IVFH - Earnings call 3 2023 | Innovative Food Holdings, Inc.

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Unknown Executive

Good morning, and welcome to the Innovative Food Holdings Third Quarter 2023 Earnings Conference Call. My name is [ Ernie Wallace], and I will be monitoring today's call. With me on today's call for Innovative Food Holdings is Bill Bennett, our CEO; Brady Smaller -- Smallwood, our COO; and Richard Tang, our CFO. Throughout the conference, we will be presenting both GAAP and non-GAAP financial measures, including, amongst others, historical and estimated EPS, adjusted EBITDA, which is net income before costs associated with amortization, depreciation, interest and taxes and excluding certain onetime expenses and adjusted fully diluted EBITDA per share using the weighted average shares outstanding for the quarter ended September 30, 2023. These measures are not calculated in accordance with GAAP. Quantitative reconciliations of certain of our non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's press release. I'd like to remind everyone that today's call will contain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amendment concerning future events. to may, estimates projects, such goals similar are aim, believes, intends, words as expressions hopes, statements. anticipates, and intended such could, expects, should, plans, and Words forward-looking identify variations of strategies, results our control. Actual operating results be statements the future many the other by operational and of in growth as subject as of -- materially beyond upon company's from to which significant potential to differ are are management uncertainties adversely results risks, plans company's estimates, as number implied of and risks are such well those this assumptions forward-looking well as unknown may These and results, or conference addressed involve and limitation, based matters significant which of metrics and including, statements. without potential inherently known by our contingencies or call the operations and expressed and www.sec.gov. Except all Form which our other statements as SEC, to risk disclosures are the cause factors XXXX are but XX, differ and we XX-K with and the required actual the accessible obligation year for filings include, by that risk extent our in to other Exchange contained update described Factors factors ended Securities Commission, filings with including in results December could and materially our to the on law, the no and the of assume disclosures limited circumstances not other change. call turn like I'd that, Mr. the to to With over Bill Bennett. Please ahead. go

William Bennett

to our call. Hello, COO, Smallwood, our also today. welcome everyone, to glad new welcome you our second and morning. I'm consecutive earnings to good I'm happy Brady call to

saw for reference. him later which role press quarter. results our call. We'll release the XX-Q morning second quarter was a some third full of you from quarter with this the the your later bit be filing the the our today XXXX, from on from CEO Hopefully, in also be highlights my We'll full IVFH. of be of discussing You'll in hearing

I my context quarter, last reminding want I start in some in As the strategic as company. outlined to we're by to today of comments moment our call investors a

IVFH the by that at I to is few approach of growth delivers With arrival company goal X-phase Our our grow a Board goal. shareholder ago, towards to a build are building our long-term my outlined we months taking a company to investors. profitable that value to

This We're anticipate model. my will make models that investments that been a reminder, on which and is first to year. We're business business a the will our laying model our to focused entail the calling We We are we've fully of build X consistently business tested. calling we'll flow. and deliver business. for statements the follows: heavily our credibility prepared of build and moves a why as scale we've phase focused on expenses so As Phase first we for those profitable scale when stabilization is next-generation foundation making need to last growth, phase successful cash. strategic X several rightsizing be can cash positive build Phase uses this margins, to

stabilization think QX along jump I journey. that With our in that that and is it's path, this helpful let's traverse are remember results squarely candor still phase, transparency we As our to into introduction, to for investors we commitment but XXXX.

deeper XXX Our SG&A pricing show basis to make which onetime by on our X.X%, will Rich year-over-year bit due to strategy. as margins to significant focus a into. profitability continue optimize improving charges, Gross delve progress. increased we strong continued primarily points of growth

$XXX,XXX, to of improved EBITDA $XXX,XXX year. versus adjusted an our improvement last Lastly,

of through XXXX our stabilization the same phase the as we quarter, compared During our the third declined revenue to plan. approximately in XX% work by period

business client. main chef Our was for the professional the driver

we year, making. a of face want progress earlier, business a we model, that revenue demonstrate the said example the to we're even the to this was of this in sustainable, think great and I building quarter I are expected profitable continue As lower

over Now Brady? the time business Brady talk of I'll the this specific turn we've operation improvements some to our of to quarter. through made to some

