So that concludes my opening opening commentary and Paul you can go ahead and poll for questions.

Dayton Judd: Certainly at this time, we'll be conducting a question and answer session. If you have any questions or comments. Please press star one on your telephone at this time.

Dayton Judd: He asked about posing your question you. Please pickup your handset if listening on speaker phone to provide optimum sound quality.

Dayton Judd: Once again, please press star one on your phone at this time, if you wish to ask a question. Please.

Dayton Judd: Please hold while we poll for questions.

Ryan Meyers: The first question today is coming from Ryan Meyers from Lake Street Capital Markets. Ryan, your line is live. Hey guys, thanks for taking my questions. You know, first one for me and Dayton, I know you're not providing guidance, but if we think back to last quarter, you guys did give some commentary that you expect to at least grow revenue and EBITDA for the year. So, you know, not asking to reiterate that, but have you seen any changes over the, you know, first quarter, first quarter, sorry, in the first month of April that would think or that would cause you to, you know, change that expectation?

Dayton Judd: And our first question today is coming from Ryan Meyers from Lake Street Capital markets. Ryan Your line is live.

Ryan Meyers: Hey, guys. Thanks for taking my questions.

Ryan Meyers: First one for me and Dave and I know, you're not providing guidance, but if we think back to last quarter. You guys did give some commentary that you expect to at least grow revenue and EBITDA for the year, so not asking to reiterate that but have you seen any changes over the fourth quarter first quarter sorry in the first month of April that would be.

Ryan Meyers: Thank God that would cause you to change that expectation.

Dayton Judd: No, and yeah, I'm happy to reiterate that. I guess I don't view that as formal guidance, like we're not giving a revenue number, or an EBITDA number for the full year. But yeah, our hope and expectation would be that we deliver organic revenue growth for the company overall in 2020.

Ryan Meyers: No and yeah look I'm happy to reiterate that I guess I don't view that as formal guidance like we're not giving a revenue number or an EBITDA number for the full year, but yeah, our hope and expectation would be that we deliver organic revenue growth for the company overall in 2025.

Dayton Judd: Okay, got it. And then just, you know, thinking about where margins for the year can look quarter on quarter, you know, there was obviously some mixed dynamics that impacted the margins here in the first quarter. But you know, maybe any commentary on how we should think about margins for the rest of this year? Um, not specific, like I don't have a number for you. Obviously, you can see in the tables that we provided, where we, you know, break it out by by groupings of brand, right? Muscle Farm, there's been an intentional investment that started in Q4 and continued in Q1.

Ryan Meyers: Okay got it and then just thinking about where margins for the year can look quarter on quarter. You know there was obviously some mixed dynamics that impacted the margins here in the first quarter.

Ryan Meyers: But maybe any commentary on how we should think bard thinking about margins for the rest of this year.

Ryan Meyers: Not specific like I don't have a number for you. Obviously you can see in the tables that we provided where we break it out by by groupings of brand right Mussel farm Theres been an intentional investment that started in Q4 and continued in Q1.

Dayton Judd: You know, Q1 was, you know, closer to 30%, whereas Q4, I think was around 25%. So, you know, as long as we're continuing to try and invest in Muscle Farm and drive some growth for that brand, you know, something around, that 30% level is probably realistic. On the, you know, Mimi's Rock side, that kind of fluctuates between, I don't know, 44 and 47%, roughly, depending on again, product mix, we have some products that are higher margin than others, and we like when those are outperforming, but it sometimes moves against us as well. On the legacy FitLife side, we tend to be historically in the low 40s there.

Ryan Meyers: Q1 was closer to 30%, whereas Q4 I think it was around 25%. So you know as long as we're continuing to try and invest in muscle farm in and drive some growth for that brand something around that 30% level is probably realistic.

Ryan Meyers: On the debt you know mimi's rock side that kind of fluctuates between yeah.

Ryan Meyers: 44, and 47% roughly depending on again product mix, we have some products that.

Our higher margin than others, and we like when those are outperforming in but you know sometimes moves against us as well.

Ryan Meyers: On the legacy fit life side, we tend to be historically in the low forties there.

Dayton Judd: We did a bit better in Q1, so we're seeing much stronger online growth for the legacy FitLife products. Online is the most profitable part of our business. We're earning retail gross margins as opposed to wholesale. So as we shift more of legacy FitLife revenue from wholesale to online, not that we're looking to move it from wholesale to online, but as we grow more online relative to wholesale, we should benefit from some margin expansion there. The other thing I'll point out for legacy FitLife gross margins, because they were materially higher in Q1 relative to some previous quarters.

Ryan Meyers: We did a bit better in Q1, so we're seeing much stronger online growth for the legacy fit life products.

Ryan Meyers: Online is the most profitable part of our business and we're earning retail gross margins as opposed to wholesale.

