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CST: 22/07/2019 14:13:49   

Innovative Food Holdings, Inc. Reports Financial Results For 2018

96 Days ago

Revenue for 2018 Increased 28% to a Record $53 Million
Fourth Quarter Revenue up 67% to a Record $18 Million
Acquisitions Exceed Expectations and Contributed to 2018 e-commerce Revenue of over $9 Million, or 17% of Total Revenue
Addition of Leading Specialty Food e-commerce Assets Significantly Enhances Specialty Food Platform Capabilities

BONITA SPRINGS, Fla., April 17, 2019 (GLOBE NEWSWIRE) -- Innovative Food Holdings, Inc. (OTCQB: IVFH), (“IVFH” or “the Company”) an interconnected platform of specialty food companies that provides chefs and consumers direct access to the highest quality specialty food products across the U.S., today reported its financial results for the fourth quarter and full year of 2018.

“I am extremely pleased with 2018’s record revenues and favorable financial results, as well as the strong momentum we achieved in the fourth quarter,” stated Sam Klepfish, CEO of Innovative Food Holdings.  “2018’s results reflect our compelling direct-to-chef food services business and the significant growth of our interconnected platform of specialty food companies.  We have been focused on reinvesting our operating cash flow back into our business and during the year made two strategic and complementary acquisitions of certain assets of iGourmet LLC (www.igourmet.com) and Mouth Foods, Inc. (www.mouth.com) to further expand our platform.  Both acquisitions have exceeded our expectations, added important e-commerce capabilities, and accelerated the development of our interconnected platform.  We also added experienced associates throughout our organization including; marketing, branding, procurement, IT, creative, financial, data analytics and e-commerce talent.  In addition, we invested in new business opportunities including a key focus of leveraging our unique multi-faceted specialty food platform to build and launch a portfolio of branded products.”

“Our business strategy leverages the experience, relationships and scale of our core foodservice business, which allows us to identify disruptive opportunities across the food industry.  As a result, we have developed a diversified data driven business strategy focused on expanding e-commerce opportunities that resonate with our customers.  We believe these additional channels and go-to-market approaches are highly synergistic to our overall business, diversify our revenue mix, and can drive rapid and profitable revenue growth.  I am pleased with the initial success we have experienced in 2018 as e-commerce sales represented 17% of total revenue in 2018, compared to 1% of total revenue in 2017. Specialty food e-commerce is both a key component of our platform and an important driver of our growth plans and I am encouraged by the strong momentum underway in this channel.” 

“I appreciate our shareholders’ patience through this period of investment and transformation.  Across our organization our highly talented and expanded team has been working extremely hard to build unique, well positioned, and compelling direct-to-chef and direct-to-consumer businesses as well as working towards the launch of our line of high-quality branded specialty food products.  2018’s results reflect the initial foundation of the expanded platform we have created, and we believe we are well positioned for long-term sustainable growth.  Now that we have accomplished key components of our business transformation, we plan on expanding our engagement with investors and I look forward to significantly increased investor interaction as the year progresses.” 

IVFH’s revenue increased to nearly $18.0 million during the three months ended December 31, 2018, compared to $10.8 million for the three months ended December 31, 2017.  The primary drivers of the 67.1% increase in fourth quarter revenue was due to strong growth in the Company’s e-commerce business as well as growth in the Company’s foodservice business.  For the full year of fiscal 2018, total revenue increased 28.3% to $52.9 million, compared to $41.2 million last year. 

Deferred revenue associated with the Company’s e-commerce subscription services, which includes both Mouth and iGourmet, increased to $559,000 at December 31, 2018, compared to $28,000 at September 30, 2018.  The Company did not have e-commerce subscription sales in 2017.  For 2018, iGourmet and Mouth had over 100,000 active unique customers, which include over 30% growth in iGourmet active unique customers compared to 2017. In addition, in 2018, iGourmet’s Pennsylvania facility fulfilled over 175,000 orders for both Mouth and iGourmet, including over 20,000 packages fulfilled for both Mouth and iGourmet during the busiest week in the 2018 holiday season. 

The following table sets forth IVFH’s revenue by business category for the three months and year ended December 31, 2018 and December 31, 2017 by segment:

  Three Months Ended
  December 31,
2018
  % of
Net Sales
  December 31,
2017
  % of
Net Sales
  %
Change

Specialty Foodservice $ 11,761,000   66 %   $ 9,988,000   93 %   18 %
E-commerce 5,634,000   31 %   170,000   2 %   3214 %
National Brand Management 570,000   3 %   592,000   5 %   -4 %
Total IVFH $ 17,965,000   100 %   $ 10,750,000   100 %      


  Twelve Months Ended
  December 31,
2018
  % of
Net Sales
  December 31,
2017
  % of
Net Sales

