Innovative Food Holdings, Inc. Reports 2022 Second Quarter Financial Results and Record Second Quarter Sales

Rhea-AI Summary

Innovative Food Holdings (IVFH) reported a record total revenue of $20.5 million for Q2 2022, marking a 47% year-over-year increase. Specialty foodservice revenue surged 66% to $16.9 million, driven by the reopening of restaurants and travel-related foodservice. Despite eCommerce revenue slightly declining to $3.2 million, the company maintained a strong market presence. However, Q2 net loss stood at $(1.2 million), which is an increase from $(0.9 million) in Q2 2021. The company is on track to close a USDA loan for $4.5 million to support its growth strategies.

Positive

• Record total revenue of $20.5 million for Q2 2022, a 47% increase year-over-year.
• Specialty foodservice revenue increased 66% to $16.9 million, benefiting from the reopening of restaurants.
• SG&A expenses as a percentage of revenue improved to 27% from 33% year-over-year.
• Cash used in operating activities improved by $996,000 compared to Q2 2021.
• On track to secure a USDA loan guarantee of approximately $4.5 million.

Negative

• GAAP net loss for Q2 2022 was $(1.2 million), higher than $(0.9 million) in Q2 2021.
• eCommerce revenue declined by 3% compared to the previous year due to normalizing COVID-19 demand.
• Selling, general, and administrative (SG&A) expenses increased by $0.9 million primarily due to higher advertising costs.

•  Total revenue up 47% year-over-year to a second quarter record of $20.5 million
•  Specialty foodservice revenue increased 66% year-over-year to a second quarter record

BONITA SPRINGS, Fla., Aug. 23, 2022 (GLOBE NEWSWIRE) -- Innovative Food Holdings, Inc. (OTCQB: IVFH) (“IVFH” or the “Company”), a leading end-to-end DTC eCommerce platform and direct-to-chef online platform that provides high-quality, unique specialty foods through eCommerce offerings and multichannel partnerships, reported its financial results for the second quarter of 2022.  

“The strong growth we are experiencing in specialty foodservice revenue is encouraging and helped IVFH produce record second quarter revenue. Positive momentum remains robust across our foodservice operations, including igourmet’s B2B business, as a result of continued re-opening activities and our ability to grow market share by providing unique specialty foods and excellent customer service to our customers. I am proud of our team’s hard work as we continue to successfully navigate unprecedented logistics, supply chain, and inflationary challenges. Second quarter and year-to-date sales also reflect the strength of our platforms as record foodservice revenue successfully offset normalizing eCommerce trends and industry wide changes impacting the effectiveness of digital marketing,” stated Sam Klepfish, CEO of Innovative Food Holdings.

“Overall, eCommerce trends remain significantly above pre-pandemic levels and we continue to improve our overall cost structure with a focus on driving long-term profitable growth within our eCommerce businesses. Second quarter profitability was impacted by several nonrecurring, one-time items affecting both our cost of goods sold and our SG&A expenses, including inventory adjustments and fees associated with our recent refinancing. Additionally, we implemented several actions towards the end of the second quarter and in the third quarter aimed at improving our marketing cost structure. This includes realigning our marketing strategies to improve our customer acquisition costs, while also doubling down on efforts to improve customer retention, and drive recurring and subscription revenues within our eCommerce business,” continued Mr. Klepfish.

“We believe our specialty foodservice assets are well positioned for revenue growth throughout 2022 and beyond, while we also navigate the rapidly changing digital marketing environment by continuing to focus on the customer experience within our eCommerce platform. We also continue to pursue an expanding number of organic, non-organic, and partnership opportunities, as well as additional B2B opportunities. We believe we are well positioned to leverage our specialty food direct-to-consumer eCommerce platform, which includes leading back-end logistics, fulfillment, and procurement capabilities, as well as our front-end digital infrastructure. Looking at the second half of 2022, I am excited by the direction we are headed as we focus on growing our business profitably,” concluded Mr. Klepfish.

Financial Results

Revenues in the 2022 second quarter increased 47% to a second quarter record of $20.5 million, compared to $14.0 million for the three months ended June 30, 2021. Second-quarter revenue benefited from a 66% increase in specialty foodservice revenue, which was partially driven by the nationwide opening of restaurants and other foodservice establishments previously affected by COVID-19, as well as strong increases in travel related foodservice. In addition, the Company’s unique supply chain capabilities continue to provide reliable, consistently high-quality specialty foodservice solutions for its customers. eCommerce revenue was $3.2 million, compared to $3.3 million for the same period last year primarily due to a decrease in COVID-19 driven demand in 2022 compared to 2021, and a more challenging digital marketing environment. For the first half of fiscal 2022, total revenue increased 38% to $36.2 million, compared to $26.2 million last year.

