Now presenting CEO Bill Bennett for Innovative Food Holdings.
All right, how's everyone doing? I don't know if after lunch is the coveted time or the worst time to be here, but I'll try to keep the energy high for you so that you don't let those stomach juices go to work and fall asleep on me. Excited to be here. My name is Bill Bennett, CEO of Innovative Food Holdings. Very excited to have a few minutes to talk through our company. It's fun to see a few familiar faces here, but so many new faces too. It's great to build some new connections. Obligatory forward-looking statements. I get two slides because that's how many Legal gave me. Let me just back up a little bit.
I know some of you are familiar with the company's history, but want to give you a bit of a taste of kind of where we've been and where we're headed. The company was really founded about 25 years ago by sort of a celebrity chef of his own right who had been asked over and over again for his rolodex of vendors. He'd done so much work to kind of build this really unique book that he'd use vendors to pull from as he would build restaurant after restaurant. He thought there's got to be a way to monetize that.
That was really sort of the basis of the company, was bringing together a catalog of small vendors that could dropship out to restaurants and build something really unique that was not available from the typical big food distributors like a US Foods or a Sysco. After many years of unprofitable M&A, we came in as a leadership team about two years ago and really kind of cleaned up the company. We got rid of some of the consumer e-commerce businesses that had been built up over time and had lost many millions of dollars, built out some new sales channels. We just announced and launched a new retail business this last fall. We are not selling to consumers. We are selling to the retailer themselves, supplying their gourmet cheese business. Now we are sitting on very consistent profitable growth for the first time in over a decade.
We made two acquisitions this last fall, Golden Organics and LoCo Food Distribution, both based in the greater Denver area. What that is doing is helping us expand into areas of the catalog that we have not been in before. What that has done is really create a diversified platform of a company for us that we are going to talk about more here in a minute. We are really focused on B2B. We are focused on specialty food, which is anything unique that is hard to find. We are now pursuing a NASDAQ uplisting. We are targeting that kind of middle to late this year. We meet all of the criteria except for the stock price because of the heavy dilution of the company in years past. We will be doing a reverse stock split later this year to make that last kind of qualification.
We will be uplisting to NASDAQ. Some things in my deck align with what we learned yesterday about Chris's presentation. Other things do not. This one's too wordy, but hey, you've got everything you need now. That is kind of some of the headlines of the company. We finished in 2024, $72 million in revenue. Our Q4 organic revenue growth, so excluding the acquisitions, was up 44% with that new retail business. Very excited to see how our growth plans are starting to play out. Like I said, first time that we are consistently profitable in over a decade. That is us in a nutshell. Like I said, my leadership team and I came in about two years ago. We all come from big company backgrounds. Most recently, I ran the Kroger e-commerce business, about a $10 billion P&L.
I was really looking for an opportunity to lead something and put my mark on something on my own. I brought along Brady Smallwood. He and I have worked together for the better part of a decade across Kroger, Walmart, and some other side projects. Really nice to have kind of my wingman with me here at the company. Gary is somebody that Brady and I met back in our Walmart days on the finance team. He comes in with awesome experience from both Tyson Foods and Walmart as our CFO. Also have an awesome board with fantastic capital markets experience. Our chairman, James Pappas, also sits on the board of UNFI and Red Robin, owns or runs a fund that does several hundred million in assets under management. Super sharp guy. It's awesome to have as our chairman.
We've got three total activists on the board, so we are active, but great partners in that group and just fantastic to have an aligned strategy with a sharp group of guys that are helping us steer the company in the right direction. Let me take a step back for a minute and teach you a bit about this industry if you don't know anything about food service. Food service is typically split into two segments, I guess we'll call them. Broadline distributors, this is the Sysco and US Foods of the world. We talk about them as sort of like the Walmarts of food distribution. They are really good at selling commodities at cheap prices and moving volume, right?
Because of that business model, by definition, they don't sell the long tail of a catalog that most restaurants need to have access to in some way or fashion, which is why the specialty distribution space exists. Very high concentration in the broadline distributors, very low concentration in the specialty distributors. The main point we're trying to make on the slide is that when you think specialty, a lot of people think white tablecloth, high-end restaurants. Every single segment in the restaurant space buys from specialty distributors because they can't get everything they need from the broadliners. That's the way we think about our addressable market. It's big, it's fragmented, and it represents lots of opportunity for disruption and for doing things differently than how they've been doing things for the last 200 years. What do we do differently?
