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IVFH Releases Q4 and FY 2014 Results

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Innovative Food Holdings Reports Fourth Quarter and Full Year 2014 Financial Results

Innovative Food Holdings, Inc. (IVFH), a leading, direct, nationwide provider of specialty food in the direct to chef market and the nationwide leader in the direct to consumer freshly prepared specialty meal space announced today financial results for the fourth quarter and year ended December 31, 2014. The results include the impact of the Company’s August 2014 acquisition of the nationwide leader in the direct to consumer, daily gourmet meal sector, The Fresh Diet®, Inc. (“The Fresh Diet”). The Company will hold a conference call today at 5 p.m. ET to discuss the results.

2014 Financial Highlights:

  • Total Revenue of $30.8 million, an increase of approximately 37% compared to the same period in 2013
  • Revenues associated with the direct-to-chef business, (“Specialty foodservice”) revenue was $25.8 million, an approximate 15% increase compared to 2013
  • Specialty foodservice Adjusted EBITDA (EBITDA excluding non-cash and one-time charges) increased over 40% year over year to approximately $2.8 million

On August 15, 2014 the Company acquired The Fresh Diet, America’s No. 1 fresh gourmet specialty daily meal delivery company, which operates the industry leading direct to consumer specialty meal platform. The Fresh Diet’s platform includes highly efficient preparation and logistics infrastructure, as well as a comprehensive network of same-day and next-day last mile food delivery capabilities to over 570 cities and towns across the United States. The combination of Innovative Food Holdings’ specialty food platform with the specialty food last-mile capabilities of The Fresh Diets’ platform has created the first fully, vertically integrated, source-to-table specialty food company. The Fresh Diet is operated as a wholly-owned subsidiary of Innovative Food Holdings, Inc.

The Fresh Diet business highlights include:

  • New leadership including Bryan Janeczko, an experienced Chief Executive Officer with extensive deep domain expertise and demonstrated success in the fresh meal space
  • Improvement in digital marketing metrics including: website traffic, new visitors to the website, ad click rates, website leads and lead conversion rate all improved versus the year-ago period
  • Committed customers are staying longer, decreasing churn rate under new leadership
  • Platform wide delivery accuracy rate of above 99%
  • Operating at five-sigma in production with overall production accuracy of 99.98%

Sam Klepfish, CEO of Innovative Food Holdings commented, “We delivered another year of record organic revenue growth and record Adjusted EBITDA in our direct to chef business. Our recently acquired direct to consumer subsidiary, The Fresh Diet, contributed to top line growth for total combined 2014 sales of approximately $31 million.”

Mr. Klepfish continued, “The Fresh Diet team had built a solid and growing business prior to the acquisition by Innovative Food Holdings; at the same time, it had faced significant challenges as it transitioned from a fast growing startup company, with a focus on revenue growth at all costs, to a data driven, process driven business, with a focus on profitable long term revenues. With that in mind, I believe that Innovative Food Holdings’ ability to recruit and retain top talent with the domain expertise and reputation of Bryan Janeczko, has created the long term potential to grow sales and profits of The Fresh Diet, even beyond our initial expectations. In the few short weeks that Bryan has been on the team there has been a laser-like focus on growing The Fresh Diet brand, employing data-driven, short and long term revenue focused decision making, and bringing in high caliber marketing, sales, and culinary talent to The Fresh Diet leadership team.

Mr. Klepfish continued, “To summarize, we have made good progress in just a few months in working towards transforming The Fresh Diet into a data-minded, e-commerce marketing-driven leader in the health and wellness category. In addition, by effectively leveraging the management, resources, and core expertise of Innovative Food Holdings, we believe we can take advantage of the opportunity to benefit from additional synergies, enabling us to transition this segment of our business to profitability.”

Fourth Quarter 2014 Financial Results

Fourth quarter 2014 total revenue was approximately $10 million, up 64% as compared to $6.1 million in the fourth quarter of 2013. Innovative Food Holdings’ Specialty foodservice revenue grew approximately 13% to $6.8 million. Adjusted EBITDA for the Specialty foodservice segment increased 35% year over year to $737,731 for the 4th quarter.

The Fresh Diet acquisition resulted in a GAAP loss for the quarter ended December 31, 2014. Costs associated with The Fresh Diet include several accounting, legal and other charges, including over $1.1 million in a non-cash, GAAP-related charge associated with accounting for the acquisition of The Fresh Diet. This GAAP related charge had the effect of lowering GAAP revenues by over $1.1 million without any corresponding decrease in GAAP expenses. In addition, as expected, The Fresh Diet’s transition to a metric-driven business with a key focus on long-term, profitable revenues, contributed to the loss in the fourth quarter.

As a result, Innovative Food Holdings reported a GAAP loss of $3.7 million for the quarter ended December 31, 2014 compared to a GAAP loss of approximately $1.0 million for the quarter ended December 31, 2013.

The Fresh Diet Financial information

The fourth quarter of 2014 included the contribution of The Fresh Diet, which was acquired on August 15, 2014 and as a result the fourth quarter of 2013 included no contribution from this acquisition. Revenues attributed to The Fresh Diet in this quarter were $3.1 million and results reflect the focus on profitable revenues described above. Furthermore, certain accounting adjustments, including over $875,000 in acquisition related GAAP amortization charges, had the direct effect of lowering The Fresh Diet GAAP revenues by over $875,000 without any corresponding decrease in GAAP expenses.

