WFCF - Earnings call transcript Q1 2020 | Where Food Comes From, Inc.

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Operator

Greetings, and welcome to the Where Food Comes From First Quarter Results. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

to conference like host to now Mr. would turn over the your I Relations Comes Where Pfeiffer, for Jay Investor Food From. Thank you.

You may begin.

Jay Pfeiffer

Good Food Comes to the quarter welcome call. morning earnings From and first Where

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

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

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

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

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

John Saunders

and joining for the thanks morning, Good call.

economy talked food as and little impact earnings in about else, the having On footnote, deep almost how nearly but March beef its I our be for on broad COVID-XX on chain like our last appreciation the early chain, overall would its supply and call Xth, on supply particular. noting a how impact everyone

ranchers, have In and which and transpired government food in China. we on impact lead-off that has think my had What from the distancing demand, food I and remained in quarter, including it's subject. social I focused supply are mandated the fact service. has quarantines fairly a Today, including on devastating processors beef chain, remarks strong, the edicts with farmers last appropriate interim,

cut no Our customers onsite into ranch verification our visitor policies farm have activity. and

our has by supply and clarity get of purchasing decisions primarily The and until chain on also business been can they the investment side delaying customers the more software of by economy. reopening disruptions impacted

As a flat was the revenue our result, in first essentially quarter year-over-year.

as weeks there a lot much look the when XX unknowns exactly will will normal For of and as we've learned as to return like. last over things normal to what remain

carried and know onsite through trend offsite what reduced we to has the second packing see is at really to we'll But point. some this hard disruptions say, to The of think quarter, XXXX. balance -- of it's plant into it to the safe impacts verifications extent and continue

there's reopening and still really a Every that this much day, weeks next or some Hopefully wait-and-see state about state's plans, the we not so few we're in mode. provide consistency. will read clarity,

$X.X slightly its perspective, From financial a verification down and at were services four I down million. results certification $X components, that our this and to XX% Breaking impact actually reflects the from the closures and social processing $XXX,XXX ranches and distancing impact $XXX,XXX. Again were up infection million. to QX $X.X was to million revenue into of farms sales Product flat said, from due rates. as plant on

disruptions due and a general software down year-over-year budget overall caution. was supply to but Our aforementioned the business bag mixed chain

from sales, to of net an That $XXX,XXX and support $XXX,XXX. business intercompany by consulting declined services, net partially from of maintenance $XXX,XXX sales intercompany offset in licensed $XXX,XXX. software Our increase was

in million Gross of million. the net quarter, year-over-year profit intercompany sales, from $X.X decreased $X.X first X% to

million. $X SG&A expense was flat at

year. million generated $XXX,XXX operations in $X.X down quarter in from From to in quarter the $XXX,XXX Comes cash last attributable loss We year-over-year. to first from net $XXX,XXX And increased the from Food same net Where

with We up and at investments XX% strong and $X.X from at $X.X of maintain million equivalents million year-end. balance cash March a sheet XX, short-term cash

no $X.X of capital and Working long-term million debt.

with months took ever change. levels revenue stage. the metrics few our have XXXX can the last strongest continuing government's XXXX. from how in expectation a been pandemic until more The profit momentum with had good, the fast and and good all reminder year every reaction of center reaching entered those We trends importantly, of record to We things pandemic

we're good better a weather current focus lean many organization a to we discipline; is sheet we with because balance the storm. positioned The run news on than think

