Innovative Food Holdings, Inc. Reports Financial Results for Second Quarter and First Half of 2021

Rhea-AI Summary

Innovative Food Holdings (IVFH) announced a 17% revenue increase year-over-year, achieving a total of $14 million in the second quarter of 2021. Specialty foodservice revenue soared by 148%, offset by a 56% decline in e-commerce sales. Despite challenges from COVID-19, the company reported improvements in gross margins and efficiency in SG&A expenses, which fell to their lowest level since 2019. A net loss of $0.9 million per share reflects continued investment in growth, yet also indicates operational challenges. Overall, revenue for the first half of 2021 reached $26.2 million, up from $25.3 million last year.

Positive

• 17% increase in total revenue to $14 million in Q2 2021.
• 148% growth in specialty foodservice revenue.
• Gross margin improved compared to Q1 2021.
• SG&A expenses at lowest level since 2019.

Negative

• 56% decline in e-commerce revenues year-over-year.
• Net loss of $0.9 million in Q2 2021, though improved from last year.

Total Revenue Increased 17% YoY to a Second Quarter Record
Specialty Foodservice Increased 148% YoY and Up 49% QoQ

BONITA SPRINGS, Fla., Aug. 24, 2021 (GLOBE NEWSWIRE) -- Innovative Food Holdings, Inc. (OTCQB: IVFH) (“IVFH” or the “Company”), a leading direct-to-consumer e-commerce platform with complete multi-channel, specialty food and grocery capabilities for both consumers and professional chefs, today reported its financial results for the second quarter and first half of 2021.

“We are thrilled by the return to year-over-year growth within our specialty foodservice operations, which helped produce record second-quarter revenues and a 17% increase over the prior year period. Our foodservice business increased 148% despite continued uncertainty related to increasing COVID-19 cases. In addition, IVFH’s agile operations, strong supplier network, and leading procurement teams allowed the Company to navigate unprecedented industry-wide supply chain challenges during the second quarter. We continue to leverage our strong platform and leading service-oriented culture to help our foodservice customers and e-commerce partners navigate rapidly evolving market conditions,” stated Sam Klepfish, CEO of Innovative Food Holdings.

“As expected, second quarter e-commerce sales were down compared to last year’s heightened level during the COVID-19 pandemic. Compared to pre-covid levels, second quarter e-commerce sales were up 84% from the 2019 second quarter and have grown 113% from the 2019 first half. In addition, our average order value continues to experience improving trends throughout our e-commerce platform. Our growth-oriented e-commerce strategies remain focused on pursuing additional partnerships, creating new transformative verticals, and introducing additional subscription-based products. We are also differentiating our brands and creating heightened awareness of our unique value propositions, while leveraging our leading digitally enabled, plug-and-play, direct-to-consumer platform. The progress we are making is encouraging, and I am excited by the positive momentum underway across our strong distribution channels, especially as we prepare for the seasonally strong holiday season.”

“We are also focused on transforming our operations, controlling costs, and returning to profitability. During the second quarter our gross margin improved from the first quarter, and we continue to prudently control SG&A expenses. We are working to leverage our fixed expenses and labor costs and, as a percent of revenue, SG&A expenses were the lowest level since 2019. I believe we have a significant opportunity to leverage our cost structure and further improve efficiencies as our business scales,” concluded Mr. Klepfish.

Financial Results
Revenues in the 2021 second quarter increased 17% to $14.0 million, compared to $12.0 million for the three months ended June 30, 2020. Second-quarter revenue benefitted from an 148% increase in specialty foodservice revenue, which was driven by the nationwide opening of restaurants and other foodservice establishments previously affected by COVID-19. The increase in specialty foodservice revenue was partially offset by a 56% decrease in e-commerce revenues as a result of heightened COVID-19 driven demand in 2020 compared to 2021. Compared to pre-covid levels, second quarter e-commerce revenue is up 84% from the 2019 second quarter, reflecting strong organic growth. For the first half of fiscal 2021, total revenue was $26.2 million, compared to $25.3 million last year.

