Innovative Food (IVFH) 13 Nov 242024 Q3 Earnings call transcript

Good afternoon, and welcome to the Innovative Food Holdings Third Quarter 2024 Earnings Conference Call. My name is Ronit Wallerstein, and I'll be moderating today's call. With me on today's call for Innovative Food buildings is Bill Bennett, our CEO; and Brady Smallwood our COO.

Throughout the conference, we will be presenting both GAAP and non-GAAP financial measures, including amongst other 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 shares outstanding for the quarter ended 9/30/24. These measures are not calculated in accordance with GAAP. of GAAP financial today's financial certain most to press of comparable directly measures reconciliations our measures non-GAAP their release. Quantitative appear in

will anticipates, amended our like forward-looking of meaning and the would to as hopes, Exchange of everyone as XXE to XXA today's I amended. goals XXXX of Act expressions as intend, Concerning Securities aim, such may, remind XXXX Words of expects, similar could, Section statements of Section made management of call Act from plans, identify Securities variations events. within believes, estimates, and and and such projects, should, the future that contain the forward-looking words statements. intended are

operational a to without assumptions currently results beyond number which are as involve this which risks, many those conference Actual matters significant implied differ estimates, our by results, of forward-looking including limitation, risks or in to management plans other such statements These company's and known upon and adversely our materially as statements. and be subject significant and company's and by results control. growth future are of call or unknown of metrics well expressed the contingencies, uncertainties the and based strategies, addressed operating and operations of are from potential may

and our risk Securities could Form XX-K cause the our and described factors the other and filings the Commission, are but filings other with SEC. disclosure risk to, with factors that Factors in in limited results to include, including differ and not disclosures contained our the materially Exchange

to statements we extent accessible to as assume circumstances are Except no these the of required by All www.sec.gov. change. the law, update obligation at

like over ahead. Bill turn to Please to With go Mr. call I'd that, Bennett. the

We'd he unfortunately, you with our Hopefully, Thanks, file Ronit. call. morning family, you CFO, with reference. QX as [indiscernible] morning Schubert and quarter, call, to on Hello, with our his and good prayers saw I'm shortly is XXXX where or full earnings insights to for our good are the your we like also some excuse our for to him depending the thoughts dealing this happy and you are. welcome from Gary afternoon, everyone, release XX-Q family. the will

several mentioned scale working first stabilization With lay stabilize plan I've future. times build phase. report, before, As our for then the confidently X-phase the exited and are I company, through for we declare our the growth, this we've to that we foundation can think quarter's then

a Let me last months. recap bit XX for the

have our off-strategy bottomed core unprofitable and Revenues divesting to in growth are or declining now businesses. foodservice back finished remaining We business. our

this a will started We be a we're us. we business of hundred Gross millions margins basis with revenue several points that ramping retailer since have national in up for up tens worth large are new journey.

as basis is SG&A points down Our joined. hundred sales of a rate since I several

We basis. are consistently profitable on adjusted EBITDA

on XX first implemented company. that transparency serving We've which our our with one. comment in consider a delivering ramped dramatically I every investor our earnings and company contribute will I months businesses to day professional and single now acquisition, up communication made focused on a joined. we stabilized forward-looking since we've and announced chefs, new base, the culture on We've

growth. our this laying we're enter phase, the for phase, we As second calling foundation

in Our objective will aspire during Phase which achieve establish business someday X our we revenue. is model, to and billion prove define, long-term $X

growth growing we potential. the These profit retail Golden acquisition, our during new begin will model As our in will long-term start scaling Organics, additional large first our customers integrating initial this to and process. some finding scaling and phase, business actions of demonstrate business, actions our and

our $XXX be our EBITDA. in of milestone first first million revenue in first journey said meaning and will $XX $XXX We've this our before adjusted that million, million

the down step phase. exciting an was quarter of second This path our

a XXXX, been core XXXX. of for exciting meaningful This quarter since business our a is nearly we are. year year growth growth, we've QX versus nearly be that the X food This businesses really third driven of was milestone ago. returned messaging back 'XX. by specialty were new service here increasing the we'd now back that officially X.X% by to half And nonexistent of to a For growth

full our in in This, with scale having quarter was we QX, new First retail test rollout. will as business. This partner. full retail our to dramatically course, stores new expand XX of of first a our

going our for to for is In dollars in total QX recent fact, our and year of to tens revenue be revenue. period. drive the in company prior the press release, company growing game-changing our XX% versus as we date this millions to is This stated over expect of

