Innovative Food Holdings, Inc. Reports Financial Results for Second Quarter of 2023
- Adjusted EBITDA improved by $1.2 million to $453,947, marking the first profitable second quarter since 2019.
- Gross margin improved 377 basis points to 25.4%.
- SG&A declined by 271 basis points to 24.2%.
- The company generated $1.3 million in positive cash flow from operations, an improvement of $1.7 million compared to Q2 2022.
- None.
Key highlights:
- Second quarter adjusted EBITDA improved by
$1.2 million to$453,947 , first profitable second quarter since 2019 - Second quarter revenue down
8.2% year-over-year to$18.8 million - Gross margin improved 377 basis points to
25.4% - SG&A declined by 271 basis points to
24.2% $1.3 million in positive cash flow from operations, an improvement of$1.7 million compared to Q2 2022
BONITA SPRINGS, Fla., Aug. 10, 2023 (GLOBE NEWSWIRE) -- Innovative Food Holdings, Inc. (OTCQB: IVFH) (“IVFH” or the “Company”), a national seller of gourmet specialty foods to professional chefs and home gourmets, today reported its financial results for the second quarter of 2023.
“During the second quarter, our revenue declined by
“We also exit our second quarter with a dramatically reshaped balance sheet, enabled by the restructuring of our loans through Maple Mark bank, receiving a loan guarantee from the USDA, and receiving additional working capital from the USDA. As a result, we improved net working capital to a positive
Mr. Bennett continued, “It’s exciting to see the impacts of our plan begin to take shape as we see improvements in our capital structure, margins, expenses, and profit, and revenue declines less than we had expected. As we look forward, improving near term profitability and operating cash flow continue to be top priorities. This includes delivering continued improvements to gross margin by enhancing our product mix, building a more strategic pricing and promotional plan with supplier support, and reducing shipping expenses. We also remain committed to establishing a new lower baseline in SG&A expenses as we optimize our corporate structure, and proactively reduce spending on digital marketing programs.”
“Over the past five months as my tenure as CEO has developed, my level of confidence in the opportunity that lies ahead for IVFH continues to increase. We have a solid foundation, a passionate and committed team, and an industry with tremendous long-term potential. We recognize the importance of maintaining a laser focus on our top priorities in a complex economic environment to create a robust, profitable, and sustainable business model. As we navigate the ever-changing landscape of the food industry, we are confident in our ability to adapt, innovate, and capitalize on opportunities that will drive long-term shareholder value,” concluded Mr. Bennett.
Financial Results
Revenues in the 2023 second quarter decreased
The following table sets forth IVFH’s revenue by business category for the months ended June 30, 2023, and June 30, 2022 (unaudited):
Three Months Ended | ||||||||||||||
June 30, 2023 | % of Net Sales | June 30, 2022 | % of Net Sales | % Change | ||||||||||
Specialty Foodservice | $ | 16,046,000 | 85.3 | % | $ | 16,901,000 | 82.4 | % | -5.1 | % | ||||
E-Commerce | 2,208,000 | 11.7 | % | 3,185,000 | 15.5 | % | -30.7 | % | ||||||
National Brand Management | 309,000 | 1.6 | % | 252,000 | 1.2 | % | 22.6 | % | ||||||
Logistics | 270,000 | 1.4 | % | 185,000 | 0.9 | % | 45.9 | % | ||||||
Total IVFH | $ | 18,833,000 | 100 | % | $ | 20,523,000 | 100 | % | -8.2 | % |
For the 2023 second quarter, gross margin as a percentage of sales was
For the 2023 second quarter, selling, general, and administrative (SG&A) expenses were
The Company recorded GAAP net income for the 2023 second quarter of
Adjusted EBITDA, a non-GAAP metric (see tables below), for the 2023 second quarter was
Conference Call
IVFH will host an investor call on August 10, 2023 at 9:00 am Eastern Time via Zoom and by phone. The purpose of the meeting will be for management to discuss the Company's second fiscal quarter results for the quarter ended June 30, 2023, followed by Q&A with investors.
Investors and other interested participants may attend the call on the web or by phone as follows:
Join Zoom Meeting online: https://us02web.zoom.us/j/83669790398?pwd=NG9qcXVpeE03WmtTb0pZK1hXNjNiQT09
Meeting ID: 836 6979 0398
Passcode: 487262
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About Innovative Food Holdings, Inc.
At IVFH, we help make meals special. We provide access to foods that are hard to find, have a compelling story, or are on the forefront of food trends. Our gourmet foods marketplace connects the world’s best artisan food makers with top professional chefs and passionate home gourmets nationwide. We curate the assortment, experience, and tech enabled tools that help our professional and home chefs create unforgettable experiences for their guests and families. IVFH’s owned online retail brands include www.igourmet.com, www.plantbelly.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 international crises, 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.
