iFresh, Inc. Reports Fiscal 2017 Financial Results

NEW YORK, June 30, 2017 (GLOBE NEWSWIRE) — iFresh, Inc. (“iFresh” or “the Company”) (Nasdaq:IFMK), a leading Asian American grocery supermarket chain and online grocer in the United States, today reported audited financial results for the fiscal year ended March 31, 2017.

Fiscal 2017 Highlights:

  • Total net sales decrease of 0.3% to $130.9 million from $131.2 million compared to fiscal 2016
  • Retail segment net sales decrease of 5.0% to $106.8 million from $112.4 million compared to fiscal 2016
  • Total wholesale segment net sales increase of 27.7% to $24.1 million from $18.9 million compared to fiscal 2016
  • Gross margin increase to 21.3% from 20.3% in fiscal 2016
  • Net income of $1.6 million or $0.13 per diluted share compared to $3.6 million or $0.30 in fiscal 2016

Long Deng, Chairman of the board of directors and CEO of iFresh, commented, “We are pleased to see strong results in the competitive environment of fiscal 2017. Retail store sales dipped because of non-recurring interruptions in one of our bigger stores, impacting net income, but net sales remained stable due to robust growth in our wholesale business. Gross margin increased due to improved efficiencies in our procurement system, and our cash position is strong.

We are also proud of our public listing through the business combination with E-Compass Acquisition Corporation. While this impacted net income through a significant increase in selling, general, and administrative expenses, becoming a publicly listed company adds tremendous intangible value to our brand. We look forward to carrying this momentum through fiscal 2018, during which we will continue to drive growth by refining our vertically-integrated model, expanding our store presence along the I-95 corridor, and further promoting our online and mobile platforms to reach more customers. We expect to have a promising future ahead as we gain importance in a niche market and evolve to become a major player. We look forward to sharing our progress with our investors in the coming months ahead.”

Fiscal Year 2017

In the fiscal year ended March 31, 2017, total net sales were $130.9 million, a decrease of 0.3% as compared to $131.2 million in the previous year. This was driven by a retail segment net sales decrease of 5.0% to $106.8 million from $112.4 million compared to fiscal 2016 and a total wholesale segment net sales increase of 27.7% to $24.1 million from $18.9 million compared to fiscal 2016.

Gross profit for 2017 increased by 4.8% to $27.9 million compared to $26.6 million in the prior year driven by growth and efficiencies in the wholesale business. Gross margin was 21.3% and 20.3% for the fiscal years 2017 and 2016, respectively.

SG&A expense was $25.7 million in fiscal 2017 compared to $20.7 million in the same period last fiscal year due to an increase in payroll and fees related to the NYM/E-Compass business combination.

Income from operations was $2.1 million compared to $5.9 million in fiscal 2016. Profit margin was 1.6% and 4.5% for the fiscal years 2017 and 2016, respectively.

Net income was $1.6 million or $0.13 per basic and diluted share in fiscal 2017 compared to $3.6 million or $0.30 per basic and diluted share in fiscal 2016.

Balance Sheet

As of March 31, 2017, the Company had cash and cash equivalents of $2.5 million, compared to $0.6 million as of March 31, 2016. Working capital was a positive $13.4 million, compared to a negative $3.3 million as at the end of fiscal 2016. As of March 31, 2017, the Company had $1.1 million of bank loans due within one year.

For the full year of 2017, net cash provided by operating activities was $2.6 million. Net cash used in investing activities was $10.6 million. Net cash provided by financing activities was $10.0 million.

Financial Outlook

In the coming months, as the Company continues to make investments in its business to expand, management expects its financial performance to remain stable. Costs may rise due to planned expansions, but these are expected to be offset in later quarters due to expected increases in sales. On a quarter-to-quarter basis, the Company expects to see slightly lower sales in its fiscal 2018 first quarter than in the previous quarter due to the impact of seasonality –the Company’s fiscal fourth quarter sales that concludes March 31st are typically sharply boosted by the Chinese Spring Festival, which in 2017 was celebrated at the end of January, and while the Dragon Boat Festival in June presents a sales bump, it does not present as sharp of a sales increase as the Spring Festival.

About iFresh, Inc.

iFresh Inc., headquartered in New York, New York, is a leading Asian American grocery supermarket chain and online grocer. With eight retail supermarkets along the US eastern seaboard and two in-house wholesale businesses strategically located in cities with a highly concentrated Asian population, the Company aims to satisfy the increasing demands of Asian Americans, whose purchasing power has been growing rapidly, for fresh and culturally unique produce, seafood and other groceries that are not found in mainstream supermarkets. With an in-house proprietary delivery network, online sales channel and strong relations with farms that produce Chinese specialty vegetables and fruits, iFresh is able to offer fresh, high-quality specialty perishables at competitive prices to a growing base of customers. For more information, please visit: http://www.ifreshmarket.com/.

Forward-Looking Statements

This announcement contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Examples of forward-looking statements in this announcement include, but are not limited to, statements regarding our disclosure concerning the Company’s operations, cash flows, financial position and dividend policy.

