Financial Data and Key Metrics Changes - The company reported an approximate 6% year-over-year decline in total revenue for Q1 2025, primarily due to a decrease in the Verification and Certification Services segment, which saw revenue drop by $252,000 compared to Q1 last year [4] - Net income for the quarter was $31,000 or $0.01 per diluted share, down from $178,000 or $0.03 per diluted share in the same quarter last year, with more than half of the decline attributed to a $76,000 non-cash charge on digital assets [6] - Gross margins remained stable at 41.6%, attributed to disciplined cost management, with SG&A expenses flat year-over-year at $2,100,000 [6] Business Line Data and Key Metrics Changes - The beef verification business, which represents roughly 50% of the revenue mix, was significantly impacted by fewer cattle moving through the system due to cyclical herd size reduction and severe drought conditions [4] - The upcycled certified program, the world's first and largest certification standard for upcycled food, is the fastest-growing service offering, with total certifications growing 70% year-over-year in 2024 and 10% growth in Q1 2025 [9] - The fee-based retail labeling program for protein products is expanding, with new partnerships with two prominent retailers to display Care certified labeling, potentially increasing visibility and brand enhancement [10][11] Market Data and Key Metrics Changes - The global food market for upcycling is currently valued at $46 billion and is expected to grow to nearly $75 billion by 2029, indicating a significant market opportunity [8] - The company noted disruptions in poultry and dairy cow verification businesses due to avian influenza outbreaks, impacting customer operations [5] Company Strategy and Development Direction - The company views the current herd size reduction as a cyclical and temporary situation, expecting a rebound in the future [5] - The focus on upcycled certified products aligns with global trends to reduce food waste and lower carbon footprints, appealing to environmentally conscious consumers [8] - The CARES certified program aims to meet growing consumer expectations for responsibly sourced products, enhancing the company's licensing revenue stream [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the headwinds faced in the first quarter but expressed satisfaction with the adjusted bottom line given the challenges [6] - The CEO highlighted that despite the decline in certain verification activities, there is growth in other business aspects, particularly in biosecurity services and upcycled certifications [6][8] Other Important Information - The company continues to buy back shares, purchasing a total of 376,000 shares at a cost of $383,000 during the first quarter [7] - The company has faced challenges in communicating its digital asset investments due to media policies, which may affect investor perception [7][8] Q&A Session Summary Question: What are the expectations regarding the herd size reduction? - Management views the herd size reduction as cyclical and expects it to swing back in the future [5] Question: How is the company addressing the disruptions in poultry verification? - The company is experiencing disruptions due to avian influenza but is offsetting some impacts with increased demand for biosecurity services [5][6] Question: What is the growth outlook for the upcycled certified program? - The upcycled certified program is the fastest-growing service, with significant growth expected as it aligns with global trends in sustainability [9][8]

