SOURCE: Where Food Comes From

Where Food Comes From

August 11, 2016 07:00 ET

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

CASTLE ROCK, CO--(Marketwired - Aug 11, 2016) - Where Food Comes From, Inc. (OTCQB: WFCF)

Second quarter revenue up 13% year over year to $2.8 million from $2.5 million

Second quarter net income up 18% year over year to $169,600 from $144,100; ninth consecutive profitable quarter

Six-month revenue up 15% year over year to $5.2 million from $4.6 million

Six-month net income up 29% year over year to $256,900 from $199,000

Strong balance sheet: $4.3 million cash and cash equivalents; 4.8:1 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 second quarter ended June 30, 2016.

"We continue to deliver double digit revenue and earnings growth in spite of the effects of weak cattle prices and the dampening impact the strong dollar is having on European demand for American Non-hormone Treated Cattle (NHTC)," said John Saunders, chairman and CEO. "Our performance in the face of these beef industry headwinds underscores the strength of our business model, which emphasizes diversity in our services mix in order to better weather downturns in any given market segment. We continue to look for ways to diversify our services mix -- both organically and through M&A -- in order to strengthen and grow our business and further differentiate ourselves from the competition."

Second Quarter Results
Second quarter revenue increased 13% to $2,799,600 from revenue of $2,479,100 in the same quarter last year. Verification services revenue increased 20% to $2,569,200 from $2,146,800 due to the addition of new customers and new verification service offerings. Product revenue (cattle identification tags) decreased 32% to $204,500 from $300,100 due to a stronger US dollar and decreased verification activity associated with lower cattle prices. Other revenue decreased 20% to $25,800 from $32,200 a year ago.

Gross profit in the second quarter increased 10% year over year to $1,317,600 from $1,199,100. Gross margin in the second quarter declined slightly to 47% versus 48% a year ago. Selling, general and administrative expense as a percent of revenue improved to 38% in the second quarter from 40% in the same quarter last year.

Income from operations in the second quarter increased 23% to $248,400 from $202,100 in the same quarter last year. Net income attributable to Where Food Comes From, Inc. increased 18% to $169,600, or $0.01 per share, compared to $144,100, or $0.01 per share, in the same quarter a year ago.

Six-Month Results
Revenue for the first half of 2016 increased 15% to $5,245,400 from $4,560,400 in the same period last year. Verification revenue increased 20% to $4,716,600 from $3,921,000 year over year. Product revenue decreased 18% to $475,600 from $579,900 a year ago. Other revenue decreased 11% to $53,100 from $59,600 in the same period last year.

Gross profit through six months increased 17% to $2,524,700 from $2,162,400 a year ago. Gross margin was 48% compared to 47% a year ago, reflecting the scalability of the Company's business model combined with the positive impact of services bundling. Selling, general and administrative expense as a percent of revenue improved to 41% from 43% year over year.

Operating income increased 64% year over year to $352,300 from $214,400. Net income attributable to Where Food Comes From, Inc. was up 29% to $256,900, or $0.01 per share, versus $199,000, or $0.01 per share, in the same period last year. The Company generated $765,800 in net cash from operations through the first six months of 2016 versus $872,200 over the same period a year ago.

Balance Sheet
The Company's cash and cash equivalents balance at June 30, 2016, increased 13% to $4,288,500 from $3,781,400 at 2015 year-end. Working capital increased to $4,534,400 with a current ratio of 4.8:1.

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: 13641561

Phone replay:
A telephone replay of the conference call will be available through August 25, 2016, as follows:
Domestic Toll Free: 1-877-660-6853
International: 1-201-612-7415
Conference Code: 13641561

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 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 industry leadership; the Company's ability to weather industry downturns and to continue producing financial results similar to those described in this press release; 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 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  
(Unaudited)  
   
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2016     2015     2016     2015  
                         
Revenues                        
  Service revenue   $ 2,569,245     $ 2,146,838     $ 4,716,647     $ 3,920,989  
  Product sales     204,517       300,053       475,592       579,857  
  Other revenue     25,840       32,237       53,115       59,582  
    Total revenue     2,799,602       2,479,128       5,245,354       4,560,428  
Costs of revenue                                
  Labor and other costs of services     1,341,959       1,084,558       2,451,096       2,040,596  
  Costs of products     140,064       195,482       269,563       357,462  
    Total costs of revenue     1,482,023       1,280,040       2,720,659       2,398,058  
Gross profit     1,317,579       1,199,088       2,524,695       2,162,370  
Selling, general and administrative expenses     1,069,216       996,942       2,172,378       1,947,930  
Income from operations     248,363       202,146       352,317       214,440  
Other expense (income):                                
  Interest expense     402       416       697       873  
  Other income, net     (1,683 )     (1,857 )     (3,614 )     (3,544 )
Income before income taxes     249,644       203,587       355,234       217,111  
Income tax expense     80,000       81,435       129,950       121,285  
Net income     169,644       122,152       225,284       95,826  
Net loss attributable to non-controlling interest     -       21,960       31,605       103,133  
Net income attributable to Where Food Comes From, Inc.   $ 169,644     $ 144,112     $ 256,889     $ 198,959  
Net income per share:                                
  Basic   $ 0.01     $ 0.01     $ 0.01     $ 0.01  
  Diluted   $ 0.01     $ 0.01     $ 0.01     $ 0.01  
Weighted average number of common shares outstanding:                                
Basic     23,854,451       23,805,559       23,803,657       23,780,911  
Diluted     24,006,266       23,976,211       23,952,935       23,970,052  
             
             
Where Food Comes From, Inc.            
Balance Sheets            
             
    June 30,     December 31,  
    2016     2015  
ASSETS   (unaudited)        
Current Assets:            
  Cash and cash equivalents   $ 4,288,483     $ 3,781,397  
  Accounts receivable, net     1,237,280       1,110,052  
  Prepaid expenses and other current assets     207,489       154,912  
    Total current assets     5,733,252       5,046,361  
Property and equipment, net     165,671       157,950  
Intangible and other assets, net     1,682,663       1,760,199  
Goodwill     1,279,762       1,279,762  
Deferred tax assets     101,502       231,452  
Total assets   $ 8,962,850     $ 8,475,724  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 419,723     $ 417,836  
  Accrued expenses and other current liabilities     197,139       92,574  
  Customer deposits     65,560       77,784  
  Deferred revenue     504,319       194,087  
  Short-term debt and current portion of notes payable     8,066       7,846  
  Current portion of capital lease obligations     4,000       4,634  
    Total current liabilities     1,198,807       794,761  
Capital lease obligations, net of current portion     17,785       1,776  
Notes payable and other long-term debt, net     4,258       8,365  
Total liabilities     1,220,850       804,902  
Contingently redeemable non-controlling interest     -       936,370  
Stockholders' equity:                
  Common stock     23,963       23,822  
  Additional paid-in capital     8,274,765       7,446,634  
  Treasury stock     (255,529 )     (177,916 )
  Accumulated deficit     (301,199 )     (558,088 )
Total Equity     7,742,000       6,734,452  
Total liabilities and stockholders' equity   $ 8,962,850     $ 8,475,724  
                 

Contact Information

  • Company Contacts:

    John Saunders
    Chief Executive Officer
    303-895-3002

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