  %
Change
Specialty Foodservice $ 41,714,000   79 %   $ 38,534,000   94 %   8 %
E-commerce 9,038,000   17 %     519,000   1 %   1641 %
National Brand Management 2,174,000   4 %     2,192,000   5 %   -1 %
Total IVFH $ 52,926,000   100 %   $ 41,245,000   100 %    

For the 2018 fourth quarter, selling and administrative (“SG&A”) expense, as a percentage of net revenue, was 26.1% compared to 24.8% in the prior year quarter.  SG&A expenses increased as a result of investments the Company continues to make to support growth including investments associated with the launch of Mouth fulfillment within the iGourmet warehouse, as well as overall higher expenses associated with managing the greater than anticipated fourth quarter package volume at the iGourmet warehouse.  For 2018, SG&A expense, as a percentage of net revenue was 26.7% compared to 21.7% for 2017.

For the 2018 fourth quarter, net income was $0.8 million, or $0.02 per diluted share, compared to $1.0 million, or $0.04 per diluted share in the prior year's fourth quarter. For 2018, net income was $1.7 million, or $0.05 per diluted share, compared to $4.5 million, or $0.15 per diluted share for 2017. Cash EBITDA for the 2018 fourth quarter was $1.1 million, a 15% decrease from $1.3 million in the prior year quarter, driven by record revenue increases and offset by increases in SG&A expenses.

IVFH's balance sheet remains strong with $4.8 million of cash and cash equivalents, and the full availability of over $2 million in commercial credit. For the twelve months ended December 31, 2018, IVFH had cash provided by operating activities of $2.6 million, compared to $3.4 million for the twelve months ended December 31, 2017 including over $2.4 million in operating cash flow in the fourth quarter compared to $1.3 million in the fourth quarter of 2017.

About Innovative Food Holdings, Inc.
Innovative Food Holdings, Inc. is an interconnected platform of small, specialty food companies serving business and consumer customers.  The platform offers efficient, cost effective, and transparent sourcing of over 7,000 specialty food products including proprietary branded products. Sales channels on the platform include specialty foodservice channels and data driven DTC e-commerce channels including leading specialty food direct-to-consumer e-commerce websites www.igourmet.com and www.mouth.com as well as a strong specialty food omnichannel offering via www.amazon.com, www.jet.com and www.walmart.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,” “anticipate,” “believe,” “intend,” “plan,” “might,” “potentially” or “expect.” 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.
Consolidated Balance Sheets
 
  December 31,     December 31,  
  2018     2017  
ASSETS              
Current assets              
Cash and cash equivalents $ 4,759,817     $ 5,133,435  
Accounts receivable, net   3,039,756       2,042,505  
Inventory   2,301,377       937,962  
Notes receivable   -       325,500  
Other current assets   144,301       86,730  
Total current assets   10,245,251       8,526,132  
               
Property and equipment, net   2,456,610       1,955,250  
Investments   339,525       201,525  
Other amortizable intangible assets, net   1,282,855       968,916  
Goodwill and other unamortizable intangible assets   3,058,708       368,000  
Total assets $ 17,382,949     $ 12,019,823  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current liabilities              
Accounts payable and accrued liabilities $ 3,689,868     $ 1,836,559  
Accrued interest   16,402       15,860  
Deferred revenue   559,315       -  
Notes payable - current portion   928,857       346,855  
Contingent liability - current portion   472,876       200,000  
Total current liabilities   5,667,318       2,399,274  
               
Contingent liability - long-term   357,600       200,000  
Note payable - long term portion   1,196,245       866,010  
Total liabilities   7,221,163       3,465,284  
Stockholders' equity              
               
Common stock: $0.0001 par value; 500,000,000 shares authorized; 36,296,218 and 36,080,519 shares issued, and 33,708,638 and 33,509,407 shares outstanding at December 31, 2018 and 2017, respectively   3,627       3,605  
Additional paid-in capital   36,132,065       36,196,682  
Treasury stock: 2,373,171 and 2,276,703 shares outstanding at December 31, 2018 and 2017, respectively   (1,016,370 )     (992,313 )
Accumulated deficit   (24,957,536 )     (26,653,435 )
Total stockholders' equity   10,161,786       8,554,539  
               
Total liabilities and stockholders' equity $ 17,382,949     $ 12,019,823  
 

 

 
Innovative Food Holdings, Inc.
Consolidated Statements of Operations
 
  For the
Twelve
    For the
Twelve
 
  Months
Ended
    Months
Ended
 
  December 31,     December 31,  
  2018     2017  
               
               
Revenue $ 52,925,526     $ 41,244,717  
Cost of goods sold   36,841,530       27,619,026  
Gross margin   16,083,996       13,625,691  
Selling, general and administrative expenses   14,128,662       8,936,709  
Total operating expenses   14,128,662       8,936,709  
               
Operating income   1,955,334       4,688,982  
               
Other income (expense:)              
Gain on settlement of contingent liability   (11,000 )     -  
Interest expense, net   115,435       159,720  
Total other expense   104,435       159,720  
               