QX costs anticipate scale, incurring in are startup delivering but we next as to year. get early begin the profit up business We will we

to relationship efforts Second, sourcing our distributor partner expect to only our continue assortment. so, as accelerate as their capable scale deeper This exposure as with who doing as perishable broadline items add building trends this a distributor. add new and is and we business our continues to we more of a getting to these is great

efforts cost foodservice Our our Amazon. grow on resources way our to This adding offering used focused be shifting business, of managing items. Amazon, these already on business no grow significantly third to a we've low to business hundreds new a items consumer platform that since carry capital enabled now our on of ramped to we up our is by our over

years, with couple We large, driving ramping us. which significant Gourmet now the business growth. following we of becoming trajectory meaningful incremental are our airline a Fourth, for caterer, a Gate this is business similar as part see next another of quickly over

growth new These them expect and approximately continue accelerate. our to of businesses food we to in X points service drove X business,

we over and new these items their business Foods we to continued cycle in growth with businesses, our but planning business an sales has digits, our staff business, prior Artisans as growth as partially drop-ship new in begun in win where improvement our investment negative into to Gourmet offset In This trend our their quarters. off. saw this integrate strong in addition also continue business as Chicago ourselves single the menus sales further pay which legacy only in declined on Specialty well to growth in Gate by is was

work business get to to this continue We to growth.

we XXX prior declined now negative XX basis gross points move margins high our As anticipation the intentionally at as by improved of smaller in cost margin portfolio. the our versus down goods test mixed we rollout, in the year we QX. achieving margins which P&L, business ran during in gross store are of retail e-commerce Also,

continue and and our percentage of driving in In savings, expenses. of relative QX, journey after nonrecurring by savings SG&A savings resulted transactional basis These to spending our of savings sales of points growth to leaner the opportunities. more into to same cost per legal down critical dollar as new as we continued run are XXX $XXX,XXX a These that period on we excluding and we noncash achieve support lean we growth a spend SG&A last year. also while

iGourmet to $XX,XXX. assets The that well on the Golden Organic. gain as from and Adjusted operations $X.XXX the this adjustments grew continuing share related grew $X.XXX of divestiture to GAAP sale pertained diluted the net million million related $X.X fully compared last or third share quarter transactional $X.X as net [indiscernible] acquisition per income or those adjusted per and to costs quarter largest EBITDA illegal year. to was and in of diluted income the the fully

as ultimately I synergies finished discussing opportunities acquisition did gives and Now excitement of access that customers, we want categories the into to playbook national our I Golden channels will new about It just and large for to recently acquisitions. business for my new our a in QX, express sales future Organics. announced us become expertise plug

I'll some time details and as Organics more in the of to as business Brady? to over about turn to the the talk iGourmet some Golden well retail ramp-up. now Brady transaction detail divestiture

I'm to talking Thanks, week, worked excited with and everyone. we our ago. hitting be been more with ever the a Bill Bill, Despite the context a this towards the and have to the hello, have that my agenda. IVFH transparent stabilize pleased our and XX-month with mark now under progress diligently company minute be you than shared I'll relatively we've still, X-phase short made I'm shareholders, along to way you, XX-year and

removed our a of gift been years. card closed eliminate end transition I'm an the September, obligation the from to we iGourmet had a happy also At fulfillment drag on multiple $XXX,XXX forward approximately of the with sheet started, any commitments. in of to the say e-commerce officially business. path key the September, it mine that wound was associated remaining liability completing financial balance focus we future for would I company our on early for This period buyer. for after down XX-day the determine iGourmet sale When that

mainly left in balance assets, another In of mainly sale of QX, of We October, such QX. mouth.com was years and future improvement liability, domain we sale the the IP an you operations amount will which gift with until remaining $XXX,XXX mouth.com the with exchange card X to reflected of trademark sheet as a assets see website. a liabilities we expiration. in but assumption remaining remaining legacy that the of The for in small X were further still ceased in completed in approximately also

