Innovative Food Holdings Expands Organic Reach with Golden Organics Acquisition

Innovative Food Holdings, Inc. (OTCQB: IVFH), a leading national seller of gourmet specialty foods to professional chefs, has announced the acquisition of Golden Organics, LLC, a prominent organic food distributor based in Denver, Colorado. This strategic move aims to bolster IVFH's product assortment, customer base, and sourcing capabilities, positioning the company for long-term growth and profitability.

Unlocking Synergies and Expanding Organic Reach

Acquiring a Thriving Organic Food Distributor

Innovative Food Holdings has entered into a definitive agreement to acquire 100% of the assets of Golden Organics, LLC, a specialty food distribution company founded in 1994 and focused on being the premier organic food distributor in the Rocky Mountain region. The $1.75 million transaction, consisting of $1.4 million in cash and a $350,000 seller's note, represents a multiple of 2024 expected unadjusted EBITDA in line with IVFH's previously stated target range of 3-5 times.Golden Organics has generated $6.8 million in trailing-twelve-month revenue and has grown at a CAGR of 22% since 2018, without the benefit of a dedicated sales staff or direct marketing efforts. The company has also consistently generated positive unadjusted net income over the same period, demonstrating its financial stability and profitability.

Expanding Product Assortment and Sourcing Capabilities

The acquisition of Golden Organics brings a significant incremental customer base and sourcing capabilities to IVFH's organization. Golden Organics has built a base of over 200 customers spanning the United States, primarily located in the greater Denver market, with a diverse customer mix of restaurants, food manufacturers, and food retailers. No individual customer currently accounts for more than 8% of total sales.On the product side, Golden Organics adds more than 800 incremental organic items to IVFH's assortment, enabled by its deep international sourcing experience and supplier relationships. This expanded product portfolio allows IVFH to capitalize on the growing demand for organic and specialty food products, particularly among professional chefs and discerning consumers.

Unlocking Synergies and Cross-Selling Opportunities

As IVFH integrates Golden Organics, the company expects to realize bi-directional synergies that will further improve the deal's economics. IVFH plans to cross-list Golden Organics' products on its other sales channels, including its drop ship business with large foodservice distributors and its owned sales channels like Amazon. This strategy has been a key growth driver for IVFH's Artisan Specialty Foods entity, acquired over a decade ago, leading to approximately half of its sales currently coming from the drop shipping of products.Additionally, Golden Organics will have the opportunity to cross-sell IVFH's broader specialty products portfolio to its local base of customers. The company also expects to implement synergies with key back-office functions, implement a single ERP system, and integrate a single warehouse management system to drive further efficiencies and growth opportunities.

Experienced Leadership to Drive Growth

To lead the Golden Organics business, IVFH has brought on Taeshaud Jackson, a Denver native with extensive experience in food distribution, warehouse management, and business management. Mr. Jackson has previously held various managerial roles at leading companies such as U.S. Foods, Americold, DHL, Kroger, and Wal-Mart. He has already been working with IVFH for the past few months, building relationships with the existing employee, vendor, and customer bases, and is poised to take the helm at Golden Organics.

Aligning with IVFH's Strategic Vision

The acquisition of Golden Organics aligns with IVFH's strategic vision of expanding its product assortment, entering new markets, and accessing new customers. Bill Bennett, Chief Executive Officer of IVFH, expressed enthusiasm for the transaction, stating that it exceeds the company's rate of return requirements before including the upside from synergies. The financial terms of the deal, including the downside protection of receiving shelf-stable inventory equal in value to the cash outlay, further enhance the attractiveness of the acquisition.Overall, the integration of Golden Organics into the IVFH platform is expected to drive significant long-term strategic value, providing the company with new growth opportunities and strengthening its position as a leading provider of gourmet specialty foods to professional chefs across the United States.