Innovative Food (IVFH) 14 May 242024 Q1 Earnings call transcript

Good afternoon, and welcome to the Innovative Food Holdings First Quarter 2024 Earnings Conference Call. My name is Ronit Wallerstein, and I'll be monitoring today's call. With me on today's call for Innovative Food Holdings is Bill Bennett, our CEO; Brady Smallwood, our COO; and Gary Schubert, our CFO. Throughout the conference, we'll 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 earnings per share using the weighted average share outstanding for the quarter end 3/31/24. These measures are not calculated in accordance with GAAP. remind made of GAAP financial today's financial and management of would meaning XXXX like future certain most amended, Exchange to Act press Act the of the Section XXE events. call also Section comparable amended concerning XXXX today's directly measures to reconciliation our forward-looking measures of non-GAAP their as within in of release.I of will Securities Quantitative contain that statements everyone our from appear XXA of in the Securities as Words expects, intended such such hopes, and should, statements. as words aim, may, identify of to intends, estimates, could, projects, variations are anticipates, plans, believes, expressions forward-looking and similar goal the other the our which the with with from contained filings statements.Factors www.sec.gov. accessible of or in Securities operational and are and significant risks subject upon as or factors These inherently Exchange including, results are disclosures company's and those limitation, our and by growth such and to, statements implied the our to are the forward-looking significant limited not unknown and results of and addressed risks, materially differ known the the XX-K be in other differ and this and of management materially may in are described operations company's involve the beyond that disclosures other adversely results by all which them in well including conference estimates, actual plans many strategies, cause but and uncertainties could control.Actual operating matters to Commission, potential Form of call results, are SEC, as filings expressed other metrics of and assumptions contingencies, to include, our without risk on based factors risk a number future that, circumstances to to extent the we statements over extent Mr. call as no with -- turn to by obligation assume filings would our update the like the I required to the sorry, of change.With SEC, to required the all except law, Except Bill Bennett. Please go ahead.

I'm afternoon. release to Hopefully our morning you XXXX Thanks, QX Ronit. the quarter. press with earnings some you the to happy welcome this good everyone, Hello, call. highlights from and saw

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haven't our a for just to quarter profitable In financials.As Foodservice and sale the direct-to-consumer efforts business. our our will the initiatives, shifted unproductive growing the adjusted XXXX. Foodservice as our and Accordingly, go an a ramp into to is line benefit At profit Gary fact, strategic reminder QX, in that subsidiary, off QX consummated reinvest officially assets our we Haley broader this the some deeper had the business. started to the of goal we our mix e-commerce side. when bit in of since into QX was sell of began beginning also our bottom of down Group. We we the resources

new largely e-commerce And sell interest given inquiries business sale with of it regular able the a of do our we recent be also contract de-resourced we the sale. continuing our stream recent building our levels, with the we've marketing announcement the building efforts of business, and are confident Cheney conducted.Lastly, to for While market continue Pennsylvania We're soon. for tours we'll to with a We'll the to the few the we these efforts various customer. begin releases press flowing as cusp customer large next issue large orders continue fruition. relationships a our kick progresses. come Brothers, to as ramp off to year We're partnership with and test continue, also potential of about launching to and on to new expect beginning another weeks with a integration in and

to on XX an make years. process. moment to company take continue food The M&A.So wanted its outline service just in over business about acquisition also We thinking we're hasn't a to I progress how potential that made in

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X taking a acquisition, our approach. looking consider For we qualities any in buying. business for would We're first we're conservative key very

