Innovative Food Holdings, Inc. Reports Financial Results for Second Quarter and First Half of 2020
COVID-19 Crisis Accelerates Ongoing Digital and Direct-to-Consumer Transformation
Second Quarter e-commerce Revenue Increased Over 317% to a Record $7.5 Million
Second Quarter Active and Unique e-commerce Customers Increased Over 266% Compared to the Prior Year Period
BONITA SPRINGS, Fla., Aug. 18, 2020 (GLOBE NEWSWIRE) -- Innovative Food Holdings, Inc. (OTCQB: IVFH), (“IVFH” or “the Company”), an interconnected data-driven platform of specialty food companies that provide chefs and consumers direct access to the highest quality unique specialty food products as well as gift boxes and other curated products across the U.S., today reported its financial results for the second quarter and first half of 2020.
“The COVID-19 pandemic has accelerated our ongoing transformation to a digitally-enabled, e-commerce-centric, direct-to-consumer and direct-to-chef company as second quarter e-commerce sales increased over 317% to a record $7.5 million and unique e-commerce customers for the quarter grew over 266% to more than 79,500 unique customers. I am extremely proud of our team’s response to the significant and rapid surge in e-commerce demand during the 2020 second quarter, and I am thankful that IVFH was able to provide customers across the country with essential food products in a safe and timely manner.”
“As we head into the second half of the year and the upcoming holiday season, momentum across our direct and third-party e-commerce channels is accelerating. Our enhanced digital marketing strategy is producing favorable results, across all e-commerce channels including particularly strong record sales growth at Mouth.com during the second quarter. We believe that as positive e-commerce trends continue, there are significant specialty food and specialty grocery e-commerce opportunities for IVFH. In addition, as we move towards the coming launch of the new igourmet.com website, we are particularly excited about additional growth opportunities related to the execution of our expanded digital marketing strategies, which will leverage the expertise, synergies, and success achieved by the team at Mouth.com. Furthermore, during the third quarter, we plan on migrating our Pennsylvania operation to a new warehouse, which is expected to improve efficiencies and enhance logistics, packaging, and automation capabilities. As a result, we are targeting greater overall and per unit efficiencies and productivity, and higher profitability of e-commerce as we move towards the anticipated increased demand of the fourth quarter.”
Mr. Klepfish continued “The COVID-19 crisis continues to have a meaningful impact on the specialty foodservice market. We are working hard to support our customers during this challenging period, and we believe we are strongly positioned to grow specialty foodservice revenues as economic conditions improve. Our direct-to-consumer e-commerce platform as well as our leading procurement and logistic capabilities allowed IVFH to quickly pivot resources and respond to the rapidly-changing market, which partially offset lower foodservice revenue during the quarter as a result of the COVID-19 crisis. We believe that IVFH’s leading multi-channel infrastructure and e-commerce-centric platform are uniquely positioned to offer our products directly to a growing customer base. In addition, we continue to accelerate compelling partnership opportunities with large, national retailers and other specialty food companies, leveraging years of experience working with corporate partners. Going forward, we are focused on continuing to leverage the positive momentum underway at IVFH and the multiple opportunities we have to expand e-commerce sales and bottom-line profitability.”
IVFH’s revenue were $12.0 million during the three months ended June 30, 2020, compared to $13.9 million for the three months ended June 30, 2019. E-commerce revenue increased over 317%, driven by the Company’s ability to increase customers, conversion and sales at its e-commerce properties and partially offset a 65% decline in specialty foodservice revenues. The decline in foodservice revenue was driven by the nationwide closures of restaurants and other foodservice establishments related to COVID-19. For the first half of fiscal 2020, total revenue was $25.3 million, compared to $26.8 million last year.
For the 2020 second quarter, IVFH had over 79,500 active and unique e-commerce customers, which is an increase of approximately 267% from the same period last year and is up nearly 100% from the 2020 first quarter.
