SOURCE: Where Food Comes From

Where Food Comes From

November 08, 2016 07:00 ET

Where Food Comes From, Inc. Reports Revenue and Earnings Growth for 2016 Third Quarter

CASTLE ROCK, CO--(Marketwired - Nov 8, 2016) - Where Food Comes From, Inc. (OTCQB: WFCF)

  • Third quarter revenue up 10% year over year to $3.3 million from $3.1 million
  • Third quarter net income up 24% year over year to $225,000 from $181,600; tenth consecutive profitable quarter
  • Nine-month revenue up 13% year over year to $8.6 million from $7.6 million
  • Nine-month net income up 27% year over year to $481,900 from $380,600
  • Strong balance sheet: $4.2 million cash and cash equivalents; 4.4:1 current ratio

Where Food Comes From, Inc. (d.b.a. IMI Global, Inc.) (OTCQB: WFCF), the most trusted resource for independent, third-party verification of food production practices in North America, today announced results for its third quarter ended September 30, 2016.

"Where Food Comes From continues to achieve double-digit, year-over-year revenue and earnings growth and to generate solid cash flows from operations," said John Saunders, chairman and CEO. "Our strategy of positioning the Company as a single-source provider of multiple, complementary verification solutions across a variety of commodities is paying dividends in the form of new customer wins and a widening moat around the business. Our unique ability to offer customers the convenience and cost savings of bundled services represents a critically important competitive advantage for us. Going forward, we intend to build on that advantage through a combination of organic initiatives and M&A activity designed to add new verification standards and commodity coverage and to expand our geographic footprint."

Third Quarter Results
Third quarter revenue increased 10% to $3,344,200 from revenue of $3,052,900 in the same quarter last year. Verification services revenue increased 11% to $2,948,900 from $2,655,800, reflecting a growing customer base and the addition of new verification service offerings. Product revenue (cattle identification tags) increased slightly to $380,400 from $371,700. Other revenue decreased 41% to $14,900 from $25,400 a year ago.

Gross profit in the third quarter increased 9% year over year to $1,601,400 from $1,473,800. Gross margin was flat year over year at 48%. Selling, general and administrative expense as a percent of revenue improved to 37% in the third quarter from 38% in the same quarter last year.

Income from operations in the third quarter increased 20% to $361,600 from $302,300 in the same quarter last year. Net income attributable to Where Food Comes From, Inc. increased 24% to $225,000, or $0.01 per share, compared to $181,600, or $0.01 per share, in the same quarter a year ago.

Nine-Month Results
Revenue for the first nine-months of 2016 increased 13% to $8,589,600 from $7,613,300 in the same period last year. Verification services revenue increased 17% to $7,665,600 from $6,576,800 year over year. Product revenue decreased 10% to $856,000 from $951,600 a year ago due to a strong US dollar and a decline in beef-related verifications due to lower cattle prices. Other revenue decreased 20% to $68,000 from $85,000 in the same period last year.

Gross profit through nine months increased 13% to $4,126,100 from $3,636,200 a year ago. Gross margin was 48%, unchanged from the same period a year ago. Selling, general and administrative expense as a percent of revenue improved to 40% from 41% year over year.

Operating income increased 38% year over year to $713,900 from $515,800. Net income attributable to Where Food Comes From, Inc. increased 27% to $481,900, or $0.02 per share, from $380,600, or $0.02 per share, in the same period last year.

The Company generated $1,210,600 in net cash from operations through the first nine months of 2016 versus $1,383,200 over the same period a year ago.

Balance Sheet
The Company's cash and cash equivalents balance at September 30, 2016, increased 12% to $4,245,000 from $3,781,400 at 2015 year-end. Working capital increased to $4,526,100 with a current ratio of 4.4:1.

Conference Call
The Company will conduct a conference call today at 10:00 a.m. Mountain Time.

Dial in:
Domestic Toll Free: 1-877-407-8289
International: 1-201-689-8341
Conference ID: 13647997

Phone replay:
A telephone replay of the conference call will be available through November 22, 2016, as follows:
Domestic Toll Free: 1-877-660-6853
International: 1-201-612-7415
Conference Code: 13647997

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. Visit for additional information.

