WFCF - Earnings call transcript Q3 2020 | Where Food Comes From, Inc.

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Operator

Greetings, and welcome to Where Food Comes From Third Quarter 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. I would now like to turn the conference over to your host, Jay Pfeiffer, Investor Relations. you. Thank

begin. may You

Jay Pfeiffer

welcome Call. Where and Third Comes Quarter Earnings to morning, Food the From Good

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

on GAAP as we’ll opportunities, forward-looking that call, statements. there market subject Saunders, to Statements and review metrics, acceptance our important also forward-looking turn refer complement John future risk. a to current services many disclosures information a Chief non-GAAP to for differ on estimates and documents publicly measure, customer today’s more growth filed as for this During discuss the non-GAAP Listeners strategy, are statements forward-looking based the measures. regarding new financial should and and as statements. current results. products make are you I’ll as now projections reliance to not and Today, company. our could Executive financial about adjusted website expectations, of Officer. wins, these Chairman We earnings that acquisitions over statements are factors about release results to cause undue place John? potential EBITDA, we’ll Please our actual our encourage from provided materially and business well news call releases to

John Saunders

morning, thanks QX the for results. call. joining financial This Good and our morning, we released

customers, on-site parties due producers have on of relatively production facilities. a is protein visiting are to our food impact the especially impact pork-, particularly performance, the processors quarter, and we have with and business. facilities. that in enclosed of restrictions pleased players second up customers our late severely basis, consistent stay egg-producing third on dairy- ongoing our running quarter, and poultry-, to and our the chain have in context This which As pandemic’s in other first true the their on supply Since in many audits curtailed the key struggled

in meaningful a and these declined verification restrictions revenue commodities has since Our percentage generate significantly that place revenue, of for services March. in our put were

to The good news strong these referenced. has, been resume other once last just business declines We that we the part, has auditing the commodities exceptionally the offset expect for verification in and categories months most for X is beef our over that experienced us pandemic revenue in the subsides. I

As a of slightly profitability has declines, are only improved reporting when our companies in lot was flat at result, perhaps X first roughly a time XXXX. pandemic-related dramatically. our the importantly, of revenue revenue QX months and more And a down through

the $XX.X million. with share few a highlights versus at than X% third less me financial Revenue million flat year-to-date you. $X.X Let $XX.X at and in quarter million was down

verification sales As verification packers tag continued very to our I earlier, prioritize was categories premium contributed line, very our year-over-year revenue producers business X mentioned top beef the XX% increased but of to related and strong as little core verifications. and

delighted it’s introduced example a that a the is beef The suite address third a great X demand in largest that In years Food center the those With as to addition, solid offers packers. events CARE new and world’s potential trend sustainability We like sustainability growth first customers, be would products. program beef, of and U.S. of that BeefCARE transparency said the organic we a And sets program announcing and their the BeefCARE Comes us dairy, is recent what new in they to highlighted the quarter Where solutions Foods, commitment us From the initiative CARE sustainably demand press in from apart for in release cornerstone of of one BeefCARE CARE front growth the the our among this of swan poultry Tyson pork from program producer our of of new the kind the year. largest insulate customer were initiative fast-growing processor and consumer for continued helps a pandemic. grow consumers, as produced come. quarter in competition black we to including program added meat packers, for

If encourage about you program. learn done to I more haven’t already, visit you to so exciting wherefoodcomesfromcare.com this

higher-margin Moving year-to-date. XXX another gross our third us, in points tends third bright profitability, on quarter activity, The in quarter. spot company to drove which increase XXX for to basis by higher margins and basis by was the points the which beef-related in for the be revenue

less premium conducted here: the as beef in margins improved increased profitability again, to flat personnel increased for are RFID the audits each trended and factors demand remote the higher-margin has considerably. sales revenue have of our one, play salaried audit; down audits ear drove of by tags. our So slightly, specific at increased costly growth There X two, has