Financial Data and Key Metrics Changes - The company reported an approximate 6% year-over-year decline in total revenue for Q1 2025, primarily due to a decrease in the Verification and Certification Services segment, which saw revenue drop by $252,000 compared to Q1 2024 [4] - Net income for the quarter was $31,000 or $0.01 per diluted share, down from $178,000 or $0.03 per diluted share in the same quarter last year, with more than half of the decline attributed to a $76,000 non-cash charge on digital assets [6] Business Line Data and Key Metrics Changes - The Verification and Certification Services segment, which represents roughly 50% of total revenue, was significantly impacted by fewer cattle moving through the system due to cyclical herd size reduction and severe drought conditions [4] - Despite the challenges, gross margins remained stable at 41.6%, attributed to disciplined cost management [6] - The Upcycled Certified program, the fastest-growing service offering, saw total certifications grow 70% year-over-year in 2024 and 10% growth in Q1 2025 [10] Market Data and Key Metrics Changes - The global food market for upcycling is currently valued at $46 billion and is expected to grow to nearly $75 billion by 2029, indicating a significant market opportunity [10] - The company is experiencing increased demand for biosecurity services due to disease outbreaks affecting poultry operations [6] Company Strategy and Development Direction - The company is focusing on expanding its Upcycled Certified program and fee-based retail labeling program for protein products, targeting mass market and high-end regional retailers [10][11] - The CARES certified program aims to meet growing consumer expectations for responsibly sourced products, enhancing visibility and brand recognition among retail consumers [12] Management's Comments on Operating Environment and Future Outlook - Management views the herd size reduction as a cyclical issue that is expected to reverse in the future, despite current challenges [5] - The company remains optimistic about customer retention rates, which are in the high 90% range, despite the disruptions in verification activities [5] Other Important Information - The company continues to buy back shares, having repurchased 376,000 shares at a cost of $383,000 during the first quarter [7] - The company has faced challenges in communicating its digital asset performance due to media policies, which have affected the visibility of its financial news [8][9] Q&A Session Summary Question: What are the impacts of the current cattle market on the business? - Management noted that the decline in cattle movement is due to cyclical herd size reduction and drought conditions, but they expect this to be temporary [4][5] Question: How is the company addressing the challenges in poultry verification? - The company is seeing increased demand for biosecurity services as a response to avian influenza outbreaks affecting poultry operations [6] Question: What is the growth outlook for the Upcycled Certified program? - The Upcycled Certified program is experiencing significant growth, with a 70% increase in certifications year-over-year and continued expansion expected [10]

Core Insights - Where Food Comes From, Inc. (WFCF) reported a decline in total revenue for the first quarter of 2025, with total revenue at $5.3 million compared to $5.6 million in the same period of 2024 [5][7] - The beef verification business, which constitutes about half of the company's revenue, is facing challenges due to smaller herd sizes and high beef prices, alongside a halt in beef exports to China due to tariffs [3][4] - Despite these challenges, the company has maintained gross margin stability at 41.6% and overall profitability through disciplined cost management [3][6] Financial Performance - Verification and certification services revenue decreased to $4.2 million from $4.4 million, while product sales remained flat at $0.7 million [7][8] - Gross profit for the quarter was $2.2 million, down from $2.3 million, with selling, general, and administrative expenses remaining flat at $2.1 million [6][12] - Net income fell to $31,000, or $0.01 per diluted share, compared to $178,000, or $0.03 per diluted share in the previous year [6][11] Strategic Developments - The company has added two major food retailers to its labeling program, which is expected to enhance licensing revenue and visibility among consumers [4] - The Upcycled Certified® program is noted as the fastest-growing verification standard, reflecting increasing consumer demand for upcycled food products [4] - The company continues to repurchase shares, having bought back 31,345 shares at a cost of $383,000 during the first quarter, totaling over 1.2 million shares since the inception of the buyback program [5][6]

Core Insights - Where Food Comes From, Inc. (WFCF) will release its 2025 first quarter financial results on May 8, 2025, before market opens and will hold a conference call at 10:00 a.m. Mountain Time [1] - The company is recognized as a trusted resource for independent, third-party verification of food production practices in North America [1][2] Company Overview - Where Food Comes From, Inc. supports over 17,500 stakeholders in the food industry, including farmers, ranchers, processors, retailers, and restaurants, through various value-added services [2] - The company utilizes proprietary technology and patented business processes to verify food claims, optimize production practices, and enhance food supply chains with analytics and data-driven insights [2] - The Where Food Comes From® labeling program aims to connect consumers with the sources of their food, fostering meaningful engagement for clients [2]

