WFCF - Earnings call transcript Q3 2021 | Where Food Comes From, Inc.

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Operator

Greetings. Welcome to the Where Food Comes From Third Quarter Earnings 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. turn over I'll Investor Jay time, Relations. this the to conference Pfeiffer, At begin. you Jay, may

Jay Pfeiffer

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

Chief Saunders; today Leann CEO, me Dannette John Joining Saunders; are and Financial Officer, Henning. President,

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

John Saunders

reflect Good that results the in industry third a Today, joining began our slow, quarter of quarter. morning, and growing normalization market the first our of Those thanks but morning. we to financial the second released for call this opened. results the we before see continuation

in loan revenue same million increased in was basis. Net you month quarter PPP and resumption year-over-year delayed respectively of of The year. revenue not we're income pre-pandemic our in we pandemic. quarter year-to-date good in and visitation, million, experienced although was the which $X.XX revenue grew first per but into to Net the a net profitable grew last year. to getting the up of third through income the resulted to in are quarter. or and to net numbers, Not $X XXXX verification beef $X.X our less to $X.XX income improved million increase third carried counting quarter $X.X digits. momentum positioned XX% curtailed compared QX continued bottom year. third-party their sustain was from audits poultry, on think quarter levels, our in the or profit than there. per audits open facilities last egg the forward. still forgiveness the pork, line of and these our up to from second an $XXX,XXX year-over-year impact PPP $XXX,XXX, severely period nine the although double $XXX,XXX back to on these we're up to loan profit approximately this the per categories quarter, The We're our or due the that nine going much the to in audits, $X.XX for in To recall X% we because of income months share, a of contributed share dairy customers Earnings from forgiveness, $X.XX basis news share Specifically, XX% still XXX% and was typically is margin pressure growth a services

margin under lesser during revenue been that year a was we and have impacted verification margins of extent to the performance the when gross earlier, mentioned lower suspended ago activity pressure accrual bonuses of the height by of pandemic. the resumption a I As

we $XXX,XXX XX% and XX% Despite at Working QX in EBITDA was management to slightly by month year-to-date, increased in personnel as SG&A new higher from to look lower $X in In more a continue areas million for our addition, from and operate the we year-over-year. contributed have was year more EBITDA from cost period ways adjusted decreased Adjusted million. line nine to to increased from net made in hires our approximately $X.X a QX $X XX% sales this, several actually the that year-to-date $X.X million year-over-year increase capital million XX% million. ago. operations in higher to $X.X cash $X.X efficiently. We generated of million

than form equivalents despite to our $XXX,XXX a cash $X.X to one-time we of the quarter. the in special out in year-end balance in and million grew stockholders XXXX cash paid fact $X.X the million that from dividend Our more third

have continued I momentum us quarter growth cost under while of restrictions the to to positioning that steady into our our track by and uplisting our our to combined generation. program year-to-date in $XXX,XXX. more share of this now occurred say to also and have in we the leadership our the buyback XX,XXX to both revenue importantly market stockholders pandemic want industry certified shares in underscore return taken business, CARE with off offering strengthened few NASDAQ of to These profit our and the than strong The cash our value We more emergence have in shares gears, year. business, April Switching from confidence about record beef repurchase continued driven a of a in growing at future. part efforts position and extend popularity words

and not exchange. to intended community that that the are traded investment was raise from for funds of companies uplisting prohibited shares our major that buying a profile us eligible make by in are recall on You'll investment

and thank they levels day. From for each others. ETF, Fidelity the cap Following of the several fund, outstanding investors a of closing, Among want several the our market all micro business the Comes uplisting, total Vanguard forth months. cap the new total over significant fund, index in interest increase the six last this investor of effort up new stock of experienced micro index BlackRock, our iShares' from Food fold number to class and a employees at we put In I Where every institutions with

enormous business shareholders And and has employees for of From questions. results Our call the open Where and Operator? deserve the I'll years. their want to continued to positive thank for Comes also deliver Food able and to with the confidence support. I are customers the our over backbone been that, credit our

