Innovative Food Holdings, Inc. Reports 2022 Second Quarter Financial Results and Record Second Quarter Sales


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•  Total revenue up 47% year-over-year to a second quarter record of $20.5 million•  Specialty foodservice revenue increased 66% year-over-year to a second quarter record

BONITA SPRINGS, Fla., Aug. 23, 2022 (GLOBE NEWSWIRE) — Innovative Food Holdings, Inc. (OTCQB: IVFH) (“IVFH” or the “Company”), a leading end-to-end DTC eCommerce platform and direct-to-chef online platform that provides high-quality, unique specialty foods through eCommerce offerings and multichannel partnerships, reported its financial results for the second quarter of 2022.  

“The strong growth we are experiencing in specialty foodservice revenue is encouraging and helped IVFH produce record second quarter revenue. Positive momentum remains robust across our foodservice operations, including igourmet’s B2B business, as a result of continued re-opening activities and our ability to grow market share by providing unique specialty foods and excellent customer service to our customers. I am proud of our team’s hard work as we continue to successfully navigate unprecedented logistics, supply chain, and inflationary challenges. Second quarter and year-to-date sales also reflect the strength of our platforms as record foodservice revenue successfully offset normalizing eCommerce trends and industry wide changes impacting the effectiveness of digital marketing,” stated Sam Klepfish, CEO of Innovative Food Holdings.

“Overall, eCommerce trends remain significantly above pre-pandemic levels and we continue to improve our overall cost structure with a focus on driving long-term profitable growth within our eCommerce businesses. Second quarter profitability was impacted by several nonrecurring, one-time items affecting both our cost of goods sold and our SG&A expenses, including inventory adjustments and fees associated with our recent refinancing. Additionally, we implemented several actions towards the end of the second quarter and in the third quarter aimed at improving our marketing cost structure. This includes realigning our marketing strategies to improve our customer acquisition costs, while also doubling down on efforts to improve customer retention, and drive recurring and subscription revenues within our eCommerce business,” continued Mr. Klepfish.

“We believe our specialty foodservice assets are well positioned for revenue growth throughout 2022 and beyond, while we also navigate the rapidly changing digital marketing environment by continuing to focus on the customer experience within our eCommerce platform. We also continue to pursue an expanding number of organic, non-organic, and partnership opportunities, as well as additional B2B opportunities. We believe we are well positioned to leverage our specialty food direct-to-consumer eCommerce platform, which includes leading back-end logistics, fulfillment, and procurement capabilities, as well as our front-end digital infrastructure. Looking at the second half of 2022, I am excited by the direction we are headed as we focus on growing our business profitably,” concluded Mr. Klepfish.

Financial Results

Revenues in the 2022 second quarter increased 47% to a second quarter record of $20.5 million, compared to $14.0 million for the three months ended June 30, 2021. Second-quarter revenue benefited from a 66% increase in specialty foodservice revenue, which was partially driven by the nationwide opening of restaurants and other foodservice establishments previously affected by COVID-19, as well as strong increases in travel related foodservice. In addition, the Company’s unique supply chain capabilities continue to provide reliable, consistently high-quality specialty foodservice solutions for its customers. eCommerce revenue was $3.2 million, compared to $3.3 million for the same period last year primarily due to a decrease in COVID-19 driven demand in 2022 compared to 2021, and a more challenging digital marketing environment. For the first half of fiscal 2022, total revenue increased 38% to $36.2 million, compared to $26.2 million last year.

The following table sets forth IVFH’s revenue by business category for the three and six months ended June 30, 2022, and June 30, 2021 (unaudited):

    Three Months Ended
    June 30,2022   % of NetSales   June 30,2021   % of NetSales   %Change
Specialty Foodservice   $ 16,901,000   82 %   $ 10,161,000   73 %   66 %
eCommerce     3,185,000   16 %     3,285,000   23 %   -3 %
National Brand Management     252,000   1 %     265,000   2 %   -5 %
Logistics Services     185,000   1 %   $ 263,000   2 %   -30 %
Total IVFH   $ 20,523,000   100 %   $ 13,974,000   100 %   47 %
    Six Months Ended
    June 30,2022   % of NetSales   June 30,2021   % of NetSales   %Change
Specialty Foodservice   $ 28,442,000   79 %   $ 16,989,000   65 %   67 %
eCommerce     6,797,000   19 %     8,265,000   32 %   -18 %
National Brand Management     536,000   1 %     491,000   2 %   9 %
Logistics Services     391,000   1 %     411,000   1 %   -5 %
Total IVFH   $ 36,166,000   100 %   $ 26,156,000   100 %   38 %

For the 2022 second quarter, selling, general, and administrative (SG&A) expenses were $5.5 million, or 27% of revenue, compared to $4.7 million, or 33% of revenue for the same period last year. The $0.9 million increase in SG&A dollars was primarily due to higher advertising and marketing costs driven by an increasingly challenging digital marketing environment, including expanded privacy rules that significantly reduce data sharing and an increase in foodservice payroll to support higher sales, mostly offset by reductions in eCommerce related payroll. For the 2022 first six months, SG&A expenses were $10.7 million, or 30% of revenue, compared to $9.5 million, or 36% of revenue for the same period last year.

