Innovative Food Holdings, Inc (OTCMKTS:IVFH)

Transcription

1 NEW YORK SÃO PAULO SHANGHAI Innovative Food Holdings, Inc (OTCMKTS:IVFH) Research Note IVFH, through its Innovative Gourmet subsidiary, acquired the assets of igourmet, a leading online gourmet food and gift retailer. Michael Fabrico, previously the CIO of Haddon House Food Products from 2015 until 2016, appointed as Chief Information Officer Company Description Innovative Food Holdings ( IVFH ) is a specialty food platform in the food-service and consumer markets. IVFH sells its products directly from its network of vendors and warehouses, and through its websites. It provides direct access to consumers and chefs for high-quality specialty food products throughout the U.S. IVFH is headquartered in Bonita Springs, FL and its website is Key Data 52-Week Range Shares Outstanding Market Cap Months Avg Volume 144, Total Cash 3.76 Total Debt 2.73 Key Financials FY14A FY15A FY16A Revenue EBIT EBITDA Earnings (3.70) (27.20) 6.40 CFF (1.40) One-Year Price & Volume $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $ Millions Price Volume 845 Third Ave, Fl 6 New York, NY (646) research@jgrcap.com

2 IVFH Strengthens Foothold in Online Food Delivery with igourmet Acquisition IVFH, through its Innovative Gourmet subsidiary, acquired the assets of igourmet, a leading online gourmet food and gift retailer. Through its namesake website and channel partners, igourmet sells gourmet and specialty food products. Acquisition Keypoints: igourmet sells directly to restaurants, specialty retailers, and other business enterprises via its specialty foodservice division. igourmet has established itself as an industry resource and reliable vendor with its industry-veteran leadership, and IVFH plans to continue operating the site under its veritable branding. igourmet s CEO and founder, Spencer Chesman, was named President of Innovative Gourmet. Consideration Terms $1.5mn $0.325mn advancements to sellers via its Food Funding LLC subsidiary $0.2mn purchase of debt owed by igourmet potential contingent liability allocation for a portion of igourmet s ~$2.3mn debt that is not purchased or assumed by IVFH additional consideration remunerated in the following scenarios a maximum of $1.5mn if Innovative Gourmet s 2018 EBITDA accrues to $3.8mn a maximum of $1.75mn if Innovative Gourmet s 2019 EBITDA exceeds its 2018 EBITDA by at least 20% and if its EBITDA accrues to $5mn a maximum of $2.125mn if Innovative Gourmet s 2020 EBITDA exceeds its 2019 EBITDA by at least 20% and if its EBITDA accrues to $8mn the EBITDA-based earnout would remit in: 37.5% cash 25% IVFH shares 37.5% IVFH shares or cash -- at IVFH s discretion research@jgrcap.com 2

3 Quick Notes -- IVFH Recent Activity Michael Fabrico Appointed as Chief Information Officer previously, the CIO of Haddon House Food Products from 2015 till its acquisition by United Natural Foods the following year from 2008 through 2013, Mr. Fabrico was EVP and CIO of Euro-Pro, which is now Shark- Ninja while there, he built the IT and data infrastructure that scaled the company s growth from $300mn to $1.3bn earlier in his career, Mr. Fabrico served as interim CIO of WearGuard-Crest -- an Aramark Corporation subsidiary -- and served 6 years as VP of IT for Broder Bros. Co (currently Alpha Broder) -- a portfolio company of Bain Capital Financial Analysis Income Statement Income Statement Summary 12/31/ /31/ /31/2014 Revenue Operating Income Pretax Income Income bef XO Items Net Income Basic EPS Before XO Items Basic EPS Diluted EPS Before XO Items Diluted EPS Dividends per Share EBITDA Return on Common Equity research@jgrcap.com 3

4 Balance Sheet Balance Sheet Summary 12/31/ /31/ /31/2014 Total Current Assets Total Long-Term Assets Total Assets Total Current Liabilities Total Long-Term Liabilities Total Liabilities Total Shareholders' Equity Shares Outstanding Book Value per Share Tangible Book Value / Sh Shareholder Equity/Total Liab Cash Flow Statement Cash Flow Summary 12/31/ /31/ /31/2014 Net Income Depreciation and Amortization Change in Working Capital Cash - Operating Activities Capital Expenditures Cash - Investing Activities Cash - Financing Activities Net Changes in Cash Free Cash Flow Free Cash Flow / Basic Sh Free Cash Flow / Diluted Sh Cashflow per Share research@jgrcap.com 4

5 Fundamentals Analysis Per Share Data EPS (Trailing 12m) 0.14 Dividend per Share 0.00 Book Value / Share 0.22 Sales / Share (Trailing 12m) 1.44 Cash Flow / Basic Share 0.14 Free Cash Flow / Share 0.14 Cash Flow Analysis Price / Cash Flow 7.87 Price / Free Cash Flow 7.95 Cash Flow / Net Income 0.54 Dividend Payout Ratio 0.00 Cash Generated / Cash Req Cash Dividend Coverage #N/A N/A Cash-oper / Sales 9.86 Eff Interest Rate 0.00 Profitability EBIT 3 Operating Margin 9.38 Pretax Margin 8.01 Return on Assets Return on Common Equity Return on Capital #N/A N/A Asset turnover 4.15 Structure Current Ratio 1.14 Quick Ratio 0.98 Total Debt to Total Assets Total Debt to Com Equity Acct Receivable Turnover Inventory Turnover Gross Margin EBIT / Total Inter #N/A N/A research@jgrcap.com 5

6 Innovative Food Holdings, Inc JGR Capital Information Headquarters Address 845 Third Ave, Fl. 6 New York, NY Contact research@jgrcap.com Disclosure This report contains forward-looking statements, which involve risks and uncertainties. Actual results may differ significantly from such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the Risk Factors section in the SEC filings available in electronic format through SEC Edgar filings at The research analysts principally responsible for this research preparation do not receive compensation that is based upon any specific investment banking services or recommendations and can be compensated based on factors relating to the overall profitability of JGR Capital ( firm ). As of the date of research distribution, neither the firm nor the principal research analysts beneficially own 1% or more of any class of common equity securities for this issuer (including, without limitation, any option, right, warrant, future, long or short position). The securities of the issuer(s) discussed in this research may be unsuitable for investors depending on their specific investment objectives and financial position. Past performance is no guarantee of future results. This research does not constitute a personal trading recommendation or take into account the particular investment objectives, financial situation or needs of an individual reader of this report, and does not provide all of the pertinent information to make an investment decision. JGR Capital does not provide investment banking services nor has it received compensation for investment banking services from the issuers covered in this research content. The firm does not make a market in the issuer s securities. It has received compensation from the issuer for providing non-investment banking services to this issuer. The non-investment banking services provided to the issuer includes investor relations advisory and services, production of this research content, comprehensive reporting analytics, and financial analysis. The fees for these services vary on a per-client basis and are subject to the amount and category of provided services. Firm analysts and members of the research production team are prohibited from holding or trading securities in the issuer. Additional information is available upon request. JGR Capital s research contents are based on data obtained from sources that it believes to be reliable and does not purport to be a complete statement of all material factors. This report is for informational purposes and is not a solicitation of orders to purchase or sell securities. No part of this material may be copied, photocopied or duplicated in any form or by any means, or redistributed without prior written consent from JGR Capital. All rights reserved.