GEO Investing

innovative food holdingsInnovative Food Holdings (IVFH), a specialty food service distribution business, yesterday reported financial results for the year ended December 31, 2014, results that GeoInvesting believes hints at sustained long-term growth and profitability.  Operating results for Q4 and all of 2014 indicate the company is making steady progress.

The IVFH story is really a tale of two businesses.  The legacy, direct to chef, specialty food business is chugging along while the recently acquired (August 2014), Fresh Diet (“FD”), a direct to consumer specialty meal platform business, is undergoing  transformational changes as management positions the company for sustained revenue growth and profitability.

Innovative Food Holdings Financial Highlights

A review of Innovative Food Holdings financial highlights for the year ended December 31, 2014 include:

  • Total Revenue for 2014 of $30.8 million, increased approximately 37% compared to the same period in 2013.
  • Revenues associated with the direct-to-chef business, specialty food business totaled $25.8 million, an approximate 15% increase compared to 2013.
  • FD, which was acquired August 15, 2014, contributed $5 million revenue.  FD’s revenue was reduced by a GAAP adjustment to the carrying value of deferred revenues acquired of around $1.2 million.
  • Specialty foodservice adjusted EBITDA (excluding non-cash and one-time charges) increased over 40% year over year to approximately $2.8 million.
  • Adjusted EBITDA for IVFH was $1.4 million indicating FD generated a negative adjusted EBITDA of around $1.4 million.
  • The total GAAP loss for the year was $3.7 million compared to a net loss of $1.4 million in the same period of 2013. GAAP EPS for 2014 was ($0.32) per share compared to ($0.23) per share in the year ago period.  Adjusted EPS for 2014 was $0.10 per share compared to $0.28 per share in 2013.
  • Q4 2014 revenues of $10 million vs $6.1 million in Q4 2013
  • Q4 2014 adjusted loss per share of $0.03 vs adjusted EPS of $0.07 in Q4 2013.

As we expect Innovative Food Holdings specialty food business to continue to reap good returns, the company’s transitional stage is apparent in the recent recruitment of a new CEO (who is in turn is making key hires), the revamping of marketing programs, pricing adjustments to ensure long term profitability, and the aggressive handling of other challenges facing the business.  IVFH management stated:

We have made good progress in just a few months in working towards transforming The Fresh Diet into a data-minded, e-commerce marketing-driven leader in the health and wellness category. In addition, by effectively leveraging the management, resources, and core expertise of Innovative Food Holdings, we believe we can take advantage of the opportunity to benefit from additional synergies, enabling us to transition this segment of our business to profitability.

We expect the FD turnaround to take the better part of 2015 but once completed, the combination of specialty foods and FD will put IVFH on a solid and exciting path for sustained growth and profitability over the long term.  We believe investors will begin to see the benefits of the integration of FD in IVFH’s bottom line financial results starting in Q2 2015.

To stay ahead of the market with GeoInvesting arbitrage and learn about investment ideas not yet digested by the market, Sign up now for More Research and Insight