Full Year 2014 Financial Results

For the year ended December 31, 2014 total revenue was $30.8 million, an increase of approximately 37% compared to 2013.

Total net GAAP loss for the year ended 2014 was $3.7 million compared to a net loss of $1.4 million in the same period of 2013. GAAP EPS for 2014 was $(0.32) per share compared to $(0.23) per share in the year ago period. Adjusted EPS for 2014 was $0.10 per share compared to $0.28 per share in 2013. Adjusted EBITDA was $1.4 million in 2014 compared to approximately $2 million in 2013.

Innovative Food Holdings’ revenues for the Specialty foodservice segment grew to $25.8 million, an increase of approximately 15% compared to the prior period. Adjusted EBITDA for the Specialty foodservice segment increased over 40% year over year to approximately $2.8 million from $2 million a year ago.

Total Operating Cash flow for the year ended December 31, 2014 was $940,046 as compared to approximately $1,354,881 in 2013.

The Company paid down $666,667 of its commercial loan with Fifth Third Bank, and ended the year with over $3.0 million in cash. In addition the Company had the full availability of its $1 million line of credit with Fifth Third Bank.

Conference call information:

  • Date and time: Tuesday, March 31, 2015 at 5:00 p.m. ET
  • Dial-in number: 1-888-523-1225 (domestic) or 1-719-325-2323 (international)
  • Call/Conference ID: 2669131
  • Replay number: Dial 1-877-870-5176 (domestic) or 1-858-384-5517 (international). Please use passcode 2669131 to access the replay. The replay will be available until April 7, 2015.
  • Webcast link: http://public.viavid.com/index.php?id=113736

About Innovative Food Holdings

Innovative Food Holdings’ 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®, Inc. (www.thefreshdiet.com) is the nationwide leader in the freshly prepared gourmet meal sector, using the finest specialty ingredients. The meals are delivered directly, from kitchen to doorstep to consumers in 12 states, 44 metropolitan areas and over 570 cities and towns across the country using The Fresh Diet® platform. The Fresh Diet® is a wholly owned subsidiary of Innovative Food Holdings.

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. Information about other parties was supplied to the Company by other parties and we accept no responsibility for its accuracy.

Management Contact
Ronit Wallerstein
Investor Relations Analyst
(718) 645-1755
rwallerstein@ivfh.com
Investor Relations Contact
James Carbonara
Regional Vice President, Hayden IR
(646) 755-7412
james@haydenir.com

Innovative Food Holdings and subsidiaries 

Adjusted EPS

2014

2013

2014

2013

FY

FY

q4 2014

q4 2013

Net Income (loss)

(3,730,948)

(1,486,257)

(3,733,918)

(1,085,565)

Amortization of intangible assets (1)

446,014

183,880

37,114

45,969

Amortization of discount on notes payable (2) 

707,698

2,322,909

99,157

984,975

Deferred Revenue Adjustment  (3) 

1,164,563

876,222

Stock based compensation (4) 

1,662,798

372,013

1,501,943

321,351

Non-recurring expenses (5) (6)

567,373

408,428

444,864

248,308

Fresh Diet Legacy Costs (7) 

295,877

221,745

Adjusted Net Income

1,113,375

1,800,973

(552,873)

515,038

Weighted average shares outstanding

11,421,690

6,500,506

20,834,910

6,949,666

Adjusted EPS

0.10

0.28

(0.03)

0.07

2014

2013

2014

2013

FY

FY

q4 2014

q4 2013

Net Income (loss)

(3,730,948)

(1,486,257)

(3,733,918)

(1,085,565)

Interest

116,372

129,167

100,917

18,990

Taxes

20,052

3,052

Depreciation & amortization

630,086

262,882

126,436

66,824

Amortization of discounts on notes payable (2)

707,698

2,322,909

99,157

984,975

Stock based compensation (4) 

1,662,798

372,013

1,501,943

321,351

Non-recurring expenses (5) (6)

567,373

408,428

444,864

248,308

Fresh Diet Legacy Costs (7) 

295,877

221,745

Deferred Revenue Adjustment (3) 

1,164,563

876,222

Adjusted  EBITDA

1,413,819

2,029,194

(362,634)

546,211


(1) amortization of certain acquired assets
(2) Includes non-cash amortization charges mainly associated with the GAAP recording of the discount on certain notes
(3) A GAAP non cash entry related to valuation of acquired deferred revenue
(4) Includes stock and option based compensation
(5) for 2013 Included non-recurring charges related mainly to the following:
a) The Artisan acquisition and integration
b) The subordination of existing notes and restructuring of certain terms of notes
c) The prepayment of the Artisan acquisition loan
d) Entering into a credit line with Fifth Third Bank
e) Entering into a mortgage with Fifth Third Bank
f) The move into new facility and the warehouse build out of the new facility
(6) for 2014 Including non recurring charges mainly related to the following:
a) Consists mainly of acquisition, legal, other service providers expenses related to Fresh Diet
(7) costs related to Fresh Diet operations associated with old expenses, commitments

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