Key highlights:
- Second quarter adjusted EBITDA improved by
$1.2 million to$453,947 , first profitable second quarter since 2019 - Second quarter revenue down 8.2% year-over-year to
$18.8 million - Gross margin improved 377 basis points to 25.4%
- SG&A declined by 271 basis points to 24.2%
$1.3 million in positive cash flow from operations, an improvement of$1.7 million compared to Q2 2022
“During the second quarter, our revenue declined by 8.2%. Both our eCommerce and Specialty Foodservice businesses contributed to the declines, though both declined less than our expectations. On the eCommerce business, we continued to restrict marketing spend relative to historical levels as we improve the business model, leading to declines of 30.7%, in line with trends in the prior three quarters. Now that we’ve run four quarters of marketing cuts and revenue declines, we expect these revenue headwinds to subside in future quarters. On the Specialty Foodservice business, revenue declined 5.1% as post-COVID reopening trends normalized. This normalization, combined with our recent price increases and a change in the technology platform used by a key partner, have led 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. Our plan to improve the fundamentals of the company’s business model made significant progress, with gross margins increasing 377 basis points to 25.4% and SG&A decreasing 271 basis points to 24.2%, compared with Q2 of 2022. These improvements drove a
“We also exit our second quarter with a dramatically reshaped balance sheet, enabled by the restructuring of our loans through Maple Mark bank, receiving a loan guarantee from the
“Over the past five 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
Financial Results
Revenues in the 2023 second quarter decreased 8.2% to
The following table sets forth IVFH’s revenue by business category for the months ended
Three Months Ended | ||||||||||||||
2023 | % of Net Sales | 2022 | % of Net Sales | % Change | ||||||||||
Specialty Foodservice | $ | 16,046,000 | 85.3 | % | $ | 16,901,000 | 82.4 | % | -5.1 | % | ||||
E-Commerce | 2,208,000 | 11.7 | % | 3,185,000 | 15.5 | % | -30.7 | % | ||||||
National Brand Management | 309,000 | 1.6 | % | 252,000 | 1.2 | % | 22.6 | % | ||||||
Logistics | 270,000 | 1.4 | % | 185,000 | 0.9 | % | 45.9 | % | ||||||
Total IVFH | $ | 18,833,000 | 100 | % | $ | 20,523,000 | 100 | % | -8.2 | % |
For the 2023 second quarter, gross margin as a percentage of sales was 25.4%, compared to 21.7% for the same period last year, primarily due to improved margin and mix management and lower shipping costs.
For the 2023 second quarter, selling, general, and administrative (SG&A) expenses were
The Company recorded GAAP net income for the 2023 second quarter of
Adjusted EBITDA, a non-GAAP metric (see tables below), for the 2023 second quarter was
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About
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
Investor and Media contact:
Chief Financial Officer
investorrelations@ivfh.com
Consolidated Balance Sheets
(unaudited)
2023 | 2022 | |||||||
ASSETS | (unaudited) | |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 6,172,432 | $ | 4,899,398 | ||||
Accounts receivable, net | 4,604,872 | 4,969,395 | ||||||
Inventory | 2,619,771 | 3,053,852 | ||||||
Other current assets | 390,091 | 289,432 | ||||||
Total current assets | 13,787,166 | 13,212,077 | ||||||
Property and equipment, net | 7,754,787 | 7,921,561 | ||||||
Right of use assets, operating leases, net | 120,575 | 152,425 | ||||||
Right of use assets, finance leases, net | 503,363 | 570,323 | ||||||