Ryan Meyers: So as we as we shift more of legacy fit life revenue from wholesale to online not that we're looking to move it from wholesale to online, but as we grow more online relative to wholesale.

Ryan Meyers: We should benefit from some margin expansion there.

Ryan Meyers: The other thing I'll point out for legacy fit life gross margins because they were you know.

Ryan Meyers: Materially higher in Q1 relative to some previous quarters.

Dayton Judd: We talked last quarter about the... challenges we had with GNC during the fourth quarter, which trickled a little bit into the first quarter. And as you probably recall, one of our approaches to deal with that was to ship directly to the GNC franchisees, for example, when we were not shipping to GNC corporate. When we ship directly to the franchisees, that's at a higher price than where we were selling to GNC corporate. So, a little bit of the bump in Q1 is due to higher pricing. We're also incurring higher expense there, in terms of the logistics and the fulfillment.

Ryan Meyers: We talked last quarter about the chat.

Ryan Meyers: Challenges, we had with GNC during the during the fourth quarter, which trickled a little bit into the first quarter and as you probably recall one of our approaches to deal with that was to ship directly to the GNC franchisees for example, when GNC corporate when we were not shipping to GNC corporate.

Ryan Meyers: But when we ship directly to the franchisees right that's at a higher price than where we were selling to GNC corporate so a little bit of the bump in Q1 is due to higher pricing were also incurring higher expense there in terms of the logistics and fulfillment.

Dayton Judd: But hopefully that gives you some color. I don't think there's anything dramatically different going on other than the intentional investments on the muscle farm side. We've kind of historically guided that gross margins are generally in the 42 to 45-ish percent range for the company overall, depending on, again, mix and promotions.

Ryan Meyers: But hopefully that gives you some color like I don't think there's anything dramatically different going on other than the intentional investments on the muscle farm side.

Ryan Meyers: We've kind of historically.

Ryan Meyers: Did that gross margins are.

Ryan Meyers: Generally in the 42 to 45 ish percent range for the company overall, depending on again mix and promotions and other other things like that.

Dayton Judd: other people. Okay. Got it. And then just the last question for me on the topic of muscle farms. So, you know, you called out the wholesale revenue was down. There was kind of that pull forward in orders, but I think you also called out that you didn't, you know, subsequently see a lot of reorders heading into the quarter. So just, you know, any dynamics to call out there, maybe how has that business begun to perform at the wholesale level? Are they seeing strong, you know, end customer demand, but any commentary there would be helpful. Sure.

Ryan Meyers: Got it and then just the last question for me on the topic of muscle farm. So you know you called out the wholesale revenue was down there was kind of that pull forward in orders, but I think you also called out that you didn't you know subsequently see a lot of reorders heading into the quarter.

Speaker Change: So just any dynamics to call out there or maybe how has that business began to perform at a wholesale level or are they seeing strong end customer demand, but any commentary there would be helpful. Sure. So it's a mixed bag there are some customers that.

Dayton Judd: So it's a mixed bag. There are some customers that, you know, we are certainly supporting and giving promotional support to that is showing very clear end consumer lift, right? Where it's having the desired effect, right? The promotional discounts are converting into higher units. uh... there are others like the one that we called out last quarter where that wasn't the case where we we gave pretty substantial discounts and you know that they they would say that they they spent the money uh... and, but maybe just didn't get the desired result, right? It's hard for us to know, right?

Ryan Meyers: No. We are we are certainly supporting and giving promotional support to that is showing very clear.

Ryan Meyers: And consumer left right, where we're where how is having the desired effect right. The promotional discounts are.

Ryan Meyers: Converting into higher unit movement.

Ryan Meyers: There are others like the one that we called out last quarter, where that wasn't the case, where we gave pretty substantial discounts and.

Ryan Meyers: They they would say that they they spent the money.

Ryan Meyers: And but maybe it just didn't get the desired result, right. It's hard for us to know right, what what people do and what they don't do we don't have the ability to audit. It. So some customers may choose to just take it in terms of higher margin for themselves well, if they do that right or if we give them promotional spend promotional support and it's not effective.

Dayton Judd: What people do and what they don't do. We don't have the ability to audit it. So some customers may choose to just take it in terms of higher margin for themselves. Well, if they do that, right? Or if we give them promotional spend, promotional support, and it's not effective, you know, the net result of that is they don't get it anymore, right? So that particular customer, which is a good customer and important customer for us, the promotional discounts they're getting now, and that they received in the first quarter and they continue to receive in the second quarter quite a bit lower than they got in the fourth quarter.

Ryan Meyers: The net result of that is they don't get it anymore right. So that that particular customer, which is a good customer and an important customer for us right the promotional discounts they're getting now.

Ryan Meyers: And that they received in the first quarter and they continue to receive in the second quarter quite a bit lower than they got in the fourth quarter. So it's a little bit like look we'll help you out if you can drive volume, but if we help you out and you don't then you know you don't get it anymore. So it's it's a mixed bag in there. There's some that are where we're seeing the investment translate to two unit movement in there.