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 industry leadership and competitive advantage; the Company's ability to continue winning new customers, widen the moat around the business, and continue producing financial results similar to those described in this press release; the Company's ability to add new commodity coverage, new verification standards and expand its geographic footprint; and demand for, and impact and efficacy of, the Company's products and services on the marketplace, 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

Where Food Comes From, Inc.  
Statements of Income  
  Three Months Ended     Nine Months Ended  
  September 30,     September 30,  
  2016   2015     2016     2015  
  Service revenue $ 2,948,945   $ 2,655,792     $ 7,665,590     $ 6,576,781  
  Product sales   380,393     371,699       855,986       951,556  
  Other revenue   14,908     25,417       68,023       84,999  
    Total revenue   3,344,246     3,052,908       8,589,599       7,613,336  
Costs of revenue                            
  Labor and other costs of services   1,522,203     1,362,800       3,973,299       3,403,398  
  Costs of products   220,599     216,298       490,162       573,759  
    Total costs of revenue   1,742,802     1,579,098       4,463,461       3,977,157  
Gross profit   1,601,444     1,473,810       4,126,138       3,636,179  
Selling, general and administrative expenses   1,239,834     1,171,513       3,412,211       3,120,379  
Income from operations   361,610     302,297       713,927       515,800  
Other expense (income):                            
  Interest expense   649     380       1,347       1,253  
  Other expense (income), net   1,008     (2,242 )     (2,623 )     (6,721 )
Income before income taxes   359,953     304,159       715,203       521,268  
Income tax expense   135,000     92,000       264,950       213,285  
Net income   224,953     212,159       450,253       307,983  
Net loss (income) attributable to non-controlling interest   -     (30,549 )     31,605       72,584  
Net income attributable to Where Food Comes From, Inc. $ 224,953   $ 181,610     $ 481,858     $ 380,567  
Net income per share:                            
Basic $ 0.01   $ 0.01     $ 0.02     $ 0.02  
Diluted $ 0.01   $ 0.01     $ 0.02     $ 0.02  
Weighted average number of common shares outstanding:                            
Basic   23,772,967     23,813,295       23,817,980       23,791,825  
Diluted   23,929,011     23,981,133       23,969,134       23,972,897  
Where Food Comes From, Inc.  
Balance Sheets  
  September 30,     December 31,  
  2016     2015  
ASSETS (unaudited)        
Current Assets:              
  Cash and cash equivalents $ 4,245,049     $ 3,781,397  
  Accounts receivable, net   1,423,856       1,110,052  
  Prepaid expenses and other current assets   181,365       154,912  
    Total current assets   5,850,270       5,046,361  
Property and equipment, net   668,982       157,950  
Intangible and other assets, net   1,643,895       1,760,199  
Goodwill   1,279,762       1,279,762  
Deferred tax assets   -       231,452  
Total assets $ 9,442,909     $ 8,475,724  
Current liabilities:              
  Accounts payable $ 471,969     $ 417,836  
  Accrued expenses and other current liabilities   351,592       92,574  
  Customer deposits   109,773       77,784  
  Deferred revenue   386,849       194,087  
  Short-term debt and current portion of notes payable   -       7,846  
  Current portion of capital lease obligations   4,033       4,634  
    Total current liabilities   1,324,216       794,761  
Capital lease obligations, net of current portion   16,764       1,776  
Notes payable and other long-term debt, net   -       8,365  
Lease incentive obligation   160,734       -  
Deferred tax liabilities, net   33,498       -  
Total liabilities   1,535,212       804,902  
Contingently redeemable non-controlling interest   -       936,370  
Stockholders' equity:              
  Common stock   23,984       23,822  
  Additional paid-in capital   8,317,506       7,446,634  
  Treasury stock   (357,563 )     (177,916 )
  Accumulated deficit   (76,230 )     (558,088 )
Total Equity   7,907,697       6,734,452  
Total liabilities and stockholders' equity $ 9,442,909     $ 8,475,724  

Contact Information

  • Company Contacts:

    John Saunders
    Chief Executive Officer

    Jay Pfeiffer
    Pfeiffer High Investor Relations, Inc.