Financial Performance - Total revenue for 2024 increased by 2% to $25.7 million compared to $25.1 million in 2023[9] - Net income for 2024 was $2.1 million, or $0.40 per diluted share, down slightly from $2.2 million, or $0.39 per diluted share in 2023[11] - Verification and certification services revenue for the full year rose by 6% to $20.6 million from $19.4 million[15] - Gross profit for the full year increased slightly to $10.6 million from $10.5 million[10] - Cash generated from operations in 2024 was $2.7 million, compared to $2.8 million in 2023[12] - In Q4 2024, total revenue was flat at $6.7 million, with verification and certification revenue at $5.4 million, down from $5.5 million in Q4 2023[4][6] - Gross profit in Q4 2024 declined by 7% to $2.8 million from $3.0 million in Q4 2023[5] Expenses and Shareholder Returns - Selling, general and administrative expenses for 2024 increased to $8.4 million from $7.8 million, primarily due to higher marketing and personnel costs[11] - The company repurchased a total of 273,057 shares for $3.3 million in 2024, with a total of $13.9 million returned to shareholders since the buyback program began[3] Future Outlook - The company expects to continue utilizing solid cash flows to reduce share float while investing in new programs and services to strengthen its beef business[3]

Core Viewpoint - Where Food Comes From, Inc. (WFCF) reported a mixed performance in Q4 2024, with earnings growth driven by bitcoin investments, but overall revenues remained flat, reflecting challenges in its beef-related verification services [1][2][10]. Earnings Overview - WFCF's diluted earnings per share for Q4 2024 were 18 cents, a 28.6% increase from 14 cents in the same quarter last year, primarily due to a $345,000 gain in bitcoin holdings [2][11]. - Total quarterly revenues were $6.7 million, unchanged from the previous year, while gross profit decreased by 7% to $2.8 million from $3 million [2]. Segmental Performance - Revenues from verification and certification services, which constitute the majority of WFCF's business, fell by 2% to $5.4 million, attributed to lower volumes in beef-related source and age verification due to cyclical herd contractions [3][10]. - Product sales increased by 6% year over year to $922,000, driven by demand for bundled verification solutions and new programs like CARE Certified and Upcycled Certified [4]. - Professional services revenues decreased to $360,000 from $391,000, indicating reduced demand for consulting services [4]. Key Business Metrics - The company maintained a stable gross margin despite changes in revenue composition. SG&A expenses decreased to $2 million from $2.1 million, attributed to higher marketing and personnel costs [5]. - Cash flow from operations was $2.7 million in 2024, slightly down from $2.8 million in 2023, while cash and cash equivalents fell to $2 million from $2.6 million [6]. Management Commentary - CEO John Saunders noted the impact of herd contractions on beef-related verification services but highlighted strong performance in newer offerings like CARE Certified and Upcycled, with the latter seeing a 17% revenue increase [7]. - Management emphasized ongoing investments in marketing and technology to support growth, despite an increase in SG&A expenses [8]. Factors Influencing Results - The decline in beef-related verification revenues was linked to external factors in the cattle industry, but management expects this to be temporary, with demand for other verification programs helping to offset losses [10]. - The company's net income benefited from a fair market value gain of $345,000 from its bitcoin investment, which had an initial investment of $178,000 [11]. Other Developments - WFCF continued its share repurchase program, buying back 57,018 shares in Q4, and has repurchased a total of 1.2 million shares since the program's inception [12]. - Management reiterated its long-term strategy of expanding verification services through organic growth and strategic acquisitions [12]. Outlook - WFCF anticipates continued demand for its verification programs and aims to leverage its unique positioning in the food verification space [13]. - The company plans further share buybacks and investments in technology to support expected customer growth, while remaining open to potential acquisitions [14].

