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

• Total revenue up 32% year-over-year to a third-quarter record of $20.1 million
• igourmet B2B growth of over 300%, helped drive a 46% year-over-year increase in specialty foodservice revenue to a third quarter record
• Increased scale and previously announced optimization and SG&A efficiency strategies drive third quarter profitability
• $0.5 million of operating cash flow generated during the third quarter

BONITA SPRINGS, Fla., Nov. 16, 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 third quarter of 2022.

“Positive trends across our business remained strong in the third quarter, reflecting solid market share gains within our specialty foodservice business as we grew our customer base and expanded our offerings within existing customers. Robust specialty foodservice revenue drove record third-quarter sales, and we returned to profitability as a result of initiatives we announced in the second quarter aimed at optimizing our marketing cost structure and our continued emphasis on SG&A efficiency and bottom-line profitability. These trends helped SG&A expenses as a percentage of total revenue improve to 21.5% for the 2022 third quarter, from 32.9% for the same period last year and our relentless focus on bottom-line results drove a significant turnaround in core profitability and operating cash flow,” stated Sam Klepfish, CEO of Innovative Food Holdings.

Mr. Klepfish continued, “Our specialty foodservice and eCommerce teams continue to execute on our strategic growth plan, while successfully navigating unprecedented logistics, supply chain, and inflationary challenges. In addition, we continue to effectively offset normalizing eCommerce trends and industrywide changes impacting the effectiveness of digital marketing, demonstrating the benefits, flexibility, and sophistication of our DTC eCommerce and direct-to-chef platform.”

“While the economic and business environment remains extremely fluid, we have a strong, established, and leverageable foundation that provides valuable specialty food offerings to both professional chefs and consumers alike.   The direction we are headed is encouraging, and we entered the seasonally strong fourth quarter with positive momentum as we focus on profitably growing our business,” concluded Mr. Klepfish.

Financial Results

Revenues in the 2022 third quarter increased 32% to a third quarter record of $20.1 million, compared to $15.2 million for the three months ended September 30, 2021. Third-quarter revenue benefited from a 46% 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 $1.8 million, compared to $2.7 million for the same period last year primarily due to a decrease in COVID-19 driven demand in 2022 compared to 2021, and a strategic decision to focus on maximizing near term return on marketing spend, given the shifting changes within the digital marketing environment.

For the 2022 nine-month period, total revenue increased 36% to $56.2 million, compared to $41.4 million last year.

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

  Three Months Ended
  September 30,
2022
    % of Net
Sales
    September 30,
2021
    % of Net
Sales
      %
Change
Specialty Foodservice $ 17,630,000     88 %   $ 12,060,000     79 %     46 %
eCommerce   1,840,000     9 %     2,652,000     17 %     -31 %
National Brand Management   337,000     2 %     261,000     2 %     29 %
Logistics Services   253,000     1 %   $ 234,000     2 %     8 %
Total IVFH $ 20,060,000     100 %   $ 15,207,000     100 %     32 %

  Nine Months Ended
  September 30,
2022
  % of Net
Sales

  September 30,
2021
  % of Net
Sales 

  %
Change
Specialty Foodservice $ 46,072,000   82 %   $ 29,049,000   70 %   59 %
eCommerce   8,637,000   15 %     10,917,000   26 %   -21 %
National Brand Management   873,000   2 %     752,000   2 %   16 %
Logistics Services   644,000   1 %     645,000   2 %   0 %
Total IVFH $ 56,226,000   100 %   $ 41,363,000   100 %   36 %

For the 2022 third quarter, selling, general, and administrative (SG&A) expenses were $4.3 million, or 21.5% of revenue, compared to $5.0 million, or 32.9% of revenue for the same period last year. The $0.7 million decrease in SG&A dollars was primarily due to reductions in payroll and related costs, and decreased advertising and marketing expenses as a result of the strategic reductions in digital marketing given the challenging digital marketing environment, partially driven by higher customer acquisition costs and expanded privacy rules that significantly reduce data sharing. For the 2022 nine-month period, SG&A expenses were $15.0 million, or 26.7% of revenue, compared to $14.5 million, or 35.1% of revenue for the same period last year.

The Company recorded GAAP net income for the 2022 third quarter of $9,746, or $0.00 per diluted share, compared to GAAP net income of $367,026, or $0.01 per diluted share, in the prior year’s third quarter. For the 2022 nine-month period, the Company reported a net loss of $(2.4 million), or $(0.05) per share, compared to net loss of $(2.4 million) or $(0.06) per share, for the same period last year.   GAAP net income in both the 2021 third quarter and nine-month periods included a one-time gain of $1.6 million related to forgiveness of loans under the Paycheck Protection Program.