The Company recorded a GAAP net loss for the 2022 second quarter of $(1.2 million), or $(0.03) per share, compared to a GAAP net loss of $(0.9 million), or $(0.03) per share, in the prior year’s second quarter. For the first six months of 2022, the Company reported a net loss of $(2.5 million), or $(0.05) per share, compared to a net loss of $(2.8 million), or $(0.08) per share, for the first six months of 2021.

Cash used in operating activities for the 2022 second quarter was $384,000 an improvement of $996,000 compared to cash used in operating activities of $1.4 million for the same quarter a year ago. Furthermore, IVFH is on track to close its previously announced USDA loan guarantee. These USDA approvals will extend the Company’s current term loan to 30 years and will provide approximately $4.5 million of additional non-dilutive capital to the Company. According to the terms of the loan, uses include, but are not limited to, supporting the Company’s expansion strategies, and investments to support and enhance the Company’s specialty food, direct-to-consumer, and direct-to-chef platforms.

Adjusted net income, a non-GAAP metric (see table below), for the 2022 second quarter was a loss of $(0.4 million), or $(0.009) per share, compared to an adjusted net loss of $(0.8 million), or $(0.022) per share, for the same period last year. For the six months of 2022, adjusted net income was a loss of $(1.8 million), or $(0.038) per share, compared to an adjusted net loss of $(2.3 million), or $(0.063) per share, for the same period last year.

Cash EBITDA loss, a non-GAAP metric (see tables below), for the 2022 second quarter improved by over $0.4 million to $(0.1 million), compared to Cash EBITDA loss of $(0.6 million) in the prior year’s second quarter. For the 2022 first six months, Cash EBITDA was a loss of $(1.3 million), compared to an EBITDA loss of $(1.8 million) for the same period a year ago.

About Innovative Food Holdings, Inc. IVFH’s leading end-to-end direct-to-consumer e-commerce platform and direct-to-chef platform connect the world’s best artisan food makers with top chefs and epicurean consumers nationwide. Our unique ability to reach both specialty foodservice B2B customers and consumers positions IVFH as a compelling resource for artisanal food producers, CPG brands, chefs, and consumers. IVFH’s owned online retailer brands on its leading DTC e-commerce platform include www.igourmet.com and www.mouth.com

Additional information is available at www.ivfh.com

Forward-Looking StatementsThis release contains certain forward-looking statements and information relating to Innovative Food Holdings, Inc. (the “Company”) that are based on the current beliefs of the Company’s management, as well as assumptions made by, and information currently available to, the Company. Such statements reflect the current views of the Company with respect to future events and are subject to certain assumptions, including those described in this release. Should one or more of these underlying assumptions prove incorrect, actual results may vary materially from those described herein as “should,” “could,” “will,” “anticipate,” “believe,” “intend,” “plan,” “might,” “potentially” “targeting” or “expect.” Additional factors that could also cause actual results to differ materially relate to the global COVID-19 crisis, international crisis, environmental and economic issues and other risk factors described in our public filings. The Company does not intend to update these forward-looking statements. The content of the websites referenced above are not incorporated herein.

 
Innovative Food Holdings, Inc.Condensed Consolidated Balance Sheets
 
    June 30,     December 31,  
    2022     2021  
    (unaudited)          
ASSETS                
Current assets                
Cash and cash equivalents   $ 2,360,473     $ 6,122,671  
Accounts receivable, net     5,027,892       3,256,764  
Inventory     3,041,782       3,109,984  
Other current assets     340,702       314,107  
Total current assets     10,770,849       12,803,526  
                 
