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 | |
- Includes non-cash amortization charges related to assets acquired
- Includes stock and options-based compensation and expenses
- 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 |