Cash provided by operating activities for the 2022 third quarter was $454,000, an improvement of $1.5 million compared to cash used in operating activities of $1.0 million for the same quarter a year ago. IVFH now expects to close its previously announced USDA loan guarantee in the first quarter of 2023. These USDA approvals, if received as currently anticipated, 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 tables below), for the 2022 third quarter was $173,000, or $0.004 per diluted share, compared to an adjusted net loss of $(1.1 million), or $(0.028) per share, for the same period last year. For the first nine months of 2022, adjusted net income was a loss of $(1.6 million), or $(0.034) per share, compared to an adjusted net loss of $(3.4 million), or $(0.091) per share, for the same period last year.

Cash EBITDA, a non-GAAP metric (see tables below), for the 2022 third quarter improved by over $1.4 million to $490,000, compared to a Cash EBITDA loss of $(922,000), in the prior year quarter. For the 2022 first nine months, Cash EBITDA was a loss of $(790,000), compared to a Cash EBITDA loss of $(2.7 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

    September 30,     December 31,  
    2022     2021  
    (unaudited)          
ASSETS                
Current assets                
Cash and cash equivalents   $ 2,752,404     $ 6,122,671  
Accounts receivable, net     4,670,645       3,256,764  
Inventory     2,937,098       3,109,984  
Other current assets     336,350       314,107  
Total current assets     10,696,497       12,803,526  
                 
Property and equipment, net     8,008,057       8,186,227  
Investments     286,725       286,725  
Right of use assets, operating leases, net     168,344       232,381  
Right of use assets, finance leases, net     603,803       669,039  
Other amortizable intangible assets, net     41,325       72,218  
Tradenames and other unamortizable intangible assets     1,532,822       1,532,822  
Total assets   $ 21,337,573     $ 23,782,938  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities                
Accounts payable and accrued liabilities   $ 6,070,249     $ 5,702,905  
Accrued interest, current portion     18,008       29,349  
Deferred revenue     1,094,649       1,631,406  
Line of Credit     2,014,333       2,000,000  
Notes payable – current portion, net of discount     5,667,485       412,961  
Lease liability – operating leases, current     63,569       74,088  
Lease liability – finance leases, current     188,818       159,823  
Contingent liability – current portion     187,000       187,000  
Total current liabilities     15,304,111       10,197,532  
                 
Lease liability – operating leases, non-current     104,775       158,293  
Lease liability – finance leases, non-current     382,286       499,240  
Contingent liability – long-term     108,600       108,600  
Note payable – long term portion, net     1,899       5,409,172  
Total liabilities     15,901,671       16,372,837  
                 
                 
                 
                 
Commitments & Contingencies (see note 17)                
Stockholders’ equity                
Common stock: $0.0001 par value; 500,000,000 shares authorized; 50,616,590 and 48,879,331 shares issued, and 47,779,010 and 46,041,751 shares outstanding at September 30, 2022 and December 31, 2021, respectively     5,057       4,885  
Additional paid-in capital     42,132,756       41,662,710  
Treasury stock: 2,623,171 and 2,623,171 shares outstanding at September 30, 2022 and December 31, 2021, respectively.     (1,141,370 )     (1,141,370 )
Accumulated deficit     (35,560,541 )     (33,116,124 )
Total liabilities and stockholders’ equity     5,435,902       7,410,101  
                 
Total stockholders’ equity   $ 21,337,573     $ 23,782,938  
                 

Innovative Food Holdings, Inc.
Condensed Consolidated Statements of Operations
(unaudited)

    For the Three
Months Ended
    For the Nine
Months Ended
 
         
    September 30,     September 30,     September 30,     September 30,  
    2022     2021     2022     2021  
                                 
Revenue   $ 20,059,982     $ 15,207,353     $ 56,226,249     $ 41,362,816  
Cost of goods sold     15,546,132       11,427,343       43,537,570       30,471,401  
Gross margin     4,513,850       3,780,010       12,688,679       10,891,415  
                                 
Selling, general and administrative expenses     4,320,981       4,998,673       15,015,456       14,512,803  
Total operating expenses     4,320,981       4,998,673       15,015,456       14,512,803  
                                 
Operating (loss) income     192,869       (1,218,663 )     (2,326,777 )     (3,621,388 )
                                 
Other income (expense:)                                
Impairment of investment                       (209,850 )
Gain on interest rate swap                 294,000        
Gain on forgiveness of debt           1,665,818             1,665,818  
Loss on extinguishment of debt                 (40,556 )      
Other leasing income     785       1,900       8,169       8,940  
Interest expense, net     (183,908 )     (82,029 )     (379,253 )     (257,889 )
Total other income (expense)     (183,123 )     1,585,689       (117,640 )     1,207,019  
                                 
Net (loss) income before taxes     9,746       367,026       (2,444,417 )     (2,414,369 )
                                 
Income tax expense                        
                                 
Net (loss) income   $ 9,746     $ 367,026     $ (2,444,417 )   $ (2,414,369 )
                                 
Net (loss) income per share – basic   $ 0.00     $ 0.01     $ (0.05 )   $ (0.06 )
                                 
Net (loss) income per share – diluted   $ 0.00     $ 0.01     $ (0.05 )   $ (0.06 )
                                 
