SOURCE: Where Food Comes From

Where Food Comes From

July 30, 2015 07:00 ET

Where Food Comes From, Inc. Reports Continued Revenue and Earnings Growth in Second Quarter and Six-Month Period

CASTLE ROCK, CO--(Marketwired - Jul 30, 2015) - Where Food Comes From, Inc. (OTCQB: WFCF)

Second quarter revenue up 25% to $2.5 million from $2.0 million last year

Second quarter net income up 170% to $144,100 from $53,400 last year

Six-month revenue up 35% to $4.6 million from $3.4 million last year

Six-month net income increases to $199,000 from a net loss of $80,200 last year

Operating cash flow grows 406% to $473,700 in second quarter and 378% to $872,200 for six-month period

Where Food Comes From, Inc. (d.b.a. IMI Global, Inc.) (OTCQB: WFCF), the most trusted resource for third-party verification of food production practices, today announced continued growth in revenue and profitability for its second quarter and six-month period ended June 30, 2015.

"We are pleased to report record revenue and earnings growth in the second quarter and year-to-date period," said John Saunders, chairman and CEO. "We continue to add new customers for our growing portfolio of verification solutions and to benefit from consumer and regulatory demand for increased transparency in food production practices. In addition to resurgent demand for source verification resulting from the USDA's Animal Disease Traceability (ADT) program, we are seeing particularly strong consumer interest in areas including non-GMO, organic and sustainable production practices. Our involvement with the pilot project for sustainable beef in Canada continues to deepen and we believe the leadership McDonald's is showing in this area is an early leading indicator of a much larger movement in North America, if not internationally. This bodes well for Where Food Comes From as the leader in independent third-party verification of sustainable production practices."

Second Quarter Results
Second quarter revenue increased 25% to $2,479,100 from revenue of $1,978,500 in the same quarter last year. Verification services revenue increased 27% year over year to $2,146,800 from $1,696,300. Product revenue (cattle identification tags) increased 27% to $300,100 from $236,100. The growth in both revenue categories reflects a larger customer base resulting from the Company's organic growth initiatives as well as M&A activity. In particular, the Company is benefitting from the early effects of the USDA's Animal Disease Traceability (ADT) program, which is phasing in slowly but expected to steadily contribute to increased product and service revenue as more producers come into compliance with the program through source audits and the associated purchase of ear tags. Other revenue, primarily associated with the Company's Where Food Comes From® labeling program, decreased 30% year over year -- to $32,200 from $46,100 -- due to a change in beef suppliers at Heinen's Fine Foods, the Company's largest labeling customer. The Company continues to work with Heinen's to bring its new beef supply chain into conformance with labeling program requirements. In addition, the Company continues to add new grocery customers to the program across the United States.

Gross profit in the second quarter increased 36% year-over-year to $1,199,100 from $884,600. Gross margin improved to 48% from 45% year over year. Selling, general and administrative expenses grew by 25% year over year as the result of higher head count, increased sales and marketing costs, and higher costs related to being a publicly held company. SG&A as a percent of revenue in the second quarter was steady year over year at 40%.

Net income attributable to Where Food Comes From, Inc. increased 170% to $144,100, or one cent per share, compared with net income of $53,400, or less than one cent per share, in the same quarter a year ago.

The Company generated $473,700 in cash from operations in the second quarter, up 406% from $93,500 in the same quarter last year.

Balance Sheet
Cash, cash equivalents and restricted cash at June 30, 2015, increased 23% to $3,480,300 from $2,833,100 at 2014 year-end. Working capital increased to $3,850,400 from $3,380,700.

Six-Month Results
Total revenue increased 35% to $4,560,400 from revenue of $3,374,400 in the same period last year. Verification services revenue increased 34% year over year to $3,921,000 from $2,921,000. Product revenue (cattle identification tags) increased 56% to $579,900 from $371,500. As in the second quarter, the growth in verification and product revenue reflected an increase in auditing customers. Labeling program revenue declined 27% year over year to $59,600 from $81,900 due to the aforementioned change in beef suppliers at the Company's largest labeling customer. However, for the comparative six-month periods, the number of grocery locations using the Company's labeling program has increased significantly, and the Company expects labeling revenue to grow over the long term.

Gross profit through six months increased 50% to $2,162,400 from $1,442,200. Gross margin increased to 47% from 43% in the first six months of 2014. Selling, general and administrative expenses grew by 20% year over year as the result of higher head count, increased sales and marketing costs, and higher public company costs. However, as a percent of revenue, SG&A expenses improved to 43% from 48% in the year-ago period.

Net income attributable to Where Food Comes From, Inc. improved to $199,000, or one cent per share, from a net loss of $80,200, or less than one cent per share, a year ago.

The Company generated $872,200 in cash from operations in the first half of 2015, up 378% from $182,600 in the same period last year.

Conference Call
The Company will conduct a conference call today at 9:00 a.m. Mountain Time (11:00 a.m. ET.)

Dial in:
Domestic Toll Free: 1-877-407-8289
International: 1-201-689-8341
Conference ID: 13614643

Phone replay:
A telephone replay of the conference call will be available through August 13, 2015, as follows:
Domestic Toll Free: 1-877-660-6853
International: 1-201-612-7415
Conference Code: 13614643

About Where Food Comes From, Inc.
Where Food Comes From, Inc. (d.b.a. IMI Global) is America's trusted resource for third party verification of food production practices. The Company supports more than 10,000 farmers, ranchers, processors, retailers, distributors and restaurants with a wide variety of value-added services through its IMI Global, International Certification Services, Validus Verification Services, and Sterling Solutions units. In addition, the Company's Where Food Comes From® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers to the sources of the food they purchase through product labeling and web-based information sharing and education. Go to www.wherefoodcomesfrom.com for additional information.

