Where Food es From(WFCF) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Introduction Where Food Comes From, Inc. (WFCF) announced its financial results for the second quarter and six-month period ended June 30, 2025, highlighting revenue growth despite cattle herd size headwinds, driven by other verification services and hardware sales. The company also reported a subsequent event involving the sale of its interest in Progressive Beef - WFCF is a trusted resource for independent, third-party verification of food production practices in North America[1] - The company announced financial results for Q2 and six-month period ended June 30, 2025[1] - A subsequent event involved the sale of interest in Progressive Beef for $1.8 million cash and return of 12,585 shares[1] Second Quarter 2025 Highlights In Q2 2025, WFCF reported a 3% year-over-year revenue increase to $6.6 million, primarily due to demand for CARE Certified and UpCycled programs and hardware sales, offsetting reduced beef verification. Net income rose 15% to $562,000, or $0.11 per diluted share, boosted by a $172,000 gain in digital asset fair market value, despite gross margin pressure from increased compensation and hardware costs - Q2 revenue increased 3% year-over-year despite headwinds from smaller cattle herd sizes[2] - Revenue growth was driven by increasing demand for CARE Certified and UpCycled programs, and hardware sales[2] - Gross margins were negatively impacted by increased compensation expense and hardware costs[2] Second Quarter 2025 Financial Highlights (YoY) | Metric | 2025 (Q2) ($ thousands, except EPS) | 2024 (Q2) ($ thousands, except EPS) | Change (%) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :--------- | | Verification & Certification Revenue | 5330 | 5250 | 1.5% | | Product Sales | 964 | 819 | 17.7% | | Total Revenue | 6600 | 6400 | 3.1% | | Net Income | 562 | 489 | 14.9% | | Diluted EPS | $0.11 | $0.09 | 22.2% | - The company bought back 24,481 shares of common stock in Q2 2025[3] Six Month 2025 Highlights For the first six months of 2025, total revenue slightly decreased to $11.8 million from $12.0 million year-over-year. Net income also saw a decline to $593,000, or $0.11 per diluted share, compared to $667,000, or $0.12 per diluted share, in the prior year, despite a $96,000 net gain in digital asset fair market value. Cash generated from operations remained strong at $1.8 million, and the company continued its share repurchase program Six Month 2025 Financial Highlights (YoY) | Metric | 2025 (6 Months) ($ thousands, except EPS) | 2024 (6 Months) ($ thousands, except EPS) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Verification & Certification Revenue | 9500 | 9700 | -2.1% | | Product Sales | 1700 | 1600 | 6.3% | | Total Revenue | 11800 | 12000 | -1.7% | | Net Income | 593 | 667 | -11.1% | | Diluted EPS | $0.11 | $0.12 | -8.3% | | Cash from Operations | 1800 | 1900 | -5.3% | | Cash & Cash Equivalents | 3200 | 2000 (2024 YE) | 60.0% | - Year-to-date stock buybacks totaled 55,826 shares[3] - Total buybacks since plan inception plus private purchases reached 1,247,462 shares, representing approximately $13.6 million[3] - $14.6 million in total value returned to stockholders via buybacks, private purchases, and a special dividend since 2019[3] Strategic and Operational Developments WFCF expanded its retail labeling program, adding two major retailers featuring CARE Certified beef products across the US, with plans to reach over 110 locations by year-end 2025. The company is also investing in Artificial Intelligence tools and technical talent to enhance efficiency, customer experience, and scale operations for improved bottom-line results - Expanded retail labeling program with two new major retailers featuring CARE Certified beef products[4] - Rollout expected to include over 110 retail locations by year-end 2025, with potential for more in 2026[4] - Continued buildout of Artificial Intelligence tools to improve efficiency and enhance customer experiences[4] - Investing in technical talent to transform business operations and customer solutions, aiming for efficient scaling and stronger bottom-line results[4] Financial Performance Analysis Second Quarter 2025 Results For the second quarter of 2025, total revenue increased to $6.6 million, driven by growth in verification and certification services and product sales. Gross profit, however, declined to $2.5 million due to higher compensation and hardware costs. Net income improved to $562,000, or $0.11 per diluted share, primarily benefiting from a $172,000 gain in digital asset fair market value, while SG&A expenses slightly decreased Second Quarter 2025 Key Financials (YoY) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Total Revenue | 6,562 | 6,395 | 2.6% | | Gross Profit | 