Where Food es From(WFCF)2023-11-10 15:53Financial Data and Key Metrics Changes - Total revenue in Q3 2023 declined 4% to $7 million from $7.3 million in Q3 2022, primarily due to lower hardware revenue [10] - Verification and certification revenue increased 4% in Q3 to $5.4 million from $5.2 million, while product revenue decreased by $367,000 to $1.2 million [10] - Net income for Q3 was $723,000 or $0.13 per diluted share, compared to $785,000 or $0.13 per diluted share in Q3 2022 [11] - Adjusted EBITDA in Q3 was down slightly at $1.2 million from $1.3 million [11] - Year-to-date total revenue decreased 2% to $18.4 million from $18.8 million in the same period last year [12] Business Line Data and Key Metrics Changes - Verification and certification services revenue increased 8% year-to-date to $13.9 million from $12.9 million [13] - Product revenue decreased 10% year-to-date to $3.1 million from $3.5 million [13] - Consulting revenue was $1.3 million compared to $2.4 million in the prior year period, impacted by a one-time contract booked in Q1 2022 [13] Market Data and Key Metrics Changes - The company is experiencing headwinds due to smaller herd sizes related to cyclical cattle trends, affecting tag sales and overall revenue [5][8] - Customer retention rate is over 90%, indicating strong customer loyalty [9] Company Strategy and Development Direction - The acquisition of the Smart Catch program aims to accelerate its rollout and expand its scope, focusing on sustainability in seafood [15][16] - The company is exploring expansion opportunities in the seafood supply chain and other products beyond seafood [20] Management's Comments on Operating Environment and Future Outlook - Management noted an increased focus on sustainability, particularly regarding carbon footprint and supply chain traceability [24] - The company is actively involved in pilot projects under the USDA's Climate-Smart program, emphasizing its role in maintaining product traceability [24] Other Important Information - The company returned $855,000 to stockholders through stock buybacks in Q3, with year-to-date buybacks totaling nearly $3 million [6] - Cash and cash equivalents declined to $3.8 million from $4.4 million at the end of 2022, primarily due to share repurchases [14] Q&A Session Summary Question: Update on potential regulations driving demand for tags - Management indicated no significant movement other than the closure of a USDA comment period, with results expected early next year [22] Question: Future excitement and focus areas - Management expressed excitement about the increased focus on sustainability and the importance of carbon footprint tracking in supply chains [23] Question: Changes in competitive dynamics within auditing - Management noted no significant changes but highlighted challenges in finding qualified auditor staff as a limiting factor [25] Question: Capital allocation strategy - Management stated they are looking for M&A opportunities while continuing aggressive stock buybacks in the absence of other opportunities [26] Question: Update on the ADT program - Management confirmed ongoing collaboration with industry groups and continued momentum in traceability initiatives [28]