The following table sets forth IVFH’s revenue by business category for the three and six months ended June 30, 2021 and June 30, 2020 (unaudited):

	Three Months Ended
	June 30, 2021			% of Net Revenues			June 30, 2020			% of Net Revenues			% Change
Specialty Foodservice	$	10,161,000		73	%		$	4,105,000		34	%		148		%
E-commerce		3,285,000		23	%			7,454,000		62	%		-56		%
National Brand Management		265,000		2	%			283,000		3	%		-6		%
Logistics		263,000		2	%			156,000		1	%		69		%
Total IVFH	$	13,974,000		100	%		$	11,998,000		100	%		16		%

	Six Months Ended
	June 30, 2021			% of Net Revenues			June 30, 2020			% of Net Revenues			% Change
Specialty Foodservice	$	16,989,000		65	%		$	14,018,000		55	%		21		%
E-commerce		8,265,000		32	%			10,332,000		41	%		-20		%
National Brand Management		491,000		2	%			533,000		2	%		-8		%
Logistics		411,000		1	%			421,000		2	%		-2		%
Total IVFH	$	26,156,000		100	%		$	25,304,000		100	%		3		%

For the 2021 second quarter, selling, general, and administrative (SG&A) expenses were $4.7 million, compared to $4.9 million for the same period last year, and $4.9 million for the 2021 first quarter. The $0.2 million decrease was primarily due to lower payroll and related costs, advertising costs, and increased efficiencies.

The Company reported a net loss for the 2021 second quarter of $(0.9 million), or $(0.03) per share, compared to a net loss of $(1.7 million), or $(0.05) per share, in the prior year’s second quarter. For the first six months of 2021, the Company reported a net loss of $(2.8 million), or $(0.08) per share, compared to a net loss of $(4.9 million), or $(0.14) per share, for the first six months of 2020.

Adjusted net income (see tables below) for the 2021 second quarter was a loss of $(0.8 million), or $(0.022) per share, compared to an adjusted net loss of $(1.5 million), or $(0.043) per share, for the same period last year. For the six months of 2021, adjusted net income was a loss of $(2.3 million), or $(0.063) per share, compared to an adjusted net loss of $(2.6 million), or $(0.074) per share, for the same period last year

Cash EBITDA, a non-GAAP metric (see tables below), for the 2021 second quarter was a loss of $(0.6 million), compared to Cash EBITDA loss of $(1.3 million), in the prior year quarter. For the 2021 first six months, Cash EBITDA was a loss of $(1.8 million), compared to an EBITDA loss of $(2.2 million) for the same period a year ago.

About Innovative Food Holdings, Inc.
IVFH’s direct to consumer e-commerce platforms and multiple distribution channels connect the world’s best artisan food makers with top chefs and epicurean consumers nationwide. Our unique ability to reach both specialty foodservice customers via leading national partnerships, and consumers via leading e-commerce channels, positions IVFH as a compelling industry resource for artisanal food producers, chefs, and the home gourmand. IVFH’s direct to consumer specialty food platforms 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 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.
Consolidated Balance Sheets
(unaudited)

