Where Food Comes From, Inc. Reports 2023 Fourth Quarter and Full Year Financial Results
- Verification and certification revenue increased by 17% to $5.5 million in Q4 2023 from $4.7 million in 2022.
- Net income surged by 58% to $776,000 in Q4 2023 from $490,000 in 2022.
- Adjusted EBITDA rose by 31% to $1.3 million in Q4 2023 from $1.0 million in 2022.
- Full-year 2023 saw total revenue slightly up to $25.1 million from $24.8 million in 2022.
- Cash generated from operations increased to $2.8 million in 2023 from $2.7 million in 2022.
- Company's cash and cash equivalents decreased to $2.6 million in 2023 from $4.4 million in 2022 due to share repurchase program.
- Company bought back more than $3.9 million of its shares in 2023.
- Dividend income from Progressive Beef ownership interest increased by 28% in 2023.
- Conference call scheduled for further discussion of financial results.
- None.
Insights
The reported increase in verification and certification revenue by 17% to $5.5 million is a strong indicator of Where Food Comes From, Inc.'s core business health. The 58% surge in net income and the 31% rise in adjusted EBITDA reflect effective cost management and operational efficiency. The stock buyback of more than $1.0 million in Q4 and $3.9 million over the full year, signifies management's confidence in the company's intrinsic value and a shareholder-friendly capital allocation policy. However, the decline in cash & cash equivalents from $4.4 million to $2.6 million year-over-year due to these buybacks could raise concerns about liquidity and the company's ability to invest in future growth initiatives.
The flat SG&A expenses, despite inflationary pressures, suggest Where Food Comes From has been successful in containing costs, a notable achievement that could provide a competitive edge. However, the decline in product sales by 8% and the flat total revenue growth year-over-year indicate potential market saturation or increased competition. The company's diversification strategy, including new partnerships and acquisitions like the upcycled food program, could be key in driving future growth and offsetting the decline in product sales. Expansion into seafood verification and the exclusive verifier designation might open new revenue streams and enhance the company's 'competitive moat' as mentioned by the CEO.
The increase in dividend income from the Progressive Beef ownership interest by 28% to $320,000 suggests a profitable investment for Where Food Comes From. This could be an attractive point for investors looking for companies with income-generating assets. However, the flat adjusted EBITDA at $3.8 million, despite the revenue growth, may indicate that the company is reaching a plateau in terms of operational efficiency gains. Investors should monitor how the company plans to navigate the mentioned 'macro headwinds' and whether its growth initiatives can indeed lead to substantial revenue diversification.
Fourth Quarter Highlights – 2023 vs. 2022
- Verification and certification revenue up
17% to$5.5 million from$4.7 million - Product sales flat at
$0.9 million - Total revenue up
10% to$6.7 million from$6.1 million - Net income increased
58% to$776,000 from$490,000 - Diluted EPS increased to
$0.14 from$0.08 - Adjusted EBITDA up
31% to$1.3 million from$1.0 million - Company buys back more than
$1.0 million of its stock in Q4
Full-Year Highlights – 2023 vs. 2022
- Verification and certification revenue up
10% to$19.4 million from$17.6 million - Product sales decline
8% to$4.0 million from$4.4 million - Total revenue up slightly to
$25.1 million from$24.8 million - Net income increases
8% to$2.2 million from$2.0 million - Diluted EPS of
$0.39 vs.$0.33 - Adjusted EBITDA flat at
$3.8 million - Cash generated from operations increased to
$2.8 million from$2.7 million - Cash & cash equivalents of
$2.6 million vs.$4.4 million at 2022 year-end, reflecting impact of$3.9 million in stock buybacks for full year
CASTLE ROCK, Colo., Feb. 15, 2024 (GLOBE NEWSWIRE) -- Where Food Comes From, Inc. (WFCF) (Nasdaq: WFCF), the most trusted resource for independent, third-party verification of food production practices in North America, today announced financial results for its fourth quarter and full-year ended December 31, 2023.