Brady Smallwood

Thanks, Bill.

with the business, focused Chef end food of which start [indiscernible] service specialty we the side Professional Let's customer. our call on

revenue of we faced XX% our Here, declined post-COVID first as strength. reopening quarter full [indiscernible]

seasonality smaller for also compared inflation have increases to the [indiscernible] for the and industry significantly headwinds, as professional customer, trend in a and our slowdown. These headwinds, I'd softened change combined that still the pre-COVID more a business saw with experiencing to group consumer more a recent We years like by a costs price though food return key is QX service slowing to and XX% with market a pointing lowest to remind our also X normal levels. chef led us. the in up profitable used revenue technology platform reasons to

post-COVID majority So business our with held are of we operating have growth, to sales an improved on the but now model. we

but also growth in encouraging headwinds, some areas. we Now I saw some mentioned

relationship roughly customers. brokerage. food future like proposition with and our a with geographic leading we new Professional brokerage our $X value broadliner, in airline Opportunities expanded channels both us a in This agreement pursuing gives signed top the and this market growth presence and catering us support with differentiated will started Chef's existing abound trillion service that quarter, confidence in retail a opportunities the

the Now moving e-commerce to business.

sales start X.X% historical We XX% levels. restrict e-commerce QX. year-over-year we're to and And that to minus of our in QX minus marketing relative year, the lapping now continue restricted this of declines in moderated spend versus last marketing to strategy

materially margins largest where have in sales increase gross was online resources SG&A. iegarmay.com, most brand, Our focused we and while the on flat increasing

lifetime an the factors. economics, quarters, level and of order assessment value other key conducted X customer we business e-commerce end-to-end Over last

total gross we the reduce company enable profitability. A the a to materially shipping consistent it's losses team and operations. good generate result, channels to to implemented and on losses, to margins, our to continue the have see boost costs, marketing those does margins. E-commerce tactics optimize packaging has As progress warehouse to return more streamline reduce but little and made

points consolidating the place in XXX operations, margin to of improvement impacted experienced QX carriers year. of mic from stable the basis contract it full the for the which with both countered in and Rich. favorable With now provides QX, our we The improved also to compared which growth. our and margin improvement actions I'll declines FedEx more to this from gross gained that, majority encouraged shipping positively efficiencies came pricing in the warehouse margin. Overall, XXXX. our over quarter the prior a We've turn gross are by foundation margin having a Our rationalized of future

Richard Tang

CFO for savings On the of everyone. of onetime our touch primarily over a by increased SG&A decrease Richard IVFH year, year-to-date office expenses past in a large expense by of is a hello, to XXXX. comments. In and offset e-commerce CEOs relative severance name from been a years. expenses. and our increased we to I'll Tang, expense revaluation This in stock offset basis, $XXX,XXX by of QX business. due rates X.X partially in primarily Brady, driven you, planned, actions, QX Thank was extent My but saw the appreciation $XXX,XXX, to million $X.X marketing quarterly by in on SG&A onetime last by my and profit I've at QX,

P&L. yet reminder, from to the to of P&L from on we fully This a removing But the the will many in unnecessary. nice we've where now to highly SG&A changes flow our are As tailwinds been through future. last lead have the focused call, making

For contracts services. have travel Investor office for instance, our we lease exited Relations services, cut facility Brooklyn space. insurance, expenses, our the We legal renegotiate for and

We e-commerce significantly several We labor and teams XX%. warehouse. by expense service our reduced have even at our printing restructured cut

lot the how every why. before We are it. we're getting understand we're resetting out committed us extremely we're us profitable And cost SG&A dollar still a have single from. spent to give to structure that opportunity to weeds of is check on to the deep being viewing front, goes a We base company the into the every to we personally, the door give and company's process and

Now to profit.