Dayton Judd: So it's a little bit like, look, we'll help you out if. drive volume, but if we help you out and you don't, then, you know, you don't get it anymore. So it's a mixed bag, and there's some that are where we're seeing the investment translate to unit movement, and there's others where we don't, and, you know, as a result of that, we work. you know, different customers will get different promotional support based on their ability to. To.

Ryan Meyers: Others, where we don't and as a result of that we work.

Ryan Meyers: Different customers will get different promotional support based on their ability to to increase movement.

Dayton Judd: Got it.

Operator: Thank you for taking my questions. Yep.

Speaker Change: Got it. Thank you for taking my questions Yep. Thank you.

Sean McGowan: And the next question will be from Sean McGowan from Roth Capital Partners. Sean, your line is live. Thank you. Thanks for taking the question, Dayton. A couple of questions to tie into what you were just talking about. And then a couple of unrelated questions.

Speaker Change: Thank you and the next question will be from Sean Mcgowan from Roth Capital Partners, Sean Your line is live.

Sean McGowan: Yeah. Thank you thanks for taking the question.

Speaker Change: Couple of questions to tie into what you were just talking about a couple of.

Unrelated question, so any update on what the situation is with that major customer with GSA incorporated has there been any change there.

Dayton Judd: So any update on what the situation is with that major customer with GMC Corporate? Has there been any change there? No change. I mean, that was resolved in January during the first quarter. We called that out in the first quarter call, the impact, or sorry, the fourth quarter call that we did in March. We called out the impact on the fourth quarter and the impact on the first quarter and the fact that we were shipping direct. So I think it was like third or fourth week of January when that was resolved. And then it was just a matter of getting shipments into their distribution network.

Speaker Change: No no change not saying I mean that was Laurie that was resolved and really the in January during the first quarter, we called that out in the first quarter call the impact or sorry, the fourth quarter call that we did in March.

Speaker Change: We called out the impact on the fourth quarter and the impact on the first quarter and the fact that we were shipping direct so I think it was like third or fourth week of January when that was resolved and then it was just a matter of getting shipments into their distribution network and you know that happened within a couple of weeks and you know what.

Dayton Judd: And that happened within a couple of weeks. And it's been kind of off to the races since then. So I would characterize our relationship as very, very positive. They have been very constructive with us and us with them. If anything, we're happy with the levels of inventory they're carrying now, which is certainly, in our view, better than it was late last year. So.

Speaker Change: It's been not kind of off to the races. Since then so I would characterize our relationship is very very positive.

Speaker Change: They have been very constructive with us and us with them and.

Speaker Change: If anything we're happy with the levels of inventory, they're carrying now which is certainly in our view.

Speaker Change: Then it was late last year so.

Sean McGowan: Everything is good from our perspective in our relationship. Okay, thank you.

Speaker Change: Everything is good from our perspective, and our relationship with GNC.

Dayton Judd: And then back on on Muscle Farm. So your way you account for that promotion is a reduction in the sales price. So it affects revenue. Can you give us an idea kind of on an apples to apples basis, like maybe volume or units, you know how that how Muscle Farm compared to the first quarter of 24? Yeah, I don't have that in front of me. Again, it's going to be it's account specific. So we have like one account in particular, and I obviously can't can't give names, but where, you know, we're providing additional support, and we see continued growth.

Speaker Change: Okay. Thank you.

Speaker Change: Back on muscle Fob.

Speaker Change: So the way you account for that promotion is a reduction of the sales price. So it affects revenue can you give us an idea of kind of on an apples to apples basis, like maybe volume or unit.

Speaker Change: I'll muscle farm compared to the first quarter of 'twenty four.

Speaker Change: Yeah, I don't have that in front of me again, it's going to be it's account specific so we have like one account in particular and I, obviously can't can't give names, but where you.

Speaker Change: You know we are providing additional support and we see continued growth.

Dayton Judd: And there's others where it's that that's not the Yeah, and the accounting is exactly like you described. You know, for example, we might offer a 10% off invoice discount that is intended to be used for promotional support. The way the accounting works under GAAP is that support is recorded as a reduction in revenue for us. Right? Our gross revenue, if we sold $100 worth of product, our gross revenue would be $100, but our net revenue would be $90. In addition to that, so that's where you see maybe revenue not as high, perhaps, or it's really you see it in the lower gross margin because our costs are the same, but the revenue is, again, call it 10% lower.

Speaker Change: And there's others, where it's that that's not the case.

Speaker Change: Yeah, and the accounting is exactly like you described the.

Speaker Change: For example, we might offer at 10% off invoice discount.

Speaker Change: That is intended to be used for promotional support the way the accounting works under GAAP.

Speaker Change: Is that support is recorded as a reduction in revenue for US right. Our gross revenue if we sold a $100 worth of product our gross revenue would be 100, but our net revenue would be 90.