“We closed the year with a very strong fourth quarter, highlighted by a
“In 2023 we continued to diversify our business mix with a number of transactions and partnerships that give our customers additional options to differentiate and add value to their products,” Saunders added. “These moves include multiple seafood initiatives, another exclusive verifier designation and acquisition of the industry’s leading upcycled food program. As we continue to expand on what is already the industry’s largest solutions set, we widen our competitive moat while affording customers convenience and price advantages through services bundling.”
Fourth Quarter Results – 2023 vs. 2022
Total revenue in the fourth quarter ended December 31, 2023, increased
Revenue mix included:
- Verification and certification services, up
17% to$5.5 million from$4.7 million . - Product revenue, flat at
$0.9 million - Professional services revenue of
$0.4 million vs.$0.5 million .
Gross profit in the third quarter increased to
Selling, general and administrative expense was flat at
Operating income was
Net income increased
Adjusted EBITDA in the fourth quarter increased
The Company bought back more than
Full Year Results – 2023 vs. 2022
Total revenue for 2023 increased slightly to
Revenue mix included:
- Verification and certification services, up
10% to$19.4 million from$17.6 million . - Product revenue, down
8% to$4.0 million from$4.4 million . - Professional services revenue of
$1.7 million compared to$2.9 million in the prior year due to the aforementioned$0.9 million , non-recurring order from a Japanese government entity.
Gross profit for the full year was flat at
Selling, general and administrative expense was also flat at
Operating income was flat at
Net income for the year increased
Adjusted EBITDA for the year was flat at
The Company generated
The cash and cash equivalents balance at December 31, 2023, declined to
In 2023, the Company realized
The Company will conduct a conference call today at 10:00 a.m. Mountain Time.
Call-in numbers for the conference call:
Domestic Toll Free: 1-877-407-8289
International: 1-201-689-8341
Conference Code: 13744489
Phone replay:
A telephone replay of the conference call will be available through February 29, 2024, as follows:
Domestic Toll Free: 1-877-660-6853
International: 1-201-612-7415
Conference Code: 13744489
About Where Food Comes From, Inc.
Where Food Comes From, Inc. is America’s trusted resource for third party verification of food production practices. Through proprietary technology and patented business processes, the Company estimates that it supports more than 17,500 farmers, ranchers, vineyards, wineries, processors, retailers, distributors, trade associations, consumer brands and restaurants with a wide variety of value-added services. Through its IMI Global, Validus Verification Services, SureHarvest, WFCF Organic, and Postelsia units, Where Food Comes From solutions are used to verify food claims, optimize production practices and enable food supply chains with analytics and data driven insights. In addition, the Company’s Where Food Comes From® retail and restaurant labeling program uses web-based customer education tools to connect consumers to the sources of the food they purchase, increasing meaningful consumer engagement for our clients.
*Note on non-GAAP Financial Measures
This press release and the accompanying tables include a discussion of EBITDA and Adjusted EBITDA, which are non-GAAP financial measures provided as a complement to the results provided in accordance with generally accepted accounting principles ("GAAP"). The term "EBITDA" refers to a financial measure that we define as earnings (net income or loss) plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes from EBITDA stock-based compensation and, when appropriate, other items that management does not utilize in assessing WFCF’s operating performance (as further described in the attached financial schedules). None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance or any other GAAP measure. We have reconciled Adjusted EBITDA to GAAP net income in the Consolidated Statements of Income table at the end of this release. We intend to continue to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting.
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, expectations for offsetting industry headwinds, ability to continue expanding on the solutions set, widening the competitive moat and providing customers with convenience and price advantages, 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 2023 and the Company’s pace of stock buybacks 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.