The following table sets forth IVFH’s revenue by business category for the three and six months ended June 30, 2022, and June 30, 2021 (unaudited):

		Three Months Ended
		June 30, 2022			% of Net Sales			June 30, 2021			% of Net Sales			% Change
Specialty Foodservice		$	16,901,000		82	%		$	10,161,000		73	%		66	%
eCommerce			3,185,000		16	%			3,285,000		23	%		-3	%
National Brand Management			252,000		1	%			265,000		2	%		-5	%
Logistics Services			185,000		1	%		$	263,000		2	%		-30	%
Total IVFH		$	20,523,000		100	%		$	13,974,000		100	%		47	%

		Six Months Ended
		June 30, 2022			% of Net Sales			June 30, 2021			% of Net Sales			% Change
Specialty Foodservice		$	28,442,000		79	%		$	16,989,000		65	%		67	%
eCommerce			6,797,000		19	%			8,265,000		32	%		-18	%
National Brand Management			536,000		1	%			491,000		2	%		9	%
Logistics Services			391,000		1	%			411,000		1	%		-5	%
Total IVFH		$	36,166,000		100	%		$	26,156,000		100	%		38	%

For the 2022 second quarter, selling, general, and administrative (SG&A) expenses were $5.5 million, or 27% of revenue, compared to $4.7 million, or 33% of revenue for the same period last year. The $0.9 million increase in SG&A dollars was primarily due to higher advertising and marketing costs driven by an increasingly challenging digital marketing environment, including expanded privacy rules that significantly reduce data sharing and an increase in foodservice payroll to support higher sales, mostly offset by reductions in eCommerce related payroll. For the 2022 first six months, SG&A expenses were $10.7 million, or 30% of revenue, compared to $9.5 million, or 36% of revenue for the same period last year.

The Company recorded a GAAP net loss for the 2022 second quarter of $(1.2 million), or $(0.03) per share, compared to a GAAP net loss of $(0.9 million), or $(0.03) per share, in the prior year’s second quarter. For the first six months of 2022, the Company reported a net loss of $(2.5 million), or $(0.05) per share, compared to a net loss of $(2.8 million), or $(0.08) per share, for the first six months of 2021.

Cash used in operating activities for the 2022 second quarter was $384,000 an improvement of $996,000 compared to cash used in operating activities of $1.4 million for the same quarter a year ago. Furthermore, IVFH is on track to close its previously announced USDA loan guarantee. These USDA approvals will extend the Company’s current term loan to 30 years and will provide approximately $4.5 million of additional non-dilutive capital to the Company. According to the terms of the loan, uses include, but are not limited to, supporting the Company’s expansion strategies, and investments to support and enhance the Company’s specialty food, direct-to-consumer, and direct-to-chef platforms.

Adjusted net income, a non-GAAP metric (see table below), for the 2022 second quarter was a loss of $(0.4 million), or $(0.009) per share, compared to an adjusted net loss of $(0.8 million), or $(0.022) per share, for the same period last year. For the six months of 2022, adjusted net income was a loss of $(1.8 million), or $(0.038) per share, compared to an adjusted net loss of $(2.3 million), or $(0.063) per share, for the same period last year.

Cash EBITDA loss, a non-GAAP metric (see tables below), for the 2022 second quarter improved by over $0.4 million to $(0.1 million), compared to Cash EBITDA loss of $(0.6 million) in the prior year’s second quarter. For the 2022 first six months, Cash EBITDA was a loss of $(1.3 million), compared to an EBITDA loss of $(1.8 million) for the same period a year ago.

