WFCF - Earnings call transcript Q4 2019 | Where Food Comes From, Inc.

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Operator

Greetings. Welcome to the Where Food Comes From 2019 Year-End Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

conference your the Investor Jay turn Relations. now over host to Pfeiffer, I'll Mr. begin. you Pfeiffer, may

Jay Pfeiffer

Welcome morning. fourth earnings year XXXX Where quarter end Good call. the and to Food Comes From

the CFO. CEO; on Joining John today and Henning, President; Saunders, me Dannette Leann call Saunders, are

of risk. we will acceptance course growth revenue, profitability, Statements based about forward-looking be that projections strategy, call and estimates services are acquisitions products wins, our cash, market expectations, future of current and this business new are the making statements potential During on subject opportunities, statements. customer to expenses, and forward-looking

should these the our filed company. releases well as many results are Listeners about to statements. undue and place cause differ documents as website to not you reliance publicly forward-looking statements as actual our news could information that on our We there more from for materially encourage factors review

provided our provided and evaluating principles. not benefit financial reflect also presentation on and complement to by Today, are which operating we of from EBITDA results non-GAAP accordance a EBITDA, will and believe our as the operations. EBITDA basis investors because certain an a use additional adjusted and it in do tool operating to consistent EBITDA adjusted removing of impact performance management in provides be with believes measures, compare the discussing the items our We GAAP performance core directly

and John? Chief I'll now Officer. turn over the Executive call Chairman Saunders, John to

John Saunders

Good call. morning and for thanks joining the

company. our they the investors, Many have not them first time Back been only This well. original for very also in did dozen of a of but we number morning shareholders occurred public of we years this and we'd it to customers today. me we our a that it's release XXXX issued XXXX small earnings have the were as seed were since as fraction

this largest many fact extremely are individual a our four still stock few of five Today, say own investors or among sure of original are vision for and individuals I'm in I'm both gratifying only this them several our us to today. them in continue us. bought means as that of lot happy not customers we're these that a call It's what on stock these confidence their doing the to holders. day; and but support in listening to shareholders company, into to our

units drive a on broad across employees industry we morning, adjusted noted all this and and we strong to earnings reached who business this had income, financial at attribute and trends very share in of us Revenue, level consistently As what terms year very our helped all perform press our gross EBITDA daily a do profit, on terrific high have record that who We consumer in capitalize a results. of net basis. release per levels.

beef Revenue XX%, accrual A big our few of financial across margin bonus quarter. in anomalous lower of fourth the including this highlights quarter. couple stemmed offerings. XX%, million of $X.X beginning range the broad from reflecting an factors audits increased increased $X.X million with XX% and from a demand acceleration to from jump Gross good fourth

From XXX% increased to adjusted and XXX,XXX. to $X.XX X.X XXX,XXX from from per Where rose doubled Comes to Earnings income attributable Net XXX,XXX. Food EBITDA XXX% million share to

$X.XX grew per X.X million share year adjusted increased Net volume XXX,XXX. tag for from programs X.X particularly $X.XX XX% space. margin pricing a customers. XX% Comes from variety grew full the to million, protein verification Gross by the dominance lower for For again, of XX.X X.X benefiting attributable and XX.X%, improved revenue million Where competitive to efficiencies to from income rose EBIDTA XX% due Food million our reflecting demand partially XX.X% year increased from million. and good to From to margins product XX.X offset to in from to from services Earnings

For year, generated million. X.X operations million XXX% from of X.X the year-over-year cash full we from up

In have year million very cash with to cash million spent equivalents and cash we up of in interest and At quarter, buy XX, in the have and balance the investments Nevertheless, X sheet. the we in XX% no fourth X.X solid X.X December closed million we debt. SureHarvest. We working year-over-year. capital we a have remaining XX% long-term

four our XX% and growth XX% demand to for Turning the achieved both the year-over-year certification fourth in year. the Verification increases quarter the strength year. services, attributable to beef. continued mix, the of fourth in for part we Chinese which revenue in were full revenue all in grew for U.S. revenue and quarter comprised and full These segments majority

experience As continue standards. to I a verification for mentioned also other earlier, demand of growing we variety

revenue Based on QX year. verification XX% RFID XX% full for of our comprised and product in grew activity, tags higher the