Financial Data and Key Metrics Changes - Total revenue in Q4 2024 was flat at $6.7 million year-over-year [6] - Gross profit in Q4 declined 7% to $2.8 million from $3 million [7] - Net income increased to $961,000 or $0.18 per diluted share from $776,000 or $0.14 per diluted share [7] - Full year total revenue increased 2% to $25.7 million from $25.1 million [9] - Net income for the year was down slightly to $2.1 million or $0.40 per diluted share versus $2.2 million or $0.39 per diluted share in 2023 [15] Business Line Data and Key Metrics Changes - Verification and certification services revenue was down slightly at $5.4 million versus $5.5 million [6] - Product revenue increased 6% to $922,000 from $871,000 [6] - Professional services revenue was $360,000 versus $391,000 [6] - Full year verification and certification services revenue was up 6% to $20.6 million from $19.4 million [9] - Product revenue for the full year was down 5% to $3.8 million from $4 million [10] Market Data and Key Metrics Changes - The traditional beef-related source and age business has been impacted by cyclical herd size reductions [10] - Rising demand in other service offerings has offset lower source and age activities [11] - The Upcycled Certified program saw a 17% year-over-year increase in 2024, becoming the fastest-growing service [13] Company Strategy and Development Direction - The company is focused on enhancing its technology platform and expanding its services portfolio [14][20] - Plans to continue investing in new programs and services to strengthen the beef business and accelerate growth in other offerings [17] - The company aims to leverage its position as a provider for producers, CPGs, distributors, and retailers [22] Management Comments on Operating Environment and Future Outlook - Management believes the decline in beef source and age verifications is a temporary cyclical occurrence [11] - The company is supported by consumer trends around food safety, traceability, and claims verification [21] - Management expressed confidence in the potential for strong growth in individual standards and new offerings [23] Other Important Information - The company repurchased a total of 273,057 shares for $3.3 million or approximately $11.97 per share [16] - Total value returned to stockholders via buybacks and dividends over the past 21 quarters totaled $13.9 million [17] - The company celebrated its 30th anniversary, highlighting its evolution and growth in the industry [18] Q&A Session Summary - No specific questions or answers were documented in the provided content.

Revenue and Income - Verification and certification service revenue for the year ended December 31, 2024 increased approximately $1.1 million, or 5.9%, compared to 2023[126] - Product sales for the year ended December 31, 2024 decreased approximately $0.2 million, or 5.0%, compared to 2023, attributed to a decline in beef cow herd size[128] - Total revenues for the year ended December 31, 2024 were $25.746 million, compared to $25.135 million in 2023[124] - Net income for the year ended December 31, 2024, was approximately $2.1 million or $0.40 per share, a slight decrease from $2.2 million or $0.39 per share in 2023[137] - Dividend income from Progressive Beef, LLC for the year ended December 31, 2024 was $400,000, compared to $320,000 in 2023[134] Costs and Expenses - Costs of revenues for the verification and certification segment for the year ended December 31, 2024 were approximately $14.2 million compared to approximately $13.3 million in 2023[129] - Gross margin for the verification and certification segment for the year ended December 31, 2024 decreased to 41.9% compared to 43.4% in 2023[129] - Selling, general and administrative expenses for the verification and certification segment for the year ended December 31, 2024 increased approximately $0.7 million compared to 2023[130] - Professional services revenue for the year ended December 31, 2024 decreased approximately $0.3 million compared to 2023[131] - Gross margin for the professional services segment improved to 26.5% from 21.3% in 2023[132] Cash Flow and Working Capital - Cash and cash equivalents as of December 31, 2024, were approximately $2.0 million, down from $2.6 million in 2023; working capital decreased from approximately $3.2 million to $2.4 million[138] - Net cash provided by operating activities in 2024 was approximately $2.7 million, compared to $2.8 million in 2023, primarily due to a decline in gross margins in the Verification and Certification Segment[139] - Net cash used in investing activities during 2024 was approximately $0.2 million, a decrease from $0.6 million in 2023, with $0.2 million allocated for the acquisition of Blue Trace in 2023[140] - Net cash used in financing activities was approximately $3.2 million in 2024, down from $3.9 million in 2023, mainly for share repurchases[141] Deferred Revenue and Credit Facilities - Deferred revenue as of December 31, 2024, was approximately $1.7 million, up from $1.4 million in 2023, primarily related to annual certification for third-party audits[154] - The company has a revolving line of credit agreement providing for $75,080 in working capital, with an effective interest rate of 9.0% as of December 31, 2024[147] Industry and Market Conditions - The company is currently in a contraction phase of the cattle industry cycle, which began in 2014, with significant impacts expected from drought and pasture conditions[157] - The company plans to focus on diversification in product offerings and potential acquisitions to capitalize on growing consumer demand[146] Goodwill and Intangible Assets - As of December 31, 2024, the company had approximately $2.9 million of goodwill, with no impairment losses recognized during the year[171] - The company acquired trademarks/tradenames in the Validus acquisition, which were determined to no longer have an indefinite life and will now be amortized over their remaining useful life[181] - The excess of the purchase price over the fair value of net assets acquired in business combinations is recorded as goodwill[186] Accounting Policies and Valuation - The company implemented ASU 2023-08 effective January 1, 2024, requiring digital assets to be measured at fair value with changes recognized in net income each reporting period[184] - Digital assets were previously held as indefinite-lived intangible assets and were recorded at cost, net of impairment losses, as of December 31, 2023[185] - Business combinations are part of the company's growth strategy, with the purchase price allocated to tangible and intangible assets based on estimated fair values at the date of purchase[186] - The company uses various recognized valuation methods, including present value modeling, to determine the fair values of assets acquired and liabilities assumed in business combinations[187] - ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term[177] - The company has ownership and control over its digital assets, which are included in non-current assets on the balance sheet[182] - Indefinite-lived intangible assets are tested for impairment annually, or more frequently if circumstances indicate potential impairment[180] - The company evaluates the remaining useful life of intangible assets not being amortized each reporting period[179]

