Where Food Comes From, Inc. Reports 2024 Third Quarter and Nine-Month Financial Results
Third Quarter Highlights, 2024 vs. 2023
Verification and certification revenue up 2% to $5.5 million from $5.4 million
Product sales up 9% to $1.3 million from $1.2 million
Total revenue up 1% to $7.1 million from $7.0 million
Net income down 32% to $492,000 from $723,000
Diluted EPS of $0.09 vs. $0.13
Adjusted EBITDA of $0.8 million vs. $1.2 million
Company buys back 66,620 shares of stock in third quarter
Nine Month Highlights, 2024 vs. 2023
Verification and certification revenue up 9% to $15.2 million from $13.9 million
Product sales decline 8% to $2.9 million from $3.1 million
Total revenue up 4% to $19.1 million from $18.4 million
Net income decreases 16% to $1.2 million from $1.4 million
Diluted EPS of $0.21 vs. $0.24
Adjusted EBITDA of $2.1 million vs. $2.5 million
Cash generated from operations increased 6% to $2.8 million from $2.6 million
Cash & cash equivalents increase to $2.8 million vs. $2.6 million at 2023 year-end
Year-to-date stock buybacks and private repurchases total 216,039 shares
CASTLE ROCK, Colo., Nov. 12, 2024 (GLOBE NEWSWIRE) -- Where Food Comes From, Inc. (WFCF) (NASDAQ:WFCF), the most trusted resource for independent, third-party verification of food production practices in North America, today announced financial results for its third quarter and nine months ended September 30, 2024.
"We continue to grow our top line and generate solid profitability despite headwinds impacting our core beef verification business," said John Saunders, chairman and CEO. "While growth rates for beef verification and related tag revenue have slowed due to cyclical herd contraction, our other service offerings have more than compensated as consumer demand for verifications across multiple food groups and claims continues to rise. On a year-to-date basis, total revenue increased 4% to $19.1 million, and we posted solid net income of $1.2 million, or $0.21 per diluted share. We generated $2.8 million in cash from operations through nine months, up 6% year-over-year, and continued to allocate cash to our stock buyback program. We retired 66,620 shares of common stock in the third quarter, raising to 216,039 the total number of shares we have repurchased in 2024.
"As more ranchers become familiar with the use of electronic tags now required by a recent USDA rule covering certain classes of cattle, we are hopeful we can enroll more cattle into our voluntary, value-added programs," Saunders added. "Electronic tags have long been a cornerstone of our verification programs because they allow us to verify cattle claims at the speed of commerce, claims that help producers differentiate their beef products and capture sales premiums. Although the ruling has a number of controversial implications for the cattle industry, one very positive outcome is ranchers will now have the option to participate in one or more of our many verification programs their cattle weren't previously eligible for."
Third Quarter Results, 2024 vs. 2023Total revenue in the third quarter ended September 30, 2024, increased 1% to $7.1 million from $7.0 million.
Revenue mix:
Verification and certification services, up 2% to $5.5 million from $5.4 million.
Product revenue increased 9% to $1.3 million from $1.2 million.
Professional services revenue of $0.3 million vs. $0.4 million.
Gross profit in the third quarter declined slightly to $2.8 million from $2.9 million.
Selling, general and administrative expense increased 13% to $2.2 million from $1.9 million, reflecting increased marketing, personnel and travel costs.
Operating income declined 36% to $0.6 million from $0.9 million.
Net income declined 32% to $0.5 million, or $0.09 per diluted share, from $0.7 million, or $0.13 per diluted share.
Adjusted EBITDA in the third quarter was down 29% at $0.8 million vs. $1.2 million.
The Company bought back 66,620 shares of its common stock in the third quarter at a cost of $734,000.
Nine Month Results, 2024 vs. 2023Total revenue for the nine months ended September 30, 2024, increased 4% to $19.1 million from $18.4 million in the same period last year.
Revenue mix:
Verification and certification services, up 9% to $15.2 million from $13.9 million.
Product revenue, down 8% to $2.9 million from $3.1 million.
Professional services revenue of $1.0 million compared to $1.3 million.
Gross profit through nine months was up 3% year over year to $7.8 million from $7.5 million.
Selling, general and administrative expense increased 10% to $6.3 million from $5.7 million due primarily to the aforementioned increases in marketing, personnel and travel expenses.
Operating income declined 18% to $1.5 million from $1.8 million.
