Innovative Food Holdings Reports Third Quarter 2014 Financial Results

BONITA SPRINGS, Fla., Nov. 19, 2014 /PRNewswire/ -- Innovative Food Holdings, Inc. (OTCQB: IVFH), a leading nationwide specialty foods provider and the nationwide leader in the freshly prepared, direct to consumer daily gourmet meal sector, today announced financial results for the third quarter and nine months ended September 30, 2014. The quarter's results include the impact of the Company's August 2014 acquisition of the nationwide leader in the direct to consumer, daily gourmet meal sector, The Fresh Diet, Inc. ("The Fresh Diet"). The Company will hold a conference call today at 11:00 a.m. ET.

Third Quarter Financial Highlights:

• Total Revenue of $8.7 million, an increase of approximately 50%.
• Revenue associated with operating business prior to the acquisition of The Fresh Diet, ("Specialty foodservice") was $6.9 million, a 20% increase compared to the same period in 2013.
• Specialty foodservice operating income of $480,965 compared to $395,796 in 2013.
• Specialty foodservice Cash EBITDA (EBITDA excluding non-cash charges) increased 44% year over year to $667,171.

On August 15, 2014 the Company acquired The Fresh Diet , a transaction that combines Innovative Food Holdings' Specialty foodservice segment platform, which includes a chef-driven, industry leading, sourcing, logistics and customer service platform, with America's No. 1 fresh gourmet daily meal delivery company, which operates the industry leading direct to consumer specialty meal platform. The Fresh Diet's platform includes highly efficient preparation and logistics infrastructure, as well as a comprehensive network of same-day and next-day last mile food delivery capabilities to over 500 cities across the United States.

The combination of Innovative Food Holdings' specialty food platform with the direct to consumer last-mile capabilities of The Fresh Diet platform has created the first fully, vertically integrated, source-to-table specialty food company.

The Fresh Diet is being operated as a wholly-owned subsidiary of Innovative Food Holdings, and as previously announced, the transaction is expected to be accretive to the Company's earnings beginning in fiscal year 2015. The current focus at The Fresh Diet continues to be on streamlining and optimizing the platform, including key focuses on both optimizing costing and optimizing spending, and a particular focus on building profitable long term revenue channels. At the same time Fresh Diet is aggressively pursuing new and promising expansion opportunities to further enhance the value of the platform and to profitably focus on a re-launch of certain segments of the business.

The Fresh Diet third quarter and YTD business highlights include:

• Revamped and relaunched the online customer acquisition process in October, resulting in significant improvements in new customer acquisition
• Continued to focus on driver cost efficiencies on a per unit basis. Variable kitchen labor cost per unit decreased 7%, raw materials and packaging costs per unit decreased 13% year over year
• Continued to optimize the delivery platform resulting in a delivery cost per unit decrease of 10% per unit year over year
• Platform wide delivery accuracy rate of 99.7%
• Launched Vegetarian and Gluten-Free product lines

Sam Klepfish, CEO of Innovative Food Holdings, commented, "We utilized the power of our Specialty foodservice platform to drive solid revenue growth and enhanced profitability, as we benefited from the operating leverage intrinsic in our business model. We continued to show both top line revenue growth and bottom line growth in the Specialty foodservice segment as we focused on the execution of our business model and strategic goals. We believe that the purchase of The Fresh Diet provides a unique opportunity to add a valuable, strategic, and operational asset to Innovative Food Holdings, including the ability to add an efficient, low-cost, last mile, direct to consumer platform to our business which is highly synergistic to our core specialty food offering.  We further believe that this platform is highly scalable, with the ability to handle significant growth without extensive infrastructure investments and that the Fresh Diet platform substantially fills gaps within both the direct-to-consumer and foodservice food distribution system in the United States, giving us a comprehensive, efficient, source-to-table offering unmatched in the industry."

Mr. Klepfish continued, "The Fresh Diet management team continues to leverage their years of food service expertise in systems and processes gained as senior executives at Fortune 100 global food companies. Under the leadership of Chief Executive Officer Raj Rawal, former CIO of Burger King and of Budget Avis, and Asif Sayed, COO of The Fresh Diet, former Senior Director, Global Operations for Burger King, who was responsible for ensuring the profitable, efficient and customer-focused operations for 8,750 restaurants in 29 countries across the Americas, the team has made significant progress in streamlining and improving key operational and quality metrics and continues to focus on optimization and integration of further operational efficiencies in the platform.

"We entered into The Fresh Diet acquisition with high expectations for the market opportunity. Based on further analysis of the expanding addressable market and feedback from industry executives in this space, we now believe that The Fresh Diet platform has growth and new market opportunities that significantly exceed our initial expectations.

"In that regard, we believe that The Fresh Diet is uniquely positioned to take advantage of several key consumer trends such as eating healthy, source to table, same day and next day delivery, customized food nutrition and specialty daily meals, the growth in e-grocery, and specialty food ecommerce amongst several other fast growing markets. Finally, the barriers to entry to create a viable platform in this market remain significant and we believe that our market presence, combined with the power of a scaled platform uniquely positions us to potentially capture several key organic growth opportunities and select focused synergistic acquisition opportunities."

