• 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 Net Sales | June 30, 2021 | % of Net Sales | % 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 Net Sales | June 30, 2021 | % of Net Sales | % 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 Statements
This 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 |
| rwallerstein@IVFH.com | andrew@smberger.com |