In has SG&A of in reduction from addition to gross the improved impact expense. our bottom margins, meaningful a line benefited

of marketing some the make both cost we going experienced in costs. the and During permanent third to period, quarter reduction hope and forward. travel X-month a reductions these And pandemic-related we

during company $XXX,XXX. Through or XXXX, by year-over-year. down X X% we benefited Additionally, from public $XXX,XXX specifically SG&A SG&A QX, months, in lower came X% or our have lower costs, is

$X.X $XXX,XXX. our operating comparison From per Where $XXX,XXX per share Food to Where increased income a $X.XX $X.XX $X Net From adjusted increase XX% in XX% or and income result, million. or quarter operating third increased Food Comes included share; net profitable $XXX,XXX year-over-year the -- income quarter increased As was million to history, $XXX,XXX most from Comes it EBITDA of attributable XX% highlights: from following company to from to

just due cash Where I September net And September XX, equivalents to and the to income up payments. cash of million last of from at cash, in of the months million year-end. from $X.X XX% want million $X.X at timing X million the first this operations investments team capital in $X.X And state EBITDA increased for We million XX% federal closing, same to, from and to with and shareholders income from that, adjusted support. XX, million continue period, million. effort open $X.X year other the period year-end. at in $X.X year, the $X.X the generated sheet $XXX,XXX We net Food to XXXX, from attributable to In X% X% short-term we their thank million our continued tax strengthen I’ll million $X.X increased had Where for to from stakeholders Operator? with down X-month working to $X Comes from at For outstanding XXXX their operating $XXX,XXX up XXXX and XX% income From increased to Food From Comes $X.X questions. and call again, balance our $XXX,XXX,

Operator

line question Advisors. Raphi Savitz with the of first [Operator Instructions] Our RYS comes from

Raphi Savitz

I good about has a your well. your And a evolved talk maybe Could today? on access quarter. you stands March? Congrats to as And then since how that follow-up company’s have where facilities

John Saunders

And our to you to are or our customers own referring here? operations

Raphi Savitz

the limited No, kind how obviously, to access of And facilities. you do? to you normally period and what evolved your access of stands to customer and that’s understand have ability today today where may sounds facilities, you’d audits some I’m since do right? during the pandemic, like and that sort Because it trying the March the have

John Saunders

question. Great Yes.

industries geography of that it’s on the we’re they’re then and where located. So the in dependent different

and what mentioned. I’ll auditing it between difference I’ve give on our more means So a specifics business kind importantly, of forward. as means Leann been specifically it let other big beef for what some moving and But our there’s what and businesses, our business means

Leann Saunders

of work we standard-setting and some auditing, establish with different we with were bodies So, where virtual that. operations able remote and did to

body continue the cases, order we certification you tended of In to possible. think that that remote was make direction a of When in kind operations. that some as moved to about we that So and in technology-driven. auditing, be quickly virtual helping them obviously as lot is decision

and when think as locations, our about cow-calf don’t comfortable and really physically when about that when go on-site as the you’ve been to as where as trying ability have auditor. such to really the good So operations, customer remote such you you remote much dairies, do technology, is with possible, you think remote locations, audit,

are when back really When visitor moving down processing could. we handling a these those time, that’s how think with to large we’ve and slowly been were audits were that that basically facilities we’ve period have of doing you themselves, some struggling then internally really shut as about So entities of just been it. COVID policies and for you

with We’re different you complexity site. dealing going physically at state look can we when also, imagine, of on the rules rules as and quarantine

So it’s team to our been I have but done has innovating bit and to a job encouraged, very during manage, times. -- these and wonderful being flexible a we’re

John Saunders

-- with unfortunately, the occurring But summer. seeing finish we I country. just positive were think through moved and -- Yes, we across felt lockdowns more as we’re we think, relatively I the I’ll

So we’re that. really kind dealing of with

much be much -- and we more company going move as technology, it’s to verification smarter we’re again, think we’re I reliant as said, forward. I as think on a Leann