our who we team dedicated by transactions. move the I for As as financial the a our the resilience phases. airline throughout warehouse Pennsylvania X of to businesses, quarters the I'm the because quickly have been number a we X this least consider phase we was of had these which we long-time team I growth stated service, warehouse forward proud as nascent as the stabilization the business. the be food to goal these and us exited phase turbulent actively these to the effort of with despite in e-commerce, with transition planned minute The growth of of year ago, retail eliminate to drag collective at to very pulled first of a stuck accomplished employees

similar to executed also our a August. was hundred of release just list. $XXX,XXX scale press means scaled largest expansion several of that the our rollout, order late approximately warehouse, short Two half had That we to a X purchase successful order October, began model, a scale. we was of instead in Wave stores weeks now production in work fulfillment instead release nationwide. reached where X The to Wave precision revamped as line has shipping order, to assortment to we and announcing at SKUs on the and on instead e-commerce And focused small of XX converted of quantities focus was parcel consumers. we centers of large what press retail shipping low in business fulfillment X paid Pivoting in stores we we as a In later, we disclosed once Wave of a purchase broad store which our ever consolidated turn, of X,XXX, quality distribution number off. into that are required and a

be weekly of thousands initial than opportunity each to to be of volumes tens experience retail was in the we the will of the what the of our volume ahead our successful. retail team, inventory staff, the stages understand prudently enable in takes lower working given expect Part launches. and cheese replenishment invest mainly week. in of leadership foray. capital, warehouse, pounds October early We're Though equipment be it the the to to set, But and these need of we the

will You now can week. new reaching we expect that include first QX, in results, full of each But skilled costs. those the milestones start-up efficiency are that quarter

flows profitable confident and this set to be XXXX. We in continue be to cash business that generate positive is up

based sales with less we XX, also big of overall in you big acquisition Denver. and win an LLC Higher definitive Pennsylvania of On signing and the the operations update for expenses its operating of progress closing a the announced October since the in were to pleased and agreement, volume towards and for on Golden I assets IVFH we a the wanted then. provide Organics win shareholders. is with inventory

our the have new certifications, of Golden the assumption of most had Jackson, safety and since check organic We closing on negotiated Organics, working of of lease remaining the the on new our signing items list. the and President "housekeeping" completed agreement. site Taeshaud secured We

inventory, major last capital, largest physical true anticipate weekend. we and finalizing scheduled working kick for The within and is this up next week. of a that to milestone that's is part that the to closing off The to conduct

wanted be it little on more value and for I a context why us. rationale provide to the generator will a

we valuable is while self-funded prudent structure inventory, our financial equivalent of the reduces base. the the all, the note essentially cash be earnings of deal existing the as equipment, value this, $X.X customer First supplier seller an million in $XXX,XXX by risk upfront assets. with an also received future of purchased relationships payments buying of Along will of and

few one payables, or has lease We the lease receivables the also than remaining. less the there's approximately years offset warehouse truck X and received very liabilities as

attractive growth transaction. also synergies that it this IRR We We and refresh the scale. that drive experience strategy, had of means warehouse kind we profitability you finish of further can our without we very the as updating XX% years, to returns well needing energies, CAGR our cross capabilities tell consistent bring, quickly assume and a levels of to X of technology and And greater bones business only projected any past management which accelerated revenue is soon good that our to this accelerate. in of a or as achieve will look and would over complement achieve with forward to line

open up Q&A. it I'll we that, to With back before Bill to turn

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

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

the to the section call. move of Q&A Instructions]. now [Operator We'll

Herbert one the got chat as new We e-comm from margins impacting? gross effects ]. the through as Can you discuss much Brian from is [ well Okay. retail how question cheese

appreciate that for Brian. question, it. I thanks Yes,

XX% So that on run as a the to gross out extreme gross actually and both release comments, we dip margins business get typically did XX% levels mentioned the business the e-commerce margins funny this The is about to the because press would of quarter. order of an that the our thing we expense course, door. in take

then it cost all in money, very lose a is So packaging of incur costs, come all once you the But the does we've business. FedEx course, way, you, which all exited and why the margin. at that

