Innovative Food Holdings: Reports Q1-2020 Results

Bonita Springs / FL. (ifh) Innovative Food Holdings, an interconnected data driven platform of specialty food companies that provides chefs and consumers direct access to the highest quality unique specialty food products across the U.S., reported its financial results for the first quarter ended March 31, 2020.

«We experienced strong e-commerce growth in the 2020 first quarter, which accelerated during the second quarter, as our e-commerce assets have been uniquely positioned to benefit from disruptive trends underway in our markets. Our in-house chefs and curation teams are working with our procurement, logistics, and marketing departments to create new products including high-quality specialty grocery products, themed specialty food kits, curated gifts, and monthly subscriptions. We are also investing in our platform to further increase customer engagement and conversion rates. During the third quarter, we expect to move into our new Pennsylvania distribution center, launch the new igourmet website featuring a modern user interface supported by Shopify, and further expand our digital marketing efforts,» stated Sam Klepfish, CEO of Innovative Food Holdings.

«As restaurants start re-opening, foodservice revenue has experienced sequential monthly improvements in May and June; however, foodservice revenues have experienced unprecedented declines starting in the second half of March 2020 and the impacts of the Covid-19 pandemic continue to affect foodservice customers. Related to these declines, we recorded a non-cash USD 1.7 million impairment charge during the first quarter. In addition, we experienced reduced profitability in the first quarter, which included higher expenses related to the Covid-19 crisis and a less profitable mix of foodservice business due to the Covid-19 crisis, as well as continued investments in our rapidly growing e-commerce platform. Despite these near-term impacts to profitability, we saw a USD 0.6 million year-over-year improvement in operating cash flow during the first quarter.»

«We believe our unique multi-channel infrastructure provides us with significant resources to successfully operate in the current market environment. As a result, we have seen growing interest from companies looking to leverage our e-commerce and foodservice assets. We have recently formed new relationships with large national retailers that are seeking to leverage our unique product lines and fulfillment capabilities in order to expand their specialty food offerings, which in turn has the potential to further expand our distribution channels and customer access. The Covid-19 crisis has significantly accelerated changes in consumer behavior already underway and, IVFH, like other e-commerce retailers, is seeing a paradigm shift towards digital channels. As a result, we are highly encouraged by our growing digital and direct-to-consumer presence, including our e-commerce monthly subscription offerings, our new omnichannel sales channels, and our new online products including recently developed meal kits, as well as the planned launch of igourmet’s new website and the move to our new state-of-the-art Pennsylvania distribution center,» concluded Mr. Klepfish.

IVFH’s revenue increased to USD 13.3 million during the three months ended March 31, 2020, compared to USD 12.9 million for the three months ended March 31, 2019. The primary drivers of the 3.5 percent increase in first quarter revenue was due to over 30 percent year-over-year growth in the Company’s e-commerce business as well as the contribution from new logistics revenue.

Deferred revenue associated with the Company’s e-commerce subscription services, which includes both Mouth and igourmet, was USD 0.4 million at March 31, 2020, compared to USD 0.3 million at March 31, 2019. The nearly 30 percent year-over-year increase in deferred revenue was driven by increased demand for the Company’s monthly food subscription offerings as well as an increase in gift cards sales.

For the 2020 first quarter, igourmet and Mouth had over 40,000 active unique customers, an increase of over 70 percent from the same period last year.

The following table sets forth IVFH’s revenue by business category for the three months ended March 31, 2020 and March 31, 2019 (unaudited).

Revenue by business category (unaudited)…
Three months ended… 2020-03-31 Net Sales 2019-03-31 Net Sales Change
Specialty Foodservice USD 9,913,000 74.5 % USD 10,206,000 79.4 % -2.9 %
E-commerce 2,878,000 21.6 % 2,187,000 17.0 % 31.6 %
National Brand Management 251,000 1.9 % 466,000 3.6 % -46.2 %
Logistics USD 264,000 2.0 % USD
Total IVFH USD 13,306,000 100 % USD 12,859,000 100 % 3.5 %

.
For the 2020 first quarter, selling and administrative (SG+A) expenses were USD 4.6 million, compared to USD 3.8 million for the same period last year. The USD 0.8 million, or approximately 21.7 percent increase, which included costs associated with Covid-19, was primarily due to a one-time increase in uncollectible debt allowance of USD 0.2 million, a USD 0.1 million increase in digital marketing expenses, USD 0.2 million of higher payroll and related costs, increases in professional and legal fees of USD 0.1 million, and increases in computer and information technology costs of USD 0.1 million.

For the 2020 first quarter, the Company reported a net loss of USD (3.3 million), or USD (0.09) per share, compared to net income of USD 0.2 million, or USD 0.01 per diluted share in the prior year’s first quarter. Adjusted net income for the 2020 first quarter was a loss of USD (1.1 million), or USD (0.031) per share, compared to net income of USD 0.5 million, or USD 0.015 per diluted share for the same period last year.

Cash Ebitda for the 2020 first quarter was a loss of USD (0.9 million), compared to positive Ebitda of USD 0.6 million in the prior year quarter.

bakenet:eu