Bonita Springs / FL. (ifh) Innovative Food Holdings, a leading end-to-end DTC e-commerce platform and direct-to-chef platform that provides unique specialty foods through e-commerce offerings and multichannel partnerships, reported its financial results for the second quarter of 2022.
«The strong growth we are experiencing in specialty foodservice revenue is encouraging and helped IVFH produce record second quarter revenue. Positive momentum remains robust across our foodservice operations, including igourmet’s B2B business, as a result of continued re-opening activities and our ability to grow market share by providing unique specialty foods and excellent customer service to our customers. I am proud of our team’s hard work as we continue to successfully navigate unprecedented logistics, supply chain, and inflationary challenges. Second quarter and year-to-date sales also reflect the strength of our platforms as record foodservice revenue successfully offset normalizing eCommerce trends and industry wide changes impacting the effectiveness of digital marketing,» stated CEO Sam Klepfish.
«Overall, eCommerce trends remain significantly above pre-pandemic levels and we continue to improve our overall cost structure with a focus on driving long-term profitable growth within our eCommerce businesses. Second quarter profitability was impacted by several nonrecurring, one-time items affecting both our cost of goods sold and our SG+A expenses, including inventory adjustments and fees associated with our recent refinancing. Additionally, we implemented several actions towards the end of the second quarter and in the third quarter aimed at improving our marketing cost structure. This includes realigning our marketing strategies to improve our customer acquisition costs, while also doubling down on efforts to improve customer retention, and drive recurring and subscription revenues within our eCommerce business,» continued Klepfish.
«We believe our specialty foodservice assets are well positioned for revenue growth throughout 2022 and beyond, while we also navigate the rapidly changing digital marketing environment by continuing to focus on the customer experience within our eCommerce platform. We also continue to pursue an expanding number of organic, non-organic, and partnership opportunities, as well as additional B2B opportunities. We believe we are well positioned to leverage our specialty food direct-to-consumer eCommerce platform, which includes leading back-end logistics, fulfillment, and procurement capabilities, as well as our front-end digital infrastructure. Looking at the second half of 2022, I am excited by the direction we are headed as we focus on growing our business profitably,» concluded Klepfish.
Revenues in the 2022 second quarter increased 47 percent to a second quarter record of USD 20.5 million, compared to USD 14.0 million for the three months ended June 30, 2021. Second-quarter revenue benefited from a 66 percent 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 USD 3.2 million, compared to USD 3.3 million for the same period last year primarily due to a decrease in COVID-19 driven demand in 2022 compared to 2021, and a more challenging digital marketing environment. For the first half of fiscal 2022, total revenue increased 38 percent to USD 36.2 million, compared to USD 26.2 million last year.
For the 2022 second quarter, selling, general, and administrative (SG+A) expenses were USD 5.5 million, or 27 percent of revenue, compared to USD 4.7 million, or 33 percent of revenue for the same period last year. The USD 0.9 million increase in SG+A dollars was primarily due to higher advertising and marketing costs driven by an increasingly challenging digital marketing environment, including expanded privacy rules that significantly reduce data sharing and an increase in foodservice payroll to support higher sales, mostly offset by reductions in eCommerce related payroll. For the 2022 first six months, SG+A expenses were USD 10.7 million, or 30 percent of revenue, compared to USD 9.5 million, or 36 percent of revenue for the same period last year.
The Company recorded a GAAP net loss for the 2022 second quarter of USD (1.2 million), or USD (0.03) per share, compared to a GAAP net loss of USD (0.9 million), or USD (0.03) per share, in the prior year’s second quarter. For the first six months of 2022, the Company reported a net loss of USD (2.5 million), or USD (0.05) per share, compared to a net loss of USD (2.8 million), or USD (0.08) per share, for the first six months of 2021.
Cash used in operating activities for the 2022 second quarter was USD 384,000 an improvement of USD 996,000 compared to cash used in operating activities of USD 1.4 million for the same quarter a year ago. Furthermore, IVFH is on track to close its previously announced USDA loan guarantee. These USDA approvals will extend the Company’s current term loan to 30 years and will provide approximately USD 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 table below), for the 2022 second quarter was a loss of USD (0.4 million), or USD (0.009) per share, compared to an adjusted net loss of USD (0.8 million), or USD (0.022) per share, for the same period last year. For the six months of 2022, adjusted net income was a loss of USD (1.8 million), or USD (0.038) per share, compared to an adjusted net loss of USD (2.3 million), or USD (0.063) per share, for the same period last year.
Cash Ebitda loss, a non-GAAP metric, for the 2022 second quarter improved by over USD 0.4 million to USD (0.1 million), compared to Cash Ebitda loss of USD (0.6 million) in the prior year’s second quarter. For the 2022 first six months, Cash Ebitda was a loss of USD (1.3 million), compared to an Ebitda loss of USD (1.8 million) for the same period a year ago.