Software support grew full the year. revenue and license sales intercompany of fourth maintenance in the and inclusive for XX% XX% quarter

the revenue consulting software fourth full And and grew and inclusive XX% sales the of quarter XX% respectively year. for intercompany

is to the a aware, strategy probably build in to lead Where certainly our our industry's potential when most From, almost you're so road interested services distributor, to will processor, verification get one the retailer business units provider of of our or maintain particular component decides a producer, today. complete business Food As that as portfolio Comes or and a standard,

far portfolio verification more in services away the offer service than we our largest space. Today, and XX

down a additive we company believe as our shop So the serve customers are building food one long-term. of the over our bundling, for with advantage ourselves competitive up and we that will positioning chain around while well are supply shareholders services we the stop

XXXX, In programs to new added we two portfolio. our

beef. process a estimate in reassure cattle position producers that market verification claims about verified IMI sizeable. Black consumers further marketers and Black verified Black make is our program domestic This program Beef, beef is producers Verified so beef, the authentic. Angus approved and half the The Beef are Angus Global's USDA newly all of U.S. Angus subprogram Verified ranchers cattle that We strengthens Beef new leadership are was program. addressable first Angus designed to new beef Black and buyers of a

more That program have gluten. the makers demand formerly standard are free menu new grain-based thoroughly was From been contain part decided was From under showing a demand branding study and administered This the customers in requirements spurred surge released bring ICS gluten by Food Food Comes Where necessary updated percentage ingredients consumer our labeled their in standard. We by a free launched gluten-free to in vetted. to a second following Comes was standard for and in umbrella gluten that restaurant to at Where XXXX reassure business it did the relaunch gluten products. at least that as as of in the new unit. essentially by items fact it high well The Our restaurants replace includes and CPG stringent The products product free

double We of with X.X we for market estimated will think products. care expectations us that large sustainability Food billion for demand rolled XXXX. the as in From addressable More is another address at for gluten solutions recently to designed annually free produced program, sustainably out this a U.S. is suite the by products demand growing Comes Where consumer

the programs. and care, introduced new beef of care the Since the we've poultry dairy care first year

a in is From. are consumer and the to We the our customers there's drive lot sustainability growing growth of we of about because think further Where one these Food food potential value revenue trends Comes and excited space. And programs for fastest

competitive is last the doing go audits. way programs really When The reasons. genesis provider a been and made with to to quarter, cleared for from interesting. It something years we single due care Whole for the had us decision of conducting Foods do precluded

the out roadblock the to stewardship, and that very offerings programs attracted under quickly current to of prospective address suite With own create three they're moved be to way, brand. we and that worker animal and husbandry, care our All of think welfare customers. sustainability we going environmental

second quantify and that that retailers' on undeniable be market sustainability, major the trend, for we a yards feed these with is us to beef in to encouraged are eager was bear Comes that process, we us will packers That program Food difficult mentioned were would although retailer significant. this Where we in quarter opportunities. on process and that but similar there the the and relationships no retailer asked influential a the in we From sustainability to attracted We with space. these to fruit, the large believe is more meantime have It's guarantee capitalize a engaged selected is producers, trend response that explore engaged addressable consumer it continuing the last create based in of to

were of sustainability didn't programs leader purchase of we so able for food have Postelsia. a earlier while because it we getting and pleased environmental the Ltd., the conclude that emerging are a been we We've into where for field agreement social about the sector in an services this Postelsia of seafood announced only expanding And presence, a we with talking industry. Holdings speaking our portfolio, seafood to major week the was

producers, our the seafood both manage and maximize worker sustainability reach. strengthens This retailers, leadership promote producers in restaurants. to The include and geographical in associated consulting impact and chain. extends improve inclusive help Postelsia the a practice themselves. services to abuse and idea consumers of range customers is environmental supply buyers acquisition to that risk programs and Postelsia value with provides the our for protein position and space

of with initiative example, for the Foundation seafood created of advises educational Smart food the the Beard chain. sustainability an company Program the seafood chefs supply an James Catch the As sustainability increasing purpose chefs by