The following table sets forth IVFH’s revenue by business category for the three and six months ended June 30, 2020 and June 30, 2019 (unaudited):
Three Months Ended | ||||||||||||||
June 30, | % of Net Sales | June 30, | % of Net Sales | % Change | ||||||||||
Specialty Foodservice | $ | 4,105,000 | 34 | % | $ | 11,670,000 | 84 | % | -65 | % | ||||
E-commerce | 7,454,000 | 62 | % | 1,784,000 | 13 | % | 318 | % | ||||||
National Brand Management | 283,000 | 3 | % | 471,000 | 3 | % | -41 | % | ||||||
Logistics | 156,000 | 1 | % | - | - | - | ||||||||
Total IVFH | $ | 11,998,000 | 100 | % | $ | 13,925,000 | 100 | % | -14 | % | ||||
Six Months Ended | ||||||||||||||
June 30, | % of Net Sales | June 30, | % of Net Sales | % Change | ||||||||||
Specialty Foodservice | $ | 14,018,000 | 55 | % | $ | 21,968,000 | 82 | % | -36 | % | ||||
E-commerce | 10,332,000 | 41 | % | 3,880,000 | 15 | % | 166 | % | ||||||
National Brand Management | 533,000 | 2 | % | 937,000 | 3 | % | -43 | % | ||||||
Logistics | 420,000 | 2 | % | - | - | - | ||||||||
Total IVFH | $ | 25,304,000 | 100 | % | $ | 26,785,000 | 100 | % | -6 | % | ||||
For the 2020 second quarter, selling and administrative (SG&A) expenses were $4.9 million, compared to $4.0 million for the same period last year, and $4.6 million for the 2020 first quarter. The $0.9 million, or approximately 21.8% year-over-year increase, which included costs associated with COVID-19, was primarily due to a $0.5 million increase in digital marketing expenses, $0.4 million of higher payroll and related costs including higher fulfillment costs as we focused on providing food to our customers, increases in professional and legal fees of $0.2 million, and $0.2 million of higher costs associated with banking and credit card fees, taxes, and insurance. For the 2020 first half, SG&A expenses were $9.5 million, compared to $7.8 million in the prior year period.
The Company reported a net loss for the 2020 second quarter of $(1.6 million), or $(0.05) per share, compared to net income of $22,000, or $0.00 per diluted share, in the prior year’s second quarter. For the first six months of 2020, the Company reported a net loss of $(4.9 million), or $(0.14) per share, compared to net income of $0.2 million, or $0.01 per diluted share, for the first six months of 2019.
Adjusted net income for the 2020 second quarter was a loss of $(1.5 million), or $(0.043) per share, compared to adjusted net income of $0.4 million, or $0.011 per diluted share, for the same period last year. For the six months of 2020, adjusted net income was a loss of $(2.6 million), or $(0.074) per share, compared to adjusted net income of $0.9 million, or $0.025 per diluted share, for the same period last year.
Cash EBITDA a non-GAAP metric (see tables below), for the 2020 second quarter was a loss of $(1.3 million), compared to Cash EBITDA of $0.5 million in the prior year quarter. For the 2020 first six months, Cash EBITDA was a loss of $(2.2 million), compared to EBITDA of $1.1 million for the same period a year ago.
About Innovative Food Holdings, Inc.