QX in so to year year, this proud business profit EBITDA our how to adjusted basis, we're significant this create consecutive to to quarter came profit year's QX X.X% last X revenue This $X.XX on in performance. per XXXX. quarters progress of EBITDA sustainable was last a is profit see to After extremely our a an the from first doubling we're amounts adjusted compared compared Our adjusted approximately helping to $XXX,XXX lapping to $XXX,XXX and EBITDA share X.X% This On EBITDA net up a GAAP of improvement $X.XX at swung demonstrates of QX progress, almost of our profit. Adjusted of $XXX,XXX, us year. about model. the down is compared P&L growth, $XXX,XXX continued last year. last focus income

This was quarter. $XXX,XXX other in were payments to key settled capital that prior ongoing use shift notice Regarding payments customers of from that the previously onetime cash discussed. days operations X And QX. did we working in cash post a in the and net after executive you'll to X of a cash from that changes flow, due

on balance full line of the credit, our On revolving the balance access we our $X million million. up down to $X sheet, line opening paid of

million remained capital year-end working $X.X at XXXX. million, a net swing of positive Our from from $X.X unchanged last quarter

altogether. aggressive of contracts scrutinizing costs for process procurement to in remain renegotiate driving our receivable payment each and looking to continue be that subsidiaries, accounts cut in We inventory leaves streamlining down our out diligent every opportunities and and/or

site mention to navigate. Lastly, you, more want thank that I revamped Bill. be you, us intuitive Please Relations and and at our check to Investor out to ivfh.com. Thank easier we've

William Bennett

as despite sense business we're year, the the you and Hopefully, how begin great quarter position Rich. stabilize this and that to a our company through and to a lower for work future. Thanks, stronger prepare of investing are can much cement X get we Phase excited revenue, plan the model about in a this we

in review start business, give to you As we've like to the peek to a been on we've working which hard of alluded into. full I'd a past, the

want we know business analyzed, we've be company to that every make aligned decision someday. I small someday, discussed company a billion because fact $X the could this want what we tell you revenue be that on We we've to don't that and you I goal. a focused want is forever. on be now debated to that As

to overnight. we going aren't billion jump Now to $X

incremental So debt to a our Phase the XXX our and EBITDA. X million talked getting that our We over to This we entails Phase years. and achieve lot other milestone this financials. revenue $XX plans million out to what with X you're next want first and that in adjusted our our Phase is X This play entails no X $XXX in our in plan. first X in raises plans. We've X milestone about capital seeing and driving call first journey

allocate better So differentiated later a investments proposition value for first, phases. I'll on future profitable going can second this to to X growth the that decisions growth. capital plans. We're our demonstrate capital now fund X bit help model our businesses, our generate Phase that scaled. business let and to me our We're in foundation will logical in make pull business our evolve be sections: core laying the and curtain these cash goal because calling back a into phase, comments allocation; separate focused deliberate is further

capital First, allocation.

As CEO, capital. and to most of jobs resources the one important my consider be I allocation of

the X over into dove I've capital allocation. profitability, months, purely and I growth large As to seen last opportunities the through drive business

Let me share metrics seen. I've to what few a highlight

historical been driver for business financials, e-commerce has losses our that I into dug I of our found company. primary the the As

those excess of purchased in X e-commerce debt have more $XX since than businesses, Over our our we years past businesses, the on entire lost million outstanding. we

business the nicely is money During business. chef $XX years. E-commerce time, for company of profitable, but million our the lost side a revenue overall X remained those of this professional most

than been more So profit losing enough has remaining money about of company to XX% of offset company. of XX% the our the revenue the

driving Now that while is X in was also IVFH loss million the business. investing over that e-commerce years, differentially last $XX e-commerce

$XX approximately in center today. XX% real million that in value is estate own appraised e-commerce of we our up Mountain tied of example, Pennsylvania. fulfillment For About Top,

money estate up the capital. of our is signing XX% real of XX% losing revenue So that's

dedicated employed to X/X have Another primarily we whom about about XXX e-commerce. IVFH, of people example, by are

our use need head believe of come diving that's and requires have we for fees, to a larger cetera. We've count. a things the around don't risks, could bolt on take good I revenue size a without cash to accretive again, business time, large say model. time. and deep expenses, would to, entailing to e-commerce to skew management X-plus marketing plan This the and legal profitability this XX% the losing is that its the capital, would management, years to and significant an resources additional we business conclusion maintenance So company's this investment triple require effort et company spend, about significant get resources spent into the e-commerce of X/X similar of of inventory, money