	June 30,				December 31,
		2021				2020
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	1,639,359			$	5,060,015
Accounts receivable, net		2,923,798				2,380,305
Inventory		3,032,879				3,719,786
Other current assets		348,241				286,815
Total current assets		7,944,277				11,446,921
Property and equipment, net		8,362,522				8,550,401
Investments		286,725				496,575
Right to use assets, operating leases, net		285,396				246,737
Right to use assets, finance leases, net		710,743				776,439
Other amortizable intangible assets, net		94,640				100,380
Goodwill and other unamortizable intangible assets		1,532,822				1,532,822
Total assets	$	19,217,125			$	23,150,275
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	4,052,543			$	5,098,523
Accrued interest, current portion		33,128				28,873
Deferred revenue		980,535				2,917,676
Line of Credit		2,000,000				2,000,000
Notes payable - current portion, net of discount		2,037,495				1,741,571
Lease liability - operating leases, current		92,762				87,375
Lease liability - finance leases, current		148,094				146,004
Contingent liability - current portion		187,000				187,000
Total current liabilities		9,531,557				12,207,022
Accrued interest, long term portion		5,848				-
Lease liability - operating leases, non-current		192,634				159,362
Lease liability - finance leases, non-current		565,365				638,137
Contingent liability - long-term		108,600				116,600
Note payable - long term portion, net		7,401,327				6,151,345
Total liabilities		17,805,331				19,272,466
Commitments & Contingencies (see note 17)		-				-
Interco
Stockholders' equity
Common stock: $0.0001 par value; 500,000,000 shares authorized; 38,800,629 and 38,209,060 shares issued, and 35,963,049 and 35,371,480 shares outstanding at June 30, 2021 and December 31, 2020, respectively		3,877				3,817
Additional paid-in capital		37,730,475				37,415,155
Treasury stock: 2,623,171 and 2,623,171 shares outstanding at June 30, 2021 and December 31, 2019, respectively.		(1,141,370	)			(1,141,370	)
Accumulated deficit		(35,181,188	)			(32,399,793	)
Total stockholders' equity		1,411,794				3,877,809
Total liabilities and stockholders' equity	$	19,217,125			$	23,150,275
See notes to consolidated financial statements.		0				-

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,
			2021				2020				2021				2020
Revenue		$	13,974,564			$	11,997,649			$	26,155,463			$	25,303,569
Cost of goods sold			10,165,144				8,677,096				19,044,058				18,869,960
Gross margin			3,809,420				3,320,553				7,111,405				6,433,609
Selling, general and administrative expenses			4,663,302				4,895,430				9,514,130				9,508,191
Impairment of intangible assets			-				-				-				1,698,952
Total operating expenses			4,663,302				4,895,430				9,514,130				11,207,143
Operating (loss) income			(853,882	)			(1,574,877	)			(2,402,725	)			(4,773,534	)
Other income (expense:)
Impairment of investment			-				-				(209,850	)			-
Other leasing income			1,900				10,977				7,040				21,856
Interest expense, net			(85,542	)			(90,646	)			(175,860	)			(157,066	)
Total other income (expense)			(83,642	)			(79,669	)			(378,670	)			(135,210	)
Net (loss) income before taxes			(937,524	)			(1,654,546	)			(2,781,395	)			(4,908,744	)
Income tax expense			-				-				-				-
Net (loss) income		$	(937,524	)		$	(1,654,546	)		$	(2,781,395	)		$	(4,908,744	)
Net (loss) income per share - basic		$	(0.03	)		$	(0.05	)		$	(0.08	)		$	(0.14	)
Net (loss) income per share - diluted		$	(0.03	)		$	(0.05	)		$	(0.08	)		$	(0.14	)
Weighted average shares outstanding - basic			35,872,143				34,646,149				35,729,807				34,641,212
Weighted average shares outstanding - diluted			35,872,143				34,656,149				35,729,807				34,641,212

Innovative Food Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)