Other amortizable intangible assets, net | 10,332 | 30,994 | ||||||
Tradenames and other unamortizable intangible assets | 1,532,822 | 1,532,822 | ||||||
Total assets | $ | 23,709,045 | $ | 23,420,202 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 5,444,639 | 6,853,253 | |||||
Accrued separation costs, related parties, current portion | 350,590 | - | ||||||
Accrued interest | 61,316 | 18,104 | ||||||
Deferred revenue | 1,084,122 | 1,558,155 | ||||||
Line of Credit | 2,014,333 | 2,014,333 | ||||||
Notes payable - current portion | 119,627 | 5,711,800 | ||||||
Lease liability - operating leases, current | 65,356 | 64,987 | ||||||
Lease liability - finance leases, current | 190,507 | 191,977 | ||||||
Total current liabilities | 9,330,490 | 16,412,609 | ||||||
Note payable, net of discount | 8,934,659 | - | ||||||
Accrued separation costs, related parties, non-current | 957,892 | - | ||||||
Lease liability - operating leases, non-current | 55,219 | 87,438 | ||||||
Lease liability - finance leases, non-current | 240,166 | 333,092 | ||||||
Total liabilities | 19,518,426 | 16,833,139 | ||||||
Commitments & Contingencies (see note 16) | ||||||||
Stockholders' equity | ||||||||
Common stock: | 5,092 | 4,938 | ||||||
Additional paid-in capital | 42,608,233 | 42,189,471 | ||||||
Common stock to be issued, 847,320 and 1,499,940 shares at | 85 | 150 | ||||||
(1,141,370 | ) | (1,141,370 | ) | |||||
Accumulated deficit | (37,281,421 | ) | (34,466,126 | ) | ||||
Total liabilities and stockholders' equity | 4,190,619 | 6,587,063 | ||||||
Total stockholders' equity | $ | 23,709,045 | $ | 23,420,202 |
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 | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue | $ | 18,833,321 | $ | 20,523,156 | $ | 35,828,521 | $ | 36,166,267 | ||||||||
Cost of goods sold | 14,040,410 | $ | 16,074,259 | 26,949,099 | 27,991,438 | |||||||||||
Gross margin | 4,792,911 | 4,448,897 | 8,879,422 | 8,174,829 | ||||||||||||
Selling, general and administrative expenses | 4,556,149 | 5,522,049 | 9,355,235 | 10,694,475 | ||||||||||||
Separation costs - executive officers | - | - | 1,945,650 | - | ||||||||||||
Total operating expenses | 4,556,149 | 5,522,049 | 11,300,885 | 10,694,475 | ||||||||||||
Operating income (loss) | 236,762 | (1,073,152 | ) | (2,421,463 | ) | (2,519,646 | ) | |||||||||
Other income (expense:) | ||||||||||||||||
Gain on interest rate swap | - | - | - | 294,000 | ||||||||||||
Loss on extinguishment of debt | - | (40,556 | ) | - | (40,556 | ) | ||||||||||
Other leasing income | 1,900 | 2,294 | 3,800 | 7,384 | ||||||||||||
Interest expense, net | (209,357 | ) | (112,372 | ) | (381,798 | ) | (195,345 | ) | ||||||||
Total other income (expense) | (207,457 | ) | (150,634 | ) | (377,998 | ) | 65,483 | |||||||||
Net income (loss) before taxes | 29,305 | (1,223,786 | ) | (2,799,461 | ) | (2,454,163 | ) | |||||||||
Income tax expense | 15,834 | - | 15,834 | - | ||||||||||||
Net income (loss) | $ | 13,471 | $ | (1,223,786 | ) | $ | (2,815,295 | ) | $ | (2,454,163 | ) | |||||
Net income (loss) per share - basic | $ | 0.00 | $ | (0.03 | ) | $ | (0.06 | ) | $ | (0.05 | ) | |||||
Net income (loss) per share - diluted | $ | 0.00 | $ | (0.03 | ) | $ | (0.06 | ) | $ | (0.05 | ) | |||||
Weighted average shares outstanding - basic | 49,064,084 | 46,855,525 | 48,764,822 | 46,557,498 | ||||||||||||
Weighted average shares outstanding - diluted | 49,064,084 | 46,855,525 | 48,764,822 | 46,557,498 |
Consolidated Statements of Cash Flows
(unaudited)
For the Six | For the Six | |||||||