Raphi Savitz

it as your bit, the guess, gears super say, the the it better beef we time be consumer like demand for -- just I is as it will That’s kind products? Okay. about? driver should business? else -- on the Is X, Or to consumer years, few for business tag do over Is more you put be want let’s next frame maybe helpful. on Is of whatever demand the switching kind better X something the export you years, for what it, you on it products? you about -- feel And think a #X of Is of you more regulations? it your for you market? that thinking

John Saunders

Raphi. has I’d combination and it’s have think all changed, the things pandemic There’s chain. of that supply those highlighted One our really many lack -- food things. a it’s Yes. that of in is the I transparency say few traceability ways, in specifically a

a with trying systems, strong on we to within our are the online cumbersome foundation directly that and regional connect that food with to now. system and right more local seen we’ve consumers, So towards have reliance producers themselves eliminate push

blame program. disease to specifically talking saying, is tailwinds in to really regard leaders I the voluntary credit industry system this And of "We we’ve And a not highlighted the we’ve a the are a lot more like think that pandemic, the of been industry XXXX. off in I’m seen need that significant a proponents again, going pandemic going. think, are about something industry. on now." and their our your strong major I final a sustainability a And a the think, U.S. really give is in to for of the or address and need But consumers to but trend as then beef traceability it’s to point to the robust of radar. understand pandemic gone focusing as keyword and to of that have And others result they’re has we’ve with the business. well literally result that looking as seen, as become kind back I we what talked So Sustainability, retailers lot they’re a on where forward Walmart trying XXXX, has about that that impact

And part a so of big that. we’re

So going now. we those anticipate last changes the our in I months seen have business can probably right of that bigger think to and all trends X than impacts we’ve are on even three really

Raphi Savitz

how your in software of future? role does a play And kind

John Saunders

what I highlighted And a Yes. ranges FaceTime that typically, that Yes, boots that once on-site, technology did It’s never that the using it past, year a from It’s specific was found FaceTime. it in always being -- the think Isn’t just some in even is that before. the FaceTime, we’re people we a was way think just on we’ve in interval. one? right? And and -- area having at ground, I the interval.

using are auditors our of All iPads.

using that lot was before. an And a different were verifications. video We’re conduct doing doing what of interval we than at we’re again, to

opposed So once as quarter once maybe an a year. we or once check to a operation month a on

been biggest probably looking we that is Raphi, So that’s use I the would day to are difference, technology. every say more

Zoom, some some Salesforce, doing of that using lot we’re of products, everybody just everything that it developing learning -- as it’s but else to, FaceTime, we’re using internally, adapt GoToMeeting, And proprietary, to of off-the-shelf a has we’re been it well. again,

So big part a future. of the it’s

Operator

investor. the comes line private your Bardes, question Timothy Please with question. from next proceed of Our

Unidentified Analyst

kind and to great this this you’ve far results and quarter that It’s the year done. work of the see so

allocation strategy of and works how into strategy your kind acquisition business I within get wanted well talked strategy into capital the as more think about I of the as kind acquisition to of business of acquisition the but it. well -- your the that kind strategy, kind you’ve very and kind of

on made fund either you’re have of issuing look And cash to the you past, debt decisions when kind your no on at do at acquisitions? taking then acquisitions you in how on going the decisions or how with equity? it kind looking look of how at within So How you on or you’re those valuation decisions? do yes, hand

John Saunders

Tim. question, Great

our as not aware, XX the we may acquisitions. completed in we’ve a sheet. may on didn’t we lot started, of excess or you have And when of balance in past, So be cash

company the of complete those So an really to really some us. at time, being acquisitions a transformative us for public gave opportunity

we think, history, impeccable reputations. the a and in with a businesses So base, looked were at that was then and our strong and That most that literally blessed, something same -- glass, for customer same a they we part in were the strong strong those very, almost I all And with very of family-founded cases, look businesses, was business. we family-run businesses. that is with

a we at From requirement, or but financial investment, those later, wasn’t that And financial that either come an kind performance was that leave buy revenue in at we pretty controlling the I look we worked would We -- place. would in would say, of revenue on the would really complete with the businesses. we looked X.Xx transaction-based at we have out then, interest the of in way. at perspective, X.Xx a a then a at EBITDA to that cases, would we it just valuation most usually, So some principles necessarily business. point it the looked where of And simple. initial

is kind most criteria I was which was acquisition, those today, the at mentioned. So a before. of met that look you The groups space. same can which think, I world our of world seafood Postelsia, And within one of team, lot protective Tim, we The X.Xx roughly that is recent our our of the well-renowned husband-and-wife revenue. deal difference, was the are most now. that a stock very big It’s