We kind of outline here three different industry gaps. First is an inadequate catalog in both breadth and freshness. I mentioned how the broadliners have an inadequate catalog, but even the specialty distributors, they're always making bets, right? If a customer asks for something, they got to decide, man, if I bring in a whole case or a whole pallet of that product, am I going to be able to sell through it before the expiration date? It's food, right? It goes bad. There is sort of this whole industry structure that is developed around only selling things that have some kind of movement to them. What do we do differently? We have an extensive catalog that leverages a dropship model. We work directly with vendors, manufacturers, the farms, boats, and ranches that produce the product.
That means that this is about half of our business represents this dropship structure. We don't have to take ownership of the inventory. We don't take that inventory risk. It's very high margin. It's very low capital and allows us to grow our catalog with very little investment. The industry gap number two, large delivery minimums. Even these specialty guys are beholden to the same laws of physics that the broadliners have, which is if I'm going to deliver to your restaurant, I've got to have a big enough order to justify that kind of fixed cost of the delivery. For a lot of independent restaurants, it's hard to hit those minimums that are required by the specialty distributors. What do we do differently? We're dropshipping, right? It's literally one order, one package at a time.
We have a big enough scale in our FedEx shipping that we get very good rates with FedEx. That allows us essentially to cut out all the middle distribution, right? Rather than a seafood producer selling to a distributor who sells to US Foods, who gets it delivered to the restaurant, all that's cut out in the middle. Even though FedEx can be expensive, it allows us our end price to the restaurant to be competitive with what they might get the products from elsewhere. The last gap, sporadic delivery days. Most specialty distributors are going to say, "I deliver to the northeast area of Chicago on Wednesdays." If you're located there and you want your product, then you got to get your order in by Monday and I'll deliver it on Wednesday, right?
With our model that's much more sort of precise one order at a time, we can do fast next-day delivery and we don't have to adhere to any specific delivery days. That's sort of what we're doing differently. Let me talk a bit about sort of how this all comes together. It really starts with our sourcing efforts. As you can imagine, we want to carry stuff that by definition is specialty, that US Foods is not carrying, that Sysco is not carrying, and that other specialty distributors aren't carrying. It takes some work to find those vendors, to train them on how to pack and ship a box with FedEx to make sure that it's safe and protected along the journey. It takes time to set up the technology platform to get the orders flowing correctly.
All of that process is really kind of our secret sauce that we're good at in building this catalog of products. We've been focused a lot since I got here on perishable products. I learned this from my retail days at Walmart and Kroger that perishables drive repeat with a customer, right? If they buy a 50 lb bag of ground cumin, we're not going to see them for a year, right? They're gone forever. If instead they come and buy 100 lb of Wagyu beef, they're going to call back again next week and they're going to order their Wagyu beef again, right? Those perishables drive the repeat. It allows us to attach other non-perishables to their orders. That is where we've been focusing a lot.
One that I'm particularly excited about, I've mentioned to a few of you, is a new guy we brought on in Alaska that does seafood. It is tough to get fresh seafood from Alaska today because there just aren't many producers. Most of the seafood we all eat is all frozen, right? It gets thawed before it's cooked and we don't even know that we're getting frozen seafood. This guy will ship fresh Alaskan black cod from his processing facility in Alaska straight to a restaurant's door. Literally, when the chef opens that box, that particular fish came out of the water 48 hours ago in Alaska, right? That's pretty unique. There's nobody else that's offering that kind of a product. It's unique because we go that extra mile to figure out how to bring these small vendors on board. I talked about the dropship network.
I talked about this group of vendors we bring on, but that's just like a little smattering of where our customers are. They're everywhere, right? We sell through US Foods, which is still a big portion of our business, but the end customer is really those restaurants that are ordering through the US Foods platform and we ship all over the place. The other half of our business is a more traditional specialty food distribution business. We have warehouses in Denver, Chicago, and Pennsylvania that sort of do different activities. Our one in Chicago is with an entity called Artisan Specialty Foods. That's an acquisition that we made probably 12 or 13 years ago. They sell all kinds of specialty foods locally in Chicago. They have branded trucks. They deliver to restaurants. They have a sales team. It's kind of a traditional food distribution business.
What we learned from Artisan is that as we got their assortment, their catalog for sale on our dropship platforms, their business has doubled over the decade plus that we've owned them. Now they do half of their sales shipping out to our dropship customers all around the country, and only half of their business is done there locally in the city of Chicago. Now we took that model and we said, "Let's go acquire another business and see if we can do this again." The businesses there in Denver are the ones we just acquired last fall. Golden Organics is an example, 800 products that we brought into our portfolio. We only had 25 organic products in our catalog before we bought them. We now have 825. Get those listed across all of our dropship channels.
