Second Quarter & First Half 2019 Financial Results

In Press Releases by Innovative Food Holdings

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

Second Quarter Revenue Increased 16% to $13.9 Million
Specialty Foodservice Revenue Up 17% to $11.7 Million
e-commerce Revenue Up Over 29% to $1.8 Million

BONITA SPRINGS, FL. (August 14, 2019) – 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 unique specialty food products across the U.S., today reported its financial results for the second quarter and first half of 2019.

Sam Klepfish, CEO of Innovative Food Holdings stated, “IVFH experienced strong growth across both our specialty foodservice and e-commerce channels during the 2019 second quarter, reflecting increasing customer awareness of our product offerings, as well as successfully leveraging the resources of our interconnected platform. Our continued emphasis on providing customers with new, exciting, and unique products that reflect the latest food trends helped drive strong second quarter results.”

“We continue to make strategic investments to support current and future growth opportunities across our business and during the second quarter we added a new e-commerce focused corporate VP of Operations and expanded our accounting capabilities and staff. In addition, we recently announced a new independent board member and signed an agreement to purchase a 200,000 square-foot fulfillment facility that adds significant growth capacity and will support both our national e-commerce and northeast specialty foodservice distribution businesses.

“IVFH’s focus on unique specialty foods supports growing consumer preferences to smaller, high-quality, digitally- driven suppliers. As a result, we are experiencing higher levels of demand and interest from current and potential customers. I am excited by our growth opportunities for the remainder of 2019 and beyond,” concluded. Mr. Klepfish.

IVFH’s revenue increased to $13.9 million during the three months ended June 30, 2019, compared to $12.0 million for the three months ended June 30, 2018. The primary drivers of the 16% increase in second quarter revenue was due to strong growth in the Company’s specialty foodservice and e-commerce businesses. For the first half of fiscal 2019, total revenue increased 17% to $26.8 million, compared to $22.9 million last year.

Deferred revenue which includes revenues associated with the Company’s e-commerce subscription services, including both Mouth and iGourmet, increased to $281,000 at June 30, 2019, compared to $26,000 at June 30, 2018. For the 2019 second quarter, IVFH had over 21,650 active and unique e-commerce customers, which is an increase of approximately 17% from the same period last year.

The following table sets forth IVFH’s revenue by business category for the three and six months ended June 30, 2019 and June 30, 2018:

Three Months Ended

June 30, 2019 % of Net Sales June 30, 2018 % of Net Sales Change
Specialty Foodservice………………….. $ 11,670,000 84% $    10,013,000 83% 17%
E-commerce……………………………….. 1,784,000 13% 1,384,000 12% 29%
National Brand Management ………..            471,000 3% 592,000 5% -20%
Total IVFH ……………………………. $ 13,925,000 100% $ 11,989,000 100% 16%

 

Six Months Ended

June 30, 2019 % of Net Sales June 30, 2018 % of Net Sales Change
Specialty Foodservice………………….. $ 21,968,000 82% $ 19,258,000 84% 14%
E-commerce……………………………….. 3,880,000 15% 2,435,000 11% 59%
National Brand Management ………..          937,000 3% 1,213,000 5% -23%
Total IVFH ……………………………. $ 26,785,000 100% $ 22,906,000 100% 17%

For the 2019 second quarter, selling and administrative (“SG&A”) expense, as a percentage of net revenue, was 28.9% compared to 25.6% 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 procurement, accounting, and systems, as well as the expansion of fulfillment capabilities within the iGourmet warehouse for both e-commerce and specialty foodservice. For the 2019 first six months, SG&A expense, as a percentage of net revenue, was 29.1% compared to 26.5% for 2018.

For the 2019 second quarter, net income was $22,000, or $0.00 per diluted share, compared to $330,000, or $0.01 per diluted share in the prior year’s second quarter. For the 2019 first six months, net income was $185,000, or $0.01 per diluted share, compared to $779,000, or $0.02 per diluted share for the 2018 first six months.

