BONITA SPRINGS, Fla. - Innovative Food Holdings, Inc. (OTCQB: IVFH), a leading provider of gourmet specialty foods to professional chefs, has announced its acquisition of Golden Organics, LLC, a specialty food distributor based in Denver, Colorado. The transaction, valued at $1.75 million, includes $1.4 million in cash and a $350,000 seller’s note with a 6% interest rate over five years.
Golden Organics, established in 1994, specializes in distributing organic dry-good products in the Rocky Mountain region. With over 85% of its products certified organic, the company also offers items with Gluten Free, Kosher, Halal, and Non-GMO certifications. The acquisition includes approximately $1.4 million in inventory and $100,000 in property, plant, and equipment.
The company operates from a 22,000-square-foot leased warehouse and has reported $6.8 million in trailing-twelve-month revenue, with a compound annual growth rate of 22% since 2018, achieved without a dedicated sales staff or direct marketing efforts. Golden Organics has maintained positive unadjusted net income annually during this period.
Golden Organics' customer base includes over 200 entities, such as restaurants, food manufacturers, and retailers, mainly in the Denver area. The acquisition is expected to expand IVFH's organic product offerings by over 800 items and is projected to enhance the company's long-term growth opportunities.
IVFH plans to cross-list Golden Organics’ products on various sales channels, including its drop ship business and Amazon (NASDAQ:AMZN), to realize bi-directional synergies. The integration also aims to combine back office functions, implement a unified ERP system, and adopt a single warehouse management system to drive further efficiencies.
Taeshaud Jackson, with extensive experience in food distribution and warehouse management, has been appointed as the new President of Golden Organics. Jackson has been preparing for the role by engaging with the current employee, vendor, and customer bases.
Bill Bennett, CEO of IVFH, expressed confidence in the acquisition, citing strategic long-term benefits and the potential for incremental shareholder value through profit synergies. Legal counsel for the transaction was provided by Steptoe & Johnson PLLC.
IVFH anticipates incurring transaction-related costs of around $75,000, primarily during the latter half of 2024. More details will be disclosed in IVFH’s Current Report on Form 8-K to be filed with the Securities and Exchange Commission.
This news is based on a press release statement from Innovative Food Holdings.
In other recent news, Innovative Food Holdings reported a decrease in Q2 2024 earnings, with total revenue falling by 10.1%. This decline was largely attributed to a strategic scale-down of its direct-to-consumer e-commerce operations. Despite the dip, the company reported an adjusted net income and positive EBITDA and free cash flow figures. Innovative Food Holdings is also actively pursuing merger and acquisition opportunities, aiming to expand its foodservice business.
In light of these recent developments, the company is optimistic about growth in the latter half of the year, driven by new customer acquisitions and diversification into different sales channels. Innovative Food Holdings is also in the process of selling igourmet.com's intangible assets, which is expected to streamline operations and improve net profit.
Furthermore, Innovative Food Holdings is piloting a program with a retailer to implement a cheese business across 10 stores. The company plans to utilize proceeds from the sale of igourmet.com and a $3 million credit line to support these growth strategies.
InvestingPro Insights
To complement the recent acquisition news of Golden Organics by Innovative Food Holdings (IVFH), let's examine some key financial metrics and insights from InvestingPro.
IVFH's market capitalization stands at $66.62 million, reflecting the company's current valuation in the specialty food distribution sector. Despite the recent acquisition and growth strategies, InvestingPro data shows that IVFH's revenue for the last twelve months as of Q2 2024 was $69.41 million, with a revenue growth of -10.93% during the same period. This decline in revenue highlights the importance of the Golden Organics acquisition in potentially reversing this trend.
InvestingPro Tips reveal that IVFH has a "high return over the last year" and a "strong return over the last five years," which aligns with the company's strategic moves to expand its product offerings and market reach. The acquisition of Golden Organics, with its positive net income history and strong growth rate, could further bolster IVFH's financial performance.
Another relevant InvestingPro Tip indicates that IVFH "operates with a moderate level of debt," which is crucial when considering the cash component of the acquisition. This moderate debt level suggests that the company may have the financial flexibility to integrate Golden Organics without overstretching its resources.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of IVFH's financial health and growth prospects.
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