Speaker Change: In addition to that so that that's where you see you know maybe revenue not as high perhaps or it's really you see it in the in the lower gross margin.

Speaker Change: Because our costs are the same but the revenue is again call it 10% lower.

Dayton Judd: You also notice, I think, in Q4, slightly elevated advertising and marketing expense, and then even more in Q1. And so in addition to giving some of those promotional discounts to customers, we're also spending more of our money on advertising and marketing. Right. Okay.

Speaker Change: You'll also notice I think in Q4.

Speaker Change: Slightly elevated advertising and marketing expense and then even more in Q1. So in addition to giving some of those promotional discounts to customers. We're also spending more of our money on on advertising and marketing.

Speaker Change: Right. Okay. So is it fair to ask what the gross to gross comparison would be on muscle problem.

Sean McGowan: So is it fair to ask what the gross to gross comparison would be on muscle farm? What do you mean by gross-to-gross? Gross revenue in Q1 of 25 compared to gross revenue in the first quarter of 24. Sure, it would, but I actually don't have it in front of me. Yeah, it's going to be down clearly, right? Because I think what I say our wholesale was down. We're at numbers, I think, what, 40-something percent, right? There's that issue with the one customer that didn't reorder for much of Q1.

Speaker Change: What do you mean by gross to gross.

Speaker Change: <unk> revenue in Q.

Speaker Change: 125 compared to gross revenue.

Speaker Change: First quarter of 'twenty, four I'm sure it would but I actually don't have it in front of me, but.

Speaker Change: Yeah, it's gonna be down clearly right because I think what I say, our wholesale was down.

Speaker Change: Round numbers I think what 40 something percent right, there's that issue with the one customer.

Speaker Change: It didn't reorder for much of Q1.

Dayton Judd: It'd probably be a bit more relevant to look at Q2, maybe, versus Q4 or Q2, but again, I don't have those numbers in front of me, but I can certainly connect with you after the fact. Okay.

Speaker Change: It would probably be a bit more relevant to look at it Q2, maybe versus Q4 Q2, but again I don't have those numbers in front of me, but I will I can certainly connect with you after the fact.

Sean McGowan: I'll move on. A couple of other things.

Speaker Change: I'll move on a couple of other things.

Speaker Change: Oh, yes.

Dayton Judd: Can you tell us the status of the various new product launches that we discussed a month ago or so, or more than that, at our conference, the beverage and bars? How's that going? Yeah. So, I mean, the bars continue to, you know, those were coming up on, I think, close to a year, although we did launch two new flavors of those. I'm trying to think if there's any, like in the last few weeks, any new customers that have brought those in. But we've had decent sell-in of those into some convenient, you know, again, regional convenience store chains, regional grocers, none of the big accounts yet, continue to do fairly well online.

Speaker Change: Can you tell us the status of the various new product launches that we discussed.

Speaker Change: A month ago, or so or more than that at our conference the beverage and bars like how's that going yeah. So the I mean, the bars continue to to those were coming up on I think close to a year. Although we did launched two new flavors of those.

Speaker Change: I'm trying to think if there's any like in the last few weeks any new customers that have brought those in but we've had decent sell in of those into some convenient again regional convenience store chains regional grocers, none of the big accounts yet.

Speaker Change: Continue to do fairly well online.

Dayton Judd: uh...

Dayton Judd: the beverages for the ready to drink protein again that that's a much much more recent launch i think that was towards the end of march Again, I have to be careful because some people don't let us say their names, but certainly all the major distributors have picked it up, so there's a couple of... big distributors, one called Muscle Foods and one called Europa that does distribution of sports nutrition products. So they you know, they they have ordered it. We have some international customers that have brought it in. There are a number of gyms that have brought it in and are selling a kind of you know, in their coolers in the gym for for people that go there.

Speaker Change: The beverages, so the ready to drink protein again that that's a much more recent launch I think that was towards the end of March.

Speaker Change: Again, I have to be careful because some people don't.

Speaker Change: Let us say their names, but I mean, certainly all the major distributors have picked it up so there's a couple of big distributors, one called muscle foods, and one called Europa that does distribution of sports nutrition products. So they you know they they have ordered it.

Speaker Change: We have some international customers that have brought it in there are number of gyms that have brought it in and are selling a kind of during their coolers in the gym for for people that go there.

Dayton Judd: Again, I probably can't say names, but there's some. big gyms in Venice Beach, for example, that if somebody were to walk in there, they should see our RTDs in the cooler. So we think that, we think we have an amazing product. If you haven't tried these, we'd encourage you to try them.

Speaker Change: Again I.

Speaker Change: Can't say names, but there's some.

Speaker Change: Big Gyms in Venice Beach for example that if somebody were to walk in there they should see our RT DS in the cooler so but we think that we think we have an amazing product. If you haven't if you haven't tried these we'd encourage you to try them.