In industry. to further services second portfolio, our addition, by our in and of staying power is believe we our none breadth is which strengthened the depth

customers expand In and the a environmental industry. social seafood continue acquisition the major lead and this will the had acquisition, for sustainability hope offering, seafood only with of to our protein revenue business space quarter, our seafood Prior streams. we we exposes Holdings, our food the that didn't entered a Postelsia have new extends in been programs interesting leader relationships to where to us first very that We reach, sector presence. portfolio. out rounds Postelsia to some we new geographical and

year, first for dairy, we pork, From introduced and products. sustainability suite the CARE a sustainably the that in for of poultry. we've beef, the out program, highlight solutions Since rolled quarter, consumer produced address CARE Another Comes programs Xst of Where demand Food the

mind a of consumers. growing of Sustainability is for number front

future have response rekindle is can programs COVID-XX contribute think We trend that of and growth. optimistic we great CARE these to a to we control. under to once a lot had are potential initial So

our everyone, want as to stakeholders we're for want few forward looking the I I team Like months. economy continuing to Comes support difficult and last to that reopening From the thank usual. Food to to Where high-level to us a over back our continuing closing, In and at circumstances. perform very shareholders getting thank also under business

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

Operator

Thank you. a [Operator time, this conducting be At session. Instructions]. question-and-answer we'll

you. Thank

the Please first question. from Thompson, Our your Investor. of line question comes with Private Terry a proceed

Terry Thompson

okay, Hello John? all. Can you hear me

John Saunders

Terry? doing, you are how Yes,

Terry Thompson

be these expected to days. good it's Well, good. Doing

it's a rocket North like know, Central As living here and been in -- movement, real off the producers, a from and the those buying directly you I'm rural consumers taken farmers ranchers. now the Oklahoma

Farms. started XX,XXX if on? move weeks members, From Food is called into and ago Where In Comes to Group capitalize there might this wondering Kansas had could Shop two fact, was able be something I'm and that weeks a In two Facebook

John Saunders

Yes, is great business. similar We've seen of comment. a across trend. their of recommended good we've number country customers And that ranch diversification our a that to the a

CARE country. around you're track. that type that to programs systems access right we're through direct So have that on offer collaborate to I have to actually online and think already to to working producers our consumers our And the of information sales

board. totally we're on yes, So

great I a opportunity and great us. for it's comment a think

Terry Thompson

year. Great. Well, through And I that think track. once the this, I we appreciate, to get I on we're coming meeting this missed back

John Saunders

was I Yes, haven't had Terry. one a that us. that and Thanks, for Appreciate it. know strange

Operator

Thank you.

Please Our Private question. next question of with Andreas comes Investor. proceed from your Aaen, the line

Andreas Aaen

in this Symmetry Invest Denmark. are from Andreas How Hello, is you?

John Saunders

How Good to hear Andreas. Good, are you. you?

Andreas Aaen

clearly? hear You me

John Saunders

Yes, you're loud and clear.

Andreas Aaen

Okay.

John Saunders

Perfect.

Andreas Aaen

I'm great of front so. here. little Denmark I in this, a bit is think

to We economic normal state. are basically back

John Saunders

Good.

Andreas Aaen

Okay.

now it's getting some demand So my last of cannot lose first timeline on is until beef. farmers have to have can kind demand the Is may three of seems that verification delayed out. verification up in quarter like this this, here, the some I kind you you one or it just there pull questions, about had it the the maybe some verification you how And you for side there. -- delay elaborate expense they do long would standard to? the pull can audit, assume I business

canceled rescheduled? as I would are they just verifications like they So just or those know if

John Saunders

answer Leann let to going been with that I'm question. dealing mostly. it Great one. She's

Leann Saunders

a great that’s Yes, question.

based on looks So body it at degree depends how great the a right it. now, certification

So bodies that the you have just certification the kind down of some can road. are kicking

certification, virtual be in if these they've things extensions And to the for to large facilities, we you look year. near-term, operations look following and the those our moved at for And six and then they're onsite of kind would months those, just other within have remote so handling primarily, of auditing like at those still with but we're looking at organic processing procedures extensions. some

kind it's mixed of bag. So a

we move of with to all conduct with we audits to now what whenever have willingness deal PPP. to a to and we customer of we as team and the When the audit that So we we're can. both have have the have, always can, we kind when do continuing available

that hopefully question. your answers So,

both hope we to to look at government And with situations get you back state situations, and quickly then local But as normal possible. as different. everything's

that So do. we're of to all we that with having every manage single verification

John Saunders

one think And note specific area that that has to important relatively the been stayed we've consistent. beef, I really it's to

you As year-over-year. in up revenue actually was the first tag quarter notice our

majority vast in ones of producers country to the be affected. out were last are and the beef So the our

area. strong the it's So specific remained very in actually beef

Andreas Aaen

Okay.