Operator

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

of from question Eddie with Hutton. EF comes first the with Our line Reilly Please questions. proceed your

Eddie Reilly

and the taking Hi, just guys. poultry, question. these wondering verification I Thanks more some you in pork, was shed for Is you're in my light there seasonality the seeing rebound what any dairy could services. on typically egg if audits? from

John Saunders

the they the how pandemic dealing in see sure those Yes, we that to we're that's continue Eddie. is – seasonality some those to that keep with biggest The last going available. a through really audits over good become do factor We audits. with we've as question, make up been

most So, those are facilities contained. of

So to difficult was third-party it our auditors get on very site.

Most confined So dealing operations. those it's more are we've that of with. of been a delay

same type really contained we the where that are outside see don't behavior yearly of we're beef other in our not So on cyclical facilities. and audits species

see it timing much won't much. to of see areas as in the that but probably third-party have It's impact about on shouldn't those just more less site, on too where people sending really the we So restrictions year. we continue

Eddie Reilly

Got you. you. Got

I'm you and of access to guys Or have to maybe with those types to gain the better trying something worked try lately? get Okay, is great. any in? audits that And of certifications that

John Saunders

communication trying ahead, of question, get but done, Leann that answer we and but in the let are bulk to I'll that ma'am. Yes, constant go

Leann Saunders

they had that our do setting to the with them so the own standard as Yes, as site, we different the develop – ability weren't hit audits. pandemic was teams if bodies on soon our and to going restrictions with standards work remote began working to

And some work auditing long of through. a schemes time those take to

to we some of But as could then yes, those So, John back begin did bodies. with those seven before months things all pushed in get that maybe we six immediately mentioned, those working cycles, months place.

Eddie Reilly

how CARE many on And to great. been have the farms able just in on sign Okay, you the side, quarter? program

John Saunders

get the back approved today. I'll know we're you, to XXX but branches over that I specifics

under we time So last XXX. year, were same at just a the at

time. were whatever at we've times times, So would we four be, where year that the increased last same five

Eddie Reilly

great. That's Awesome.

for about it. John. you, does that guys. Thank I think me. just it Congrats, Appreciate

John Saunders

Thanks, Eddie.

bet You

Operator

Brown, next [Operator questions. proceed your Instructions] line a the Investor. Our is of Chris Private with question Please from

Chris Brown

that? have lot look seen of deal have And of any about how are a climate you of production perspective? et you first How I from news it at And guys in to cetera, know going I mentioned. and My do questions, impact you. think the actually. as change, beef about that? been with you discussion Thank corporate kind been a you has one, there it in has two particular

John Saunders

being and done change. great that large you look lot associated current to looks board carbon issue data the Vilsack, of agriculture even that's big you've as a We the you a specifically that Secretary, that's from Chris. part culprits we're current as cattle as ranching us pressure And at saw administration across launching question, one big the individuals combat if if the for high and to felt Well, the a the of out, I climate a with really of was and of of with. one lot climate opportunities at that sure And I'm on coming look related are the think and the dealing and research, specifically cattle CARE sequestration beef that program. impetus and ranching the Yes. targeted

very feel fortunate. we So

now right the be key able verify, much environment. parts of within then to beef customers supply positive In to be on to the fact, are most communicate products, beef it's of those and infrastructure working quantify, one those the to the the not to impact how our producers strategy those consuming having nature probably beef of but to only important to

forward it CARE points it's launch looking that really how to control So and we're broader of and question taking again we're critical of our a of that one successful a at is our much moving community. great –

Chris Brown

Great.

at a the it's of instead back in hopefully, wind a So face. your wind

John Saunders

it so. Yes, been we've very quite And preparing while. a for for much

Chris Brown

Good.

Okay.