Cash EBITDA for the 2019 second quarter was $467,000, compared to $785,000 in the prior year quarter. For the 2019 first six months, Cash EBITDA was $1.1 million, compared to $1.5 million for the same period a year ago.

IVFH’s balance sheet remains strong with $3.2 million of cash and cash equivalents, and the full availability of over

$2 million in commercial credit including the Company’s $2 million commercial credit line which was extended through August 2021.

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.

Consolidated Balance Sheets

June 30,
2019
(unaudited)
December 31,
2018
ASSETS
Current assets
Cash and cash equivalents $ 3,158,853 $ 4,759,817
Accounts receivable, net 3,018,700 3,039,756
Inventory 2,217,174 2,301,377
Other current assets              197,583              144,301
Total current assets 8,592,310 10,245,251
Property and equipment, net 2,235,416 2,456,610
Investments 395,025 339,525
Right of use assets, operating leases, net 268,638
Right of use assets, finance leases, net 122,619
Other amortizable intangible assets, net 1,702,301 2,158,498
Goodwill and other unamortizable intangible assets          2,183,065          2,183,065
Total assets $ 15,499,374 $ 17,382,949
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable and accrued liabilities $ 2,043,215 $ 3,689,868
Accrued interest 18,378 16,402
Deferred revenue 280,928 559,315
Notes payable – current portion 901,728 928,857
Lease liability – operating leases, current 197,014
Lease liability – finance leases, current 20,605
Contingent liability – current portion              519,108              472,876
Total current liabilities 3,980,976 5,667,318
Lease liability – operating leases, non-current 71,624
Lease liability – finance leases, non-current 97,959
Contingent liability – long-term 247,600 357,600
Note payable – long term portion              464,047          1,196,245
Total liabilities 4,862,206 7,221,163
Commitment and contingencies (see note 16)
Stockholders’ equity

Common stock: $0.0001 par value; 500,000,000 shares authorized; 36,427,354 and 36,296,218 shares issued, and 33,839,774 and 33,708,638

shares outstanding at June 30, 2019 and December 31, 2018, respectively

 

 

3,640

 

 

3,627

Additional paid-in capital 36,421,970 36,132,065
Treasury stock: 2,373,171 shares outstanding at June 30, 2019 and December 31, 2018  

(1,016,370)

 

 

 

(1,016,370)

 

 

Accumulated deficit       (24,772,072)         (24,957,536)
Total stockholders’ equity 10,637,168 10,161,786
Total liabilities and stockholders’ equity $ 15,499,374 $ 17,382,949

 

Consolidated Statements of Operations

For the Three
Months
Ended
June 30,
         2019        

For the Three
Months
Ended
June 30,
         2018        

For the Six
Months
Ended
June 30,
         2019        

For the Six
Months
Ended
June 30,
         2018        

 

Revenue

 

$

 

13,925,451

 

$

 

11,989,003

 

$

 

26,784,666

 

$

 

22,905,547

Cost of goods sold          9,862,369          8,409,485        18,743,749        15,846,916
Gross margin 4,063,082 3,579,518 8,040,917 7,058,631
Selling, general and administrative expenses          4,017,829          3,070,979          7,806,826          6,074,796
Total operating expenses 4,017,829 3,070,979 7,806,826 6,074,796
Operating income 45,253 508,539 234,091 983,835
Other (income) expense:
Gain on settlement of contingent liability (11,000) (11,000)
Interest expense, net                23,149                34,296                48,627                61,044
Total other expense 23,149 23,296 48,627 50,044
Net income before taxes 22,104 485,243 185,464 933,791
Income tax expense 155,000 155,000
Net income $ 22,104 $ 330,243 $ 185,464 $ 778,791
 

Net income per share – basic

 

$

 

0.001

 

$

 

0.010

 

$

 

0.005

 

$

 

0.023

 

Net income per share – diluted

 

$

 

0.001

 

$

 

0.010

 

$

 