Innovative Food Holdings, Inc. is an interconnected data driven 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.ebay.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,” “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. 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, | |||||||
2020 | 2019 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 5,258,069 | $ | 3,966,050 | ||||
Accounts receivable, net | 1,870,850 | 3,309,830 | ||||||
Inventory | 2,830,047 | 2,350,622 | ||||||
Other current assets | 342,839 | 273,689 | ||||||
Total current assets | 10,301,805 | 9,900,191 | ||||||
Property and equipment, net | 7,377,629 | 6,645,389 | ||||||
Investments | 465,225 | 435,225 | ||||||
Right to use assets, operating leases, net | 301,392 | 193,733 | ||||||
Right to use assets, finance leases, net | 304,647 | 174,631 | ||||||
Other amortizable intangible assets, net | 98,000 | 1,342,741 | ||||||
Goodwill and other unamortizable intangible assets | 1,532,822 | 2,183,065 | ||||||
Total assets | $ | 20,381,520 | $ | 20,874,975 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 3,822,730 | $ | 4,009,956 | ||||
Accrued interest | 44,259 | 16,973 | ||||||
Deferred revenue | 227,821 | 499,776 | ||||||
Line of Credit | 2,000,000 | - | ||||||
Notes payable - current portion, net | 1,052,465 | 727,766 | ||||||
Lease liability - operating leases, current | 99,972 | 133,296 | ||||||
Lease liability - finance leases, current | 49,666 | 29,832 | ||||||
Contingent liability - current portion | 187,000 | 187,000 | ||||||
Total current liabilities | 7,483,913 | 5,604,599 | ||||||
Lease liability - operating leases, non-current | 201,420 | 60,437 | ||||||
Lease liability - finance leases, non-current | 266,946 | 154,905 | ||||||
Contingent liability - long-term | 132,600 | 156,600 | ||||||
Note payable - long term portion, net | 5,966,879 | 3,881,037 | ||||||
Total liabilities | 14,051,758 | 9,857,578 | ||||||
Commitments & Contingencies (see note 17) | - | - | ||||||
Stockholders' equity | ||||||||
Common stock: $0.0001 par value; 500,000,000 shares authorized; 37,556,746 and 37,210,859 shares issued, and 34,719,166 and 34,373,279 shares outstanding at June 30, 2020 and December 31, 2019, respectively | 3,752 | 3,718 | ||||||
Additional paid-in capital | 37,110,893 | 36,889,818 | ||||||
Treasury stock: 2,623,171 shares outstanding at June 30, 2020 and December 31, 2019 | (1,141,370 | ) | (1,141,370 | ) | ||||
Accumulated deficit | (29,643,513 | ) | (24,734,769 | ) | ||||
Total stockholders' equity | 6,329,762 | 11,017,397 | ||||||
Total liabilities and stockholders' equity | $ | 20,381,520 | $ | 20,874,975 | ||||
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, | |||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenue | $ | 11,997,649 | $ | 13,925,451 | $ | 25,303,569 | $ | 26,784,666 | ||||||||
Cost of goods sold | 8,677,096 | 9,862,369 | 18,869,960 | 18,743,749 | ||||||||||||
Gross margin | 3,320,553 | 4,063,082 | 6,433,609 | 8,040,917 | ||||||||||||
Selling, general and administrative expenses | 4,895,430 | 4,017,829 | 9,508,191 | 7,806,826 | ||||||||||||
Impairment of intangible assets | - | - | 1,698,952 | - | ||||||||||||
Total operating expenses | 4,895,430 | 4,017,829 | 11,207,143 | 7,806,826 | ||||||||||||
Operating (loss) income | (1,574,877 | ) | 45,253 | (4,773,534 | ) | 234,091 | ||||||||||
Other income (expense): | ||||||||||||||||
Other leasing income | 10,977 | - | 21,856 | - | ||||||||||||
Interest expense, net | (90,646 | ) | (23,149 | ) | (157,066 | ) | (48,627 | ) | ||||||||
Total other (expense) | (79,669 | ) | (23,149 | ) | (135,210 | ) | (48,627 | ) | ||||||||
Net (loss) income before taxes | (1,654,546 | ) | 22,104 | (4,908,744 | ) | 185,464 | ||||||||||
Income tax expense | - | - | - | - | ||||||||||||
Net (loss) income | $ | (1,654,546 | ) | $ | 22,104 | $ | (4,908,744 | ) | $ | 185,464 | ||||||
Net (loss) income per share - basic | $ | (0.05 | ) | $ | 0.00 | $ | (0.14 | ) | $ | 0.01 | ||||||
Net (loss) income per share - diluted | $ | (0.05 | ) | $ | 0.00 | $ | (0.14 | ) | $ | 0.01 | ||||||
Weighted average shares outstanding - basic | 34,656,149 | 33,947,817 | 34,641,212 | 34,001,294 | ||||||||||||