The goal is over the next few years that we'll be able to drive significant growth and therefore high ROIC for that acquisition there in Denver. Just a little bit about our three physical warehouses. We can do all kinds of things there besides just store products and sell products. For example, on the bottom right there, the processing and repacking, we had our Pennsylvania warehouses where we used to operate the consumer e-commerce businesses that we sold off last year. They lost $12 million in five years of the company owning them. That's why we sold them. We had all the cheese processing equipment, all the know-how, all the vendor relationships and everything else. Last fall, we just landed and launched this new retail business that I mentioned.
We were able to use all the same infrastructure, the same people and everything in that warehouse to now cut and wrap thousands of pounds of cheese every single week now for this retailer. We look at our warehouse base as an opportunity to provide a whole variety of services that can support the rest of that dropship business. Long term, all three of us on the leadership team come from big companies. We didn't come to run a $100 million company forever. We really want to build this into something big. We've been saying since we got here, our goal is a billion dollars over the long term. Don't ask me when because I don't know when, right? That's sort of our north star. We're building a big company.
Every decision we make on our technology, on our talent that we bring in, and how we structure the company is built around how do we do this at much, much bigger scale than what we're doing today. That's really only going to be achievable through a combination of organic growth and M&A. Here's how we're sort of thinking about that strategic model. It starts with our IVFH platform. You're going to see me keep referencing Harvest. That's going to be the new company name when we go through the uplisting. Harvest Holdings Group is going to be our overall name. Harvest Group Holdings, excuse me. That's going to be the platform. It is the platform. This is made up of our unified catalog, right?
All of our different entities across the company that are selling locally, all pushing their catalogs together into a single unified catalog with a proven execution playbook. That's really what we're developing now with these acquisitions is how do we integrate an acquisition successfully and get all of their processes on par. Then centralizing all those back office functions, the accounting, the HR, the IT, and the legal. That becomes our platform. When we plug new vendors into this platform, it allows us to sell to all of our different sales channels. National distribution is the first sales channel I'll talk through. I mentioned the retail business. I haven't mentioned yet our airline catering business. Gate Gourmet is our biggest customer here. You may have seen their trucks pull up to your flight on the way out here.
They're the ones who supply all the food, the sodas, the snacks, and everything to many of the airlines. We do big business with them. About $12 million we'll do this year. Our model just works so well. It's sort of a just-in-time model that works for their kind of distributed kitchens that they have across 30 different airports around the country. Those two businesses primarily go out of our Pennsylvania warehouse, about a quarter of our revenue. Digital channels is sort of this dropship business that I keep referencing. Our biggest customer here is US Foods, but we have growing and important businesses with all of the other big food service distributors. Sysco and PFG kind of make up the big three. Gordon is a bit smaller.
We also have a growing business on Amazon, and we're sort of toying with our own website called Harvest to sell directly to chefs. That is 53% of revenue. The last one is local distribution. This is Artisan that I mentioned, and then Golden and LoCo that we recently purchased. That today represents about 17% of revenue. This is where the flywheel works, right? Every time we make another acquisition, it drives the entire business forward. Not only do we grow the unified catalog that allows us to build those digital channels that are very profitable for us, we also achieve what we call bidirectional synergies. We can also cross-sell the rest of the IVFH platform to Golden Organics customers and LoCo Foods customers.
When you come into a small distributor who does not have a lot of growth opportunities in the market in which they operate, and you now overnight give them access to a national market and a 6,000-item catalog to cross-sell to their customers, you can grow that business quickly is our goal and our hope. We are obviously only a couple of months into those acquisitions, so that is going to be a key part of our talk track on our earnings calls and press releases to keep investors updated in terms of how those acquisitions are progressing. The goal is once we create the playbook on those two acquisitions, then we would love to start to accelerate our M&A activity and push this flywheel faster. I could not talk to a bunch of investors without sharing some numbers.
You can see a lot more in all of our filings, but I did want to share just kind of some of the headline numbers. I intentionally broke out the colors in these bars because the blue bar is the things that we've gotten rid of, right? I mentioned we cleaned up a lot when we got here. We sold off or closed like seven or eight different entities, those e-commerce businesses, some brokerage businesses that didn't make sense and didn't make money for us. We really refocused the entire company onto that profitable core. We called this our stabilization phase or phase one. We got through that.
We sort of officially marked the end of it last fall and said, "Okay, now we're into phase II where we're laying the foundation for growth." During this phase is when we're doing those early acquisitions, we're writing those playbooks, we're growing our profitable food service business, and really identifying and defining that long-term business model that will someday get us to a billion dollars. Three, then as we get through this phase over the next, call it 18 months- 24 months, we'll move into a build and scale mode where we know what we're going to be when we grow up and we'll be ready to really push on the gas and drive that long-term scale. You can see how our financials have progressed.