So is bit question little broader. second my a

in kind a it? and a of overall year see kind one at of look where you kind coming parts for of – most of of from timeframe, business the come like kind you what do most year – one overall the Just zero timeframe will to one business, your to of to from? year, growth your As the of not the three necessarily three growth

John Saunders

Yes, another great question.

a represents business. beef the beef XX% little kind Just of overall of go bit back excess of our our in of portion Today, business. to

of change species almonds, the and opportunity A the is lot all necessarily that pork pressure the because and the that see of beef. in don't we wine climate equal that is other combined within industry we experiencing. dairy beef poultry, that work So, of

alternative burger or beyond beef beef on are they're as pressure and Another at primary area that beef and it's others is specifically whether replacing targeting putting protein meats that the a really source. looking

that. combine you when to with the beef the continued is to of take as more definitely short thing specifically that revenue, over focus us that and the beef related long One pressure which opportunity clearly our and more that category of second to our strong years largest product, to been and our So continues that explained the is is one hasn't for which China, real financials our maybe hardware grow that three revenue. next

Our cattle. in identified tags frequency radio radio that specifically just goes

at our hardware look in you that in other put revenue identification don't when We entirely So beef is species, of a category just tags category. the cattle.

is that I won't of now, right majority business. get but lot of a that that different reasons into For the

away doing the beef now I several with we're that the most look that protein you audits is category we with. our that mentioned. one as when are also that just with the work for reasons revenue the I think It's associated So verification, at and that right combined far with targeted biggest

beef of going the the So driving on one to across to focus those we're really supply our message program three industry all CARE chains. years, heavily and and sustainability

and which those about Some well. this Walmart, past, talked address to McDonalds, the of retailers like brands are all of Costco, issue trying as I've in major

our be how we to So so to being able beef, of that and we see they're see beef. questions, big the chains CARE those beef, work answer and a certification part we going really supply with

Chris Brown

Appreciate time guys. today. much very you Thank your

John Saunders

You bet.

Operator

from with questions. your line Advisors. Savitz next proceed the RYS Please Our of comes question with Raphi

Raphi Savitz

the Hi, and you tags? apologize. I are But on guys. how and your side? How have currently this many may have And how many – many of answered utilizing ranches already, guys beef you those

John Saunders

and those again, beef. with of half over XX,XXX as just ranchers. Yes, farms mentioned, I And over are specifically we work

is So X,XXX. close the number X,XXX, to probably

Raphi Savitz

guess Or I – And those sense get your how already to have of many are a you tags? underpenetrated utilizing fairly is your very at penetrated I'm auditing trying that point? this of base?

John Saunders

a that's question. No, good

of kind builds to required use of so foundational verification the that source tags, are then verify frequency cattle. have So verification our the opportunity them from that. each radio The we level one that's our of to

non-hormone way go up programs non-GMOs. natural So and through all to we have organic from that additional the

ranches migrating beef So what verification additional we're X,XXX source to them higher within are to specifically just doing verification. from those level that X,XXX a focused is

So, them and opportunities. selling those we're up we're bundling

it think I them in another verification. about are doing higher minimum ranches probably where of are to they're would doing is that way source of maybe X,XXX So level at X,XXX verification and the tags say putting a our

So we run lot minimum, but to sell producers have just a a room, lot to identification growth they're opportunity our at buying those of all of tags. services, a them continue more within

Raphi Savitz

it. Got

with that's above you on kind growth of terms I of of the below – the kind of industry quarter, in you mean think this line do X% that? And in or guess kind the side guys Okay. of auditing kind saw or growth I

John Saunders

growth. that the would majority we saw vast we're is I is say of the and That that. what industry

one a There think it's at. last is the – I So the quarter factors they're quarter of think couple year was in to One good. this exceptionally I almost third same. was look

