Release Details

Key highlights:

• Third quarter adjusted EBITDA improved by $0.4 million to $0.9 million, the fifth consecutive quarter of year-over-year improved adjusted profitability
• Adjusted EBITDA as a percent of sales improved to 5.1%, from 2.4% in the third quarter of 2022, with adjusted EBITDA per share growing to $0.018, from $0.010 in the same period last year
• Year-over-year gross margin improved 568 basis points to 28.2%
• Third quarter revenue declined 13.8% year-over-year to $17.3 million
• Culmination of executive review of company strategy, resulting in a capital reallocation strategy, which will be discussed in more detail in today’s earnings call

BONITA SPRINGS, Fla., Nov. 09, 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 third quarter of 2023.  

“During the third quarter, we continued to focus on profit during our year of stabilization, with gross margins increasing 568 basis points to 28.2%. Overall, our performance in the third quarter drove a $124,987 improvement in net income to $134,733, and a $397,184 improvement to adjusted EBITDA to $887,673, or 5.1% of revenue, compared to 2.4% of revenue in the third quarter of 2022, marking the fifth consecutive quarter of year-over-year improved adjusted profitability.” stated Bill Bennett, CEO of Innovative Food Holdings.

Mr. Bennett continued, “Our revenue declined by 13.8%, driven primarily by our Specialty Foodservice business sales declining by 16%, as we continued to focus on overcoming the headwinds created by a change in the technology platform used by a key partner, leading to a smaller, though significantly more profitable business for us. We expect this Specialty Foodservice revenue softness to continue at a similar magnitude for the remainder of the year while our new growth plans begin to take shape.  This quarter included the establishment of our new sales team, the opening of several new customers, and the deepening of several existing customer relationships.  The B2B sales cycle is long, but we are optimistic about how today’s efforts will drive results next year.  On the eCommerce business, we continued to restrict marketing spend relative to historical levels as we improve the business model. We have now lapped four consecutive quarters of these marketing cuts, and the current quarter decline of only 0.7% (compared to declines of 20%+ over the last four quarters) indicates that the decline has subsided as we anticipated. That said, the e-commerce business continues to lose money, so we are now evaluating strategic alternatives for the business, with an eye towards eliminating the associated losses.”

“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. 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.”

Mr. Bennett added, “As announced earlier this year, we’ve used the last several months to conduct a full review of the company strategy. As an outcome to that work, we’ve made the decision to reallocate resources and capital from our long-term loss-making businesses, into our consistently profitable businesses, while reducing our debt, and causing zero incremental dilution to our shareholders. These moves will make a significant impact to our P&L as we reduce losses in e-commerce, allocate capital to profitable business growth, and reduce interest expense for the company. We will discuss more details of the strategy in today’s earnings call.

“Over the past eight 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 third quarter decreased 13.8% to $17.3 million, compared to $20.1 million for the three months ended September 30, 2023. Third-quarter revenue was impacted by a 16% decrease in specialty foodservice revenue. Third-quarter eCommerce revenue was down 0.7% to $1.8 million from $1.8 million for the same period last year, as the Company begins to lap the commencement of marketing cuts in the third quarter of 2022.

The following table sets forth IVFH’s revenue by business category for the months ended September 30, 2023, and September 30, 2022 (unaudited):

For the 2023 third quarter, gross margin as a percentage of sales was 28.2%, compared to 22.5% for the same period last year, primarily due to improved margin and mix management and lower shipping costs.

For the 2023 third quarter, selling, general, and administrative (SG&A) expenses were $4.5 million, or 25.9% of revenue, compared to $4.3 million, or 21.5% of revenue for the same period last year. The $0.2 million, or 3.8% year-over-year increase in SG&A expense was primarily the result of $272,727 in connection with the quarterly revaluation of stock appreciation rights held by the Company’s Chief Operating Officer.

The Company recorded GAAP net income for the 2023 third quarter of $0.134 million, or $0.003 per share, compared to $0.009 million, or $0.000 per share, in the prior year’s third quarter.

Adjusted EBITDA, a non-GAAP metric (see tables below), for the 2023 third quarter was $887,673, or $0.018 per share, compared to $490,489, or $0.010 per share, for the same period last year. Adjusted EBITDA accounts for the impact of non-core items including an addback for interest, taxes, amortization expense, expense on the extinguishment of debt, and stock related expenses in both 2023 and 2022.  

Conference Call
IVFH will host an investor call on November 9, 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 third fiscal quarter results for the quarter ended September 30, 2023, followed by Q&A with investors. The company will also provide additional details on its future strategy.

Investors and other interested participants may attend the call on the web or by phone as follows:

Join Zoom Meeting
https://us02web.zoom.us/j/83433496652?pwd=NURCdEhSS01zSU82R3FtMGVwdnY3QT09

Meeting ID: 834 3349 6652
Passcode: 631890

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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 

Source: Innovative Food Holdings