So chess and to going allocation will business to objectives. This capital piece our our we're profit moves. align dramatically better shift to require several

are eliminated the the with business for we total alternatives of which profit all on strategic a different First, the of paths business. forward, potential e-commerce exploring variety but drag

will continue to spend in You e-commerce. continued will cut in see which declines revenue us marketing result

making unlocking our looking estate Florida at some exploring, our value Pennsylvania warehouse. real portfolio, are we Second, and in moves big office the building our in

we are nonmaterial focus we on so Lastly, quarter. the parts company simplifying of help other business the the can

exited have and we partnerships, Management. selling our called Brand several small are business Grow We consulting

associated associated the million losses This we capital With somewhere those based expect in appraised on eliminate these moves, strategic will unlock and and million ongoing with $X of $XX their values businesses. to loans. net between

essentially this we business. called ago, since square Our A has size by what of specialty do does in XX,XXX the with small our warehouse. nice in we've our in a to hope is foot professional So doubled in profitable specialty distribution we Chef but for It decade size food Foods. business land food limited is a Chicago Chicago Artisan us unlocked? and into Specialty capital a will distributor bought reinvest purchase

broader add including warehouse at looking opportunity even grow base larger business space, accelerate us like storage we're We're per portfolio sales cross-sell distribution. to This further the key accretive that metric adjacent allow delivered, customer order food additional could artisan exploring our the in bolt-on our a Accordingly, immediately acquisitions with produce. expand a expand, investments categories in food and cold meat, or or M&A. could to to

interest investment zero into while debt eliminating businesses P&L reducing Our from even growing to goal shift business with company. long-term losses the growth to will our profitable our this impact causing make consistently loss-making These allocate and our businesses expense we moves our as and shareholders. e-commerce, dilution capital our a to reallocation reduce in or is significant reduce incremental profitable while to capital and for

allocation. capital That's Okay.

and break into Now we our impact. in growth growth. to growth push launch serving of research, on out be drive built channels; buckets: existing carefully core With sales profit profitable support and new customers businesses leveraging two, shops target one, We and models. To to three, owners initiatives, our business significant syndicated infrastructure articulated these and a data sales capital core new dozens and allocated, talked restaurant of a existing customers in well growth business to we've and down better market. and X significant better to positioned primary built will around strategy considered channels; our growth strategies

food our came something some we the all that or of key utilize often, another. appeals is of only research uncovered too conclusions high-end is think that to One we products specialty restaurants. Instead, food service to specialty establishments to degree

dominated pricing by with to our the begun These we will as them; specialty stories strategies insights need we fair, behind when chef-driven solve uniquely help be ordering to build and and lead the and needs, with chef's the frequently. is products these and relationships we're [ unique tasks. Chef record tighter pricing found new ingredients inconsistent ], deep and calling compelling who ]This team is build market And long specific tell chefs and about more offer are hone customers a a better their and partnerships. To which message insight, our us chef, We and relationships our are unmet management research experience, customer find Choosy who we expand will time today, that's structure complicated. culinary dishes. Professional Chef experts. plan specific most marketing new one, two, to three, and a service in of pricing on to our proactively the in channels and a consistent positioned and a of uncompetitive And it's segment, products efforts products. Armed and and business. the a recently talk [ customer is a power culinary commission this than models hard passionate targets, consistent So are transparent the dramatically implementing has carry; offer a and we've chosen to Two, our office service four, to focus someone on chefs transitioned rather to process track into appeal sales salespeople to four, sales Chefs organization delighting on is food high-quality restaurant search addressable with chefs needs. One, tools how focus way. help breed unique our the find team underserved X growth us is we've to product requiring Three, we with Choosy often

are investing in new like we app We technology business our new artisan management customer recently platform a launched for and relationship in a Chicago.

revamp We also prices, and to closer freshness cutting base, manufacturer. boats the vendor sourcing out to our farm, or plan middlemen, entire ranch, increasing to reducing drop

share core will over to business We details our growth plan continue of more time.

growth. for That's Okay. business

EBITDA. talked Now SG&A get growth, a some our way bit business impact in million million talked understanding about company. billion that revenue where and $X X milestone happy and a a Phase take driving to or in adjusted Q&A. significant that revenue, And is near-term on revenue X we're a becoming first positive about $XXX $XXX reminder, we've With These and to just have million is lot, to will I've the a as hopefully, to our $XX for said, this adjusted actions goal capital Remember, EBITDA. you're Phase and will take more reallocation us. on

moderate the to to Q&A turn So I'll back ] for Renee it [ us.