Mr. Klepfish concluded, "We look forward to executing in both our Specialty foodservice segment and in our Direct to Consumer segment to capture key identified market opportunities in the rapidly growing specialty foodservice and consumer markets."

Third Quarter 2014 Financial Results

Third quarter 2014 total revenue was approximately $8.7 million, up 50% as compared to $5.8 million in the third quarter of 2013. Innovative Food Holdings' Specialty foodservice revenue grew 20% to $6.9 million, generating operating income associated with the Specialty foodservice segment, of $480,965, an increase of 22% compared to 2013. Cash EBITDA for the Specialty foodservice segment increased 44% year over year to $667,171 and net income for the Specialty foodservice segment increased to $352,633 compared to a net loss of $337,758 in the same period in 2013.

The Fresh Diet acquisition resulted in a loss for the quarter ended September 30, 2013. Costs associated with The Fresh Diet include several accounting and other charges, including over $280,000 in non-cash GAAP related charges associated with accounting for the acquisition of The Fresh Diet. This charge had the effect of lowering revenues by over $280,000 without any corresponding decrease in costs. In addition, as expected, The Fresh Diet reported lower revenues due to both timing of revenues related to the short time period Innovative Food Holdings owned The Fresh Diet as well as the focus of The Fresh Diet on long term profitable revenues, both of which factors contributed to the loss.

As a result, Innovative Food Holdings reported a GAAP loss of $653,624 for the quarter ended September 30, 2014. GAAP Basic and Fully Diluted EPS in the third quarter of 2014 was $(0.07) per share compared to $(0.05) per share in the third quarter of 2013. Cash EBITDA was $239,232 for the third quarter of 2014 compared to $464,168 in the third quarter last year.

The Fresh Diet Financial information

The Company purchased The Fresh Diet on August 15, 2014 and as a result the third quarter revenues include the contribution of approximately 45 days of The Fresh Diet's revenues. Revenues attributed to The Fresh Diet in this quarter were $1.77 million. In addition, results reflect the focus on profitable revenues described above. Furthermore, there were certain accounting adjustments required due to the acquisition of The Fresh Diet in accordance with GAAP.

The Fresh Diet had the following key operational highlights for the third quarter ended September 30, 2014: 

• Revenue per unit increased 5% year over year.
• Raw materials cost per unit decreased 13% year over year: Management believes that The Fresh Diet can further improve on this metric, as it realizes increased sourcing synergies through Innovative Food Holdings.
• Variable kitchen labor cost per unit decreased 7% year over year, while delivery cost per unit decreased 10% year over year.
• Platform wide delivery accuracy rate of 99.7%

Year-to-Date 2014 Financial Results

For the nine months ended September 30, 2014 total revenue was $20.7 million, an increase of approximately 27% as compared to $16.4 million in the first nine months of 2013. Innovative Food Holdings' revenues for the Specialty foodservice segment grew to $18.9 million, an increase of approximately 16% compared to the prior period. Cash EBITDA for the Specialty foodservice segment increased 61% year over year to $2.0 million from 1.2 million a year ago.  

Total net loss for the first nine months of 2014 was $37,777 compared to a net loss of $400,392 in the same period of 2013. GAAP basic EPS for the first nine months of 2014 was $0.00 per share compared to $(0.06) per share in the year ago period. Cash EBITDA increased to $1.3 million for the first nine months of 2014 compared to $1.2 million in the first nine months of last year.

Operating Cash flow for the nine months ended September 30, 2014 increased 28% to $1.05 million as compared to approximately $827,000 in 2013.

The Company ended the third quarter with over $4.0 million in cash and with the full availability of its $1 million line of credit with Fifth Third Bank.

Conference call information:

• Date and time: Wednesday, November 19, 2014 at 11:00 a.m. ET
• Dial-in number: 1-888-503-8169 (domestic) or 1-719-325-2429 (international)
• Call/Conference ID: 3070665
• Replay number: Dial 1-877-870-5176 (domestic) or 1-858-384-5517 (international). Please use passcode 3070665 to access the replay. The replay will be available until November 24, 2014.
• Webcast link: http://public.viavid.com/index.php?id=111930

About Innovative Food Holdings

Innovative Food Holdings' subsidiaries distribute the highest quality, specialty foods to foodservice businesses nationwide and offers freshly prepared meals and ingredients to consumers across the country through a proprietary specialty food platform.

In the foodservice space, IVFH's industry leading specialty food foodservice distribution programs offer over 7,000 specialty food, direct from source, organic, artisanal and gluten free products, which are used on a daily basis by approximately 40,000 of the leading professional chefs across the entire United States.

In the direct to consumer channel, The Fresh Diet, Inc. (www.thefreshdiet.com) is the nationwide leader in the freshly prepared gourmet meal sector, using the finest specialty ingredients. The meals are delivered directly to consumers in 12 states, 44 metropolitan areas and 573 cities across the country using The Fresh Diet® platform.

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," "anticipate," "believe," "intend," "plan," "might," "potentially" or "expect." The Company does not intend to update these forward-looking statements. Information about third parties was supplied to the Company by third parties and we accept no responsibility for its accuracy.

SOURCE Innovative Food Holdings, Inc.