Innovative Food Holdings, Inc. Reports Financial Results for Second Quarter and First Half of 2021
Total Revenue Increased 17% YoY to a Second Quarter Record
Specialty Foodservice Increased 148% YoY and Up 49% QoQ
BONITA SPRINGS, Fla., Aug. 24, 2021 (GLOBE NEWSWIRE) — Innovative Food Holdings, Inc. (OTCQB: IVFH) (“IVFH” or the “Company”), a leading direct-to-consumer e-commerce platform with complete multi-channel, specialty food and grocery capabilities for both consumers and professional chefs, today reported its financial results for the second quarter and first half of 2021.
“We are thrilled by the return to year-over-year growth within our specialty foodservice operations, which helped produce record second-quarter revenues and a 17% increase over the prior year period. Our foodservice business increased 148% despite continued uncertainty related to increasing COVID-19 cases. In addition, IVFH’s agile operations, strong supplier network, and leading procurement teams allowed the Company to navigate unprecedented industry-wide supply chain challenges during the second quarter. We continue to leverage our strong platform and leading service-oriented culture to help our foodservice customers and e-commerce partners navigate rapidly evolving market conditions,” stated Sam Klepfish, CEO of Innovative Food Holdings.
“As expected, second quarter e-commerce sales were down compared to last year’s heightened level during the COVID-19 pandemic. Compared to pre-covid levels, second quarter e-commerce sales were up 84% from the 2019 second quarter and have grown 113% from the 2019 first half. In addition, our average order value continues to experience improving trends throughout our e-commerce platform. Our growth-oriented e-commerce strategies remain focused on pursuing additional partnerships, creating new transformative verticals, and introducing additional subscription-based products. We are also differentiating our brands and creating heightened awareness of our unique value propositions, while leveraging our leading digitally enabled, plug-and-play, direct-to-consumer platform. The progress we are making is encouraging, and I am excited by the positive momentum underway across our strong distribution channels, especially as we prepare for the seasonally strong holiday season.”
“We are also focused on transforming our operations, controlling costs, and returning to profitability. During the second quarter our gross margin improved from the first quarter, and we continue to prudently control SG&A expenses. We are working to leverage our fixed expenses and labor costs and, as a percent of revenue, SG&A expenses were the lowest level since 2019. I believe we have a significant opportunity to leverage our cost structure and further improve efficiencies as our business scales,” concluded Mr. Klepfish.
Financial Results
Revenues in the 2021 second quarter increased 17% to $14.0 million, compared to $12.0 million for the three months ended June 30, 2020. Second-quarter revenue benefitted from an 148% increase in specialty foodservice revenue, which was driven by the nationwide opening of restaurants and other foodservice establishments previously affected by COVID-19. The increase in specialty foodservice revenue was partially offset by a 56% decrease in e-commerce revenues as a result of heightened COVID-19 driven demand in 2020 compared to 2021. Compared to pre-covid levels, second quarter e-commerce revenue is up 84% from the 2019 second quarter, reflecting strong organic growth. For the first half of fiscal 2021, total revenue was $26.2 million, compared to $25.3 million last year.
The following table sets forth IVFH’s revenue by business category for the three and six months ended June 30, 2021 and June 30, 2020 (unaudited):
| Three Months Ended | |||||||||||||||
| June 30, 2021 | % of Net Revenues | June 30, 2020 | % of Net Revenues | % Change | |||||||||||
| Specialty Foodservice | $ | 10,161,000 | 73 | % | $ | 4,105,000 | 34 | % | 148 | % | |||||
| E-commerce | 3,285,000 | 23 | % | 7,454,000 | 62 | % | -56 | % | |||||||
| National Brand Management | 265,000 | 2 | % | 283,000 | 3 | % | -6 | % | |||||||
| Logistics | 263,000 | 2 | % | 156,000 | 1 | % | 69 | % | |||||||
| Total IVFH | $ | 13,974,000 | 100 | % | $ | 11,998,000 | 100 | % | 16 | % | |||||
| Six Months Ended | |||||||||||||||
| June 30, 2021 | % of Net Revenues | June 30, 2020 | % of Net Revenues | % Change | |||||||||||
| Specialty Foodservice | $ | 16,989,000 | 65 | % | $ | 14,018,000 | 55 | % | 21 | % | |||||
| E-commerce | 8,265,000 | 32 | % | 10,332,000 | 41 | % | -20 | % | |||||||
| National Brand Management | 491,000 | 2 | % | 533,000 | 2 | % | -8 | % | |||||||
| Logistics | 411,000 | 1 | % | 421,000 | 2 | % | -2 | % | |||||||
| Total IVFH | $ | 26,156,000 | 100 | % | $ | 25,304,000 | 100 | % | 3 | % | |||||
For the 2021 second quarter, selling, general, and administrative (SG&A) expenses were $4.7 million, compared to $4.9 million for the same period last year, and $4.9 million for the 2021 first quarter. The $0.2 million decrease was primarily due to lower payroll and related costs, advertising costs, and increased efficiencies.