Financial statements below:

iFRESH INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 
    For the years ended  
    March 31,     March 31,  
    2017     2016  
Net sales   $ 121,826,207     $ 125,021,947  
Net sales-related parties     9,050,553       6,203,277  
Total net sales     130,876,760       131,225,224  
Cost of sales     87,610,153       91,738,333  
Cost of sales-related parties     8,162,545       5,520,917  
Occupancy costs     7,219,860       7,367,155  
Gross profit     27,884,202       26,598,819  
                 
Selling, general and administrative expenses     25,734,216       20,718,062  
Income from operations     2,149,986       5,880,757  
Interest expense, net     (303,894 )     (215,494 )
Other income     1,360,616       992,620  
Income before income taxes     3,206,708       6,657,883  
Income tax provision     (1,656,334 )     (3,016,874 )
Net income   $ 1,550,374     $ 3,641,009  
                 
Net income per share:                
Basic   $ 0.13     $ 0.30  
Diluted   $ 0.13     $ 0.30  
Weighted average shares outstanding:                
Basic     12,282,325       12,000,000  
Diluted     12,282,325       12,000,000  

iFRESH INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
    March 31,     March 31,  
    2017     2016  
ASSETS            
Current assets:            
Cash and cash equivalents   $ 2,508,362     $ 551,782  
Accounts receivable, net     2,272,011       1,814,533  
Inventories, net     9,796,984       8,200,557  
Prepaid expenses and other current assets     981,017       473,608  
Advances to related parties     14,852,083        
Total current assets     30,410,457       11,040,480  
Property and equipment, net     9,290,674       9,770,382  
Intangible assets, net     1,300,001       1,433,333  
Security deposits     912,346       925,477  
Deferred income taxes     86,799        
Advances to related parties           5,368,002  
Total assets   $ 42,000,277     $ 28,537,674  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 12,364,071       10,545,342  
Deferred revenue     206,737       145,497  
Bank loans, current, net     1,144,568       30,185  
Notes payable, current     262,578       208,059  
Capital lease obligations, current     51,376       48,303  
Accrued expenses     730,392       1,026,871  
Taxes payable     1,769,398       1,693,872  
Other payables, current     501,213       654,175  
Total current liabilities     17,030,333       14,352,304  
Bank loans, non-current, net     12,779,838       3,561,609  
Notes payable, non-current     379,376       424,291  
Capital lease obligations, non-current     59,907       40,468  
Deferred rent     5,424,134       4,930,154  
Other payables, non-current     34,800       37,800  
Deferred income taxes, net           79,422  
Total liabilities     35,708,388       23,426,048  
                 
Commitments and contingencies                
                 
Shareholders’ equity                
Preferred shares, $.0001 par value, 1,000,000 shares authorized; none issued.            
Common stock, $0.0001 par value; 100,000,000 shares authorized, 14,103,033 and 12,000,000 shares issued and outstanding as of March 31, 2017 and 2016, respectively     1,410       1,200  
Additional paid-in capital     9,075,025       9,445,346  
Accumulated deficit     (2,784,546 )     (4,334,920 )
Total shareholders’ equity     6,291,889       5,111,626  
Total liabilities and shareholders’ equity   $ 42,000,277       28,537,674  

iFRESH INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
    For the Years Ended  
    March 31,     March 31,  
    2017     2016  
Cash flows from operating activities            
Net income   $ 1,550,374     $ 3,641,009  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation expense     1,562,043       1,397,031  
Amortization expense     178,957       133,334  
Allowance for bad debt           26,931  
Deferred income taxes     (166,221 )     1,102,505  
Loss on disposal of property and equipment           36,454  
Changes in operating assets and liabilities:                
Accounts receivable     (457,478 )     231,916  
Inventories     (1,596,427 )     1,516,342  
Prepaid expenses and other current assets     (507,409 )     52,897  
Security deposits     13,131       (182,698 )
Accounts payable     1,818,729       (1,691,824 )
Deferred revenue     61,240       45,903  
Accrued expenses     (296,479 )     (227,461 )
Taxes payable     75,526       1,459,942  
Deferred rent     493,980       600,681  
Other liabilities     (155,961 )     (124,500 )
Net cash provided by operating activities     2,574,005       8,018,462  
Cash flows from investing activities                
Advances to related parties     (9,854,432 )     (5,368,002 )
Acquisition of property and equipment     (736,767 )     (1,961,225 )
Cash proceeds from acquisition of E-Compass     240        
Net cash used in investing activities     (10,590,959 )     (7,329,227 )
Cash flows from financing activities                
Payments on amount due to shareholder           (1,124,407 )
Borrowings against Term loan     15,000,000        
Borrowings against lines of credit     200,000       3,612,138  
Repayments on term loan     (3,791,795 )      
Repayments on lines of credit borrowings     (208,719 )     (2,884,464 )
Borrowings on notes payable           167,658  
Repayments on notes payable     (258,254 )     (335,139 )
Payments on capital lease obligations     (55,198 )     (67,977 )
Payment for debt issuance cost     (912,500 )      
Net cash used in financing activities     9,973,534       (632,191 )
Net increase in cash and cash equivalents     1,956,580       57,044  
Cash and cash equivalents at beginning of the year     551,782       494,738  
Cash and cash equivalents at the end of the year   $ 2,508,362     $ 551,782  
Supplemental disclosure of cash flow information                
Cash paid for interest   $ 304,483     $ 218,619  
Cash paid for income taxes   $ 1,747,028     $ 461,435  
Supplemental disclosure of non-cash investing and financing activities                
Capital expenditures funded by capital lease obligations   $ 345,567     $ 6,993  

CONTACT: Contact:

ICR Inc.
Rose Zu
[email protected]
Tel: 347-436-8368

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