Postelsia emphasis space early with of the shrimp in particular was and is important a on variety initiatives the a innovator an leading industry.

is programs build to Our help customer base expand sustainability out its us Postelsia and around world. the goal

impact to having regarding import food beef a could way coronavirus extent a May. to general note and to I and in in questions, tourism this I impact question, Before industry on into the Rabobank I in week situation. down that China Without make and call said want is Europe. comments in virus lesser saw this the up activity the April service is China a open as few an stretch the activity earlier and

the full year, of grow. the beef China note the actually went first on this year XXXX of the in imports bank despite expects However, to say, half lower to demand for

services end to a necessarily important decline keep mind overseas. on products demand does source not born the that we short-term takes directly is verification processed It's from more our calf the projected and is in EU the day that that and to it markets beef Remember than business. years Chinese two are provide before the ship sometimes impact ready in animal and begin

would Certainly ranch world. now example, rooting that calves a for cattle think opinion be the today will still be the that case raging to be from to and be ship. outbreak that stop source how the verifying billions scenario, else, counting control media the which years I would to almost has when worst So nothing decides be can a ranches products disrupt its effectively Not be that timeframe. the seems ready If the is two people betting to for virus will seems producers. global coronavirus around the disease prevailing the reasonable our of economies under the in of underscored impact fast opinion virus

reinforces and in importance this Where the Food From of well bodes view, phenomenon our the traceability for supply that food long-term. In over chain the Comes

food the As U.S. not is developed major thought. supply food just mandatory does exporter that a a have only reminder, the in chain. the That's country traceability for a

summary leader transparency and positioning Where Comes and in as strong financial success supply in was provide So XXXX the a implementing that programs From food continued by highlighted results creating chain. in Food

a all stakeholders. industry's far of translates strategic largest we Our solutions most and world creates motor the value on that diverse believe our for our class into by business portfolio

that, open With the questions. Operator? to call I'll

Operator

At Instructions] this be question-and-answer time [Operator a we conducting session. will

Alex Please First Our from Ballantyne. question. first Team, with proceed is question your

Alex Team

increases the you demand of continued do bans? coronavirus, Along the line due see wildlife the to

John Saunders

an question. interesting That's

more to I I able to do think, produce for sources a an yes. here. robust that opportunity the protein think there's we're approach

reliable more there in to fact food But, am that -- isn't for on concern as animals a more much not lend of Just stronger purely and it would so and guess. an yes, seem itself the that's a field, being of just sources I wild on the consumed. consistent kind over protein. that based aren't the hopefully that really focus were expert there

Alex Team

Okay. not And that just that then today, the was of about of seafood just acquisition and to being announced types monitored/ your on are sustainability verify verification new that's

John Saunders

products. services offer to seafood Postelsia primary focus that range a great range is wide to of has real on of Yes, question. Again, broad they But the shrimp start. a

activities both see involved we So do there.

So but verification it products and those and where those traceability, of be consulting attributes are will the also produced.

Alex Team

credit with down paid that or was cash And you hand on did on draw facility? a

John Saunders

It was cash Nope. stock. That No on purely hand. was cash. just

Alex Team

the in back if guys. have Thanks Okay. jump queue I'll I more questions.

Operator

[ph], with question is question. from Investor. proceed next Private [Ames Our Stevens] Please your

Unidentified Analyst

the morning. years. that you've all over Congratulations done really It's Yes. on remarkable. Good

questions. Just a few

it not offerings about acquisition? or of need acquisitions for that an have to releasing, I of like while what and of we we overall, areas related you do there's that then take Postelsia. we're the done acquisition feel given cost all do that First to like the feel assortment the where you a more you're would was whole do

John Saunders

Yes. to Dannette I'm is Great going the to report a financials. question. I do question, going believe that ask accurate? we're

Dannette Henning

Yes. be in later filed There information XX-K is would more Form our some today. that

Unidentified Analyst

Okay.