0.005

 

$

 

0.023

 

Weighted average shares outstanding – basic

 

33,947,817

 

34,007,519

 

34,001,294

 

33,966,497

 

Weighted average shares outstanding – diluted

 

33,947,817

 

34,007,519

 

34,001,294

 

33,966,497

 

Consolidated Statements of Cash Flows

For the Six
Months Ended
June 30,
         2019        

For the Six
Months Ended
June 30,
         2018        

 

Cash flows from operating activities:

Net income $ 185,464 $ 778,791
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 631,026 500,027
Amortization of right-of-use asset 88,644
Stock based compensation 196,252 23,408
Gain on settlement of contingent liability (11,000)
Provision for (recovery of) doubtful accounts (2,779)
Changes in assets and liabilities:
Accounts receivable (6,665) (428,976)
Inventory and other current assets, net 30,921 (526,246)
Accounts payable and accrued liabilities (1,551,011) 22,865
Deferred revenue (278,387) 25,565
Contingent liabilities (63,768)
Operating lease liability              (88,644)                            
Net cash (used in) provided by operating activities            (858,947)                384,434
Cash flows from investing activities:
Cash related to the igourmet asset acquisition (2,409,437)
Cash paid for website development (23,500)
Acquisition of property and equipment (85,829) (99,804)
Investment in food related company              (25,000)                (50,000)
Net cash used in investing activities            (134,329)           (2,559,241)
Cash flows from financing activities:
Purchase of stock options from officers, directors, and employees (167,000)
Cash received from exercise of warrants 35,000
Cash paid in settlement of contingent liability – Oasis acquisition (189,000)
Borrowings on term loan 1,500,000
Purchase of treasury stock (24,057)
Principal payments on debt (594,877) (545,674)
Principal payments capital leases              (12,811)                   (3,993)
Net cash (used in) provided by financing activities            (607,688)                605,276
Decrease in cash and cash equivalents (1,600,964) (1,569,531)
Cash and cash equivalents at beginning of period          4,759,817          5,133,435
Cash and cash equivalents at end of period $ 3,158,853 $ 3,563,904
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 49,337 $ 65,114
 

Taxes

 

$

 

 

$

 

155,000

 

Non-cash investing and financing activities:

Issuance of 131,136 shares of common stock previously accrued $ 93,666 $
Right to use assets and liabilities – operating, upon adoption of ASU 2016-02 $ 388,581 $
Return of equipment and reduction in amount due under equipment financing loan  

$

 

33,075

 

$

 

Increase in right of use assets and liabilities $ 18,701 $
Investment in food related company $ 30,500 $

 

              Three Months Ended                                Six Months Ended                 

June 30,
            2019          

June 30,
           2018          

June 30,
            2019          

June 30,
           2018          

Adjusted Net Income and EPS
Revenue $     13,925,451 $ 11,989,003 $ 26,784,666 $ 22,905,547
Net Income 22,104 330,243 185,464 778,791
Amortization of intangible assets (1) 250,567 216,157 479,697 405,303
Stock related expenses (2)                96,108               14,621             196,252               23,408
Adjusted Net Income $           368,779 $          561,021 $          861,413 $      1,207,502
Weighted Avg. Shares Outstanding Diluted (3) 33,947,817 34,007,519 34,001,294 33,966,497
Adjusted Fully Diluted EPS $               0.011 $              0.016 $              0.025 $              0.036
              Three Months Ended                                Six Months Ended                 

June 30,
            2019          

June 30,
           2018          

June 30,
            2019          

June 30,
           2018          

Cash EBITDA
Net Income $             22,104 $          330,243 $          185,464 $          778,791
Interest expense, taxes & other income 23,149 178,296 48,627 205,044
Depreciation & amortization 325,821 261,614 631,086 500,027
Stock related expenses (2)                96,108               14,621               196,252                  23,408
Cash EBITDA $           467,182 $          784,774 $      1,061,429 $      1,507,270

(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