Property and equipment, net     8,090,295       8,186,227  
Investments     286,725       286,725  
Right of use assets, operating leases, net     184,003       232,381  
Right of use assets, finance leases, net     640,931       669,039  
Other amortizable intangible assets, net     51,656       72,218  
Goodwill and other unamortizable intangible assets     1,532,822       1,532,822  
Total assets   $ 21,557,281     $ 23,782,938  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities                
Accounts payable and accrued liabilities   $ 6,285,703     $ 5,702,905  
Accrued interest, current portion     43,535       29,349  
Deferred revenue     1,222,247       1,631,406  
Line of Credit     2,014,333       2,000,000  
Notes payable – current portion, net of discount     5,617,323       412,961  
Lease liability – operating leases, current     64,665       74,088  
Lease liability – finance leases, current     185,715       159,823  
Contingent liability – current portion     187,000       187,000  
Total current liabilities     15,620,521       10,197,532  
                 
Lease liability – operating leases, non-current     119,338       158,293  
Lease liability – finance leases, non-current     430,672       499,240  
Contingent liability – long-term     108,600       108,600  
Note payable – long term portion, net     4,720       5,409,172  
Total liabilities     16,283,851       16,372,837  
                 
Commitments & Contingencies (see note 17)                
Stockholders’ equity                
Common stock: $0.0001 par value; 500,000,000 shares authorized; 50,014,147 and 48,879,331 shares issued, and 47,176,567 and 46,041,751 shares outstanding at June 30, 2022 and December 31, 2021, respectively     4,997       4,885  
Additional paid-in capital     41,980,090       41,662,710  
Treasury stock: 2,623,171 and 2,623,171 shares outstanding at June 30, 2022 and December 31, 2021, respectively.     (1,141,370 )     (1,141,370 )
Accumulated deficit     (35,570,287 )     (33,116,124 )
 Total stockholders’ equity     5,273,430       7,410,101  
                 
Total liabilities and stockholders’ equity   $ 21,557,281     $ 23,782,938  
 
Innovative Food Holdings, Inc.Condensed Consolidated Statements of Operations(unaudited)
 
    For the Three     For the Six  
    Months Ended     Months Ended  
    June 30,     June 30,     June 30,     June 30,  
    2022     2021     2022     2021  
                                 
Revenue   $ 20,523,156     $ 13,974,564     $ 36,166,267     $ 26,155,463  
Cost of goods sold     16,074,259       10,165,144       27,991,438       19,044,058  
Gross margin     4,448,897       3,809,420       8,174,829       7,111,405  
                                 
Selling, general and administrative expenses     5,522,049       4,663,302       10,694,475       9,514,130  
Total operating expenses     5,522,049       4,663,302       10,694,475       9,514,130  
                                 
Operating loss     (1,073,152 )     (853,882 )     (2,519,646 )     (2,402,725 )
                                 
Other income (expense:)                                
Impairment of investment                       (209,850 )
Gain on interest rate swap                 294,000        
Loss on extinguishment of debt     (40,556 )           (40,556 )      
Other leasing income     2,294       1,900       7,384       7,040  
Interest expense, net     (112,372 )     (85,542 )     (195,345 )     (175,860 )
Total other income (expense)     (150,634 )     (83,642 )     65,483       (378,670 )
                                 
Net loss before taxes     (1,223,786 )     (937,524 )     (2,454,163 )     (2,781,395 )
                                 
Provision for income taxes                        
                                 
Net loss   $ (1,223,786 )   $ (937,524 )   $ (2,454,163 )   $ (2,781,395 )
                                 
Net loss per share – basic   $ (0.03 )   $ (0.03 )   $ (0.05 )   $ (0.08 )
                                 
Net loss per share – diluted   $ (0.03 )   $ (0.03 )   $ (0.05 )   $ (0.08 )
                                 
Weighted average shares outstanding – basic     46,855,525       35,872,143       46,557,498       35,729,807  
                                 
Weighted average shares outstanding – diluted     46,855,525       35,872,143       46,557,498       35,729,807  
 
Innovative Food Holdings, Inc.Condensed Consolidated Statements of Cash Flows(unaudited)
 
    For the Six     For the Six  
    Months Ended     Months Ended  
    June 30,     June 30,  
    2022     2021  
                 
Cash flows from operating activities:                
Net loss   $ (2,454,163 )   $ (2,781,395 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Impairment of investment           209,850  
Depreciation and amortization     279,735       271,973  
Amortization of right-of-use asset     35,162       49,700  
Amortization of prepaid loan fees     20,582       6,211  
Stock based compensation     367,492       315,380  
Loss on extinguishment of debt     40,556        
Provision for doubtful accounts     8,056       27,987  
                 
Changes in assets and liabilities:                
Accounts receivable, net     (1,779,184 )     (571,480 )
Inventory and other current assets, net     41,607       625,481  
Accounts payable and accrued liabilities     627,395       (1,035,849 )
Deferred revenue     (409,159 )     (1,937,141 )
Contingent liabilities           (8,000 )
Operating lease liability     (35,162 )     (49,700 )
Net cash used in provided by operating activities     (3,257,083 )     (4,876,983 )
                 