CAUTIONARY STATEMENT
This news release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, based on current expectations, estimates and projections that are subject to risk. Forward-looking statements are inherently uncertain, and actual events could differ materially from the Company's predictions. Important factors that could cause actual events to vary from predictions include those discussed in our SEC filings. Specifically, statements in this news release about expectations for growing labeling revenue; expectations for ADT to positively impact revenue growth; expectations for increased demand for sustainability audits; the demand for, and impact and efficacy of, the Company's and its subsidiaries' products and services on the marketplace; and the Company's ability to generate results in the future that are comparable to better than the results contained herein are forward-looking statements that are subject to a variety of factors, including availability of capital, personnel and other resources; competition; governmental regulation of the agricultural industry; the market for beef and other commodities; and other factors. Financial results for the second quarter are not necessarily indicative of future results. Readers should not place undue reliance on these forward-looking statements. The Company assumes no obligation to update its forward-looking statements to reflect new information or developments. For a more extensive discussion of the Company's business, please refer to the Company's SEC filings at www.sec.gov.

   
Where Food Comes From, Inc.  
   
Statements of Income (Loss)  
(Unaudited)  
   
    Three Months Ended     Six Month Ended  
    June 30,     June 30,  
    2015     2014     2015     2014  
                                 
Revenues                                
  Service revenue   $ 2,146,838     $ 1,696,345     $ 3,920,989     $ 2,921,044  
  Product sales     300,053       236,074       579,857       371,494  
  Other revenue     32,237       46,074       59,582       81,907  
    Total revenue     2,479,128       1,978,493       4,560,428       3,374,445  
Costs of revenue                                
  Labor and other costs of services     1,084,558       933,621       2,040,596       1,670,320  
  Costs of products     195,482       160,253       357,462       261,962  
    Total costs of revenue     1,280,040       1,093,874       2,398,058       1,932,282  
Gross profit     1,199,088       884,619       2,162,370       1,442,163  
Selling, general and administrative expenses     996,942       798,607       1,947,930       1,629,756  
Income (loss) from operations     202,146       86,012       214,440       (187,593 )
Other expense (income):                                
  Interest expense     416       2,795       873       5,618  
  Other income, net     (1,857 )     (275 )     (3,544 )     (1,051 )
Income (loss) before income taxes     203,587       83,492       217,111       (192,160 )
Income tax expense (benefit)     81,435       31,559       121,285       (46,809 )
Net income (loss)     122,152       51,933       95,826       (145,351 )
Net loss attributable to non-controlling interest     21,960       1,510       103,133       65,164  
Net income (loss) attributable to Where Food Comes From, Inc.   $ 144,112     $ 53,443     $ 198,959     $ (80,187 )
Net income (loss) per share:                                
  Basic   $ 0.01     $ *     $ 0.01     $ *  
  Diluted   $ 0.01     $ *     $ 0.01     $ *  
Weighted average number of common shares outstanding:                                
Basic     23,805,559       22,695,810       22,780,911       22,694,343  
Diluted     23,976,211       22,907,849       23,970,052       22,694,343  
                                 
* Less than one cent ($0.01) per share                 
   
   
   
Where Food Comes From, Inc.            
Balance Sheets            
             
    June 30,     December 31,  
    2015     2014  
ASSETS   (Unaudited)        
Current Assets:                
  Cash and cash equivalents   $ 3,480,274     $ 2,583,058  
  Restricted cash     -       250,000  
  Accounts receivable, net     974,658       979,532  
  Prepaid expenses and other current assets     141,271       126,938  
  Deferred tax assets     242,805       167,805  
    Total current assets     4,839,008       4,107,333  
Property and equipment, net     202,574       231,886  
Intangible and other assets, net     1,887,724       1,952,678  
Goodwill     1,279,762       1,279,762  
Long-term deferred tax assets     176,647       361,797  
Total assets   $ 8,385,715     $ 7,933,456  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 441,655     $ 401,131  
  Accrued expenses and other current liabilities     116,707       65,849  
  Customer deposits     165,580       69,090  
  Deferred revenue     252,500       178,724  
  Short-term debt and current portion of notes payable     7,633       7,425  
  Current portion of capital lease obligations     4,514       4,397  
    Total current liabilities     988,589       726,616  
Capital lease obligations, net of current portion     4,124       6,410  
Notes payable and other long-term debt, net     12,360       16,245  
Total liabilities     1,005,073       749,271  
Contingently redeemable non-controlling interest     870,886       974,019  
Stockholders' equity:                
  Common stock     23,813       24,266  
  Additional paid-in capital     7,378,989       7,428,754  
  Treasury stock     -       (150,849 )
  Accumulated deficit     (893,046 )     (1,092,005 )
Total Equity     6,509,756       6,210,166  
Total liabilities and stockholders' equity   $ 8,385,715     $ 7,933,456  
                 

Contact Information

  • Company Contacts:

    John Saunders
    Chief Executive Officer
    303-895-3002

    Jay Pfeiffer
    Pfeiffer High Investor Relations, Inc.
    303-393-7044