Weighted average shares outstanding – basic     47,390,976       40,253,543       46,838,377       37,254,290  
                                 
Weighted average shares outstanding – diluted     47,390,976       40,253,543       46,838,377       37,254,290  
                                 

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

    For the Nine     For the Nine  
    Months Ended     Months Ended  
    September 30,     September 30,  
    2022     2021  
    (unaudited)     (unaudited)  
Cash flows from operating activities:                
Net loss   $ (2,444,417 )   $ (2,414,369 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Gain on forgiveness of debt           (1,665,818 )
Impairment of investment           209,850  
Depreciation and amortization     423,844       407,704  
Amortization of right-of-use asset     50,821       76,005  
Amortization of prepaid loan fees     70,618       9,368  
Stock based compensation     520,218       476,132  
Loss on extinguishment of debt     40,556        
Provision for doubtful accounts     11,493       32,443  
                 
Changes in assets and liabilities:                
Accounts receivable, net     (1,425,374 )     (1,254,764 )
Inventory and other current assets, net     150,643       869,165  
Accounts payable and accrued liabilities     386,414       (747,187 )
Deferred revenue     (536,757 )     (1,861,665 )
Contingent liabilities           (8,000 )
Operating lease liability     (50,821 )     (76,005 )
Net cash (used in) operating activities     (2,802,762 )     (5,947,141 )
                 
Cash flows from investing activities:                
Acquisition of property and equipment     (107,045 )     (14,812 )
Net cash used in investing activities     (107,045 )     (14,812 )
                 
Cash flows from financing activities:                
Payment of offering costs for stock previously issued     (50,000 )      
Proceeds from sale of common stock, net of costs             3,580,372  
Proceeds from Payroll Protection Plan Loan           1,748,414  
Principal payments on debt     (169,696 )     (299,924 )
Principal payments financing leases     (130,459 )     (108,528 )
Cost of debt financing     (110,305 )      
Net cash provided by (used in) financing activities     (460,460 )     4,920,334  
                 
Decrease in cash and cash equivalents     (3,370,267 )     (1,041,619 )
                 
Cash and cash equivalents at beginning of period     6,122,671       5,060,015  
                 
Cash and cash equivalents at end of period   $ 2,752,404     $ 4,018,396  
                 
Supplemental disclosure of cash flow information:                
                 
Cash paid during the period for:                
Interest   $ 187,090     $ 250,967  
                 
Taxes   $     $  
                 
Non-cash investing and financing activities:                
Increase in right of use assets & liabilities – new leases   $     $ 88,359  
Decrease in right of use assets & liabilities – cancellation of lease   $ 13,216     $  
Finance lease for fixed assets   $ 42,500     $ 21,885  
Debt to Fifth Third Bank paid directly by Maple Mark Bank   $ 7,695,866     $  
Reclassification of accounts receivable to other assets   $     $ 22,380  
                 

Innovative Food Holdings, Inc.
Reconciliation of GAAP to NON-GAAP Measures
Adjusted Net Income, Adjusted Net Income Per Share and Adjusted Cash EBITDA Calculations
(unaudited)

  Three Months Ended
(unaudited)
  Nine Months Ended
(unaudited)
  September 30,
2022
  September 30,
2021
  September 30,
2022
  September 30,
2021
Adjusted Net Income and EPS (1)              
Revenue $ 20,059,982   $ 15,207,353     $ 56,226,249     $ 41,362,816  
Net income (loss)   9,746     367,026       (2,444,417 )     (2,414,369 )
Amortization of intangible assets (2)   10,331     2,870       30,893       8,610  
One-time charges (3)             592,518       209,850  
One-time gain       (1,665,818 )     (294,000 )     (1,665,818 )
Stock related expenses (4)   152,728     160,752       520,218       476,132  
Adjusted Net Income
$ 172,805   $ (1,135,170 )   $ (1,594,788 )   $ (3,385,595 )
Weighted Avg. Shares Outstanding
Diluted (5)
  47,390,976     40,253,543       46,838,377       37,254,290  
Adjusted Fully Diluted EPS $ 0.004   $ (0.028 )   $ (0.034 )   $ (0.091 )
               
  Three Months Ended
(unaudited)
  Nine Months Ended
(unaudited)
  September 30,
2022
  September 30,
2021
  September 30,
2022
  September 30,
2021
Cash EBITDA (1)              
Net income (loss) $ 9,746   $ 367,026     $ (2,444,417 )   $ (2,414,369 )
Interest expense, taxes & other income   183,123     80,129       411,640       248,949  
Depreciation & amortization   144,109     135,733       423,844       407,676  
One-time charges(3)             592,518       209,850  
One-time gain       (1,665,818 )     (294,000 )     (1,665,818 )
Stock related expenses (4)   152,728     160,752       520,218       476,132  
Cash EBITDA $ 489,706   $ (922,178 )   $ (790,197 )   $ (2,737,580 )
                             

(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

 

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