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CST: 15/11/2019 14:43:32   

Innovative Food Holdings, Inc. Reports Financial Results for First Quarter 2019

178 Days ago

First Quarter Revenue Increased 17.8% to $12.9 Million 
e-commerce Revenue Up Over 120% to $2.2 Million 
Supporting Growth Opportunities through Strategic Investments

BONITA SPRINGS, Fla., May 21, 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 first quarter of 2019.

“The 2019 first quarter demonstrates the success of our interconnected platform of specialty food companies and continued growth across our direct-to-chef and direct-to-consumer channels,” stated Sam Klepfish, CEO of Innovative Food Holdings. “E-commerce revenues were up over 120% in the first quarter to $2.2 million and represent 17% of total revenues, compared to 9% of revenues in the first quarter last year. Our product offerings are resonating with customers and I am especially pleased with the momentum in our e-commerce channel. During the first quarter, Mouth launched new wellness, vegan, and gluten-free snack boxes. After seeing a 94% year-over-year increase for one of Mouth’s subscription boxes, the Company capitalized on this success and launched two more new subscription boxes in April.”

“On the specialty foodservice side of our business, we are excited with our plans to launch a new line of branded products later this quarter within our Artisan Specialty Foods subsidiary. This new line of branded products is the first branded product line to be launched leveraging Artisan Specialty Foods’ recently built packaging capabilities at its Chicago facility and will initially be targeted towards specialty foodservice customers. In addition, we continue to experience sales growth within our specialty foodservice channel, and we are focused on expanding our market reach. We are pleased with the traction and additional capabilities iGourmet has provided our specialty foodservice business and we are leveraging iGourmet’s Pennsylvania based warehouse to expand into new specialty foodservice markets.”

“As we stated last quarter, we are investing in our platform to support and accelerate current growth opportunities.  We expanded our team, enhanced our IT infrastructure, and incurred additional costs associated with iGourmet and Mouth, which increased SG&A expenses in the first quarter.  While additional investments are needed, especially as we begin to focus on the seasonally strong fourth quarter, we believe we can leverage SG&A expenses in the future as investments stabilize and revenues continue to scale.  In addition, we are working to improve efficiencies across all our businesses.  Also impacting overall profitability compared to 2018, was the decline in revenues from our national brand category. We are working on initiatives to turn around this high margin business over the coming quarters.  Overall, I am pleased with our first quarter results and the direction we are headed to reach our goal of increasing long-term shareholder value.” 

IVFH’s revenue increased to $12.9 million during the three months ended March 31, 2019, compared to $10.9 million for the three months ended March 31, 2018.  The primary drivers of the 17.8% increase in first quarter revenue was due to strong growth in the Company’s e-commerce business as well as approximately 10% growth in the Company’s specialty foodservice business. 

Deferred revenue associated with the Company’s e-commerce subscription services, which includes both Mouth and iGourmet, was $277,000 at March 31, 2019, compared to $559,000 at December 31, 2018, and $0 at March 31, 2018.  The $282,000 sequential decrease in deferred revenue was the result of the seasonally high amount of subscription orders that occur in the fourth quarter. 

For the 2019 first quarter, iGourmet and Mouth had over 25,000 active unique customers, which includes over 30% growth in iGourmet active unique customers compared to the same period last year.

The following table sets forth IVFH’s revenue by business category for the three months ended March 31, 2019 and March 31, 2018.

  Three Months Ended
  March 31,
2019
% of
Net Sales
March 31,
2018
% of
Net Sales

Change
Specialty Foodservice $   10,206,000 79 % $   9,312,000 85 % 9.6 %
E-commerce     2,187,000 17 %   985,000 9 % 122.0 %
National Brand Management  $   466,000 4 % $   620,000 6 % -24.8 %
  Total IVFH $   12,859,000 100 % $   10,917,000 100 % 17.8 %

For the 2019 first quarter, selling and administrative (“SG&A”) expense, as a percentage of net revenue, was 29.5% compared to 27.5% in the prior year quarter.  SG&A expenses increased as a result of continued investments associated with adding additional team members and technology related investments to support IVFH’s current and future growth opportunities which also included investments associated with the launch and growth of Mouth (which was not owned in the first quarter of 2018), and the expansion of the specialty foodservice business at iGourmet.  

For the 2019 first quarter, net income was $163,000, or $0.005 per diluted share, compared to $449,000, or $0.013 per diluted share in the prior year’s first quarter. Cash EBITDA for the 2019 first quarter was $594,000, compared to $722,000 in the prior year quarter. 

IVFH’s balance sheet remains strong with $3.1 million of cash and cash equivalents, and the full availability of over $2 million in commercial credit.

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.
Condensed Consolidated Balance Sheets
 
   
    March 31,     December 31,  
    2019     2018  
    (unaudited)          
ASSETS                
Current assets                
Cash and cash equivalents   $ 3,140,799     $ 4,759,817  
Accounts receivable, net     3,248,519       3,039,756  
Inventory     2,123,330       2,301,377  
Other current assets     166,225       144,301  
Total current assets     8,678,873       10,245,251  
                 
Property and equipment, net     2,253,224       2,456,610  
Investments     355,025       339,525  
Right to use assets, operating leases, net     295,962       -  
Right to use assets, financing leases, net     130,016       -  
Other amortizable intangible assets, net     1,929,368       2,158,498  
Goodwill and other unamortizable intangible assets     2,183,065       2,183,065  
Total assets   $ 15,825,533     $ 17,382,949  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities                
Accounts payable and accrued liabilities   $ 2,085,464     $ 3,689,868  
Accrued interest     18,285       16,402  
Deferred revenue     277,395       559,315  
Lease liability – operating leases, current     135,991       -  
Lease liability – financing leases, current     22,481       -  
Notes payable - current portion     668,833       928,857  
Contingent liability - current portion     447,569       472,876  
Total current liabilities     3,656,018       5,667,318  
                 