We swung from a low of $4.2 million loss in 2020 up to a profit of $3.2 million in 2024 on an adjusted EBITDA basis. I know everybody always makes fun of adjusted EBITDA. We outline very carefully in our quarterly press releases exactly what's included and what's not included. We keep it the same quarter to quarter. We don't switch stuff in and out based on how we want the financials to look. We try to be very transparent and candid with investors and show them why we're making those adjustments. A couple of other kind of talking points for you. With the launch of the retail business in Q4, that organic revenue was plus 44%. Very excited to see the core base business growing even outside of the acquisition activity that we've been doing.
As you look at kind of the difference between 2023 and 2024, that's where, yes, our overall revenue was flat, but that's because of those divestitures. It's really that orange bar that matters for the long term. I think, oh, I mentioned already market cap at $94 million, planning a NASDAQ uplisting. I think I said all those things. That's it. I finished perfect. Five minutes left for Q&A. Yeah, please, go ahead.
Can you talk about cost inflation or food inflation that we've seen come back? What I mean in terms of like a restaurant, what percent of their expense base is food versus flavors?
Yeah, thanks, Tom. Especially important with all the tariffs that everybody's dealing with, right? We have a significant portion of our portfolio is imported goods. That's the day-to-day whims of our dear president we're watching closely.
In particular, with the 10% European tariffs now in place, we're already seeing some of those increases come through. What we look at a lot, though, is that remember that the tariffs are only applied to the cost of goods as they come into the port. There's a lot that happens in the supply chain between there and when it gets to a restaurant's door. Any further processing, packaging, shipping, labor that's applied, those are all obviously not tariffed. When you think about the cheese business in retail that I just talked about, we only saw like a 6%-8% increase depending on the SKU, even though the European tariffs were 10%, right? Because there's some transportation and labor included in that.
By the time we apply our labor and packaging and transportation, we're only passing along a few percentage points of increase to the retailer, and they're only going to have to pass along a couple of points to the end customer. Same thing with restaurants. Think about within a restaurant's portfolio, whatever you're paying on the menu, probably only a third of that is food cost. Again, very little impact I think we expect to see in menu prices, at least based on the current 10% tariffs coming in from Europe. Obviously a lot to be seen still. Asia, obviously, China in particular, a lot higher tariffs that are going to make Chinese food a little more expensive for us all. I don't want to minimize it.
I think there's a lot of work to do on tariffs, but we don't view it as a hurdle that's insurmountable. Yeah, please.
Can you give an update on the M&A pipeline and if we can talk about Golden Organics and LoCo Food Distribution? You mentioned before your ability to kind of get more out of those assets within the previous owners. Was that a one-off thing with those two assets, or is that kind of the playbook moving forward?
Yeah, good question. We've intentionally said we're not going to do any other M&A for a while, right? The whole point of these first two is to have something to play with, right? Something to learn from. We're writing the playbook, like I mentioned. We actually just reviewed last night.
We have 20 different standard operating procedure documents now that we've written and are holding the team accountable in Denver to make sure they're hitting each one of those as we intended to make sure everything is operating the way it needs to, especially under a public company umbrella now, right? That all takes time. It takes time to hire the right talent, to get the right processes in place. If you read up on the company, you'll see that we've taken a very conservative approach at every single step of our strategy because we're not going to go bet the company on a gigantic acquisition before we've ironed these kinds of things out, right? I think we want to learn and grow as we go through the entire process. On the pipeline, nothing in the short term, and that's very intentional.
In terms of kind of like the time to integrate the playbook, the goal here is these first two, we've got to write the playbook, right? In the future, we get to execute the playbook. My hope would be that on future acquisitions, we can go much faster than we go on these first two. That was sort of all part of the plan to begin with. I think I probably have one more minute. Yeah, go ahead, Tom.
You guys have cut out a lot of middle cost distribution costs for some of the customers, but are there any high-end restaurants that could cut you guys out that could call up the farm, call up the ranch and say, "Send us those directly"?
100%. It happens all the time, right?
It's why we have to always be the best at finding the next great vendor and the next great source for products. We sort of look at that as almost like we did our job well, right? They graduated past this. Where we get the most concern is with US Foods, right? When US Foods ends up going direct to a vendor, but we just have to constantly be on the hunt for the next great vendor. The cool thing with food is it's always changing. The trends are always different, and people are always looking for something unique. I think there's always a role for us to play. Cool. Thank you. Appreciate attendance.
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