Net income through nine months decreased 16% to $1.2 million, or $0.21 per diluted share, compared to net income of $1.4 million, or $0.24 per diluted share, in the prior year period.
Adjusted EBITDA was 15% lower at $2.1 million vs. $2.5 million.
The Company generated $2.8 million in cash from operations through nine months compared to $2.6 million in the same period last year, an increase of 6%.
The cash and cash equivalents balance at September 30th increased to $2.8 million from $2.6 million at 2023 year-end.
Through the first nine months of 2024 the Company bought back 216,039 shares of its stock.
The Company will conduct a conference call today at 10:00 a.m. Mountain Time.
Call-in numbers for the conference call:Domestic Toll Free: 1-877-407-8289International: 1-201-689-8341Conference Code: 13749738
Phone replay:A telephone replay of the conference call will be available through November 26, 2024, as follows:Domestic Toll Free: 1-877-660-6853International: 1-201-612-7415Conference Code: 13749738
About Where Food Comes From, Inc.Where Food Comes From, Inc. is America's trusted resource for third party verification of food production practices. Through proprietary technology and patented business processes, the Company estimates that it supports more than 17,500 farmers, ranchers, vineyards, wineries, processors, retailers, distributors, trade associations, consumer brands and restaurants with a wide variety of value-added services. Through its IMI Global, Validus Verification Services, SureHarvest, WFCF Organic, and Postelsia units, Where Food Comes From solutions are used to verify food claims, optimize production practices and enable food supply chains with analytics and data driven insights. In addition, the Company's Where Food Comes From® retail and restaurant labeling program uses web-based customer education tools to connect consumers to the sources of the food they purchase, increasing meaningful consumer engagement for our clients.
*Note on non-GAAP Financial Measures This press release and the accompanying tables include a discussion of EBITDA and Adjusted EBITDA, which are non-GAAP financial measures provided as a complement to the results provided in accordance with generally accepted accounting principles ("GAAP"). The term "EBITDA" refers to a financial measure that we define as earnings (net income or loss) plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes from EBITDA stock-based compensation and, when appropriate, other items that management does not utilize in assessing WFCF's operating performance (as further described in the attached financial schedules). None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance or any other GAAP measure. We have reconciled Adjusted EBITDA to GAAP net income in the Consolidated Statements of Income table at the end of this release. We intend to continue to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting.
CAUTIONARY STATEMENTThis news release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, based on current expectations, estimates and projections that are subject to risk. Forward-looking statements are inherently uncertain, and actual events could differ materially from the Company's predictions. Important factors that could cause actual events to vary from predictions include those discussed in our SEC filings. Specifically, statements in this news release about industry leadership, expectations to benefit from USDA mandates, expectations that the number of cattle becoming eligible for the Company's programs will grow significantly, expectations for growth of the SOW Organic program, and demand for, and impact and efficacy of, the Company's products and services on the marketplace are forward-looking statements that are subject to a variety of factors, including availability of capital, personnel and other resources; competition; governmental regulation of the agricultural industry; the market for beef and other commodities; and other factors. Financial results for 2024 and the Company's pace of stock buybacks are not necessarily indicative of future results. Readers should not place undue reliance on these forward-looking statements. The Company assumes no obligation to update its forward-looking statements to reflect new information or developments. For a more extensive discussion of the Company's business, please refer to the Company's SEC filings at www.sec.gov.
Company Contacts:
John SaundersChief Executive Officer303-895-3002
Jay PfeifferDirector, Investor
Where Food Comes From, Inc.
Statements of Operations (Unaudited)
Three months ended September 30,
Nine months ended September 30,
(Amounts in thousands, except per share amounts)
2024
2023
2024
2023
Revenues:
Verification and certification service revenue
$
5,486
$
5,359
$
15,172
$
13,944
Product sales
1,329
1,221
2,881
3,130
Professional services
292
431
1,031
1,330
Total revenues
7,107
7,011
19,084
18,404
Costs of revenues:
Costs of verification and certification services
3,288
3,123
8,831
8,055
Costs of products
841
681
1,744
1,804
Costs of professional services
204
341
748
1,030
Total costs of revenues
4,333
4,145
11,323
10,889
Gross profit
2,774
2,866
7,761
7,515
Selling, general and administrative expenses
2,166
1,920
6,309
5,741
Income from operations
608
946
