Where Food es From(US:WFCF)2025-05-08 17:02Financial 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]