ivfh-1q-2015

Innovative Food Holdings Reports 101% Revenue Increase for the First Quarter of 2015

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Revenue from The Fresh Diet® Increases 46% Sequentially to $4.6 Million

BONITA SPRINGS, Fla., May 11, 2015 /PRNewswire/ — Innovative Food Holdings, Inc. (IVFH), a leading nationwide provider of specialty foods, healthcare foods, gluten free foods, and direct from source artisanal foods, to the professional foodservice market, and the leading, direct-to-consumer, freshly prepared meal company in the health and wellness category, announced today financial results for the first quarter ended March 31, 2015.

First Quarter Financial Highlights

  • Total revenue of $11.1 million, an increase of 101% compared to the same period in 2014 and up 11% sequentially
  • Direct to Consumer GAAP revenues associated with The Fresh Diet were $4.6 million and represented approximately 41% of total revenue compared to $3.1 million and 31% of total revenue in the fourth quarter of 2014
  • Direct to Chef specialty food revenues (“Specialty Foodservice”) were $6.5 million, an increase of 18% compared to the same period in 2014

Sam Klepfish, Chief Executive Officer of Innovative Food Holdings, commented, “We delivered strong sales growth of over 18% in our direct to chef business as more and more chefs continue to look to us to satisfy their specialty food culinary needs. We have also seen particularly strong growth of approximately 25% in our Chicago based Artisan Specialty Foods subsidiary as we continue to see chefs move towards the true specialty experience that Artisan Specialty Foods provides for its customers. We remain focused on leveraging the capabilities of our leading specialty foods direct to chef platform as well as our leading health and wellness direct to consumer Fresh Diet platform, to create significant value for our shareholders.”

Mr. Klepfish added, “We have made notable progress in our efforts to accelerate and optimize The Fresh Diet’s marketing efforts, and we believe that many of the performance metrics we track are moving in the right direction. In fact, our Fresh Diet meal bookings in March were particularly strong, further validating our marketing initiatives as we move forward. Throughout 2015, we will remain focused on growing The Fresh Diet brand and The Fresh Diet’s leading market share in the fresh delivered health and wellness category, with a key focus on reaching profitability.”

Mr. Klepfish concluded “We are pleased that during the first quarter we attracted key talent to The Fresh Diet brand and enriched The Fresh Diet’s management team with several key individuals. These include Silvia De Antonio as our Chief Culinary Officer who brings 19 years in culinary management, research and development; Bernard Seay as Director of the Call Center who has 30 years of sales and service call center experience with former roles at Informix (now IBM) and Sprint, and Linda Mignone who joined as The Fresh Diet’s new CMO, bringing more than 25 years of marketing leadership, data-driven digital marketing expertise, and brand, advertising and communications experience, and who formally served in marketing leadership roles at, Bridgepoint Education, Kerzner International and DHL.”

First Quarter 2015 Financial Results

The financial results for the first quarter of 2015 include the contribution of The Fresh Diet, which was acquired on August 15, 2014 and as a result the first quarter of 2014 included no contribution from this acquisition.

First quarter 2015 total revenue was approximately $11.1 million, up 101% as compared to $5.5 million in the first quarter of 2014. Innovative Food Holdings’ Specialty Foodservice revenue grew 18% over the same period in the prior year to $6.5 million. The Fresh Diet revenues were $4.6 million, up 43.9% compared to the fourth quarter of 2014. Certain accounting adjustments, had the direct effect of lowering The Fresh Diet GAAP revenues, increasing COGS and lowering net income by over $360,000 without any corresponding decrease in GAAP expenses.

Cost of goods sold for the three months ended March 31, 2015 was $8.1 million, an increase of $4.4 million, or approximately 120%, compared to $3.7 million for the three months ended March 31, 2014. The increase was primarily attributable to costs associated with The Fresh Diet and to an increase in organic revenues. Gross margin was 26.8% of total revenue in the first quarter of 2015 compared to 32.8% in the prior year’s quarter. The decrease in gross margin is attributable primarily to the operations of The Fresh Diet. The gross margin includes the affect a GAAP related charged associated with the acquisition of the Fresh Diet. The gross margin without the GAAP charge would have been 29% for the quarter.