2,460 | 2,658 | -7.5% | | Selling, General & Admin Expense | 1,911 | 2,075 | -7.9% | | Net Income | 562 | 489 | 14.9% | | Diluted EPS | 0.11 | 0.09 | 22.2% | - Net income was positively impacted by a $172,000 gain in fair market value of digital assets[6] - The Company bought back 24,481 shares of its common stock in the second quarter[7] Revenue Breakdown (Q2) Second Quarter Revenue by Service Type (YoY) | Revenue Type | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Verification & Certification Services | 5,332 | 5,252 | 1.5% | | Product Sales | 964 | 819 | 17.7% | | Professional Services | 266 | 324 | -17.9% | Six Month 2025 Results For the first six months of 2025, total revenue decreased slightly to $11.8 million, with a decline in verification and certification services partially offset by growth in product sales. Gross profit also decreased to $4.7 million. Net income for the period was $593,000, or $0.11 per diluted share, down from the prior year, despite a $96,000 net gain from digital assets. Cash generated from operations was $1.8 million, and the company continued its share repurchase activities Six Month 2025 Key Financials (YoY) | Metric | 6 Months 2025 ($ thousands) | 6 Months 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Total Revenue | 11,835 | 11,977 | -1.2% | | Gross Profit | 4,655 | 4,987 | -6.7% | | Selling, General & Admin Expense | 3,964 | 4,143 | -4.3% | | Net Income | 593 | 667 | -11.1% | | Diluted EPS | 0.11 | 0.12 | -8.3% | | Cash from Operations | 1,800 | 1,900 | -5.3% | | Cash & Cash Equivalents | 3,200 | 2,000 (2024 YE) | 60.0% | - Net income year-to-date included a $96,000 net gain in fair market value of digital assets[10] - Cash generated from operations was $1.8 million, slightly down from $1.9 million in the prior year[11] - Year-to-date stock buybacks totaled 55,826 shares[12] Revenue Breakdown (6 Months) Six Month Revenue by Service Type (YoY) | Revenue Type | 6 Months 2025 ($ thousands) | 6 Months 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Verification & Certification Services | 9,514 | 9,686 | -1.8% | | Product Sales | 1,666 | 1,552 | 7.4% | | Professional Services | 655 | 739 | -11.4% | Subsequent Events Sale of Progressive Beef Interest On July 22, 2025, WFCF sold its 10% interest in Progressive Beef for $1.8 million in cash and the return of 12,585 shares of WFCF common stock. This transaction, which generated an $0.8 million gain on sale, strengthens WFCF's balance sheet, provides financial flexibility for growth initiatives, and supports its stock buyback program. Progressive Beef will continue to be a customer for WFCF's auditing services - On July 22, 2025, WFCF sold its 10% interest in Progressive Beef[13] - Sale proceeds were $1.8 million in cash and the return of 12,585 shares of WFCF common stock[13] - The sale resulted in an $0.8 million gain on sale of investment and strengthens WFCF's balance sheet, providing financial flexibility[13] - Progressive Beef, which paid WFCF $1.6 million in dividends since 2018, will remain a customer for auditing services[13] Corporate Information About Where Food Comes From, Inc. Where Food Comes From, Inc. is a leading third-party verification resource for food production practices in America, supporting over 17,500 clients with value-added services and a retail labeling program that connects consumers to food sources - WFCF is America's trusted resource for third-party verification of food production practices[15] - Supports over 17,500 farmers, ranchers, processors, retailers, and other clients with value-added services[15] - Solutions verify food claims, optimize production practices, and enable food supply chains with analytics and data-driven insights[15] - The 'Where Food Comes From®' labeling program connects consumers to food sources, increasing engagement[15] Cautionary Statement This news release contains forward-looking statements subject to risks and uncertainties, and readers are cautioned not to place undue reliance on them, as actual events may differ materially from predictions - The news release contains forward-looking statements subject to inherent uncertainties and risks[16] - Important factors that could cause actual events to vary include capital availability, competition, governmental regulation, and market conditions[16] - Readers should not place undue reliance on these statements, and the Company assumes no obligation to update them[16] Investor Contacts Contact information for investor relations is provided, including John Saunders (Chief Executive Officer) and Jay Pfeiffer (Director Investor Relations) - Contact information for John Saunders, CEO, and Jay Pfeiffer, Director Investor Relations, is provided for inquiries[17] Unaudited Financial Statements Statements of Operations The unaudited Statements of