About Innovative Food Holdings, Inc.
IVFH’s leading end-to-end direct-to-consumer e-commerce platform and direct-to-chef platform connect the world’s best artisan food makers with top chefs and epicurean consumers nationwide. Our unique ability to reach both specialty foodservice B2B customers and consumers positions IVFH as a compelling resource for artisanal food producers, CPG brands, chefs, and consumers. IVFH’s owned online retailer brands on its leading DTC e-commerce platform 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, international crisis, environmental and economic issues 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. Condensed Consolidated Balance Sheets
		June 30,				December 31,
		2022				2021
		(unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	2,360,473			$	6,122,671
Accounts receivable, net			5,027,892				3,256,764
Inventory			3,041,782				3,109,984
Other current assets			340,702				314,107
Total current assets			10,770,849				12,803,526
Property and equipment, net			8,090,295				8,186,227
Investments			286,725				286,725
Right of use assets, operating leases, net			184,003				232,381
Right of use assets, finance leases, net			640,931				669,039
Other amortizable intangible assets, net			51,656				72,218
Goodwill and other unamortizable intangible assets			1,532,822				1,532,822
Total assets		$	21,557,281			$	23,782,938
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities		$	6,285,703			$	5,702,905
Accrued interest, current portion			43,535				29,349
Deferred revenue			1,222,247				1,631,406
Line of Credit			2,014,333				2,000,000
Notes payable - current portion, net of discount			5,617,323				412,961
Lease liability - operating leases, current			64,665				74,088
Lease liability - finance leases, current			185,715				159,823
Contingent liability - current portion			187,000				187,000
Total current liabilities			15,620,521				10,197,532
Lease liability - operating leases, non-current			119,338				158,293
Lease liability - finance leases, non-current			430,672				499,240
Contingent liability - long-term			108,600				108,600
Note payable - long term portion, net			4,720				5,409,172
Total liabilities			16,283,851				16,372,837
Commitments & Contingencies (see note 17)
Stockholders' equity
Common stock: $0.0001 par value; 500,000,000 shares authorized; 50,014,147 and 48,879,331 shares issued, and 47,176,567 and 46,041,751 shares outstanding at June 30, 2022 and December 31, 2021, respectively			4,997				4,885
Additional paid-in capital			41,980,090				41,662,710
Treasury stock: 2,623,171 and 2,623,171 shares outstanding at June 30, 2022 and December 31, 2021, respectively.			(1,141,370	)			(1,141,370	)
Accumulated deficit			(35,570,287	)			(33,116,124	)
Total stockholders' equity			5,273,430				7,410,101
Total liabilities and stockholders' equity		$	21,557,281			$	23,782,938

Innovative Food Holdings, Inc. Condensed Consolidated Statements of Operations (unaudited)
		For the Three								For the Six
		Months Ended								Months Ended
		June 30,				June 30,				June 30,				June 30,
		2022				2021				2022				2021
Revenue		$	20,523,156			$	13,974,564			$	36,166,267			$	26,155,463
Cost of goods sold			16,074,259				10,165,144				27,991,438				19,044,058
Gross margin			4,448,897				3,809,420				8,174,829				7,111,405
Selling, general and administrative expenses			5,522,049				4,663,302				10,694,475				9,514,130
Total operating expenses			5,522,049				4,663,302				10,694,475				9,514,130
Operating loss			(1,073,152	)			(853,882	)			(2,519,646	)			(2,402,725	)
Other income (expense:)
Impairment of investment			-				-				-				(209,850	)
Gain on interest rate swap			-				-				294,000				-
Loss on extinguishment of debt			(40,556	)			-				(40,556	)			-
Other leasing income			2,294				1,900				7,384				7,040
Interest expense, net			(112,372	)			(85,542	)			(195,345	)			(175,860	)
Total other income (expense)			(150,634	)			(83,642	)			65,483				(378,670	)
Net loss before taxes			(1,223,786	)			(937,524	)			(2,454,163	)			(2,781,395	)
Provision for income taxes			-				-				-				-
Net loss		$	(1,223,786	)		$	(937,524	)		$	(2,454,163	)		$	(2,781,395	)
Net loss per share - basic		$	(0.03	)		$	(0.03	)		$	(0.05	)		$	(0.08	)
Net loss per share - diluted		$	(0.03	)		$	(0.03	)		$	(0.05	)		$	(0.08	)
Weighted average shares outstanding - basic			46,855,525				35,872,143				46,557,498				35,729,807
Weighted average shares outstanding - diluted			46,855,525				35,872,143				46,557,498				35,729,807