Dayton Judd: In our product development here, we did multiple rounds of development, but we also did blind taste tests with kind of non-employees with potential customers of our products. We've got a vanilla, a chocolate, and a salted caramel. And we did kind of blind taste tests with pretty much everything else in the market. And occasionally people have maybe different preferences, but for the most part, ours were pretty highly favored. So we think we've got a good product. It's just a matter of now trying to get the sell-in going and sell through.

Speaker Change: In our product development here, we did multiple rounds of development, but we also did blind taste tests with kind of non employees with potential customers of our products that we've got a vanilla or chocolate in our salted caramel and we did kind of blind taste tests with pretty much everything else in the market and you know occasionally people have.

Speaker Change: Maybe different preferences, but for the most part are ours, we're pretty highly favored so we think we've got a good product. It's just a matter of now trying to to get the sell in going in and sell through.

Dayton Judd: Okay, so it sounds like it wouldn't have had much of an impact in first quarter revenue. But you know, sometimes with these new products, there's a bit of a loading period and you know, that may be a lull before reorders kind of pick up. So would you expect second quarter sales of the beverage product to be higher than the first quarter? Yeah, I would expect them to be higher in Q2. I think I mean, Q1, I don't have the date in front of me, but I'm going to guess it was like mid March or something like that when, when we kind of received them when we finished production.

Speaker Change: Okay.

Speaker Change: Sounds like it wouldn't have had much of an impact in first quarter revenue, but sometimes with these new products.

Bit of a loading period, and then maybe a lull before reorders to kind of pick up. So would you expect second quarter sales of the beverage product can be higher than the first quarter. Yeah, I would expect them to be higher in Q2, I think I mean Q1 I don't have the date in front of me, but I'm going to guess it was like mid March or something like that when when we kind of proceed them. When we finished production.

Dayton Judd: So yeah, there wasn't there wasn't a whole lot in Okay, and my last question is, I thought there was an exclusion on tariffs for certain kind of supplements and wellness products that covered vitamins, etc. Are your products not benefiting from that exemption? Some are and some aren't. So there are a number of exclusions, so pretty much all vitamins, all minerals have exclusions. We've been told that certain, like the creatine has an exclusion. There's a document, I can't remember what it's called, a government document that lists what's excluded. I mean, so certainly like in our multivitamins and whatnot, we don't expect to see much impact there.

Speaker Change: So yeah, there wasn't there wasn't a whole lot in Q1 for those okay.

Speaker Change: And my last question is I thought there was an exclusion on tariffs for a certain kind of supplement.

Speaker Change: Well, there's products that covered vitamins et cetera are you.

Speaker Change: Products not so.

Speaker Change: Benefiting from that exemption.

Speaker Change: Some are and some aren't so there are a number of exclusions, so pretty much all vitamins all minerals have exclusions.

Speaker Change: We've been told that certain like that Korea has an exclusion there's a document I can't remember what it's called the government documents that lifts what's excluded.

Speaker Change: So certainly like in our multi vitamins and whatnot, we don't expect to see much impact there, but there are a number of ingredients that we use quite a bit like carnitine. As one example that is not excluded so it's very much on a case by case basis.

Dayton Judd: But there are a number of ingredients that we use quite a bit, like carnitine is one example, that is not excluded. So it's very much on a case-by-case basis. And I can't remember if I shared this previously, but we've looked at all of our major products, our biggest products, and had our manufacturers essentially reprice them or tell us what the cost impact would be based on the products, the ingredients that are subject to tariff and what the... with us today. So it's kind of a 0 to 10% impact, depending on the product. And so it's not the end of the world by any stretch, but it's certainly not a positive thing to have.

Speaker Change: And you know that.

Speaker Change: I can't remember if I shared this previously but we we've looked at all of our major products, our biggest products and had our manufacturers essentially repriced them or tell us what the cost impact would be based on the products that the ingredients that are subject to tariffs and what the.

Speaker Change: Tariff amount is.

Speaker Change: And you know the impact ranges from about zero per cent impact again for some of our products, where they're not subject to tariffs and you know at the high end. It was you know a possible 10 or 11% increase right because it's not everything that's in these products is subject to the tariffs and a lot of the cost is componentry or labels right, which is coming from onshore and allowed.

Speaker Change: On the cost as you know the manufacturers charge, which again is coming from onshore. So it's kind of a zero to 10% impact depending on the product in and yeah. So as I said, it's not the end of the world by any stretch, but it's it's certainly not a positive thing to have these tariffs.

Sean McGowan: Okay, all right, thank you very much. That's it for me. Thank you.

Speaker Change: Okay Alright. Thank you very much that's it for me. Thank you Yep. Thank you Sean.

Operator: Thank you, Sean. Thank you and once again it will be star one on your phone if you wish to ask a question today.

Speaker Change: Yeah.

Speaker Change: Thank you and once again it will be star one on your phone if you wish to ask a question today.

