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Where Food Comes From Inc. (WFCF) reported its fourth-quarter and full-year 2024 results, showing stable financial performance with a slight increase in annual revenue. The company’s innovative certification services continue to drive growth despite cyclical challenges in its traditional markets. The stock experienced a modest rise of 3.25% following the earnings announcement.
Key Takeaways
- Q4 revenue remained flat year-over-year at $6.7 million.
- Full-year revenue increased by 2% to $25.7 million.
- Net income for Q4 rose to $961,000, translating to $0.18 per diluted share.
- Stock buybacks and strategic investments in technology and personnel marked the year.
Company Performance
Where Food Comes From maintained stable revenue in the fourth quarter, matching the previous year’s figures. The company achieved a 2% increase in full-year revenue, reaching $25.7 million. This growth was driven by expanding certification offerings and strong consumer demand for food safety and traceability.
Financial Highlights
- Revenue: $6.7 million in Q4 2024, flat year-over-year.
- Full-year revenue: $25.7 million, a 2% increase from 2023.
- Q4 net income: $961,000, up from $776,000 in the prior year.
- Earnings per share: $0.18 in Q4, $0.40 for the full year.
- Cash from operations: $2.7 million in 2024.
Earnings vs. Forecast
The company reported earnings per share of $0.18 for the fourth quarter, aligning with expectations. Revenue was consistent with forecasts at $6.7 million, indicating a stable performance amidst industry challenges.
Market Reaction
Where Food Comes From’s stock price increased by 3.25% following the earnings release, reflecting investor confidence in the company’s strategic direction and growth potential. The stock’s movement brought it closer to its 52-week high of $13.5. InvestingPro data shows the company holds more cash than debt on its balance sheet, with management actively pursuing share buybacks - a positive signal for investors. The company’s Altman Z-Score of 9.65 indicates strong financial stability.
Outlook & Guidance
The company plans to continue investing in new certification programs and technology platforms. It anticipates growth in multiple certification standards and aims to reduce stock float through ongoing buybacks.
Executive Commentary
CEO John Saunders highlighted the company’s leadership in food verification services, stating, "We are uniquely positioned as the go-to provider for producers, CPGs, distributors, and retailers." He also noted, "The decline in beef source and age verifications is a temporary cyclical occurrence."
Risks and Challenges
- Cyclical reductions in beef herd sizes could impact traditional services.
- Potential market saturation in certification offerings.
- Economic pressures affecting consumer spending on premium certifications.
Where Food Comes From’s strategic focus on diversification and innovation positions it well to navigate these challenges and capitalize on emerging market opportunities.
Full transcript - Where Food Comes From Inc (WFCF) Q4 2024:
Conference Operator: Greetings. Welcome to Where Food Comes From twenty twenty four Year End Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
It is now my pleasure to introduce Jay Pfeiffer, Investor Relations Director. Please go ahead, sir.
John Saunders, CEO, Where Food Comes From: Good morning, and welcome to the
Jay Pfeiffer, Investor Relations Director, Where Food Comes From: Where Food Comes From twenty twenty four year end earnings call. Joining me on the call today are CEO, John Saunders President, Leanne Saunders and Chief Financial Officer, Danette Henning. During this call, we’ll make forward looking statements based on current expectations, estimates and projections that are subject to risk. Statements about current and future financial performance, growth strategy, customers, business opportunities, market acceptance of our products and services and potential acquisitions are forward looking statements. Listeners should not place undue reliance on these statements as there are many factors that could cause actual results to differ materially from our forward looking statements.
We encourage you to review our publicly filed documents as well as our news releases and website for more information. I’ll now turn the call over to John Saunders.
John Saunders, CEO, Where Food Comes From: Good morning, and thanks for joining the call today. Total (EPA:TTEF) revenue in the fourth quarter was basically flat at $6,700,000 year over year. Verification and Certification Services revenue was down slightly at $5,400,000 versus $5,500,000 Product revenue increased 6% to $922,000 from $871,000 and professional services revenue was $360,000 versus $391,000 dollars Gross profit in the fourth quarter declined 7% to $2,800,000 from $3,000,000 SG and A expense decreased slightly to $2,000,000 from $2,100,000 Net income increased to $961,000 or $0.18 per diluted share from $776,000 or $0.14 per diluted share. In addition to an $80,000 or 47% increase in Progressive Beef dividend income, Net income benefited from a $345,000 gain in the fair market value of Bitcoin holdings. As you may recall, we invested $178,000 in Bitcoin a few years ago when units were trading in the $25,000 range.