Innovative Food Holdings, Inc. Condensed Consolidated Statements of Cash Flows (unaudited)
		For the Six				For the Six
		Months Ended				Months Ended
		June 30,				June 30,
		2022				2021
Cash flows from operating activities:
Net loss		$	(2,454,163	)		$	(2,781,395	)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment of investment			-				209,850
Depreciation and amortization			279,735				271,973
Amortization of right-of-use asset			35,162				49,700
Amortization of prepaid loan fees			20,582				6,211
Stock based compensation			367,492				315,380
Loss on extinguishment of debt			40,556				-
Provision for doubtful accounts			8,056				27,987
Changes in assets and liabilities:
Accounts receivable, net			(1,779,184	)			(571,480	)
Inventory and other current assets, net			41,607				625,481
Accounts payable and accrued liabilities			627,395				(1,035,849	)
Deferred revenue			(409,159	)			(1,937,141	)
Contingent liabilities			-				(8,000	)
Operating lease liability			(35,162	)			(49,700	)
Net cash used in provided by operating activities			(3,257,083	)			(4,876,983	)
Cash flows from investing activities:
Acquisition of property and equipment			(92,633	)			(12,686	)
Net cash used in investing activities			(92,633	)			(12,686	)
Cash flows from financing activities:
Payment of offering costs for stock previously issued			(50,000	)			-
Proceeds from Payroll Protection Plan Loan			-				1,748,414
Principal payments on debt			(167,001	)			(208,719	)
Principal payments financing leases			(85,176	)			(70,682	)
Cost of debt financing			(110,305	)			-
Net cash provided by (used in) financing activities			(412,482	)			1,469,013
Decrease in cash and cash equivalents			(3,762,198	)			(3,420,656	)
Cash and cash equivalents at beginning of period			6,122,671				5,060,015
Cash and cash equivalents at end of period		$	2,360,473			$	1,639,359
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest		$	128,798			$	162,636
Taxes		$	-			$	-
Non-cash investing and financing activities:
Increase (decrease) in right of use assets & liabilities – operating leases		$	(13,216	)		$	88,359
Increase in right of use assets & liabilities – finance leases		$	42,500			$	-
Debt to Fifth Third Bank paid directly by MapleMark Bank		$	7,695,866			$	-

Innovative Food Holdings, Inc. Reconciliation of GAAP to NON-GAAP Measures Adjusted Net Loss, Adjusted Net Loss Per Share and Adjusted Cash EBITDA Calculations (unaudited)
	Three Months Ended (unaudited)								Six Months Ended (unaudited)
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Adjusted Net Loss and EPS (1)
Revenue	$	20,523,156			$	13,974,564			$	36,166,267			$	26,155,463
Net loss		(1,223,786	)			(937,524	)			(2,454,163	)			(2,781,395	)
Amortization of intangible assets (2)		10,331				2,870				20,562				5,740
One-time charges (3)		592,518				-				592,518				209,850
One-time gain		-				-				(294,000	)			-
Stock related expenses (4)		214,764				157,589				367,490				315,380
Adjusted Net Loss	$	(406,173	)		$	(777,065	)		$	(1,767,593	)		$	(2,250,425	)
Weighted Avg. Shares Outstanding Diluted (5)		46,855,525				35,872,143				46,557,498				35,729,807
Adjusted Fully Diluted EPS	$	(0.009	)		$	(0.022	)		$	(0.038	)		$	(0.063	)
	Three Months Ended (unaudited)								Six Months Ended (unaudited)
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Cash EBITDA (1)
Net loss	$	(1,223,786	)		$	(937,524	)		$	(2,454,163	)		$	(2,781,395	)
Interest expense, taxes & other income		150,634				83,642				228,517				168,820
Depreciation & amortization		141,374				136,149				279,735				271,973
One-time charges (3)		592,518				-				592,518				209,850
One-time gain		-				-				(294,000	)			-
Stock related expenses (4)		214,764				157,589				367,490				315,380
Cash EBITDA	$	(124,496	)		$	(560,144	)		$	(1,279,903	)		$	(1,815,372	)

 

(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)	Charges that are non-recurring or one-time items include: inventory adjustment expenses of $316,666, $86,866 in digital marketing fees associated with a settlement of digital marketing fees to a service provider, and $188,986 in expenses associated with the MapleMark loan transaction.
(4)	Includes stock and options-based compensation and expenses
(5)	Full Year GAAP weighted fully diluted share count

 

Company Contact:	Investor and Media Contact:
Ronit Wallerstein	Andrew M. Berger
Investor Relations	Managing Director
Innovative Food Holdings, Inc.	SM Berger & Company, Inc.
(239) 449-3249	(216) 464-6400
rwallerstein@IVFH.com	andrew@smberger.com

 

FAQ

What were Innovative Food Holdings' revenue results for Q2 2022?

Innovative Food Holdings reported total revenue of $20.5 million for Q2 2022, a record and a 47% year-over-year increase.

How much did specialty foodservice revenue increase in Q2 2022?

Specialty foodservice revenue increased 66% to $16.9 million in Q2 2022.

What is the net loss reported by IVFH for Q2 2022?

IVFH reported a GAAP net loss of $(1.2 million) for Q2 2022.

What steps is IVFH taking to improve its marketing cost structure?

IVFH is realigning its marketing strategies to enhance customer acquisition and retention, focusing on recurring revenues.

What financial support is IVFH expecting from the USDA loan?

IVFH is on track to secure a USDA loan guarantee of approximately $4.5 million to support its expansion strategies.