Months Ended | Months Ended | |||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (2,815,295 | ) | $ | (2,454,163 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 286,869 | 279,735 | ||||||
Amortization of right of use asset | 31,850 | 35,162 | ||||||
Amortization of prepaid loan fees | - | 20,582 | ||||||
Amortization of discount on notes payable | 729 | - | ||||||
Stock based compensation | 250,851 | 367,492 | ||||||
Loss on extinguishment of debt | - | 40,556 | ||||||
Gain on valuation of stock appreciation rights | (419 | ) | - | |||||
Provision (recoveries) for doubtful accounts | 50,905 | 8,056 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable, net | 313,618 | (1,779,184 | ) | |||||
Inventory and other current assets, net | 333,422 | 41,607 | ||||||
Accounts payable and accrued liabilities | (1,303,268 | ) | 627,395 | |||||
Accrued separation costs - related parties | 1,476,482 | - | ||||||
Deferred revenue | (474,033 | ) | (409,159 | ) | ||||
Operating lease liability | (31,850 | ) | (35,162 | ) | ||||
Net cash used in operating activities | (1,880,139 | ) | (3,257,083 | ) | ||||
Cash flows from investing activities: | ||||||||
Acquisition of property and equipment | (32,473 | ) | (92,633 | ) | ||||
Net cash used in investing activities | (32,473 | ) | (92,633 | ) | ||||
Cash flows from financing activities: | ||||||||
Payment of offering costs for stock previously issued | - | (50,000 | ) | |||||
Cash received from notes payable, net of costs | 3,285,588 | - | ||||||
Principal payments on debt | - | (167,001 | ) | |||||
Principal payments financing leases | (99,942 | ) | (85,176 | ) | ||||
Cost of debt financing | - | (110,305 | ) | |||||
Net cash provided by (used in) financing activities | 3,185,646 | (412,482 | ) | |||||
Increase (decrease) in cash and cash equivalents | 1,273,034 | (3,762,198 | ) | |||||
Cash and cash equivalents at beginning of period | 4,899,398 | 6,122,671 | ||||||
Cash and cash equivalents at end of period | $ | 6,172,432 | $ | 2,360,473 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 342,081 | $ | 128,798 | ||||
Taxes | $ | - | $ | - | ||||
Non-cash investing and financing activities: | ||||||||
(Decrease) Increase in right of use assets & liabilities | $ | - | $ | (13,216 | ) | |||
Finance lease for fixed assets | $ | - | $ | 42,500 | ||||
Debt to | $ | - | $ | 7,686,481 | ||||
Issuance of common stock for severance agreement previously accrued | $ | 168,000 | $ | - |
Reconciliation of GAAP to Non-GAAP Measures
Adjusted EBITDA Calculations
(unaudited, except share and per share amounts)
Three Months Ended (unaudited) | ||||||||
2023 | 2022 | |||||||
Adjusted EBITDA & EBITDA per share (1) | ||||||||
Revenue | $ | 18,833,321 | $ | 20,523,156 | ||||
Net Income (Loss) | 13,471 | (1,223,786 | ) | |||||
Interest, net | 209,357 | 112,372 | ||||||
Taxes | 15,834 | - | ||||||
Depreciation and Amortization (2) | 141,482 | 141,374 | ||||||
EBITDA (3) | $ | 380,144 | $ | (970,040 | ) | |||
Loss on extinguishment of debt | - | 40,556 | ||||||
Stock related expenses (4) | 72,803 | 214,766 | ||||||
Adjusted EBITDA | $ | 452,947 | $ | (714,718 | ) | |||
Weighted Avg. Shares Outstanding | 49,064,084 | 46,855,525 | ||||||
Adjusted EBITDA per share | $ | 0.009 | $ | (0.015 | ) |
(1) | Adjusted EBITDA and Adjusted EBITDA per share 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 depreciation and amortization charges |
(3) | Earnings before interest, taxes, depreciation, and amortization |
(4) | Includes stock and options-based compensation and expenses |
Source:
2023 GlobeNewswire, Inc., source