	For the Six				For the Six
	Months Ended				Months Ended
	June 30,				June 30,
		2021				2020
Cash flows from operating activities:
Net (loss) income	$	(2,781,395	)		$	(4,908,744	)
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment of intangible assets		-				1,698,952
Impairment of investment		209,850				-
Depreciation and amortization		271,973				442,465
Amortization of right-of-use asset		49,700				107,271
Amortization of prepaid loan fees		6,211				6,246
Stock based compensation		315,380				221,109
Provision for doubtful accounts		27,987				221,799
Changes in assets and liabilities:
Accounts receivable, net		(571,480	)			1,217,181
Inventory and other current assets, net		625,481				(578,575	)
Accounts payable and accrued liabilities		(1,035,849	)			(159,940	)
Deferred revenue		(1,937,141	)			(271,955	)
Contingent liabilities		(8,000	)			(24,000	)
Operating lease liability		(49,700	)			(107,271	)
Net cash (used in) provided by operating activities		(4,876,983	)			(2,135,462	)
Cash flows from investing activities:
Cash paid for website development		-				(14,000	)
Acquisition of property and equipment		(12,686	)			(90,207	)
Net cash used in investing activities		(12,686	)			(104,207	)
Cash flows from financing activities:
Proceeds from line of credit		-				2,000,000
Proceeds from Payroll Protection Plan Loan		1,748,414				1,650,221
Principal payments on debt		(208,719	)			(97,860	)
Principal payments financing leases		(70,682	)			(20,673	)
Net cash provided by (used in) financing activities		1,469,013				3,531,688
Increase (decrease) in cash and cash equivalents		(3,420,656	)			1,292,019
Cash and cash equivalents at beginning of period		5,060,015				3,966,050
Cash and cash equivalents at end of period	$	1,639,359			$	5,258,069
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	162,636			$	125,396
Taxes	$	-			$	-
Non-cash investing and financing activities:
Building improvements financed under note payable	$	-			$	851,934
Increase in right of use assets & liabilities	$	88,359			$	214,930
Investment in food related company	$	-			$	30,000
Capital lease for purchase of fixed assets	$	-			$	152,548

	Three Months Ended (unaudited)								Six Months Ended (unaudited)
	June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Adjusted Net Income and EPS (1)
Revenue	$	13,974,564			$	11,997,649			$	26,155,463			$	25,303,569
Net loss		(937,524	)			(1,654,546	)			(2,781,395	)			(4,908,744	)
Amortization of intangible assets (2)		2,870				-				5,740				210,032
One-time charges		-				-				209,850				1,917,891
Stock related expenses (3)		157,589				155,068				315,380				221,109
Adjusted Net Loss	$	(777,065	)		$	(1,499,478	)		$	(2,250,425	)		$	(2,559,712	)
Weighted Avg. Shares Outstanding Diluted (4)		35,872,143				34,656,149				35,729,807				34,641,212
Adjusted Fully Diluted EPS	$	(0.022	)		$	(0.043	)		$	(0.063	)		$	(0.074	)
	Three Months Ended (unaudited)								Six Months Ended (unaudited)
	June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Cash EBITDA (1)
Net loss	$	(937,524	)		$	(1,654,546	)		$	(2,781,395	)		$	(4,908,744	)
Interest expense, taxes & other income		83,642				79,669				168,820				135,210
Depreciation & amortization		136,149				117,931				271,973				442,496
One-time charges		-				-				209,850				1,917,891
Stock related expenses (3)		157,589				155,068				315,380				221,109
Cash EBITDA	$	(560,144	)		$	(1,301,878	)		$	(1,815,372	)		$	(2,192,038	)

(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)	Includes stock and options-based compensation and expenses
(4)	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.
(929) 275-1563	(216) 464-6400
rwallerstein@IVFH.com	andrew@smberger.com

FAQ

What are the key financial results for Innovative Food Holdings (IVFH) in Q2 2021?

IVFH reported a 17% increase in revenue, totaling $14 million, driven by a 148% rise in specialty foodservice revenue, despite a 56% dip in e-commerce.

How does the Q2 2021 performance compare to 2020 for IVFH?

The company experienced a recovery in revenue growth, with Q2 2021 revenues significantly higher than the pandemic-impacted period of 2020.

What were the e-commerce revenue trends for IVFH?

E-commerce revenues decreased by 56% year-over-year but remain 84% above pre-COVID levels from Q2 2019.

What is the net loss reported by IVFH in Q2 2021?

IVFH reported a net loss of $0.9 million, or $0.03 per share, which is an improvement from the $1.7 million loss in Q2 2020.

What is the overall revenue trend for IVFH in the first half of 2021?

For the first half of 2021, IVFH showed total revenue of $26.2 million, slightly up from $25.3 million in the same period in 2020.