Leann Saunders

larger with workforce. now, concern their with mean issues past, maintaining workforce. affected most confinement your in facilities that what's with -- a disease ones great happening the we've larger and would Yes, now with workforce their but really be dealt we're dealing animal the over right I

Andreas Aaen

that good. sounds Okay,

So from scenario months have to a that have lot a of say have open be when like that six that a short where farmers you now likely get only let's could up done? again, states time their basically orders

Leann Saunders

is correct. that Yes,

Andreas Aaen

Okay.

and is think Okay make long-term, even like how elaborate obviously, care put about this, health with what stuff that? assume like, how now. the about But we their and they can this this hitting people like should a about health would was this think I more just you about, maybe crisis in mouth you

John Saunders

Yes, CARE will post mentioned lot And that's our really COVID-XX a future. part think, great sustainability for you spent as what and stewardship a which also and key preparing a I it a as of and become time program probably look will like. say the the of that through important We've point. then we it, more the but thinking program, I welfare, worker in has even traceability obviously has component, animal world environmental think

that in food can we're I people think providing focus of -- because the yes, on I we're more very about a comes their long-term from. where way strong So as learn they very, our mentioned

Andreas Aaen

Okay, that sounds feasible.

Okay. named you said news because Authority can The I U.S. saw a the certification were official they called that FoodChain, view elaborate you body. company have, from I Hemp they

one you think did hemp how or should the that about we industry now? lost So

John Saunders

we and you that have really CBD hemp think bit And program product Yes, them decision was before overall same most perspective its program, our little for didn't verification, think our that with time. a I in was that, alignment. hemp and year providers it of worked was market, a I and struggled providers a the that have see really there's as for programs the the many that industry specific was the specific public but of

was it decision to mutual from a that program. move So away

had that for decided there specific and correctly. of were experience working long-term more reading that goals. program our So two more that years' worth we yes, others you're appropriate it just; It's were with

in the that about you'll So hearing future. be and seeing

Andreas Aaen

is perfect. question okay the capital Then Okay, allocation my last side. general more about

advantage recent struggling your right companies the in you the quite is now, acquisition kinds there marine now. that this to, and right industry. are seafood that did related could are take You of at How obviously, you of reacting looking or also price share negative all

to ample should program, buyback So you about? are think committed your still have or you now how you liquidity

John Saunders

great well. Yes, question that's as a

I And Southeast prior light. based to think Asia there of of started. to or we all some in coming obviously all so week this is this acquired part literally business that in the was Postelsia what that a primary and -- drawbacks where really, their really

realize coming specifically conversation we're into that Postelsia and -- the again with going as we that our think United at a the be to as we're the world So position the want, around think of to really of I really beginning. coming saw more a now States to in But got even scrutiny information consumers on going food negative that being where unique are to is we that at there's going able provide what we're what more be consumers to now about back around very to or we starting it's seafood forefront from. kind

of looks struggling our opportunities, United also certification just or and chances the stock of in for And through like. the certification us in number determine here yes, future and also that but related see what both to expand we right where isn't general. but this both certification to to in price business -- there's any -- setting a body standard of the verification internationally of company this great I States trying level now any can't think And the

we about feel lot talked to yes, the balance a looking And ever and an utilize away our many So I've XXXX to no have opportunity strong put was very best that. as capital of we're debt. the really year past, in times we've fortunate we really sheet we had had. about

this going for to yes, necessarily think advantage to take as of be and as well-positioned are opportunities grow are. So not where to we others I there's time great us

Andreas Aaen

wish perfect. Okay, think Yes, I you for everything all well. was had I that now. I

John Saunders

Thanks.