At December 31, year end, Bitcoin was trading at more than three times that level in the $93,000 range and thus the gain in fair market value. Onto our full year results. Total revenue for the year increased 2% to $25,700,000 from twenty five point one million dollars a year ago. That total included verification and certification services up 6% to $20,600,000 from $19,400,000 dollars product revenue of $3,800,000 down 5% from $4,000,000 and professional services revenue of $1,400,000 versus $1,700,000 By now, you know that our traditional beef related source and age business has been hard hit by cyclical herd size reductions over the past couple of years, and that is what’s responsible for the slowing growth in our top line. We believe the decline in beef source and age verifications and related hardware sales is is a temporary cyclical occurrence.
And fortunately, in the meantime, we are experiencing rising demand in a number of other service offerings that has more than offset the lower than source and age activities. For example, we are seeing good growth in our CARE certified program in beef and other proteins. And as announced last month, our upcycled certified program has become our fastest growing service with a 17% year over year increase in 2024. We’re also seeing updates in organic certifications, California Prop 12 related audits in poultry and ag laying hens, on farm security and worker care audits in the dairy industry. And finally, we continue to benefit from more customers taking advantage of our bundling capabilities made possible by our expanding services portfolio, the largest and most diverse in the industry.
Gross profit for the full year was up slightly to $10,600,000 from $10,500,000 and our gross margins remained generally stable year over year. The big impact for profitability came in SG and A expenses, which grew by 530,000 year over year. I want to provide some context around that increase because a significant amount of this additional expense was allocated to areas that enhance our ability to execute on our growth plans. Although some of the increase was due to wage inflation in a very competitive job market, The bulk of the increase was due to stepped up marketing activities and some strategic hires of technical personnel who are strengthening our technology platform and tools to ensure we can manage the expected customer growth in both the short and long term. Net income from the year was down slightly to $2,100,000 or $0.4 per diluted share versus net income of $2,200,000 or $0.39 per diluted share in 2023.
The company generated $2,700,000 in cash from operations in 2024 versus $2,800,000 in 2023. We entered 2025 with cash and cash equivalents of $2,000,000 and working capital of $2,400,000 Turning now to our efforts to return value to stockholders. For the full year, including stock buybacks and private purchase transactions, the company repurchased a total of 273,057 shares or of its stock for $3,300,000 or approximately $11.97 per share. Aggregate buybacks since planned inception twenty one quarters ago, including private purchases, totaled 1,191,636 shares at a purchase price of $13,000,000 or approximately $10.92 per share. Our pay for buybacks from private purchases has accelerated with 73% of that total coming in the last three years.
And finally, total value returned to stockholders via buybacks, private purchases and a special dividend over the past twenty one quarters totaled $13,900,000 We expect to continue taking advantage of solid cash flows to further reduce our float, while at the same time investing in new programs and services designed to strengthen our beef business and accelerate the growth of other service offerings. We look forward to providing more specifics on these initiatives in the coming months. In closing, we are now celebrating our thirtieth year anniversary in business. Our evolution has been steady, deliberate and very gratifying. In the following stage, we identified a need in the cattle industry for traceability and began developing software to fill that need.
In our next phase of growth, we made a bet that consumer demand for transparency would extend to other areas of the food supply chain, and we began building out our verification services portfolio to address other food groups and the growing trend of food claims labeling. We also rapidly grew our cattle business and established our IMI (LON:IMI) Global unit as the undisputed leader in cattle traceability and claims verification in North America. We invested heavily in a technology platform capable of managing a diverse services portfolio and ultimately the much larger business that we expect to become. And we accomplished all of this through a combination of ground up organic initiatives and strategic acquisitions. That whole process took years to accomplish due to regulatory and myriad other issues.
Becoming an authorized certification body for a single standard, for example, can take up to three years to complete and begin generating a return on financial and human capital. That’s why, as of today, we have a large moat around our business and a business that would be very difficult to replicate. Additionally, we are supported by consumer tailwinds around food safety, food traceability and food claims verification. We believe we are uniquely positioned as the go to provider for producers, CPGs, distributors and retailers. As a result of these years of innovation and investment, we now audit to more than 50 different standards, far and away the most of any food verification businesses.
And we can bundle any number of verifications to lower compliance cost prices for our customers and food prices for consumers in general. We believe virtually all of these individual standards, including a number of new offerings we have in the works, have the potential for strong growth in the coming years, and that bodes well for our stockholders. And with that, I’ll thank you again for joining the call today, and I’ll open up the call to questions. Operator?
Conference Operator: There are no questions today. I would like to turn the conference back over for closing comments.
John Saunders, CEO, Where Food Comes From: Well, once again, we thank you for your support and look forward to talking to you in a couple of months. Have a great day.
Conference Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.
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