James Bogin: And the next question is coming from James Bogin from Legend Capital. James, your line is live. Hi, good afternoon. I'm the other analyst focused on muscle farm, which is what I was going to So I don't know if there's anything else to say about it. I'm always fascinated that it used to sell over $150 million worth of goods, and now it's 5 million running rate per year. So I'm just wondering what your long-term hopes or prospects for that might be. And just a bigger picture, what are your goals? I mean, you bought this company when it was a dollar, just a basis.

James Boggan: And the next question is coming from James Boggan from legend capital James Your line is live.

Speaker Change: Hi, good afternoon.

Speaker Change: Sure.

Speaker Change: Analysts focused on muscle farm, which was what I was going to do so I don't know if there's anything else anything else to say about it I'm always fascinated that it used to sell over $150 million worth of goods and now it's $5 million running rate per year. So I'm just wondering what your long term hopes are prospects for that might be and just a bigger bigger.

Speaker Change: Picture.

Speaker Change: What are your goals.

Speaker Change: Bought this company when it was a dollar adjusted basis. It's now $29 mm do you are you going to Bill do you want to build an Empire do you want to be acquired by Unilever, where where you're going with this thing and over what time period. Thank you.

Dayton Judd: It's now $29. Are you going to build... Do you want to build an empire? Do you want to be acquired by Unilever?

Dayton Judd: Where are you going with this thing, and over what time period? Yeah, two very big, broad questions. I'll do my best to answer. So on Muscle Farm, so yeah, I think, again, I don't have the numbers right here in front of me. Like, we're certainly not, maybe we're at a 5 million run rate based on the current quarter. Let me just see. Yeah, more or less, 4 million, 5 million. In Q1, net revenue was, it looks like we're at 2 million. So that's 2 million for one quarter. So yeah, that, you know, it was, look, when we bought this, it was under 10.

Speaker Change: Yeah, two very.

Speaker Change: Broad questions I'll I'll do my best to answer so on on muscle farm. So yeah, I think again I don't have the numbers right in front me like I said, we're certainly not maybe we're at a $5 million run rate based on the current quarter. Let me just see we did a more or less.

Speaker Change: Yes.

Speaker Change: In Q O Q1, net revenue was it looks like we're at 2 million. So that's 2 million care when I order so.

Speaker Change: So yeah that is.

Speaker Change: Well look when we bought this it was under 10 and on a run rate basis again based on Q1, we're under 10 again, we think we'll do better.

Dayton Judd: And on a run rate basis, again, based on Q1, we're under 10. Again, we think we'll do better. What I would, the way I would characterize the situation is, It certainly had a lot of brand awareness. A lot of money was spent kind of building this brand. I would say that we are certainly disappointed that we have not been able to grow it much more than we have. Obviously, we haven't done much to try and grow it until the last couple of quarters. We were focusing on getting it in stock and develop. They had dwindled their product portfolio very substantially, right down to something like 15 products.

Speaker Change:

Speaker Change: What what I would.

Speaker Change: The way I would characterize the situation is it certainly had a lot of brand awareness a lot of money was spent kind of building this brand.

Speaker Change: I would say that we are certainly disappointed that we have not been able to grow with much more than we have obviously, we we havent done much to try and do to grow it and tell you know the last couple of quarters right. We were focusing on getting it in stock in certain developed like they had they had dwindled their product portfolio very.

Speaker Change: Substantially right down to something like 15 products, so things like getting the bars back in stock working on the ready to drink right. So we kind of fix the product portfolio, we kind of changed the branding.

Dayton Judd: So things like getting the bars back in stock, working on the ready-to-drink, right? We kind of fixed the product portfolio. We kind of changed the branding and the packaging, right? And now we're out there trying to sell it. I think I would say that we probably underestimated the extent to which this brand was impaired by the bankruptcy that it went through. And certainly our hope was to be able to grow it, and we certainly hope still that we will be able to. When we do these deals, particularly for a distressed brand, the way we like to do the math is if we don't grow it, if we're not successful at growing it, we want it to still be a good acquisition.

Speaker Change: And the packaging right and now we're out there trying to sell it I think.

Speaker Change: I would say that we probably underestimated.

Speaker Change: The extent to which this brand was impaired by the bankruptcy that it went through I see and certainly our hope was to be able to grow it and we certainly hope still that we will be able to.

Speaker Change: When we do these deals, particularly for distress brand the way, we like to do the math is.

Speaker Change: If we if we don't grow it right. If we're not successful at growing it we want it to still be a good acquisition.

Dayton Judd: So that, you know, I think I used the analogy on the last earnings call, you know, heads we win and tails we win a lot, right? So we're still in kind of the heads we win scenario. In fact, if we decided to flip off all of the, you know, turn off all of the marketing and the promotional discounting, right, like you can look back and see, you know, there were quarters last year where we made more money than we're doing now, right? Because of the investments we're making and growth. So I'm not a quarter guy, but if it if it doesn't, if it doesn't pan out what we're doing, right, we can just dial back.