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improving to As returning forward, be near-term and top revenue our priorities. strong we profitability to look growth our continue

establishing We new we a lower also SG&A remain expenses margin as levels new higher our our committed and baseline in corporate structure. optimize to maintaining

think As turn building I And the some some are a the Brady? business said quarter. I that talk to earlier, we of profitable to operation taken we want continue the Brady quarter we've a specific to business this sustainable, making.Now of great of model. to our time example was over through this demonstrate I'll in we're progress actions

we sales would business, a from a each in discussed of our including good in of and decline we are company's that to alternatives said improved in our of the with plan direct-to-consumer especially XX% year-over-year profitability. for decline the our XX% X business. result sales in line profitable business. of quarters, January These this in direct-to-consumer expenses, Bill, the QX. our assess lower profit-focused on QX trends reducing for approximately quarter, actions for strategic of segment In actions losses accounts half afternoon, we drove to sales our were and in strategy expectations continue but in took last our Thanks, reduced everyone. wages, resulted testament decrease losses the which growth adjusted this that a This results.We and in marketing the is Foodservice masking to in EBITDA These

independent advisers compelling Our thorough guided options. yielded by process multiple has our

to Bill As Foodservice we Bill QX transitionary to on largest our drivers and are the any this we'll by our through resources customers that wanted decision that reach a of sales the streamlined encouraged Specialty we mentioned. our sales we out of through business sales can website, both new larger period.On confident redirect I so This igourmet.com, point the we're mouth.com line results and soon. improvement margins. halted on business, mentioned, week the focus X we'll

airline First whom was large our believe another have which we CAGR, airline long a by accelerated with adding distribution business, we runway.

of We where a attending in will continue by the broader be this targeting momentum customers. upcoming to on expo build array we catering global will Germany,

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vendors We progress. of focus have perishable brings excitement on customers.Our turn setup our chefs is to process. initial brings XX which to menus inspiration choosy with in catalog, new group the fresh stages items newness varying and XXX-plus This the of at of items our making suppliers

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us drive dry like their suppliers of to our growth staying essentials spices, bring our way an we or also I CFO, there base, and for. information out and oils refocused that ability we is forward small order with look offering down these the to the This grains, can support that, helps and higher progress menu cost have continuing plan.And Gary. goods staples, sharing prices further round on chefs quality to comes what As our professional frozen I'll therefore other diversify either demand power long to size that run. a sell With in gives hand with our supplier the this loyalty. business or to cycle as chef we more at mic

XXXX, for Thank of we scale revenues company operations. you, in revenue of due are of XXXX excited was financial highlights the by the e-commerce present to its -- by making. X.X% to as to back decrease happy and progress continued quarter $XX.X first the XX.X% our decreased to In Brady. the first the direct-to-consumer about primarily million. I'm This quarter the

continuing cash from restructure, of first sale account This can provider.SG&A of The use $X.X decreases partially to $XXX,XXX a prices by from the Specialty managing the were for shipping in the legal $X.X to operational legal our XX.X% March in on prior attributed in to during of operations the of to quarter $XXX,XXX returned the gains prior in $XXX,XXX free the income reduced for ended due million net office. our the metric, and the Florida expenses SG&A million the The a prior in year. a Florida as $X.X related operations, of of upward compared direct-to-consumer onetime by of $XXX,XXX revenue Haley focus decisions, XX, an a estate to share, of direct-to-consumer expenses. the our the the the a fees quarter fully business resulted as office Foodservice and payroll margins and to of company compensation first for and $XXX,XXX same diluted real as quarter, conclusion, year. the diluted the a XXXX $XXX,XXX or flow, sales quarter. of a in grew in our an share company $XXX,XXX. decrease well to a year.In XX.X% increase per and adjusted from higher-cost we as prices X ] year.Once last decreased as rising commissions quarter XXXX, from scaling the income, non-GAAP expenses $X.XXX compared was compared first and scaling non-GAAP to previous non-GAAP its subsidiary percentage noncash in GAAP and SG&A of of $XXX,XXX. year, of $XXX,XXX of for during for several per in current negative of business the of million gross related first million $X sale year. [ including was as was $XXX,XXX, trend decrease recorded costs a improved managing adjusted first XXXX professional ceasing to a These costs be the of sales, primarily net drove That's a in $X.XX loss the Adjusted in a quarter (sic) incurred optimizing offset XX.X% sales down strategic in back period in metric decrease first sales advertising Foodservice Specialty of the compared costs the were to the Specialty to EBITDA, fully and Foodservice $XXX,XXX $X.XXX and quarter increase gross However, margin of X.X% prior metric, have XXXX, share growth.During company operations, decrease compared percentage was XXXX XX.X% loss decrease months