Cash flows from investing activities:                
Acquisition of property and equipment     (92,633 )     (12,686 )
Net cash used in investing activities     (92,633 )     (12,686 )
                 
Cash flows from financing activities:                
Payment of offering costs for stock previously issued     (50,000 )      
Proceeds from Payroll Protection Plan Loan           1,748,414  
Principal payments on debt     (167,001 )     (208,719 )
Principal payments financing leases     (85,176 )     (70,682 )
Cost of debt financing     (110,305 )      
Net cash provided by (used in) financing activities     (412,482 )     1,469,013  
                 
Decrease in cash and cash equivalents     (3,762,198 )     (3,420,656 )
                 
Cash and cash equivalents at beginning of period     6,122,671       5,060,015  
                 
Cash and cash equivalents at end of period   $ 2,360,473     $ 1,639,359  
                 
Supplemental disclosure of cash flow information:                
Cash paid during the period for:                
Interest   $ 128,798     $ 162,636  
Taxes   $     $  
                 
Non-cash investing and financing activities:                
Increase (decrease) in right of use assets & liabilities – operating leases   $ (13,216 )   $ 88,359  
Increase in right of use assets & liabilities – finance leases   $ 42,500     $  
Debt to Fifth Third Bank paid directly by MapleMark Bank   $ 7,695,866     $  
 
Innovative Food Holdings, Inc.Reconciliation of GAAP to NON-GAAP Measures Adjusted Net Loss, Adjusted Net Loss Per Share and Adjusted Cash EBITDA Calculations (unaudited)
 
  Three Months Ended(unaudited)   Six Months Ended(unaudited)
  June 30,2022   June 30,2021   June 30,2022   June 30,2021
Adjusted Net Loss and EPS (1)              
Revenue $ 20,523,156     $ 13,974,564     $ 36,166,267     $ 26,155,463  
Net loss   (1,223,786 )     (937,524 )     (2,454,163 )     (2,781,395 )
Amortization of intangible assets (2)   10,331       2,870       20,562       5,740  
One-time charges (3)   592,518             592,518       209,850  
One-time gain               (294,000 )      
Stock related expenses (4)   214,764       157,589       367,490       315,380  
Adjusted Net Loss $ (406,173 )   $ (777,065 )   $ (1,767,593 )   $ (2,250,425 )
                               
Weighted Avg. Shares Outstanding Diluted (5)   46,855,525       35,872,143       46,557,498       35,729,807  
                               
Adjusted Fully Diluted EPS $ (0.009 )   $ (0.022 )   $ (0.038 )   $ (0.063 )
               
  Three Months Ended(unaudited)   Six Months Ended(unaudited)
  June 30,2022   June 30,2021   June 30,2022   June 30,2021
Cash EBITDA (1)              
Net loss $ (1,223,786 )   $ (937,524 )   $ (2,454,163 )   $ (2,781,395 )
Interest expense, taxes & other income   150,634       83,642       228,517       168,820  
Depreciation & amortization   141,374       136,149       279,735       271,973  
One-time charges (3)   592,518             592,518       209,850  
One-time gain                (294,000 )      
Stock related expenses (4)   214,764       157,589       367,490       315,380  
Cash EBITDA $ (124,496 )   $ (560,144 )   $ (1,279,903 )   $ (1,815,372 )

 

(1) Adjusted Net Income and Cash EBITDA are each a non-GAAP metric. Management believes that the presentation of these non-GAAP financial measures provides useful information to investors because the information may allow investors to better evaluate ongoing business performance and certain components of the Company’s results. In addition, the Company believes that the presentation of these financial measures enhances an investor’s ability to make period-to-period comparisons of the Company’s operating results. This information should be considered in addition to the results presented in accordance with GAAP, and should not be considered a substitute for the GAAP results.
(2) Includes non-cash amortization charges related to assets acquired
(3) Charges that are non-recurring or one-time items include: inventory adjustment expenses of $316,666, $86,866 in digital marketing fees associated with a settlement of digital marketing fees to a service provider, and $188,986 in expenses associated with the MapleMark loan transaction.
(4) Includes stock and options-based compensation and expenses
(5) Full Year GAAP weighted fully diluted share count

 

Company Contact: Investor and Media Contact:
Ronit Wallerstein Andrew M. Berger
Investor Relations Managing Director
Innovative Food Holdings, Inc. SM Berger & Company, Inc.
(239) 449-3249 (216) 464-6400
[email protected] [email protected]

 

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Source: Innovative Food Holdings



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