Operations detail financial performance for the three and six months ended June 30, 2025, covering revenues, costs, gross profit, expenses, income, and EPS, with comparisons to 2024 Statements of Operations (Unaudited) - Three Months Ended June 30 | (Amounts in thousands, except per share amounts) | 2025 | 2024 | | :----------------------------------------------- | :--- | :--- | | Revenues: | | | | Verification and certification service revenue | 5,332 | 5,252 | | Product sales | 964 | 819 | | Professional services | 266 | 324 | | Total revenues | 6,562 | 6,395 | | Costs of revenues: | | | | Costs of verification and certification services | 3,282 | 3,028 | | Costs of products | 617 | 469 | | Costs of professional services | 203 | 240 | | Total costs of revenues | 4,102 | 3,737 | | Gross profit | 2,460 | 2,658 | | Selling, general and administrative expenses | 1,911 | 2,075 | | Income from operations | 549 | 583 | | Other income/(expense): | | | | Dividend income | 50 | 100 | | Interest income | 5 | 7 | | Fair market value gain on digital assets | 172 | - | | Loss on foreign currency exchange | (3) | (2) | | Interest expense | (1) | (1) | | Income before income taxes | 772 | 687 | | Income tax expense | 210 | 198 | | Net income | 562 | 489 | | Per share - net income: | | | | Basic | 0.11 | 0.09 | | Diluted | 0.11 | 0.09 | | Weighted average number of common shares outstanding: | | | | Basic | 5,272 | 5,371 | | Diluted | 5,283 | 5,388 | Statements of Operations (Unaudited) - Six Months Ended June 30 | (Amounts in thousands, except per share amounts) | 2025 | 2024 | | :----------------------------------------------- | :--- | :--- | | Revenues: | | | | Verification and certification service revenue | 9,514 | 9,686 | | Product sales | 1,666 | 1,552 | | Professional services | 655 | 739 | | Total revenues | 11,835 | 11,977 | | Costs of revenues: | | | | Costs of verification and certification services | 5,677 | 5,543 | | Costs of products | 1,045 | 903 | | Costs of professional services | 458 | 544 | | Total costs of revenues | 7,180 | 6,990 | | Gross profit | 4,655 | 4,987 | | Selling, general and administrative expenses | 3,964 | 4,143 | | Income from operations | 691 | 844 | | Other income/(expense): | | | | Dividend income | 50 | 100 | | Interest income | 9 | 14 | | Fair market value gain on digital assets | 96 | - | | Loss on foreign currency exchange | (3) | (4) | | Interest expense | (2) | (2) | | Income before income taxes | 841 | 952 | | Income tax expense | 248 | 285 | | Net income | 593 | 667 | | Per share - net income: | | | | Basic | 0.11 | 0.12 | | Diluted | 0.11 | 0.12 | | Weighted average number of common shares outstanding: | | | | Basic | 5,227 | 5,426 | | Diluted | 5,240 | 5,444 | Balance Sheets The unaudited Balance Sheets present WFCF's financial position as of June 30, 2025, detailing assets, liabilities, and equity, with total assets increasing to $16.6 million from $15.3 million Balance Sheets (Unaudited) | (Amounts in thousands, except per share amounts) | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :----------------------------------------------- | :------------------------ | :-------------------------- | | Assets | | | | Current assets: | | | | Cash and cash equivalents | 3,201 | 2,012 | | Accounts receivable, net of allowance | 2,060 | 1,826 | | Inventory | 1,112 | 1,002 | | Prepaid expenses and other current assets | 742 | 705 | | Total current assets | 7,115 | 5,545 | | Property and equipment, net | 681 | 737 | | Right-of-use assets, net | 2,017 | 2,067 | | Equity investments | 1,191 | 1,191 | | Intangible and other assets, net | 1,612 | 1,810 | | Digital assets | 750 | 654 | | Goodwill, net | 2,946 | 2,946 | | Deferred tax assets, net | 312 | 356 | | Total assets | 16,624 | 15,306 | | Liabilities and Equity | | | | Current liabilities: | | | | Accounts payable | 749 | 468 | | Accrued expenses and other current liabilities | 1,053 | 611 | | Deferred revenue | 2,371 | 1,748 | | Current portion of finance lease obligations | 14 | 15 | | Current portion of operating lease obligations | 360 | 337 | | Total current liabilities | 4,547 | 3,179 | | Finance lease obligations, net of current portion | 19 | 25 | | Operating lease obligation, net of current portion | 2,087 | 2,169 | | Total liabilities | 6,653 | 5,373 | | Commitments and contingencies | | | | Equity: | | | | Common stock | 5 | 7 | | Additional paid-in-capital | 60 | 11,381 | | Treasury stock | (251) | (13,462) | | Retained earnings | 10,157 | 12,007 | | Total equity | 9,971 | 9,933 | | Total liabilities and stockholders' equity | 16,624 | 15,306 | - Total assets increased to $16.624 million as of June 30, 2025, from $15.306 million at December 31, 2024[19] - Cash and cash equivalents significantly increased to $3.201 million from $2.012 million[19]