The Company reported a net loss for the 2021 second quarter of $(0.9 million), or $(0.03) per share, compared to a net loss of $(1.7 million), or $(0.05) per share, in the prior year’s second quarter. For the first six months of 2021, the Company reported a net loss of $(2.8 million), or $(0.08) per share, compared to a net loss of $(4.9 million), or $(0.14) per share, for the first six months of 2020.
Adjusted net income (see tables below) for the 2021 second quarter was a loss of $(0.8 million), or $(0.022) per share, compared to an adjusted net loss of $(1.5 million), or $(0.043) per share, for the same period last year. For the six months of 2021, adjusted net income was a loss of $(2.3 million), or $(0.063) per share, compared to an adjusted net loss of $(2.6 million), or $(0.074) per share, for the same period last year
Cash EBITDA, a non-GAAP metric (see tables below), for the 2021 second quarter was a loss of $(0.6 million), compared to Cash EBITDA loss of $(1.3 million), in the prior year quarter. For the 2021 first six months, Cash EBITDA was a loss of $(1.8 million), compared to an EBITDA loss of $(2.2 million) for the same period a year ago.
About Innovative Food Holdings, Inc.
IVFH’s direct to consumer e-commerce platforms and multiple distribution channels connect the world’s best artisan food makers with top chefs and epicurean consumers nationwide. Our unique ability to reach both specialty foodservice customers via leading national partnerships, and consumers via leading e-commerce channels, positions IVFH as a compelling industry resource for artisanal food producers, chefs, and the home gourmand. IVFH’s direct to consumer specialty food platforms 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 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.
Consolidated Balance Sheets
(unaudited)
| June 30, | December 31, | ||||||
| 2021 | 2020 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 1,639,359 | $ | 5,060,015 | |||
| Accounts receivable, net | 2,923,798 | 2,380,305 | |||||
| Inventory | 3,032,879 | 3,719,786 | |||||
| Other current assets | 348,241 | 286,815 | |||||
| Total current assets | 7,944,277 | 11,446,921 | |||||
| Property and equipment, net | 8,362,522 | 8,550,401 | |||||
| Investments | 286,725 | 496,575 | |||||
| Right to use assets, operating leases, net | 285,396 | 246,737 | |||||
| Right to use assets, finance leases, net | 710,743 | 776,439 | |||||
| Other amortizable intangible assets, net | 94,640 | 100,380 | |||||
| Goodwill and other unamortizable intangible assets | 1,532,822 | 1,532,822 | |||||
| Total assets | $ | 19,217,125 | $ | 23,150,275 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities | |||||||
| Accounts payable and accrued liabilities | $ | 4,052,543 | $ | 5,098,523 | |||
| Accrued interest, current portion | 33,128 | 28,873 | |||||
| Deferred revenue | 980,535 | 2,917,676 | |||||
| Line of Credit | 2,000,000 | 2,000,000 | |||||
| Notes payable – current portion, net of discount | 2,037,495 | 1,741,571 | |||||
| Lease liability – operating leases, current | 92,762 | 87,375 | |||||
| Lease liability – finance leases, current | 148,094 | 146,004 | |||||
| Contingent liability – current portion | 187,000 | 187,000 | |||||
| Total current liabilities | 9,531,557 | 12,207,022 | |||||
| Accrued interest, long term portion | 5,848 | – | |||||
| Lease liability – operating leases, non-current | 192,634 | 159,362 | |||||
| Lease liability – finance leases, non-current | 565,365 | 638,137 | |||||
| Contingent liability – long-term | 108,600 | 116,600 | |||||
| Note payable – long term portion, net | 7,401,327 | 6,151,345 | |||||
| Total liabilities | 17,805,331 | 19,272,466 | |||||
| Commitments & Contingencies (see note 17) | – | – | |||||
| Interco | |||||||
| Stockholders’ equity | |||||||
| Common stock: $0.0001 par value; 500,000,000 shares authorized; 38,800,629 and 38,209,060 shares issued, and 35,963,049 and 35,371,480 shares outstanding at June 30, 2021 and December 31, 2020, respectively | 3,877 | 3,817 | |||||
| Additional paid-in capital | 37,730,475 | 37,415,155 | |||||
| Treasury stock: 2,623,171 and 2,623,171 shares outstanding at June 30, 2021 and December 31, 2019, respectively. | (1,141,370 | ) | (1,141,370 | ) | |||
| Accumulated deficit | (35,181,188 | ) | (32,399,793 | ) | |||
| Total stockholders’ equity | 1,411,794 | 3,877,809 | |||||
| Total liabilities and stockholders’ equity | $ | 19,217,125 | $ | 23,150,275 | |||
| See notes to consolidated financial statements. | 0 | – | |||||
Innovative Food Holdings, Inc.