John Saunders

complete have that dozen we position the to see started more And identified for past, the specific in mentioned strategy, those that several reinforce our since many light I've opportunities question. And second times then. companies us We initially not three had acquisition acquisition there's our come then, and when we strategy. than more it we our No, over does as industries. to always

on strategy based got into the -- those of So of in the timing the go And several relationships the are that how queue. time. those really lot we'll factors a we've continue still evolve on over acquisition

Unidentified Analyst

good. That's

And maybe food second in we Comes or we're fast mean, who's interest, to so presuming they that have third dominant sort player line you're and of ongoing after sort that the pitching given would Food I of Where supermarkets regarding who to? From? lose and the chains

John Saunders

of Great question. alternatives out aren't Really, a there there. lot

that way position a we I have as which Whole way, new are again approach a that, really that Foods there about that in brands, by in. of generation way. the clear last than a And as of to scenario to program, think put talk in us year much retailers that in different and specific the our we're but retailers people talk it's our is past. on unique very I in specific people defined mean And talk lot very with market I maybe to, is has changed we that sustainability a it's addressing care what the mentioned, depending in we -- to sustainability, more talking they're more

Sustainability means different things. lot of a

care aspects we people by ability what are really the environmental community the around So sustainability. one with specific and to that and husbandry, And critical that the of working producer meant in animal was define our stewardship of then where how meant. we've encouraged consumers. and And of been initial we a -- thought response of be key the communicated to pillars it having of sustainability to what that that really just was very where by directly going to definition

process only -- month only a far. has So again, this we've been about two so

been So the out initial see don't competitor same another encouraging. really it way. that's as in results And doing as far I have there the know, really, I

Unidentified Analyst

question one just then And great. more That's China. about

for always to just which U.S. from a the but you, where in a proteins, verification food And trade issues is the considering out there? a too and and come I products from. the there they crazy So Putting And time chain, which feel and where and long-term markets have disturbing the there, they giant scary opportunity they're opportunity to the do is where be short or stuff like of with war, it the just maybe huge understand all you all second, not shouldn't don't meat coming should interest food also happened called to isn't as are on China aside reaching and seeing like delays sort the from. on. It's bats come see these China civic the light comes cats and goes and right the in that's more beef just now? they're you open in the in

John Saunders

what the I coronavirus, specifically my it the most for ever internally China, a protein around think that of us how is I of means. critically safe mean, more done a uncertainty, for as confusion of it's this our think with I about the basis. is, I is. And daily highlighted and swings all for source engaged influence think the here as on what important last a just around system with than highlights definitely traceability we're a population world, of that within before It sphere a need the it but producers consistent it's Yes. large market important there's comment having protein because

I we're it's slopes that very, coronavirus the think there And short-term over very starts yes, the is around be could of I of protein message to source work and think what trying to and and convey today bit all consumers here big great we the the Chinese the we a of So, to their related that producers, that long-term and fits States. our we're companies seeing promote we're keen opportunity something enormous. in But consumers is a with help kind and little to our ability that United have world that. assure brands,

Unidentified Analyst

That's point, about some out Thanks at but awesome. of And myself as color. well. you the the for in [hemp] I'll take [ph] opportunity the I hope talk queue,

Operator

session; the the remarks. back John the I We end have over question-and-answer now to turn will reached of for closing Saunders call

John Saunders

Well, We're about couple in here for I Have the call very you to a excited forward time thanks talking months. great again for today. day. the XXXX a to everybody look and

Operator

conference. today's concludes This

You your time. you may your Thank participation. lines at disconnect for this

Where Food Comes From (WFCF) 5 Mar 202019 Q4 Earnings call transcript