Core Insights - Where Food Comes From, Inc. (WFCF) reported a 2% increase in total revenue for 2024, reaching $25.7 million compared to $25.1 million in 2023, despite challenges in the beef sector due to herd contraction [4][9] - The company achieved a net income of $2.1 million, or $0.40 per diluted share, slightly down from $2.2 million, or $0.39 per diluted share in the previous year [10] - The company continued its stock buyback program, repurchasing 273,057 shares at a cost of $3.3 million, contributing to a total of $13.9 million returned to shareholders since the program's inception [5][11] Fourth Quarter Highlights - Total revenue for the fourth quarter was flat at $6.7 million, with verification and certification revenue slightly down to $5.4 million from $5.5 million [6][7] - Net income for the fourth quarter increased to $961,000, or $0.18 per diluted share, compared to $776,000, or $0.14 per diluted share in the same quarter of 2023, aided by a $345,000 gain in the fair market value of bitcoin [8][10] - Gross profit in the fourth quarter declined by 7% to $2.8 million from $3.0 million [8] Full Year Highlights - Gross profit for the full year increased slightly to $10.6 million from $10.5 million, while selling, general and administrative expenses rose to $8.4 million from $7.8 million [10] - Cash generated from operations was $2.7 million in 2024, down from $2.8 million in 2023 [10] - The company reported a decrease in cash and cash equivalents to $2.0 million at year-end 2024, compared to $2.6 million at the end of 2023 [19] Revenue Breakdown - Verification and certification services revenue for the full year increased by 6% to $20.6 million from $19.4 million, while product sales decreased by 5% to $3.8 million from $4.0 million [14] - Professional services revenue for the full year was down 19% to $1.4 million from $1.7 million [14]

Core Points - Where Food Comes From, Inc. (WFCF) will release its 2024 full year financial results on February 20, 2025, before market opens and will hold a conference call at 10:00 a.m. Mountain Time [1] - The company is recognized as a trusted resource for independent, third-party verification of food production practices in North America [1][2] - WFCF supports over 17,500 entities including farmers, ranchers, vineyards, wineries, processors, retailers, distributors, trade associations, consumer brands, and restaurants through various value-added services [2] Company Overview - Where Food Comes From, Inc. utilizes proprietary technology and patented business processes to verify food claims, optimize production practices, and enhance food supply chains with analytics and data-driven insights [2] - The company's units include IMI Global, Validus Verification Services, SureHarvest, WFCF Organic, and Postelsia, which collectively provide a range of verification and optimization services [2] - WFCF's retail and restaurant labeling program connects consumers to the sources of their food purchases, fostering meaningful consumer engagement for clients [2]