Speaker Change: So that you know I think I use the analogy on the last earnings call. You know heads we win tails. We went a lot right. So we're still in kind of a hedge we win scenario in fact, if we if we decided to to flip off all of the <unk>.

Speaker Change: Turn off all of the marketing and the promotional discounting right. Like you can you can look back and see you know there are quarters last year, where we made more money than we're doing now right because of the investments we're making in growth so I'm not a quarter guy, but if it if it doesn't if it doesn't pan out what we're doing right. We can just dial back and even if this is primarily an online brand right now about.

Dayton Judd: And even if this is primarily, you know, an online brand right now, about 50 percent of the revenue is online, right? You know, this is a brand that can throw off, you know, a decent amount of cash at a, you know, mid single digit multiple in terms of what we paid for it, right, if we're not able to get it to grow. Again, our goal was to get it to grow, and it's been a bit of a challenge, right?

Speaker Change: 50% of the revenues online right. This.

Speaker Change: You know this is a brand that can throw off you know a decent amount of cash at a mid single digit multiple in terms of what we paid for it right. If we're not able to get it to grow again, our goal was to get it to grow and it's been a bit of a challenge right I think we acknowledge that and yes. So so that's what I would say about muscle.

Dayton Judd: I think we acknowledge that, and so that's what I would say about MusclePharm. Your other question about what's the long game here? What's the strategy? You know, look, I'd love to be acquired by Unilever. I don't think that's going to happen. We think, and I think we've been consistent in saying this. There is a tremendous opportunity to scale and to consolidate in the nutritional supplement space. It's an incredibly fragmented. depending on the size of the acquisition, right? We could do a big acquisition at a compelling multiple, there'd be decent SG&A savings, right? And we think in many cases we can run these brands better than some of the maybe previous owners.

Speaker Change:

Speaker Change: Your other question about what's the long game here, what's the strategy.

Speaker Change: Look I'd love to be acquired by Unilever, I don't think that's going to happen.

Speaker Change: We think and I think we've been consistent in saying this.

Speaker Change: There is a tremendous opportunity to scale and to consolidate in the nutritional supplement space its an incredibly fragmented industry.

Depending on the size of the acquisition right we could do.

Speaker Change: A big acquisition at compelling multiple there'd be decent SG&A savings right and we think in many cases, we can run these brands better than than some of the maybe previous owners.

Dayton Judd: In terms of smaller acquisitions, there's a very significant increment between kind of EBITDA to the previous owner and us. Um, you know, Muscle Farm is, Mimi's Rock would be an example of one that is more like, again, a bigger acquisition where we inherited employees and an office and stuff like that. And so it's not like you, you cut all of the SG&A and you just bolted on, right? But Muscle Farm was one where I think we've commented before, there's one employee that we brought on from the Muscle Farm team, right? So it literally all of the incremental gross profit from that brand, right?

Speaker Change: In terms of smaller acquisitions, there's a very significant increment between kind of EBITDA two two the previous owner and us.

Speaker Change: Mussel farm is mimi's rock would be an example of one that is more like again, a bigger acquisition, where we inherited employees in an office and stuff like that and so it's not like.

Speaker Change: You you cut all of the SG&A and you just bolted on right, but mussel farm was one where I think we've commented before there's one employee that we brought on from the muscle farm team right. So it literally all of the incremental gross profit from that brand right minus one employee plus any again advertising spend that we choose to make.

Dayton Judd: Minus one employee plus any, again, advertising spend that we choose to make, you know, and maybe a little bit of legal expense. You know, the incrementality is pretty significant. So we think, you know, we're not in the eighth or ninth inning, yeah, it's probably time to sell the business. And we think that there would be people that would be interested, whether they're strategic, again, it's probably not Unilever, maybe it is, that'd be nice. But maybe private equity or something like that. But for now, you know, we think it's more like the fifth or sixth inning.

Speaker Change: And maybe a little bit of legal expense.

Speaker Change: The incremental it he is pretty significant so.

Speaker Change: We think you know we're not in the AA, if we're in the eighth or ninth inning, yeah, It's probably time to sell the business and we think that there would be people that would be interested whether there are strategic again, it's probably not the unilever maybe it is that'd be nice.

Speaker Change: It may be private equity or something like that but for now we think it's more like the fifth or sixth inning.

Dayton Judd: there's plenty of M&A to do. So we think M&A is the biggest opportunity. You can see that in terms of how we're spending our time. And to a certain extent, you can see it in the M&A expense line item on the income statement. Right.

Speaker Change: There's plenty of M&A to do so we we think M&A is the biggest opportunity you can see that in terms of how we're spending our time and to a certain extent you can see it in the M&A expense line item on the income statement right.

