Where Food Comes From (WFCF) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 revenue rose 4.4% year-over-year to $6.4 million, driven by a 10% increase in verification and certification services, while product revenue declined 13% due to cyclical cattle trends and government-subsidized RFID tags.

• Net income for Q2 2024 was $489,000, down 8% from $532,000 in the prior year, with diluted EPS steady at $0.09.

• Six-month revenue grew 5% to $12 million, with verification services up 13% and product revenue down 19%.

• The company continued share buybacks, repurchasing 149,419 shares in the first half, including a private purchase.

• Diversification into upcycled food certification and biosecurity services contributed to growth despite industry headwinds.

Financial highlights

• Q2 2024 gross profit increased to $2.7 million from $2.5 million year-over-year, with gross margin improving to 42.4%.

• SG&A expenses rose to $2.1 million from $1.8 million, impacting operating income, which declined to $0.6 million.

• Adjusted EBITDA for Q2 was $844,000, down from $917,000; for the six months, it was essentially flat at $1.3 million.

• Cash from operations was $1.9 million for six months, up from $1.3 million last year.

• Cash and equivalents at June 30, 2024, were $2.6 million, with working capital at $2.3 million.

Outlook and guidance

• Management expects beef verification to rebound as herd sizes normalize, positioning for accelerated revenue and profit growth.

• Diversification, bundling of services, and new standards like upcycled food certification and biosecurity are seen as growth drivers.

• RFID tag revenue is expected to remain pressured in the near term due to government subsidies, but long-term opportunities are anticipated as subsidies phase out.

• Seasonality and cattle industry cycles may impact quarterly results.

• Forward-looking statements caution that results depend on industry trends, regulation, and market conditions.