SOURCE: Where Food Comes From

Where Food Comes From

October 29, 2015 07:00 ET

Where Food Comes From, Inc. Reports Profitable Growth in Third Quarter and Nine-Month Period

CASTLE ROCK, CO--(Marketwired - Oct 29, 2015) - Where Food Comes From, Inc. (d.b.a. IMI Global, Inc.) (OTCQB: WFCF)

Third quarter revenue up 18% to $3.1 million from $2.6 million last year

Third quarter net income of $181,600, down from $245,100 last year

Nine-month revenue up 28% to $7.6 million from $6.0 million last year

Nine-month net income increases 131% to $380,600 from $164,900 last year

Operating cash flow grows 165% for nine-month period, to $1,383,200 from $521,000 last year

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 profitable growth for its third quarter and nine-month period ended September 30, 2015.

"Where Food Comes From continues to deliver strong financial results, highlighted by our sixth consecutive profitable quarter and 28% revenue growth through the first nine months of the year," said John Saunders, chairman and CEO. "In the third quarter we invested heavily in an initiative to standardize financial and field auditing systems across all of our operating subsidiaries. In the short run, these investments will impact our levels of profitability, but in the long run these improved efficiencies will enable us to better exploit the strengths and synergies of our business units and to more quickly integrate future acquisitions.

"On the operations side, we continue to grow organically with the steady addition of new customers and by expanding our solutions portfolio with innovative auditing standards such as Feed Verified, a new resource that gives livestock producers, feed companies and food brands a means of confirming that a particular ingredient of feed product meets a specific verification or certification requirement. We now audit to more than 30 standards -- by far the most in our industry. This gives us the ability to offer producers bundled services in a one-day audit format that saves them money and reduces the days and man hours they currently devote to audits. We're also pleased to report that our involvement with the McDonald's pilot project for sustainable beef in Canada continues to gain momentum, with more beef producers seeking verification weekly as Canadian ranchers increasingly embrace the program."

Third Quarter Results
Third quarter revenue increased 18% to $3,052,900 from revenue of $2,579,400 in the same quarter last year. Verification services revenue increased 24% year over year to $2,655,800 from $2,139,300. Product revenue (cattle identification tags) decreased 10% to $371,700 from $414,500 due to timing issues involving certain large tag orders. Other revenue, primarily associated with the Company's Where Food Comes From® labeling program, was essentially flat year over year at $25,400. As previously disclosed, labeling revenue has been impacted by 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 order to resume beef labeling. In the meantime, labeling of other meat products at Heinen's, in addition to new customers coming onboard throughout 2015, has offset the temporary loss of Heinen's beef labeling revenue.

Gross profit in the third quarter increased 25% year-over-year to $1,473,800 from $1,179,600. Gross margin improved to 48% from 46% year over year. Selling, general and administrative expenses grew by 51% year over year due in part to higher head count, increased sales and marketing costs, bonus accruals related to meeting certain financial milestones, and higher costs related to being a publicly held company. In addition, the Company is making significant investments in IT process redesigns related to the integration and standardization of differing field audit and accounting methodologies used by the IMI Global, ICS and Validus business units.

Net income attributable to Where Food Comes From, Inc. decreased 26% to $181,600, or $0.01 per share, compared with net income of $245,100, or $0.01 per share, in the same quarter a year ago.

Nine-Month Results
Total revenue increased 28% to $7,613,300 from revenue of $5,953,900 in the same period last year. Verification services revenue increased 30% year over year to $6,576,800 from $5,060,400. Product revenue (cattle identification tags) increased 21% to $951,600 from $786,000. Labeling program revenue declined 21% year over year to $85,000 from $107,500 due to the previously mentioned change in beef suppliers at the Company's largest labeling customer. During the first nine months of 2015, the total number of grocery stores and food distributors using the Company's labeling program has increased to more than 220.

Gross profit through nine months increased 39% to $3,636,200 from $2,621,800 a year ago. Gross margin increased to 48% from 44% year over year. Selling, general and administrative expenses grew by 30% year over year.

Net income attributable to Where Food Comes From, Inc. increased 131% to $380,600, or $0.02 per share, from net income of $164,900, or $0.01 per share, a year ago.

The Company generated $1,383,200 in cash from operations through the first nine months of 2015, up 165% from $521,000 in the same period last year.