Operator

Instructions]. [Operator you. Thank

Our Brown, your next question Please with comes question. Private from the line of Investor. Chris proceed

Chris Brown

question on I credit of had question bad kind customers of a from at had impacting then -- I -- remainder potential look the a debt and on bankruptcies hi exposure, you how Thanks. the you over year? and your

John Saunders

Yes, now our decade people business any that in great half lot are been specific right of over to there a question. struggling. last very fortunate diversify Yes, really are involved from away customer. the really agriculture a We've

they with of most working farms So we're sheet. customers relatively right now that the balance specifically beef have strong

financial of that that that we're with So confident position. producers good in work we group are fairly a fairly

are and or concern there there long-term going either be and middle the that the some there's of short-term, growers those that over and bankruptcy some some think pork that and poultry by what finishers, I yards mean feed issues. is I to companies

And so monitoring that. we're

think that we're and question. monitoring bankruptcy one chain, diversified, I specific food on material so us. of think a any it's we're we're not too it's -- effect that any yes, the long-term big a will again, one I supply good concerned a managing customer have for issue or But specific Chris, and big really customer that

Operator

Thank you.

Our Josh proceed of next from [ph], with question. question your the comes Private Caddis Please Investor. line

Unidentified Analyst

a even quarter sorry, that Hey, pleased from XX this in was you still if already release, first earnings the this. see I covered I positive cash weak though you're flow was guys, the missed operations. to minutes,

weakness year? can you or the throughout burn John's rest continued on for comment for flow the the Given rest guidance of year, cash cash of the

John Saunders

Great question.

slowest Josh typically, our quarter quarter. first The is

But if that's pay when So programs they deficit really it profitability. had have certain historically, that we -- to look where upfront. our comes also the the we've or largest we you most,

the coming So do of year-long certification, the that's cash have that. we is across actually it's the a lot first quarter a not like in in, even though But board. programs

difficult experienced. hopeful. we're things month most that We're very think I April the reopen. see probably was starting to we

the So about we're think I positive future. pretty

think, economy really, we service for I I've and of XX% many literally times. products think got talked the And strong if as about the were overnight closed. really sheet the can open started, food I really outlet disappeared we our a back get that's we balance can get again and

side hospitals, So we're I think come as that reopen the back universities strong, we start to of start business we'll pretty to see that business, restaurants, so positive.

Operator

Thank you.

Aaen Our Investments. next with question. question comes from the line Symmetry of with Andreas Please your proceed

Andreas Aaen

I Anything government sorry, securities in to much programs I the have that stuff guys, of Hey, government have out one you Some United question and we have of in other there? the of so can business States? any say put like from the Have forgot companies the programs gotten ask. and just that. said advantage taken you

John Saunders

small definition to pursuing we've those that those. opportunities. we in them. last just sheet them we talk we've of building -- those I strong programs pretty pursued the regardless employees, we're of a really more and are are we'll take can. a need good programs just We're under done won't think business XX again we had future. And so Yes, we such are couple we we've of probably years, we the those that there business; balance But opportunities feel and going good advantage good, yes we that about the job can, our But yes, it have of because where

Andreas Aaen

Okay. I understand that.

a loan, basically but you the take can, through and Some expenses it's job employee done programs you R&D that a payroll. of

course. them of them -- basically, you of a have it's fee, don't pay basically to kind to back So you

John Saunders

Yes, programs our perhaps we are even towards that directed important agree. are the customers. being more And

late, to poultry So two going there's and our help which programs been especially dairy think as of I are pork really producers. and

we're government So really on the that helping see difficult has the them this that times. lead through encouraged taking been

we that important as probably I those as are directly. So just get think anything would

Operator

Ladies floor turn for and Mr. I'll any gentlemen, the comments. session. our back to Saunders Thank concludes question-and-answer you. final this

John Saunders

in to Again, talking look and months. your everyone. soon. we all we'll talk We'll Take support. here of questions great forward three Well, appreciate really care

Operator

gentlemen, Thank you. Ladies concludes conference. today's and this

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

Where Food Comes From (WFCF) 14 May 202020 Q1 Earnings call transcript