The Company reported a GAAP net loss of approximately $2.0 million for the quarter ended March 31, 2015 compared to net income of $189,000 in the prior year period.

On a per share basis, the Company reported a loss of $0.099 per basic and diluted share in the first quarter of 2015 compared to earnings of $0.025 and $0.014 per basic and diluted share, respectively, in the first quarter of 2014.

Adjusted Net Income (Net income without certain amortization charges, GAAP acquisition charges, and equity based compensation) was a loss of $584,936 vs. a profit $508,299 in Q1 2014 and Adjusted EPS (EPS without certain amortization charges, GAAP acquisition charges, and equity based compensation) was  a loss of $0.029 per share compared to earnings of $0.067 per share in the first quarter of 2014.

Cash EBITDA (EBITDA without equity based compensation) for the first quarter of 2015 was a loss of $466,000 compared to positive Cash EBITDA of $576,000 in the first quarter of 2014. This Cash EBITDA loss was driven primarily by a loss of $913,000 for The Fresh Diet in the current quarter. These numbers includes a spend of over $570,000 on digital and offline advertising and marketing expenses as The Fresh Diet accelerated its marketing spend in the first quarter of 2015.

Cash EBITDA for the Specialty Foodservice segment was $544,000 compared to $576,000 in the same period in 2014.  Cash EBITDA on the specialty foodservice segment includes expenses associated with the overall parent company including legal, accounting and other public company expenses, those expenses increased in the first quarter of 2015.

As of March 31, 2015, the Company had $3.2 million in cash and cash equivalents compared to $3.1 million as of December 31, 2014.

Conference call information:

  • Date and time: Monday, May 11, 2015 at 5 p.m. ET
  • Dial-in number: 1-888-466-4462 (domestic) or 1-719-457-2085 (international)
  • Call/Conference ID: 1728951
  • Replay number: Dial 1-877-870-5176 (domestic) or 1-858-384-5517 (international). Please use passcode 1728951 to access the replay. The replay will be available until May 18, 2015.
  • Webcast link: http://public.viavid.com/index.php?id=114539

About Innovative Food Holdings

Innovative Food Holdings’ (www.ivfh.com) subsidiaries distribute the highest quality, specialty foods to foodservice businesses nationwide and offer freshly prepared meals and ingredients to consumers across the country through a proprietary specialty food platform.

In the foodservice space, the Company’s industry leading specialty food foodservice direct to chef distribution programs offer over 7,000 specialty food, direct from source, organic, artisanal and gluten free products, which are used on a daily basis by thousands of leading professional chefs across the United States.

In the direct to consumer channel, The Fresh Diet has helped clients meet their diet transformation goals with personalized healthy chef-prepared meals, hand-delivering three meals and two snacks daily to customer’s doors in 44 metropolitan areas and over 570 cities and towns across the U.S. Our nutritionally balanced meals are freshly prepared daily with seasonal ingredients and are never frozen, freeze-dried or vacuum packed. For detailed delivery information, and to review available menu options or learn more about how The Fresh Diet works, please visit www.TheFreshDiet.com.

Forward-Looking Statements

This release contains 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. Information about third parties was supplied to the company by third parties and we accept no reasonability for its accuracy.

Contact:

Management Contact          

Investor Relations Contact

Ronit Wallerstein               

Brett Maas

Investor Relations Analyst

Managing Partner, Hayden IR

(718) 645-1755

(646) 536-7331

rwallerstein@ivfh.com

brett@haydenir.com 

 

Innovative Food Holdings, Inc.

Condensed Consolidated Balance Sheets

March 31,

December 31,

2015

2014

(unaudited)

ASSETS

Current assets

Cash and cash equivalents

$

3,211,491

$

3,112,526

Accounts receivable net

1,304,123

1,242,970

Inventory

1,172,482

1,195,327

Other current assets

804,745

625,495

Due from related parties

461,241

461,130

Total current assets

6,954,082

6,637,448

Property and equipment, net

1,855,619

1,922,044

Investment

204,000

204,000

Intangible assets, net

22,045,672

23,610,549

Total assets

$

31,059,373

$

32,374,041

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable and accrued liabilities