Consolidated Statements of Operations
(unaudited)
| For the Three | For the Three | For the Six | For the Six | |||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | 13,974,564 | $ | 11,997,649 | $ | 26,155,463 | $ | 25,303,569 | ||||||||
| Cost of goods sold | 10,165,144 | 8,677,096 | 19,044,058 | 18,869,960 | ||||||||||||
| Gross margin | 3,809,420 | 3,320,553 | 7,111,405 | 6,433,609 | ||||||||||||
| Selling, general and administrative expenses | 4,663,302 | 4,895,430 | 9,514,130 | 9,508,191 | ||||||||||||
| Impairment of intangible assets | – | – | – | 1,698,952 | ||||||||||||
| Total operating expenses | 4,663,302 | 4,895,430 | 9,514,130 | 11,207,143 | ||||||||||||
| Operating (loss) income | (853,882 | ) | (1,574,877 | ) | (2,402,725 | ) | (4,773,534 | ) | ||||||||
| Other income (expense:) | ||||||||||||||||
| Impairment of investment | – | – | (209,850 | ) | – | |||||||||||
| Other leasing income | 1,900 | 10,977 | 7,040 | 21,856 | ||||||||||||
| Interest expense, net | (85,542 | ) | (90,646 | ) | (175,860 | ) | (157,066 | ) | ||||||||
| Total other income (expense) | (83,642 | ) | (79,669 | ) | (378,670 | ) | (135,210 | ) | ||||||||
| Net (loss) income before taxes | (937,524 | ) | (1,654,546 | ) | (2,781,395 | ) | (4,908,744 | ) | ||||||||
| Income tax expense | – | – | – | – | ||||||||||||
| Net (loss) income | $ | (937,524 | ) | $ | (1,654,546 | ) | $ | (2,781,395 | ) | $ | (4,908,744 | ) | ||||
| Net (loss) income per share – basic | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.08 | ) | $ | (0.14 | ) | ||||
| Net (loss) income per share – diluted | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.08 | ) | $ | (0.14 | ) | ||||
| Weighted average shares outstanding – basic | 35,872,143 | 34,646,149 | 35,729,807 | 34,641,212 | ||||||||||||
| Weighted average shares outstanding – diluted | 35,872,143 | 34,656,149 | 35,729,807 | 34,641,212 | ||||||||||||
Innovative Food Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
| For the Six | For the Six | ||||||
| Months Ended | Months Ended | ||||||
| June 30, | June 30, | ||||||
| 2021 | 2020 | ||||||
| Cash flows from operating activities: | |||||||
| Net (loss) income | $ | (2,781,395 | ) | $ | (4,908,744 | ) | |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Impairment of intangible assets | – | 1,698,952 | |||||
| Impairment of investment | 209,850 | – | |||||
| Depreciation and amortization | 271,973 | 442,465 | |||||
| Amortization of right-of-use asset | 49,700 | 107,271 | |||||
| Amortization of prepaid loan fees | 6,211 | 6,246 | |||||
| Stock based compensation | 315,380 | 221,109 | |||||
| Provision for doubtful accounts | 27,987 | 221,799 | |||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable, net | (571,480 | ) | 1,217,181 | ||||
| Inventory and other current assets, net | 625,481 | (578,575 | ) | ||||
| Accounts payable and accrued liabilities | (1,035,849 | ) | (159,940 | ) | |||
| Deferred revenue | (1,937,141 | ) | (271,955 | ) | |||
| Contingent liabilities | (8,000 | ) | (24,000 | ) | |||
| Operating lease liability | (49,700 | ) | (107,271 | ) | |||
| Net cash (used in) provided by operating activities | (4,876,983 | ) | (2,135,462 | ) | |||