the said, adjusted We I'll all much. to and right and Thank confident Our the GAAP will positive are adjusted this net in to income, reflect flow financial income, net EBITDA our very committed in cash that adjusted initiatives Bill. performance it they free continue drive to strategic you over turn remain trend. back our direction.With way

the much sense you the Q&A. stabilize a happy to model get said, position Thanks, we're take to great in company Gary. all to we're a investing year, business for future. Hopefully can and some that stronger this that begin a prepare cement With

section it So moderate I'll to us. to for back turn Ronit Q&A the

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question from ]. is Our [ first Sebastian

If you can yourself. please unmute

Is the I be acquisition. My distribution probably business question it of is regarding kind food would potential the model. not in and in believe the that shipping drop correct?

Yes.

that a fresh lot quarter, the there the competitors the which business is doing we we the of I a So that really last just of think little about on ship bit drop talked way this do. call aren't

see so If just the don't on of we for opportunities to much but we be we we'd definitely haven't there. our there across side the M&A so one, drop lot a And of open ran ship it, business. in search seen far being

distributors food very that us. acquisition there of food for foodservice large the many like you company a know frankly, you understand potential small acquisitions all their service literally through built and thousands successfully. are be could distributors country the other that If roll-up strategy have industry, around And

M&A where it searching of we're space So and the M&A rocket right for short probably a in definitely is term, for us sort best that's now. the science but it's not strategy,

your between you part? business and a And potential that shareholders, the to little drop elaborate distribution food maybe mentioned letter Yes. in business. the you synergies shipping Could on bit

Yes, Sebastian. question, of Thanks course. the for

of this So in the an my first including wanted how process let us conservative to in before be structuring I me we're that be first our price round valuation, needing thought think go be after. of that we comments right especially in to might about And right? as anything that's sort for clarify acquisition we synergies, that to specific

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be, learn could to their be tool But of we the all to in of small our big directions. those Could like of you we could sort acquisition synergies of drop type existing what this that think guess for of A first it to think -- as synergy the the or we So the to I with of catalog understand is a of one ship with going go upside sales team could that the as that us. equip want second how both types reverse, synergies think distributor after. type again, belt are that might right? their sell I rest tool customers? So

Our is next from Schmidt question Christian [ ].

If you please yourself. unmute could

release careful. general release, information and In potential bit these indicated in more When the press with new new your you the my contracts us connection last be the much to I a customers current at look is that new will this? X can that am press back might win maybe year. customers. of the into And large wording into the I revenues half potential in seems too you you more give And question reading in translate basically,

response your that the first our for question, anything intended is, pipeline. suggest release would press wording don't I Maybe really my Thanks sure. that with Yes, has Christian. think in I changed that

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can So if is we releases with those with your actually that progress that hit And when anything, we're certain milestones we those you takeaway just making I hope further customers. press expect listed.

base. bringing as with leadership front. data. summer. meeting Please We call. for Ronit, York I'm right, the our reach Holdings. info appreciate whose about touch have of always, available New really press shareholders questions strategy Thanks and of And Take who in and the So some else? myself make you if care. X:XX you'd Schubert, All it. continuing to And great Gary on to day. progress our and my further reminder, inspiring connect you to Thanks for a update questions. look p.m., in QX level have at our this interest investors later a new right. publicly on excited the contact our attendance annual to out Innovative you available at we'd All love and Anyone is all, to Food to of and there. update happy tomorrow we like about Thanks of to on to release, customer schedule And team everyone as your see see do call. included have to engagement moderating. lots a It's we last the forward Thanks, to for be several