Balance Sheet
Cash, cash equivalents and restricted cash at September 30, 2015, increased 41% to $3,985,300 from $2,833,100 at 2014 year-end. Working capital increased 27% year over year to $4,294,100 from $3,380,700.

Conference Call
The Company will conduct a conference call today at 10:00 a.m. Mountain Time (12:00 p.m. ET.)

Dial in:
Domestic Toll Free: 1-877-407-8289
International: 1-201-689-8341
Conference ID: 13622853

Phone replay:
A telephone replay of the conference call will be available through November 12, 2015, as follows:
Domestic Toll Free: 1-877-660-6853
International: 1-201-612-7415
Conference Code: 13622853

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 third 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  
(Unaudited)  
   
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2015     2014     2015     2014  
                                 
Revenues                                
  Service revenue   $ 2,655,792     $ 2,139,330     $ 6,576,781     $ 5,060,375  
  Product sales     371,699       414,515       951,556       786,009  
  Other revenue     25,417       25,580       84,999       107,487  
    Total revenue     3,052,908       2,579,425       7,613,336       5,953,871  
Costs of revenue                                
  Labor and other costs of services     1,362,800       1,134,043       3,403,398       2,804,361  
  Costs of products     216,298       265,740       573,759       527,702  
    Total costs of revenue     1,579,098       1,399,783       3,977,157       3,332,063  
Gross profit     1,473,810       1,179,642       3,636,179       2,621,808  
Selling, general and administrative expenses     1,171,513       775,020       3,120,379       2,404,776  
Income from operations     302,297       404,622       515,800       217,032  
Other expense (income):                                
  Interest expense     380       3,705       1,253       9,325  
  Other income, net     (2,242 )     (932 )     (6,721 )     (1,982 )
Income before income taxes     304,159       401,849       521,268       209,689  
Income tax expense     92,000       143,940       213,285       97,131  
Net income     212,159       257,909       307,983       112,558  
Net (income) loss attributable to non-controlling interest     (30,549 )     (12,823 )     72,584       52,340  
Net income attributable to Where Food Comes From, Inc.   $ 181,610     $ 245,086     $ 380,567     $ 164,898  
Net income per share:                                
Basic   $ 0.01     $ 0.01     $ 0.02     $ 0.01  
Diluted   $ 0.01     $ 0.01     $ 0.02     $ 0.01  
Weighted average number of common shares outstanding:                                
Basic     23,813,295       23,590,662       23,791,825       22,996,399  
Diluted     23,981,133       23,813,108       23,972,897       23,224,678  
                                 
             
Where Food Comes From, Inc.            
Balance Sheets            
             
    September 30,     December 31,  
    2015     2014  
ASSETS   (Unaudited)        
Current Assets:                
  Cash and cash equivalents   $ 3,985,277     $ 2,583,058  
  Restricted cash     -       250,000  
  Accounts receivable, net     1,083,566       979,532  
  Prepaid expenses and other current assets     137,808       126,938  
  Deferred tax assets     240,805       167,805  
    Total current assets     5,447,456       4,107,333  
Property and equipment, net     180,187       231,886  
Intangible and other assets, net     1,798,967       1,952,678  
Goodwill     1,279,762       1,279,762  
Long-term deferred tax assets     86,647       361,797  
Total assets   $ 8,793,019     $ 7,933,456  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 581,118     $ 401,131  
  Accrued expenses and other current liabilities     273,927       65,849  
  Customer deposits     90,272       69,090  
  Deferred revenue     195,722       178,724  
  Short-term debt and current portion of notes payable     7,739       7,425  
  Current portion of capital lease obligations     4,574       4,397  
    Total current liabilities     1,153,352       726,616  
Capital lease obligations, net of current portion     2,958       6,410  
Notes payable and other long-term debt, net     10,376       16,245  
Total liabilities     1,166,686       749,271  
Contingently redeemable non-controlling interest     901,435       974,019  
Stockholders' equity:                
  Common stock     23,813       24,266  
  Additional paid-in capital     7,412,523       7,428,754  
  Treasury stock     -       (150,849 )
  Accumulated deficit     (711,438 )     (1,092,005 )
Total Equity     6,724,898       6,210,166  
Total liabilities and stockholders' equity   $ 8,793,019     $ 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