Company Contacts:
John Saunders
Chief Executive Officer
303-895-3002
Jay Pfeiffer
Director, Investor Relations
303-880-9000
jpfeiffer@wherefoodcomesfrom.com
| Where Food Comes From, Inc. | |||||||||||||||||||
| Statements of Income (Unaudited) | |||||||||||||||||||
| Three months ended December 31, | Year ended December 31, | ||||||||||||||||||
| (Amounts in thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Revenues: | |||||||||||||||||||
| Verification and certification service revenue | $ | 5,469 | $ | 4,693 | $ | 19,413 | $ | 17,610 | |||||||||||
| Product sales | 871 | 891 | 4,001 | 4,364 | |||||||||||||||
| Professional services | 391 | 509 | 1,721 | 2,871 | |||||||||||||||
| Total revenues | 6,731 | 6,093 | 25,135 | 24,845 | |||||||||||||||
| Costs of revenues: | |||||||||||||||||||
| Costs of verification and certification services | 2,931 | 2,487 | 10,986 | 9,748 | |||||||||||||||
| Costs of products | 468 | 448 | 2,272 | 2,333 | |||||||||||||||
| Costs of professional services | 325 | 397 | 1,355 | 2,296 | |||||||||||||||
| Total costs of revenues | 3,724 | 3,332 | 14,613 | 14,377 | |||||||||||||||
| Gross profit | 3,007 | 2,761 | 10,522 | 10,468 | |||||||||||||||
| Selling, general and administrative expenses | 2,084 | 2,119 | 7,825 | 7,816 | |||||||||||||||
| Income from operations | 923 | 642 | 2,697 | 2,652 | |||||||||||||||
| Other income/(expense): | |||||||||||||||||||
| Dividend income from Progressive Beef | 170 | 100 | 320 | 250 | |||||||||||||||
| Gain on sale of assets | 2 | 12 | 7 | 12 | |||||||||||||||
| Loss on foreign currency exchange | (1 | ) | (3 | ) | (7 | ) | (38 | ) | |||||||||||
| Impairment of digital assets | - | (20 | ) | - | (62 | ) | |||||||||||||
| Other income, net | 17 | 3 | 53 | 5 | |||||||||||||||
| Interest expense | (2 | ) | (1 | ) | (5 | ) | (3 | ) | |||||||||||
| Income before income taxes | 1,109 | 733 | 3,065 | 2,816 | |||||||||||||||
| Income tax expense | 333 | 243 | 913 | 822 | |||||||||||||||
| Net income | $ | 776 | $ | 490 | $ | 2,152 | $ | 1,994 | |||||||||||
| Per share - net income: | |||||||||||||||||||
| Basic | $ | 0.14 | $ | 0.08 | $ | 0.39 | $ | 0.34 | |||||||||||
| Diluted | $ | 0.14 | $ | 0.08 | $ | 0.39 | $ | 0.33 | |||||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||
| Basic | 5,539 | 5,814 | 5,485 | 5,955 | |||||||||||||||
| Diluted | 5,597 | 5,889 | 5,548 | 6,035 | |||||||||||||||
| Where Food Comes From, Inc. | |||||||||||||||
| Calculation of Adjusted EBITDA* | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three months ended December 31, | Year ended December 31, | ||||||||||||||
| (Amounts in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Net income | $ | 776 | $ | 490 | $ | 2,152 | $ | 1,994 | |||||||
| Adjustments to EBITDA: | |||||||||||||||
| Interest expense | 2 | 1 | 5 | 3 | |||||||||||
| Income tax expense | 333 | 243 | 913 | 822 | |||||||||||
| Depreciation and amortization | 146 | 182 | 634 | 765 | |||||||||||
| EBITDA* | 1,257 | 916 | 3,704 | 3,584 | |||||||||||
| Adjustments: | |||||||||||||||
| Impairment | - | 20 | - | 62 | |||||||||||
| Stock-based compensation | 39 | 52 | 78 | 154 | |||||||||||
| ADJUSTED EBITDA* | $ | 1,296 | $ | 988 | $ | 3,782 | $ | 3,800 | |||||||
| *Use of Non-GAAP Financial Measures: Non-GAAP results are presented only as a supplement to the financial statements and for use within management's discussion and analysis based on U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information is provided to enhance the reader's understanding of the Company's financial performance, but non-GAAP measures should not be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures are provided herein. | |||||||||||||||