Investor and Media contact:
Richard Tang
Chief Financial Officer
Innovative Food Holdings, inc.
investorrelations@ivfh.com
Innovative Food Holdings, Inc.
Consolidated Balance Sheets
(unaudited)
June 30, | December 31, | |||||||
2023 | 2022 | |||||||
ASSETS | (unaudited) | |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 6,172,432 | $ | 4,899,398 | ||||
Accounts receivable, net | 4,604,872 | 4,969,395 | ||||||
Inventory | 2,619,771 | 3,053,852 | ||||||
Other current assets | 390,091 | 289,432 | ||||||
Total current assets | 13,787,166 | 13,212,077 | ||||||
Property and equipment, net | 7,754,787 | 7,921,561 | ||||||
Right of use assets, operating leases, net | 120,575 | 152,425 | ||||||
Right of use assets, finance leases, net | 503,363 | 570,323 | ||||||
Other amortizable intangible assets, net | 10,332 | 30,994 | ||||||
Tradenames and other unamortizable intangible assets | 1,532,822 | 1,532,822 | ||||||
Total assets | $ | 23,709,045 | $ | 23,420,202 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 5,444,639 | 6,853,253 | |||||
Accrued separation costs, related parties, current portion | 350,590 | - | ||||||
Accrued interest | 61,316 | 18,104 | ||||||
Deferred revenue | 1,084,122 | 1,558,155 | ||||||
Line of Credit | 2,014,333 | 2,014,333 | ||||||
Notes payable - current portion | 119,627 | 5,711,800 | ||||||
Lease liability - operating leases, current | 65,356 | 64,987 | ||||||
Lease liability - finance leases, current | 190,507 | 191,977 | ||||||
Total current liabilities | 9,330,490 | 16,412,609 | ||||||
Note payable, net of discount | 8,934,659 | - | ||||||
Accrued separation costs, related parties, non-current | 957,892 | - | ||||||
Lease liability - operating leases, non-current | 55,219 | 87,438 | ||||||
Lease liability - finance leases, non-current | 240,166 | 333,092 | ||||||
Total liabilities | 19,518,426 | 16,833,139 | ||||||
Commitments & Contingencies (see note 16) | ||||||||
Stockholders' equity | ||||||||
Common stock: | 5,092 | 4,938 | ||||||
Additional paid-in capital | 42,608,233 | 42,189,471 | ||||||
Common stock to be issued, 847,320 and 1,499,940 shares at June 30, 2023 and December 31, 2022, respectively | 85 | 150 | ||||||
Treasury stock: 2,623,171 and 2,623,171 shares outstanding at June 30, 2023 and December 31, 2022, respectively. | (1,141,370 | ) | (1,141,370 | ) | ||||
Accumulated deficit | (37,281,421 | ) | (34,466,126 | ) | ||||
Total liabilities and stockholders' equity | 4,190,619 | 6,587,063 | ||||||
Total stockholders' equity | $ | 23,709,045 | $ | 23,420,202 |
Innovative Food Holdings, Inc.
Consolidated Statements of Operations
(unaudited)
For the Three | For the Three | For the Six | For the Six | |||||||||||||
Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue | $ | 18,833,321 | $ | 20,523,156 | $ | 35,828,521 | $ | 36,166,267 | ||||||||
Cost of goods sold | 14,040,410 | $ | 16,074,259 | 26,949,099 | 27,991,438 | |||||||||||
Gross margin | 4,792,911 | 4,448,897 | 8,879,422 | 8,174,829 | ||||||||||||
Selling, general and administrative expenses | 4,556,149 | 5,522,049 | 9,355,235 | 10,694,475 | ||||||||||||
Separation costs - executive officers | - | - | 1,945,650 | - | ||||||||||||
Total operating expenses | 4,556,149 | 5,522,049 | 11,300,885 | 10,694,475 | ||||||||||||
Operating income (loss) | 236,762 | (1,073,152 | ) | (2,421,463 | ) | (2,519,646 | ) | |||||||||
Other income (expense:) | ||||||||||||||||
Gain on interest rate swap | - | - | - | 294,000 | ||||||||||||
Loss on extinguishment of debt | - | (40,556 | ) | - | (40,556 | ) | ||||||||||
Other leasing income | 1,900 | 2,294 | 3,800 | 7,384 | ||||||||||||
Interest expense, net | (209,357 | ) | (112,372 | ) | (381,798 | ) | (195,345 | ) | ||||||||
Total other income (expense) | (207,457 | ) | (150,634 | ) | (377,998 | ) | 65,483 | |||||||||
Net income (loss) before taxes | 29,305 | (1,223,786 | ) | (2,799,461 | ) | (2,454,163 | ) | |||||||||
Income tax expense | 15,834 | - | 15,834 | - | ||||||||||||
Net income (loss) | $ | 13,471 | $ | (1,223,786 | ) | $ | (2,815,295 | ) | $ | (2,454,163 | ) | |||||
Net income (loss) per share - basic | $ | 0.00 | $ | (0.03 | ) | $ | (0.06 | ) | $ | (0.05 | ) | |||||