XXX% noticed, acquisition, probably the use within and you cash trend say that be as forward. So moving that I’d we will

pursue bigger. do But the We’ll debt now. right large going if as even at we this you or transaction can guys something really it would equity So that’s from to was problem we -- us a we’re enough probably the sheet, balance use cash. see point before required not for

Operator

[Operator Thompson, question. comes with your Instructions] investor. from Our question line next Terry Please of proceed private the

Terry Thompson

we on. profile? upstream Hey, programs a highlight Tyson going another this seems with and Where everything nice Food quarter, that’s can John. Food quarter. And on especially was swimming to Comes to From everybody it see have there public include good like like. Looks now really, pleased Congratulations I is participation them our in Comes do Is their raise From’s press anything help in Where other to release. whatever

John Saunders

me, good quite question. to Leann follow they let They’re doing actually I’ll -- kind of bit. are up a actually but

necessarily we’ve In and putting program. retail are circles the the it videos about fact, may this even the been crew BeefCARE to their and And program to commitment really though be out same lot not surprised in works, really a that their BeefCARE. to developing behind they talking at customers

quite show doesn’t probably ahead. much, Go it really lot. -- I’ve a as doing but Terry, So they’re

Leann Saunders

And R. BeefCARE. at announcement think Sustainability Chief Tyson. the Officer John strong their and actually a behind when Terry, put commitment being they I look have you

think encouraged. rises their it, a the think this long that within to commitment and within certain in you takes when a this we’re it supply commitment for a it huge, time takes I direction. to to chains level And kind to move is like -- of company and organization very So their make the about

about to but things conservative and be their moving they’re to publicly, sure talking encouraged. chain, I’m in been we’re they’ve supply extremely So very committed going about forward certain things

John Saunders

Jay’ll see that there’s just if it’s convey a that say, us, to not is important, we we we’ll from along release we’ll Even was I continue as pass that. relevant, think information to if distribute. press going information

Terry Thompson

with program inertia Has developments of on the organization. dead any involved been further lot with kind a going year that that larger is a anything from there’s water? sure of McDonald’s there the here X Is I’m And Or on Yes. or ago. in that?

Leann Saunders

other pilot for spring project project on a we the this that Beef. pilot through actually of the Roundtable pilot with Sustainable So them, worked some another U.S. we did for members

what So We Canadian prompted still get still the to pilot is McDonald’s the have the Roundtable for that Canada, really off Roundtable, presence Canadian active. Sustainable in Beef to which ground. there’s it’s -- a [indiscernible] very tied

ties, making of Similar we move hard with active. direction But So claim McDonald’s these that -- all on menu. we’re on a very very a for the like close to still of, still a Tyson, a on time. years. we a still and members it’s to have meet in takes aggressive company roundtables very say, they’re still it product That focused

Terry Thompson

having to anticipating this Or up And Good. is other are meeting the Are air? still let next shareholders’ What then your next in question, questioner. you one that you a on I’ll move and plans? spring? the

John Saunders

I’d up air. as the other and in are I kind with most Yes. the think, doing well. We’ll say -- groups what go that’s see of flow

know. we’ll we a But meeting So let you plan. have in the

Operator

end the of the over John Mr. back would I closing Saunders And to like reached have for remarks. We to our any call session. turn question-and-answer

John Saunders

great joining you again, Have year, the end thank to the the year. of for we’ll of you Once a talk all today. and first after

Operator

teleconference. concludes today’s This

this disconnect You and Thank for wonderful now your a may time. day. at you your lines have participation,

Where Food Comes From (WFCF) 8 Nov 202020 Q3 Earnings call transcript