Innovative Food Hldgs Inc

and welcome to the Innovative Food Holdings First Quarter 2025 Earnings Conference Call. My name is Rodney Wallerstein, and I'll be moderating today's call. With me on today's call for Innovative Food Holdings is Bill Bennett, our CEO, Brady Smallwood, our COO, and Garrett Shupert, our CFO. About the conference call, we will be presenting both GAAP and non-GAAP measures, including, amongst others, historical and estimated EPS. adjusted EBITDA, which is net income before cost associated with amortization, depreciation, interest in taxes, and excluding certain one-time expenses, and adjusted fully diluted earnings per share using the weighted average shares outstanding for the quarter ended March 31st, 25. These measures are not calculated in accordance with GAAP quantitative reconciliation of certain of our non-GAAP financial measures. The most directly comparable to GAAP financial measures appear in today's press release. I would 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 amended concerning future events. Words such as aim, may, could, should, projects, expects, intends, plans, believes, intends, hopes, goals, Estimates and variations of such terms and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties, and contingencies, and many of which are beyond the company control. Actual results, including without limitation the results of our company's growth strategies, operational plans, as well as future potential results of operations or operating metrics and other measures, To be addressed by our management, the conference call may differ materially and adversely from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially included but are not limited to the risk factors described in other disclosures contained in our files with the Securities and Exchange Commission, including risk factors and other disclosures in our Form 10-K and other files with the SEC, all of which are accessible on www.sec.gov. Except to the extent required by law, we assume no obligation to update statements as circumstances change. With that, I'd like to turn the call over to Mr. Bill Bennett. Please go ahead.

Hello, everyone. Good morning. I'm happy to welcome you to our Q1 2025 earnings call. You can read more detail about our results when we file our 10Q with the SEC later today. I also want to make sure you're aware that we've posted a new investor presentation on our website, ivfh.com, which gives an overview of the company and the longer-term strategy we are building. There are a number of strong points about this quarter's performance alongside several areas where we are not yet satisfied and are working to accelerate progress. I'll start with the strong points. First, our year-over-year revenue growth accelerated to 26.0% in Q1 from 19.2% in Q4. Our recently completed acquisitions, net of our divestitures, contributed approximately three points to that growth. That means our organic growth, excluding the impact of M&A and divestitures, came in at 22.9%. This was the first full quarter in which our new retail cheese business was fully integrated, and it was the largest single contributor to our overall top-line momentum. Looking across the rest of our portfolio, we continue to see growth in several key areas, including our artisan platform, our Amazon channel, the new distribution partner we onboarded last spring, Cisco, and our airline catering partners. We also launched our new airline cheese business this quarter, and we continue to chase multiple additional growth opportunities, both with cheese and with additional categories. While the team has driven strong growth across many areas of the business this quarter, three areas remained an opportunity for us. And I wanted to highlight the actions we're taking to turn them into drivers of future revenue and profit growth. First, our digital channels business continued to decline by single digits as our US foods business completed two years of declines. Their marketplace platform is seeing intensifying competition as they have expanded the number of sellers and items available on their marketplace. I'll tell you a bit more about the problem we're trying to solve here. In any marketplace strategy, catalog expansion is a core growth lever. This is why companies like Amazon and Walmart consistently focus on the breadth and depth of their offerings. We see this in our data as well, that catalog growth directly correlates to revenue growth. For most distributors, expanding a product catalog is a slow and costly process. But in our case, with an established dropship infrastructure, we should be able to do it faster and at a lower cost. Unfortunately, our legacy systems have made this more difficult than it should be. Until recently, our vendor onboarding process relied on outdated tools, including an Excel-based template with over 150 fields required for every new item set up. This has understandably created friction, particularly for the smaller artisan vendors that should be a competitive strength for us. Historically, it took us six to 12 months to fully onboard a single vendor. That translated into an average of just 13 new SKUs added per week, far too slow to drive catalog growth, especially when factoring in natural attrition and item discontinuation. We're now in the process of rebuilding our catalog management platform using AI-driven third-party tools. These tools will allow for concurrent processing by multiple team members, eliminate our reliance on the rigid Excel templates, and streamline the vendor onboarding experience. Vendors will now be able to upload any version of their catalog, and the AI will parse the data, auto-populate required fields, source additional data from public databases, resize and enhance images, and generate optimized product titles and descriptions. This transformation will reduce vendor onboarding time from six to 12 months down to a fraction of that time. This means our people can shift from tedious manual data entry to higher value activities like vendor sourcing and quality validation, further accelerating the flywheel. While this is still a work in progress, I look forward to updating you on our continued progress in future quarters. The second area of opportunity this quarter relates to the profitability of our retail business. In Q1, we narrowed our loss from approximately $700,000 in Q4 to approximately $425,000. While this represented some progress, we obviously still have work to do. There are a number of strong initiatives underway, which Brady will speak to in greater detail later in the call. We remain confident in the path to sustainable profitability, but we know we have more work to do. The third area of opportunity is the integration of our recently acquired businesses. We are still in the process of stabilizing the businesses after their purchase and the relocation of Loco. As part of this process, we made the decision to exit a subset of legacy customers that did not meet our profitability or credit standards. We're now implementing standard operating procedures across all key functions and tracking daily progress. We've upgraded the talent on the team, including the recent hire of a full-time accountant to replace the bookkeeping originally done by a contractor and the founder. And we're systematically building a scalable playbook. This playbook will help us much more quickly and efficiently integrate our next acquisitions with clear documentation around every key process in the operation. Despite all of this transition, these businesses remained profitable in Q1, even while running out of two separate locations for much of the quarter and incurring costs that won't continue into the future. Once this integration is complete, we'll begin driving the growth levers we've previously outlined, including cross-selling opportunities across our digital platforms. We anticipate being well-positioned to begin accelerating revenue and profit from these channels in the back half of the year. In summary, Q1 was a quarter of strong top line growth and clear progress, but also one of focused investment and transformation. We're seeing traction in key parts of the business and laying the foundation for long-term value creation. I want to thank our team for their focus and execution, and we look forward to updating you further in the quarters ahead. With that, I'll turn it over to Brady to talk through some of the specific actions we've taken in the operation of our business this quarter. Brady?