Net income (loss) per share - diluted | $ | 0.00 | $ | (0.03 | ) | $ | (0.06 | ) | $ | (0.05 | ) | |||||
Weighted average shares outstanding - basic | 49,064,084 | 46,855,525 | 48,764,822 | 46,557,498 | ||||||||||||
Weighted average shares outstanding - diluted | 49,064,084 | 46,855,525 | 48,764,822 | 46,557,498 |
Innovative Food Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
For the Six | For the Six | |||||||
Months Ended | Months Ended | |||||||
June 30, | June 30, | |||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (2,815,295 | ) | $ | (2,454,163 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 286,869 | 279,735 | ||||||
Amortization of right of use asset | 31,850 | 35,162 | ||||||
Amortization of prepaid loan fees | - | 20,582 | ||||||
Amortization of discount on notes payable | 729 | - | ||||||
Stock based compensation | 250,851 | 367,492 | ||||||
Loss on extinguishment of debt | - | 40,556 | ||||||
Gain on valuation of stock appreciation rights | (419 | ) | - | |||||
Provision (recoveries) for doubtful accounts | 50,905 | 8,056 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable, net | 313,618 | (1,779,184 | ) | |||||
Inventory and other current assets, net | 333,422 | 41,607 | ||||||
Accounts payable and accrued liabilities | (1,303,268 | ) | 627,395 | |||||
Accrued separation costs - related parties | 1,476,482 | - | ||||||
Deferred revenue | (474,033 | ) | (409,159 | ) | ||||
Operating lease liability | (31,850 | ) | (35,162 | ) | ||||
Net cash used in operating activities | (1,880,139 | ) | (3,257,083 | ) | ||||
Cash flows from investing activities: | ||||||||
Acquisition of property and equipment | (32,473 | ) | (92,633 | ) | ||||
Net cash used in investing activities | (32,473 | ) | (92,633 | ) | ||||
Cash flows from financing activities: | ||||||||
Payment of offering costs for stock previously issued | - | (50,000 | ) | |||||
Cash received from notes payable, net of costs | 3,285,588 | - | ||||||
Principal payments on debt | - | (167,001 | ) | |||||
Principal payments financing leases | (99,942 | ) | (85,176 | ) | ||||
Cost of debt financing | - | (110,305 | ) | |||||
Net cash provided by (used in) financing activities | 3,185,646 | (412,482 | ) | |||||
Increase (decrease) in cash and cash equivalents | 1,273,034 | (3,762,198 | ) | |||||
Cash and cash equivalents at beginning of period | 4,899,398 | 6,122,671 | ||||||
Cash and cash equivalents at end of period | $ | 6,172,432 | $ | 2,360,473 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 342,081 | $ | 128,798 | ||||
Taxes | $ | - | $ | - | ||||
Non-cash investing and financing activities: | ||||||||
(Decrease) Increase in right of use assets & liabilities | $ | - | $ | (13,216 | ) | |||
Finance lease for fixed assets | $ | - | $ | 42,500 | ||||
Debt to Fifth Third Bank paid directly by Maple Mark Bank | $ | - | $ | 7,686,481 | ||||
Issuance of common stock for severance agreement previously accrued | $ | 168,000 | $ | - |
Innovative Food Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Adjusted EBITDA Calculations
(unaudited, except share and per share amounts)
Three Months Ended (unaudited) | ||||||||
June 30, 2023 | June 30, 2022 | |||||||
Adjusted EBITDA & EBITDA per share (1) | ||||||||
Revenue | $ | 18,833,321 | $ | 20,523,156 | ||||
Net Income (Loss) | 13,471 | (1,223,786 | ) | |||||
Interest, net | 209,357 | 112,372 | ||||||
Taxes | 15,834 | - | ||||||
Depreciation and Amortization (2) | 141,482 | 141,374 | ||||||
EBITDA (3) | $ | 380,144 | $ | (970,040 | ) | |||
Loss on extinguishment of debt | - | 40,556 | ||||||
Stock related expenses (4) | 72,803 | 214,766 | ||||||
Adjusted EBITDA | $ | 452,947 | $ | (714,718 | ) | |||
Weighted Avg. Shares Outstanding | 49,064,084 | 46,855,525 | ||||||
Adjusted EBITDA per share | $ | 0.009 | $ | (0.015 | ) |
(1) | Adjusted EBITDA and Adjusted EBITDA per share 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 depreciation and amortization charges |
(3) | Earnings before interest, taxes, depreciation, and amortization |
(4) | Includes stock and options-based compensation and expenses |
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