Lease liability – operating leases, non-current     159,971          
Lease liability – financing leases, non-current     102,828          
Contingent liability - long-term     357,600       357,600  
Note payable - long term portion     1,030,160       1,196,245  
Total liabilities     5,306,577       7,221,163  
                 
Stockholders' equity                
Common stock: $0.0001 par value; 500,000,000 shares authorized; 36,427,354 and
36,296,218 shares issued; 33,839,774 and 33,708,638 shares outstanding at March 31,
2019 and December 31, 2018, respectively
    3,640       3,627  
Additional paid-in capital     36,325,862       36,132,065  
Treasury stock: 2,373,171 shares outstanding at
March 31, 2019 and December 31, 2018, respectively
    (1,016,370 )     (1,016,370 )
Accumulated deficit     (24,794,176 )     (24,957,536 )
Total stockholders' equity     10,518,956       10,161,786  
Total liabilities and stockholders' equity   $ 15,825,533     $ 17,382,949  



Innovative Food Holdings, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
 
    For the Three Months Ended  
    March 31,     March 31,  
    2019     2018  
                 
                 
Revenue   $ 12,859,215     $ 10,916,544  
Cost of goods sold     8,881,380       7,437,431  
Gross margin     3,977,835       3,479,113  
                 
Selling, general and administrative expenses     3,788,997       3,003,817  
 Total operating expenses     3,788,997       3,003,817  
                 
Operating income     188,838       475,296  
                 
Other expense:                
Interest expense, net     25,478       26,748  
 Total other expense     25,478       26,748  
                 
Net income before taxes     163,360       448,548  
                 
Income tax expense     -       -  
                 
Net income   $ 163,360     $ 448,548  
                 
Net income per share - basic   $ 0.005     $ 0.013  
                 
Net income per share - diluted   $ 0.005     $ 0.013  
                 
Weighted average shares outstanding - basic     33,947,817       33,710,609  
                 
Weighted average shares outstanding - diluted     33,947,817       33,725,720  



Innovative Food Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited) 
 
    For the Three Months Ended  
    March 31,     March 31,  
    2019     2018  
                 
Cash flows from operating activities:                
 Net income   $ 163,360     $ 448,548  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:                
 Depreciation and amortization     305,205       238,413  
 Amortization of right-of-use asset     42,619       -  
 Stock based compensation     100,144       8,787  
 Provision for doubtful accounts     (830 )     -  
                 
Changes in assets and liabilities:                
 Accounts receivable     (223,433 )     (246,231 )
 Inventory and other current assets     156,123       (334,920 )
 Accounts payable and accrued liabilities     (1,508,855 )     755,799  
 Deferred revenue     (281,920 )     -  
  Operating lease liability     (42,619 )     -  
 Contingent liabilities     (25,307 )     -  
 Net cash (used in) provided by operating activities     (1,315,513 )     870,396  
                 
Cash flows from investing activities:                
 Cash related to the iGourmet asset acquisition     -       (2,409,437 )
 Acquisition of property and equipment     (2,705 )     (69,000 )
 Investment in food related company     -       (50,000 )
 Net cash used in investing activities     (2,705 )     (2,528,437 )
                 
Cash flows from financing activities:                
 Purchase of stock options from officers, directors, and employees     -       (167,000 )
 Cash received from the exercise of warrants     -       35,000  
 Borrowings on term loan     -       1,500,000  
 Principal payments on debt     (294,734 )     (160,186 )
 Principal payments capital leases     (6,066 )     (2,394 )
 Net cash (used in) provided by financing activities     (300,800 )     1,205,420  
                 
(Decrease) in cash and cash equivalents     (1,619,018 )     (452,621 )
                 
Cash and cash equivalents at beginning of period     4,759,817       5,133,435  
                 
Cash and cash equivalents at end of period   $ 3,140,799     $ 4,680,814  


Supplemental disclosure of cash flow information:                
                 
Cash paid during the period for:                
Interest   $ 27,693     $ 22,834  
Taxes   $ -     $ -  
Non-cash investing and financing activities:                
Issuance of 131,136 shares of common stock previously accrued   $ 93,666     $ -  
Right of use asset and liabilities – operating upon adoption of ASU 2016-02   $ 388,581     $ -  



   
  Three Months Ended
  March 31,
2019
  March 31, 2018
Adjusted Net Income and EPS      
Revenue $   12,859,215   $   10,916,544
Net Income     163,360     448,548
Amortization of intangible assets (1)     229,130     189,146
Stock related expenses (2)     100,144       8,787
Adjusted Net Income

 
$   492,634   $   646,481
Weighted Avg. Shares Outstanding Diluted (3)

 
  33,947,817     33,725,720
Adjusted Fully Diluted EPS $   0.015   $   0.019
       
  Three Months Ended
  March 31,
2019
  March 31, 2018
Cash EBITDA      
Net Income $   163,360   $   448,548
Interest expense, taxes & Other Income   25,478     26,748
Depreciation & amortization   305,205     238,413
Stock related expenses (2)     100,144       8,787
Cash EBITDA $   594,187   $   722,496
  1. Includes non-cash amortization charges related to assets acquired
  2. Includes stock and options-based compensation and expenses
  3. 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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