Net income before taxes   1,850,899       4,529,262  
               
Income tax expense   155,000       -  
               
Net income $ 1,695,899     $ 4,529,262  
               
Net income per share - basic $ 0.05     $ 0.15  
               
Net income per share - diluted $ 0.05     $ 0.15  
               
Weighted average shares outstanding - basic   33,983,620       29,846,136  
               
Weighted average shares outstanding - diluted   33,983,620       29,969,699  
 

 

 
Innovative Food Holdings, Inc.
Consolidated Statements of Cash Flows
 
  For the
Twelve
    For the
Twelve
 
  Months
Ended
    Months
Ended
 
  December 31,     December 31,  
  2018     2017  
               
               
Cash flows from operating activities:              
Net income $ 1,695,899     $ 4,529,262  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation and amortization   1,082,224       533,473  
Stock based compensation   67,405       439,774  
Provision for doubtful accounts   5,099       -  
Gain on settlement of contingent liability   (11,000 )     -  
Amortization of discount on notes payable   -       185,018  
               
Changes in assets and liabilities:              
Accounts receivable, net   (821,735 )     -  
Inventory and other current assets, net   (1,246,310 )     (154,266 )
Accounts payable and accrued liabilities   1,530,476       (1,544,749 )
Deferred revenue   328,145       (504,110 )
Contingent liabilities   (69,424 )     -  
Accrued liabilities - related party   -       (65,000 )
Net cash provided by operating activities   2,560,779       3,419,402  
               
Cash flows from investing activities:              
Cash related to the iGourmet asset acquisition   (2,494,965 )     -  
Cash related to the Mouth Foods asset acquisition   (208,355 )     -  
Acquisition of property and equipment   (480,582 )     (49,845 )
Cash paid in the acquisition of Oasis   -       (300,000 )
Investment in food related company   (138,000 )     (325,500 )
Net cash used in investing activities   (3,321,902 )     (675,345 )
               
Cash flows from financing activities:              
Purchase of stock options from officers, directors, and employees   (167,000 )     (163,925 )
Common stock sold for exercise of warrants   -       196,741  
Cash received from exercise of stock options   35,000       105,000  
Cash paid in settlement of contingent liability - Oasis acquisition   (189,000 )     -  
Borrowings on term loan   1,500,000       -  
Proceeds from line of credit   391,558       -  
Purchase of treasury stock   (24,057 )     (505,660 )
Principal payments on debt   (1,147,533 )     (997,544 )
Principal payments capital leases   (11,463 )     (9,287 )
Net cash provided by (used in) financing activities   387,505       (1,374,675 )
               
(Decrease) increase in cash and cash equivalents   (373,618 )     1,369,382  
               
Cash and cash equivalents at beginning of year   5,133,435       3,764,053  
               
Cash and cash equivalents at end of year $ 4,759,817     $ 5,133,435  


 
     
  Three Months Ended Dec 31, Twelve Months Ended Dec 31,
  2018 2017 2018 2017
         
Adjusted Net Income and EPS          
Revenue   17,965,489   10,750,255   52,925,526   41,244,717  
Net Income   768,407   1,047,371   1,695,899   4,529,262  
Amortization of intangible assets (1)   236,824   82,317   885,001   370,768  
Amortization of discount on NP (2)   -   -   -   185,018  
Stock related expenses (3)   19,709   123,806   67,405   439,774  
Adjusted Net Income   1,024,940   1,253,494   2,648,305   5,524,822  
         
Weighted Average Shares Outstanding  Diluted (4)   33,983,620   29,969,699   33,983,620   29,969,699  
         
Adjusted Fully Diluted EPS   $ 0.030 $ 0.042 $ 0.078 $ 0.184  
     
  Three Months Ended Dec 31, Twelve Months Ended Dec 31,
Cash EBITDA 2018 2017 2018 2017
Net Income   768,407   1,047,371   1,695,899   4,529,262  
Interest expense,  taxes & Other Income   26,422   1,808   259,435   (25,298 )
Depreciation & amortization   287,938   124,190   1,082,223   533,473  
Stock related expenses (3)   19,709   123,806   67,405   439,774  
Amortization of discounts on NP (2)   -   -   -   185,018  
         
Cash EBITDA     1,102,476     1,297,175     3,104,962     5,662,229  
 
 
(1) Includes non cash amortization charges related to assets acquired
(2) Includes non cash amortization charges mainly associated with the GAAP recording of the discount on certain notes
(3) Includes stock and options based compensation and expenses
(4) Full Year GAAP weighted fully diluted share count


Company Contact: Investor and Media Contact:
Ronit Wallerstein Andrew M. Berger
Investor Relations Managing Director
Innovative Foods Holdings, Inc. SM Berger & Company, Inc.
(718) 645-1755 (216) 464-6400
rwallerstein@IVFH.com andrew@smberger.com

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