| Cash flows from investing activities: | |||||||
| Cash paid for website development | – | (14,000 | ) | ||||
| Acquisition of property and equipment | (12,686 | ) | (90,207 | ) | |||
| Net cash used in investing activities | (12,686 | ) | (104,207 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from line of credit | – | 2,000,000 | |||||
| Proceeds from Payroll Protection Plan Loan | 1,748,414 | 1,650,221 | |||||
| Principal payments on debt | (208,719 | ) | (97,860 | ) | |||
| Principal payments financing leases | (70,682 | ) | (20,673 | ) | |||
| Net cash provided by (used in) financing activities | 1,469,013 | 3,531,688 | |||||
| Increase (decrease) in cash and cash equivalents | (3,420,656 | ) | 1,292,019 | ||||
| Cash and cash equivalents at beginning of period | 5,060,015 | 3,966,050 | |||||
| Cash and cash equivalents at end of period | $ | 1,639,359 | $ | 5,258,069 | |||
| Supplemental disclosure of cash flow information: | |||||||
| Cash paid during the period for: | |||||||
| Interest | $ | 162,636 | $ | 125,396 | |||
| Taxes | $ | – | $ | – | |||
| Non-cash investing and financing activities: | |||||||
| Building improvements financed under note payable | $ | – | $ | 851,934 | |||
| Increase in right of use assets & liabilities | $ | 88,359 | $ | 214,930 | |||
| Investment in food related company | $ | – | $ | 30,000 | |||
| Capital lease for purchase of fixed assets | $ | – | $ | 152,548 | |||
| Three Months Ended (unaudited) | Six Months Ended (unaudited) | ||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | ||||||||||||
| Adjusted Net Income and EPS (1) | |||||||||||||||
| Revenue | $ | 13,974,564 | $ | 11,997,649 | $ | 26,155,463 | $ | 25,303,569 | |||||||
| Net loss | (937,524 | ) | (1,654,546 | ) | (2,781,395 | ) | (4,908,744 | ) | |||||||
| Amortization of intangible assets (2) | 2,870 | – | 5,740 | 210,032 | |||||||||||
| One-time charges | – | – | 209,850 | 1,917,891 | |||||||||||
| Stock related expenses (3) | 157,589 | 155,068 | 315,380 | 221,109 | |||||||||||
| Adjusted Net Loss | $ | (777,065 | ) | $ | (1,499,478 | ) | $ | (2,250,425 | ) | $ | (2,559,712 | ) | |||
| Weighted Avg. Shares Outstanding Diluted (4) | 35,872,143 | 34,656,149 | 35,729,807 | 34,641,212 | |||||||||||
| Adjusted Fully Diluted EPS | $ | (0.022 | ) | $ | (0.043 | ) | $ | (0.063 | ) | $ | (0.074 | ) | |||
| Three Months Ended (unaudited) | Six Months Ended (unaudited) | ||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | ||||||||||||
| Cash EBITDA (1) | |||||||||||||||
| Net loss | $ | (937,524 | ) | $ | (1,654,546 | ) | $ | (2,781,395 | ) | $ | (4,908,744 | ) | |||
| Interest expense, taxes & other income | 83,642 | 79,669 | 168,820 | 135,210 | |||||||||||
| Depreciation & amortization | 136,149 | 117,931 | 271,973 | 442,496 | |||||||||||
| One-time charges | – | – | 209,850 | 1,917,891 | |||||||||||
| Stock related expenses (3) | 157,589 | 155,068 | 315,380 | 221,109 | |||||||||||
| Cash EBITDA | $ | (560,144 | ) | $ | (1,301,878 | ) | $ | (1,815,372 | ) | $ | (2,192,038 | ) | |||
| (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) | 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. |
| (929) 275-1563 | (216) 464-6400 |
| rwallerstein@IVFH.com | andrew@smberger.com |