$

4,482,620

$

4,096,700

Deferred revenue

4,777,092

4,792,609

Accrued liabilities – related parties

462,045

1,137,692

Accrued interest

606,602

603,034

Accrued interest – related parties

85,945

78,945

Revolving credit facilities

360,871

Notes payable, current portion, net of discount

1,258,560

714,811

Notes payable – related parties, current portion

110,500

110,500

Deferred tax liability

1,069,200

1,069,200

Contingent liabilities

546,250

572,500

Total current liabilities

13,398,814

13,536,862

Note payable – long term portion, net of discount

532,561

1,251,745

Notes payable – related parties, long term portion

2,199,970

2,199,970

Total liabilities

16,131,345

16,988,577

Stockholders’ equity

Common stock, $0.0001 par value; 500,000,000 shares authorized; 23,173,447 and21,393,989 shares issued, and 22,472,784 and 20,693,326 shares outstanding at March 31, 2015 and December 31, 2014, respectively

2,318

2,140

Additional paid-in capital

27,496,774

25,937,734

Treasury stock, 486,254 shares outstanding at March 31, 2015 and December 31, 2014

(160,099)

(160,099)

Accumulated deficit

(12,410,605)

(10,395,495)

Total Innovative Food Holdings, Inc. stockholders’ equity

14,928,388

15,384,280

Noncontrolling interest in variable interest entity

(360)

1,184

Total stockholder’s equity

14,928,028

15,385,464

Total liabilities and stockholders’ equity

$

31,059,373

$

32,374,041

 

Innovative Food Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(UNAUDITED)

For the Three

For the Three

Months Ended

Months Ended

March 31,

March 31,

2015

2014

Revenue

$

11,181,817

$

5,553,466

Cost of goods sold

8,185,305

3,729,855

Gross margin

2,996,512

1,823,611

Selling, general and administrative expenses

4,881,396

1,368,111

Total operating expenses

4,881,396

1,368,111

Operating (loss) income

(1,884,884)

455,500

Other (income) expense:

Interest expense, net

131,770

286,794

Other (income)

(20,000)

Total other (income) expense

131,770

266,794

Net (loss) income before taxes

(2,016,654)

188,706

Income tax expense

Net (loss) income

$

(2,016,654)

$

188,706

Less net income attributable to noncontrolling interest in variable interest entities

(1,544)

Net (loss) income attributable to Innovative Food Holdings, Inc.

$

(2,015,110)

$

188,706

Net (loss) income per share – basic

$

(0.099)

$

0.025

Net (loss) income per share – diluted

$

(0.099)

$

0.014

Weighted average shares outstanding – basic

20,447,523

7,538,537

Weighted average shares outstanding – diluted

20,447,523

13,563,347

 

Three Months Ended

March 31,

Sales and Gross Profits

2014

2015

Sales

5,553,466

11,181,817

Deferred Revenue Adjustment (1)

NA

361,227

Sales without GAAP adjustment

NA

11,543,044

Gross Profit without GAAP charge

NA

3,357,739

GAAP Gross Margin 

32.8%

26.8%

 Gross Margin without GAAP charge

32.8%

29.1%

Adjusted Net Income and Adjusted  EPS

Net Income(loss)

188,706

(2,015,110)

Amortization of intangible assets (2)

45,970

210,187

Amortization of discount on NP (3)

260,035

99,157

One time gain on adjustment of accrued liability

(20,000)

Equity Related Expenses

33,588

759,603

Deferred Revenue Adjustment

0

361,227

Adjusted Net Income(loss)

508,299

(584,936)

Weighted Average Shares Outstanding – Basic

7,538,537

20,447,523

Adjusted EPS – Basic

$                  0.067

$                            (0.029)

Three Months Ended

March 31,

Cash EBITDA

2014

2015

Net Income (Loss)

188,706

(2,015,110)

Equity related expenses

33,588

759,603

Interest on notes payable

26,759

32,613

Taxes

0

0

Depreciation & amortization

67,574

295,742

Amortization of discounts 

260,035

99,157

Amortization of Deferred Revenue

361,227

Cash EBITDA

576,662

(466,768)

1

GAAP  discount ondeferred revenue amortization charges associated with Fresh Diet Acqusition 

2

Includes non cash amortization charges related to assets acquired 

3

Includes non cahs amortization charges mainly associted with the GAAP recording of the discount on certain notes

4

Includes stock and options  based compensation 

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