down course, gross so down bringing of that were as overall ramping our we rate. And business, corporate margin it's,

the the was cost the didn't wouldn't scale. earnings once the goods the our chose XX-store we comments, have loss the the cheese, take along in place, at to be test, On to a test. during to got this retail But right? the we area able the retail in have didn't I cost partner So to weeks that XX-store want to knew to first purchase we we we won our we also or during pass key yet mentioned scale business cheese of of we'd the that that

still XX stores to so because our relative for going sounds XX funny a stores where size. we're it's But And small here. of material volume company is

for a during the gross several have at did going to impact paying points in need margins we're cost that we like of we off we we're kind the of gross cheese that So of at for business were cheese to were our to scale now purchasing, QX, that of but that material knock able margins QX, the well be mentioned and goods forward. I

a follow-up to Thanks I your place free feel if for to a to Brian, question, anything. give margins back into So gross get me we healthy future. missed expect the

Got another you JD the Can go chat the financial around Amazon by Abshar. business? model question over from

Yes, sure.

that's run seller So third-party on the on we Amazon, that to similar a other sellers exist all Amazon. store

So run XX% about gets is way we commission, that typically, paid. the a Amazon

of price So Amazon consummates, then pricing our sale owe own of sold. XX% internal the we that's once those based the on then retail we And models. set products

product. like mentioned, all are So service I these food

the commission on ship have bake So need to to on product, margin pay And consumer those et be cetera. Amazon, adequately that, than of able the we able rain to to higher because the the would we're we business. much historically the seen items is in

not cost from model different model is business end cases, of some that margin really any foods where the the at they, US with our commission other distributors day, make or a themselves. the either or of a we pay the in So also

no said, So isn't answers we a capital Hope it and low like relationships. model. different that make business leverage as as vendor question, too your I really And our of existing money, to way long cost, assortment JD. can

what that Herbert. would have speaking other in forward. I'm margins any follow-up of what going One there XXXX versus or were, look before. competitive impacted been Brian Within factors existed like gross from it have Specialty, what say,

the So business. business didn't when was years purely it referencing have a e-commerce when yes, you're even an we drop-ship

start margins those days. don't business, anything you'll continues those since is those we to the retail be of those. I up Dropship I've the the think margin see No, to before, And we That's like all tends down as shine distribution that ramp has as margins of gross is inventory definitely going food lower our the actually the again. we mentioned P&L e-commerce impacted lowest business, clean be think begin highest through to margin. itself touch to -- any to where lap

the growth So our Specialty more distribution as towards course, Foods. into also business continue the the of to will we'll acquisition mix continues & that Organics scale. Golden to retail with business more business mix the food and And of Artisan

see corporate the Dropship So shine margins and I the to continue will think continue over through impact place, to strong e-commerce move all but we'll the be away. as goes business

All it. right. more We're we'll and call it XX going about to seconds, give

type You can to question your raise feel hand. free or your

in from trending be of model, type lower the in We Graph. business shouldn't got dollars. Okay. Carlos inventories your Because a question

business right on right increase definitely an so now and up. segment, ramping don't business that And actually retail inventory. hit there. numbers, able QX actually scales we in an Dropship expect grows dollars we're, time, course, that's the start able and happening cheese do we increase So the the even is this of to million what be though own of inventories a QX would in inventories. up without the more business, purchased hasn't cheese in the inventory to few do we'll we in to of hit And in own that We've seeing in over inventory. you're as increase What's that business report. to now the Most expect be to

just we the we Hope So so on scaling kind depends is now, the businesses question, grow. that scale business, coming of from Carlos. expect answers of your that to much it growth the are right really do inventories retail so of mix the in

All right. attendance for call. the everyone else, Thanks, your Thanks, today Ronit, your questions and for and on engagement for moderating.

leadership out our to further progress I'm my to contact make inspiring like to at Schubert, Innovative our is really Please reach with it's always, touch base. feel spring. data. whose of investors And Food in have update you As connect to see level forward the who free in Gary included the available of strategy our and available questions update about info schedule you'd publicly on to interest happy myself release, QX to to press Holdings. to continuing if we a look this team

all. day. Thanks, Have a great