Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Net income increased to $961,000 or $0.18 per diluted share from $776,000 or $0.14 per diluted share.
• Product revenue increased by 6% to $922,000 from $871,000.
• The Upcycled Certified program became the fastest-growing service with a 17% year-over-year increase in 2024.
• The company repurchased a total of 273,057 shares of its stock for $3.3 million, returning value to stockholders.
• The company is celebrating its 30th anniversary, highlighting its long-term stability and growth.

Negative Points

• Total revenue in the fourth quarter was flat at $6.7 million year-over-year.
• Verification and certification services revenue slightly decreased to $5.4 million from $5.5 million.
• Gross profit in the fourth quarter declined by 7% to $2.8 million from $3 million.
• SG&A expenses grew by $530,000 year-over-year, impacting profitability.
• Net income for the year was down slightly to $2.1 million from $2.2 million in 2023.

Q & A Highlights

• Warning! GuruFocus has detected 1 Warning Sign with WFCF.

Q: Can you provide an overview of the financial performance for the fourth quarter and the full year 2024? A: John Saunders, CEO, reported that total revenue for the fourth quarter was flat at $6.7 million year-over-year. Verification and certification services revenue slightly decreased to $5.4 million, while product revenue increased by 6% to $922,000. For the full year, total revenue increased by 2% to $25.7 million. Net income for the fourth quarter increased to $961,000, benefiting from a gain in the fair market value of bitcoin holdings.

Q: What factors contributed to the changes in revenue and profitability? A: John Saunders explained that the decline in beef source and age verifications due to cyclical herd size reductions impacted revenue. However, rising demand in other service offerings, such as the CARE Certified and Upcycled Certified programs, offset this decline. SG&A expenses increased due to wage inflation and strategic hires, impacting profitability.

Q: How is the company addressing the challenges in the beef-related business? A: The CEO mentioned that the decline in beef source and age verifications is seen as a temporary cyclical occurrence. The company is focusing on expanding other service offerings and leveraging bundling capabilities to offset the slowdown in the beef business.

Q: Can you elaborate on the company's strategy for returning value to stockholders? A: John Saunders highlighted that the company repurchased 273,057 shares for $3.3 million in 2024. The total value returned to stockholders through buybacks, private purchases, and special dividends over the past 21 quarters amounted to $13.9 million. The company plans to continue using solid cash flows for buybacks while investing in new programs.

Q: What are the future growth prospects and strategic initiatives for Where Food Comes From Inc? A: The CEO emphasized that the company is well-positioned to benefit from consumer trends in food safety and traceability. They plan to continue expanding their verification services portfolio and invest in technology to manage expected customer growth. The company is also exploring new offerings with strong growth potential.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.