Weighted average shares outstanding - diluted | 34,656,149 | 33,947,817 | 34,641,212 | 34,001,294 | ||||||||||||
Innovative Food Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
For the Six | For the Six | |||||||
Months Ended | Months Ended | |||||||
June 30, | June 30, | |||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net (loss) income | $ | (4,908,744 | ) | $ | 185,464 | |||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
Impairment of intangible assets | 1,698,952 | - | ||||||
Depreciation and amortization | 442,465 | 631,026 | ||||||
Amortization of right-of-use asset | 107,271 | 88,644 | ||||||
Amortization of prepaid loan fees | 6,246 | - | ||||||
Stock based compensation | 221,109 | 196,252 | ||||||
Provision for doubtful accounts | 221,799 | (2,779 | ) | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable, net | 1,217,181 | (6,665 | ) | |||||
Inventory and other current assets, net | (578,575 | ) | 30,921 | |||||
Accounts payable and accrued liabilities | (159,940 | ) | (1,551,011 | ) | ||||
Deferred revenue | (271,955 | ) | (278,387 | ) | ||||
Contingent liabilities | (24,000 | ) | (63,768 | ) | ||||
Operating lease liability | (107,271 | ) | (88,644 | ) | ||||
Net cash used in operating activities | (2,135,462 | ) | (858,947 | ) | ||||
Cash flows from investing activities: | ||||||||
Cash paid for website development | (14,000 | ) | (23,500 | ) | ||||
Acquisition of property and equipment | (90,207 | ) | (85,829 | ) | ||||
Investment in food related company | - | (25,000 | ) | |||||
Net cash used in investing activities | (104,207 | ) | (134,329 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from line of credit | 2,000,000 | - | ||||||
Proceeds from Payroll Protection Plan Loan | 1,650,221 | - | ||||||
Principal payments on debt | (97,860 | ) | (594,877 | ) | ||||
Principal payments financing leases | (20,673 | ) | (12,811 | ) | ||||
Net cash provided by (used in) financing activities | 3,531,688 | (607,688 | ) | |||||
Increase (decrease) in cash and cash equivalents | 1,292,019 | (1,600,964 | ) | |||||
Cash and cash equivalents at beginning of period | 3,966,050 | 4,759,817 | ||||||
Cash and cash equivalents at end of period | $ | 5,258,069 | $ | 3,158,853 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 125,396 | $ | 49,337 | ||||
Taxes | $ | - | $ | - | ||||
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 | ||||
Building improvements financed under note payable | $ | 851,934 | $ | - | ||||
Increase in right of use assets & liabilities | $ | 214,930 | $ | 18,701 | ||||
Investment in food related company | $ | 30,000 | $ | 30,500 | ||||
Capital lease for purchase of fixed assets | $ | 152,548 | $ | - | ||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||
Adjusted Net Income and EPS (1) | |||||||||||||
Revenue | $ | 11,997,649 | $ | 13,925,451 | $ | 25,303,569 | $ | 26,784,666 | |||||
Net Income | (1,654,546 | ) | 22,104 | (4,908,744 | ) | 185,464 | |||||||
Amortization of intangible assets (2) | - | 250,567 | 210,032 | 479,697 | |||||||||
One-time charges | - | - | 1,917,891 | - | |||||||||
Stock related expenses (3) | 155,068 | 96,108 | 221,109 | 196,252 | |||||||||
Adjusted Net Income | $ | (1,499,478 | ) | $ | 368,779 | $ | (2,559,712 | ) | $ | 861,413 | |||
Weighted Avg. Shares Outstanding Diluted (4) | 34,641,212 | 33,947,817 | 34,641,212 | 34,001,294 | |||||||||
Adjusted Fully Diluted EPS | $ | (0.043 | ) | $ | 0.011 | $ | (0.074 | ) | $ | 0.025 | |||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||
Cash EBITDA (1) | |||||||||||||
Net Income | $ | (1,654,546 | ) | $ | 22,104 | $ | (4,908,744 | ) | $ | 185,464 | |||
Interest expense, taxes & other income | 79,669 | 23,149 | 135,210 | 48,627 | |||||||||
Depreciation & amortization | 117,931 | 325,821 | 442,496 | 631,086 | |||||||||
One-time charges | - | - | 1,917,891 | - | |||||||||
Stock related expenses (3) | 155,068 | 96,108 | 221,109 | 196,252 | |||||||||
Cash EBITDA | $ | (1,301,878 | ) | $ | 467,182 | $ | (2,192,038 | ) | $ | 1,061,429 | |||
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.
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. |
(929) 275-1563 | (216) 464-6400 |