Operator

you yourself. coming Brian first Our question is Harper, can Instructions] unmute if from in please [Operator

Unknown Analyst

improvement lot I change changes more of was in wondering the the with if this or to ] like kind they're I terms of the -- and you elaborate and on see renewed can call, minutes stuff strategic thought key taking of whether there? I decisions of being wanted going first I the of heard margins first minutes, line Great gross in-house, the street a missed in the those everybody. made. is on And direction X.X X I customer. [ stuff Thanks, to what's but more broad

William Bennett

we take Appreciate your of a technology similar and as some to reiterate to we what really change that customers what Sure. happened a that customer language used item a at them. but the numbers -- very for We've had we have the welcome for Thanks, actually What items. of with sales is well, in we that. lost those Brian. quarter this lost for used The change look happy we that I'm does is [indiscernible] what last back assortment history said to entire all they on question. the a platform the portion you're in buying

anything about every know And historically. guide a food so service, list is chefs the items week, right, you of order ordered they've if you from order which an just most really

of these changed. item essentially, so we when was product years numbers history order with these and overnight years restaurants lost And had

remains a of these and to strong. been clear have is -- going of partnership that opportunities unfortunately, extremely want lapping which we overnight. But in But think great to I new the moving the rebuild with unfortunately, keep to this that they're has And for that we headwinds QX. with business growth customer we'll that and change we messaging us that are to not anyway, in with going together. going continue part impacted fact, that So begin year, forward. to why happens the this business we relationship this the and be to have pursue don't portion we're we a It's be need customer. They're they're unwind,

[Audio Gap]

Unknown Analyst

don't in a issue. like Yes. history, was are this of customer Is going like -- changes or technical future? yes, to It like where with you as to have lost going that differently it's almost sounds with in side, that happen case much if -- made -- something -- a in I don't any are the customer, address we the these track mean, you that. I of you we to the guys almost this future we know I more but are connection to were of Or direct some guess, customers could have

William Bennett

Yes.

build they such the we is there. And that's pure headwinds has done in I'll customer great a nail been part back and caused ultimate time. change -- impact big You the had and -- we helping we to have on takes work make just we without connect liner, business challenge. overnight to don't business need struggle the that growth sourcing. it the work It's reiterate -- It's an hit right? that while of business. restaurants, restaurants, -- they're those us. team to right, with BXB It restaurants to technological on in through new the opportunities. absolutely while right? do the look but of what's really can it's the unfortunate do But can't relationships build And Everything And guess, space, that the the the of is end is customer, this broadliner the there is contractual information, not just the is for I say, a restaurant broad historically products the head, so the around, information us the the you our you're decisions we we So contact kind the how over everything right. with we've with

year. All focus the quit. Thanks to So next team why right. absolutely growth even airways. don't the get to of that's have sales and just questions any back today again fill to the I anonymous we expect

give one here. it we'll more So second

Operator

you call Bill wrap turn up. back questions. I'll to the Thank to for your

William Bennett

on sale just properties getting real X timing we So and that. and Great. as The you estate? great have the potential listed of Actually, are question. mentioned I just handle one come Florida so speak. to chat Do to any Pennsylvania

of that course, and listings amount and on highly how So those get the of process proceeds. traffic

marketing. estate that We the are, strong I would markets of types be are say, of real on Both we'll properties the for those timing.

definitely everyone's updated the to for we'll move see engagement binding releases you Thanks of kind the get is today. joining today. It appreciate of attendance we for and of Thank group the offer process press moderating in quickly, as expect level to And to but the interest to a to in call stage. Great. you inspiring keep IVFH. really all we so [indiscernible]

and leadership with who As questions available connect have contact investors about Richard to progress always, ] you'd to brand. if my out happy like [ Thanks in and a further to publicly press a data. I'm our to forward have team all, to our of schedule whose continuing space. great we look make Please Take this touch strategy available care, is QX reach update the update you on our Tang, info included day. and release, myself at to

Innovative Food (IVFH) 9 Nov 232023 Q3 Earnings call transcript