Thanks, Bill, and good morning, everyone. Today, I'll focus my comments mainly on our Pennsylvania-based business, as this was our first full quarter operating a substantial retail business out of this hub, and we only hit our fully scaled points of distribution in mid-January. So far, our rollout has been roughly in line with internal expectations, driving significant top-line growth while requiring some upfront investments to transform the operations. This program launched with long lead time imports, large volume buys, and no historical demand data. For all of our current active items, forecasts had to be made before we launched. But importantly, upfront commitments from our customer helped de-risk those inventory positions. So we were able to prioritize service levels out of the gate, which required significant working capital outlay upfront. Now, with better visibility into demand and item variability, Inventory ended the quarter slightly down from its peak and is currently down more than 50% from its peak and approaching target levels. In some cases, partner-funded promotions helped clear longer positions without impacting margin and have informed a stronger demand management playbook for the future. We've also strengthened our cost structure. With scale, we've negotiated vendor cost reductions and mitigated some foreign exchange rate and tariff pressure. The rotational structure of this program also allows sourcing flexibility to maintain price competitiveness. Operationally, reducing trim has been a key focus. We now weigh every wheel and cut, capture data in real time, and adjust specs by cheese type. We're building sales channels for each trim type, some routed into drop ship, others into airline formats. About a third of our retail products are also included in airline contracts already, enabling us to repurpose trim as sellable product. We've also reduced freight cost per unit by optimizing case packs and pallets and renegotiating freight carrier rates. Our scale in retail is improving unit economics across the network, including airlines, which is predominantly serviced out of the same Pennsylvania facility. The capabilities we're building are also unlocking new revenue streams. Within just the last 60 days, we have expanded cheese conversion for airline customers and one large importer. We see a need in the market for the types of services and products we can provide, and we are expanding cooler capacity to support future growth aspirations. Speaking of airlines, this business also continued steady year over year growth. While macro uncertainty exists, our gains are primarily driven by execution, such as new items, more partners, and stronger reliability. As you can tell, we've been focused on launching retail and supporting the growth in airlines while continuing to source new opportunities for the future. While we still have work ahead to operate with excellence and solidify our new partnerships, we remain bullish on the growth opportunities that lie ahead. And with that, I'll hand it over to Gary.