Dayton Judd: Thank you very much, much appreciated. Thank you.

Speaker Change: Okay. Thank you very much yeah, that's I.

James Boggan: Appreciate it thank you James.

Samir Patel: And the next question will be from Samir Patel from Escalade Capital. Samir, your line is live. Hey, Dayton, just following up on that last question. I think previously, we've discussed that the multiples you typically see are maybe, you know, six, seven times for really good rapidly growing businesses, you know, south of that for businesses that aren't as attractive. You know, with the understanding that you obviously can't comment on a specific transaction, is that still consistent with the valuation multiples that you're kind of seeing out there for prospective deals? Yes, that's fairly consistent.

Speaker Change: Thank you and the next question will be from Samir Patel from Africa, Latin capital Sameer Your line is lives.

Speaker Change: Hey, Dayton just following up on that last question I think previously we've discussed that the multiples you typically see or maybe you know six seven times for really good rapidly growing businesses south of that for businesses that aren't as attractive.

Speaker Change: With the understanding that you obviously can't comment on any specific transaction is that still consistent with the valuation multiples that you're kind of seeing out there for prospective deals yes, it's fairly consistent.

Dayton Judd: Okay, thanks.

Samir Patel: That's all. All right, thanks.

Samir: Okay. Thanks, that's all alright, thanks Samir.

Operator: Thank you.

Speaker Change: Thank you and the next question will be from William Anderson from Bard Associates. William Your line is last yeah, I'm just curious how the vitamin Shoppe, a pilot program with muscle farm pro is going any readout Sir.

William Anderson: And the next question will be from William Anderson from Bard Associates. William, your line is live. Yeah, just curious how the Vitamin Shap pilot program with MusclePharm Pro is going. Any readouts there? Yeah, we do. We do have some readouts. I think, you know, it's going well. We wish it were going better. We don't know. It's still going. And we are seeing improvements kind of week over week. It was a little bumpy at the start in terms of getting the product to the store shelves. It was supposed to be there, I think, on shelf. And it started arriving on shelf around March 15th.

Speaker Change: Yeah, we do we do have some readouts I think.

It's going well, we wish it were going better we don't know if it's still going and we are seeing improvements kind of week over week.

Speaker Change: It was a little bumpy at the start in terms of getting the product to the store shelves that was supposed to be there I think I'm on shelf and it started arriving on shelf around March 15th.

Dayton Judd: But it was actually closer to early April before all of the stores had the product.

Speaker Change: But it was actually closer to early April before all of the stores have the product. So we're.

Dayton Judd: So that's a great example, by the way, of kind of what we're doing and how we're spending. I mean, we're doing ads on streaming services. I think we have something like 1.5 million views of. these ads that are on you know anything from Hulu to whatever like if you live within I can't remember it's three or five miles of a vitamin shop store that is carrying these products And you watch streaming. Hopefully, you've seen our ads. So we're doing a fair amount of spending. And you can see that reflected in the numbers as well to try and make that successful.

Speaker Change: That's a great example, by the way of kind of what we're doing and how we're how we're spending I mean, we are you were doing ads on streaming services I think we have something like 1.5 million views of.

Speaker Change: Of these ads that are on you know anything from Hulu to whatever like if you live with it and I can't remember, it's three years or five miles of a vitamin shoppe store that is carrying these products.

Speaker Change: And you watch streaming hopefully you've seen our ads so.

Speaker Change: So we're doing a fair amount of spending and you can see that reflected in the numbers as well to try and make that successful, but it's still early days like the.

Dayton Judd: But it's still early days. Like, I think the intent at the beginning was it'd be a two-month trial. I think we're talking about something longer than that now, given the. you know, the bumpy start in terms of the products getting to store shelves. So we're still, you know, still there, still selling and still marketing, but hope to have more of a formal readout on that. certainly as part of our next. Right. Okay. Just curious. Thank you very much. Yeah, thank you.

Speaker Change: I think the intent at the beginning was it would be a two months trial I think we're talking about something longer than that now given the.

Speaker Change: You know the the bumpy start in terms of the products getting to store shelves. So we're still it's still they're still selling and still marketing, but hope hope to have more of a formal readout on that.

Speaker Change: Certainly as part of our next earnings call.

Speaker Change: Right.

Speaker Change: Just curious thank you very much.

Speaker Change: Yeah. Thank you.

Operator: Thank you, and if there were any other questions at this time, please press star 1 on your phone. And there were no other questions from the lines at this time.

Speaker Change: Thank you and if there were any other questions at this time. Please press star one on your phone.

Speaker Change: And there are no other questions from the lines at this time.

Speaker Change: Yeah.

Operator: All right, well, thank you all for joining our first quarter conference call. We look forward to speaking with you again in about three months. 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.

Speaker Change: Alright, well. Thank you all for joining our first quarter conference call. We look forward to speaking with you again in about three months. Thank you.

Speaker Change: 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.