| All of the items included in the reconciliation from net income to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, etc.) or (ii) items that management does not consider to be useful in assessing the Company's ongoing operating performance (e.g., M&A costs, income taxes, gain on sale of investments, loss on disposal of assets, etc.). In the case of the non-cash items, management believes that investors can better assess the Company's operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company's ability to generate free cash flow or invest in its business. | |||||||||||||||
| We use, and we believe investors benefit from the presentation of, EBITDA and Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that EBITDA is useful to investors and other external users of our financial statements in evaluating our operating performance because EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. | |||||||||||||||
| Because not all companies use identical calculations, the Company's presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the Company's performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures. | |||||||||||||||
| Where Food Comes From, Inc. | |||||||||||
| Balance Sheets (Audited) | |||||||||||
| December 31, | December 31, | ||||||||||
| (Amounts in thousands, except per share amounts) | 2023 | 2022 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 2,641 | $ | 4,368 | |||||||
| Accounts receivable, net of allowance | 2,128 | 2,172 | |||||||||
| Inventory | 1,109 | 888 | |||||||||
| Prepaid expenses and other current assets | 335 | 463 | |||||||||
| Total current assets | 6,213 | 7,891 | |||||||||
| Property and equipment, net | 844 | 998 | |||||||||
| Right-of-use assets, net | 2,296 | 2,607 | |||||||||
| Equity investments | 1,191 | 991 | |||||||||
| Intangible and other assets, net | 2,303 | 2,340 | |||||||||
| Goodwill, net | 2,946 | 2,946 | |||||||||
| Deferred tax assets, net | 493 | 523 | |||||||||
| Total assets | $ | 16,286 | $ | 18,296 | |||||||
| Liabilities and Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 567 | $ | 640 | |||||||
| Accrued expenses and other current liabilities | 615 | 769 | |||||||||
| Deferred revenue | 1,485 | 1,278 | |||||||||
| Current portion of finance lease obligations | 14 | 9 | |||||||||
| Current portion of operating lease obligations | 298 | 341 | |||||||||
| Total current liabilities | 2,979 | 3,037 | |||||||||
| Finance lease obligations, net of current portion | 41 | 37 | |||||||||
| Operating lease obligation, net of current portion | 2,447 | 2,745 | |||||||||
| Total liabilities | 5,467 | 5,819 | |||||||||
| Commitments and contingencies | |||||||||||
| Equity: | |||||||||||
| Preferred stock, | |||||||||||
| none issued or outstanding | - | - | |||||||||
| Common stock, | |||||||||||
| 6,516 (2023) and 6,501 (2022) shares issued, and | |||||||||||
| 5,503 (2023) and 5,775 (2022) shares outstanding | 7 | 6 | |||||||||
| Additional paid-in-capital | 12,290 | 12,145 | |||||||||
| Treasury stock of 1,014 (2023) and 727 (2022) shares | (11,219 | ) | (7,263 | ) | |||||||
| Retained earnings | 9,741 | 7,589 | |||||||||
| Total equity | 10,819 | 12,477 | |||||||||
| Total liabilities and stockholders' equity | $ | 16,286 | $ | 18,296 | |||||||
FAQ
How much did Where Food Comes From, Inc. (WFCF) report in verification and certification revenue in Q4 2023?
What was the net income of Where Food Comes From, Inc. (WFCF) in Q4 2023?
How did the adjusted EBITDA of Where Food Comes From, Inc. (WFCF) change in Q4 2023 compared to 2022?
What was the total revenue for Where Food Comes From, Inc. (WFCF) in full-year 2023?
How much cash did Where Food Comes From, Inc. (WFCF) generate from operations in 2023?
Why did the cash and cash equivalents balance of Where Food Comes From, Inc. (WFCF) decrease in 2023?
How much did Where Food Comes From, Inc. (WFCF) spend on share buybacks in 2023?
What was the increase in dividend income from Progressive Beef ownership interest for Where Food Comes From, Inc. (WFCF) in 2023?