X the the that a to stick producers in had I this strong and how into if lot of pandemic, conversations and but were months don't with pressure we you continued about their seeing. they were X, we when beef even very of remember we programs, So know our very, the face were verify Raphi, X,

with very this sure not we're of seen products good the thing that's that So phenomenal we're was don't things stores. just year I think quarter variants last months, year. some new one very, being there's the against at that's need reflecting know time we've that about the seeing going mean this what related I'm a these you're you pressure – think some to quarter we concerns I that coming to into and to also that as is that of consider retail winter seeing same grocery are just

into getting next the last in little going back we're happen couple So, we months. saw that really what's not knowing hesitancy a year to

still I So last are the didn't the part that that that this think people same reason just that's concerned. that year we necessarily we growth quarter also of saw see

all go So beef And of we it critical we're we been through going that, now, in original the to as demand that a better really right opportunity lot also international customers. at of then but industry couldn't looked just sees our have lot that. questions us for all got we but again to back the quarter much that we're sees and pressure a it think a part of from

ahead. I'm with pressure if couple the So sorry have We'll we go pleased over of very quarters the that next quarter. see – more third

Raphi Savitz

and software then and Thank opportunity for on are for markets get existing Food of opportunity yesterday From? on kind SureHarvest And of guys, you. the what update products. collateral kind what's on Comes software your Where today thoughts was of of both marketing new to kind I for I in some you I'd the larger just saw I or the SureHarvest the love guess kind site an

John Saunders

put again which on is emphasis a Yes, a a question. great lot offering. product, our again our part big beef obviously We've Beef what of of Passport

that's The encouraging other bit Leann it been really, and a earlier. area mentioned really little

the times working platform a to it. platform OSP which so Program, One with so I that that organic way – most Raphi, with communicating prominent the And as a couple is we've standard National I been digitize organic. think the on we the is probably been work to related the mentioned, we've Organics I've organic, of body were a called on think setting the you USDA in

may digitizing Comes And rebranded Where as the research, of you also years So two we're we've our system, your platform. which really the seen provides organic to technology through related we Food perfecting From that spent have product. last SureHarvest that all how

of our a solutions a that excited organic on little So mentioned to thing on changed what's really think the bit a SureHarvest within we're and months previous this really software NOP call One and happen I big XX focusing I'm is internal to about is part going I've development. over and next XX customer we've that.

which I'm large And large brands us, makes really to call importantly that sustainability sure we're spent and of any the of around really supply rarely that certification you've From be We're SureHarvest what we've then through chains. within that their what's And that the Where sticky look are as there's they're as offering organic, understand in and supply bodies part which a does retailers to opportunity their these Comes creating. work supply. opposed companies them seeing that consumer food portion to to seen right exploding very potential other it a And understand mode, trying with that to is very really as Food at critical is with us to product program. we those of large literally or servicing world their something for their same have to retail So, to lot and be time forward We exactly so XXX% going questions answering of a critical. a I the a a for a we everybody really dashboards organic customer is certification think able we're is on is structure more supplies importantly time as is intensified that information trying how market to now. related verified really know going such and

that values understand the to Just where people it. more comes the from, of it wanting about their produced food,

really to service these ourselves the a we offer to in past. that large very to new food a being So access had we're – able really that companies beneficial haven't information very, see in service

Raphi Savitz

you. Thank Perfect.

Operator

you. Thank

with Eddie proceed EF from with Please question. Our next your is the line Hutton. question Reilly of

Eddie Reilly

guys. Hi

from me. more one Just

will the tags happen. kind a requirement around of see that is not you in legislation more more cattle general the about tags. And that. for when interstate. wondering on if was but RFID your And year seems competitors just I terms of opportunity a of this of like moved or threat I if as know earlier pushback there USA an want this offering thoughts matter Regarding where some RFID that, this

John Saunders

related – for Yes, for be that would lines to big is say across a day. issue cattle, state that big it's Interstate there in I And a opportunity to That traveling – yes. commerce continues us. every short, cattle are us.

we ability work state we're address the commerce to to very interstate our really so difficult that the veterinarians only our us with animal – play the but that confident exactly critical. out, We producers in that the packers, relationship state to is and charge when the are issues the work know And that ones unique it's all of and puts to going how are spot. it's equation with part one again times not there then vets, then a feedyards – of are the with the in really health but

not we're basis. program So point, this so a at a ruling. of that it's state by encouraged kind on compulsory state It's by

rolling to it's again, it's big to it's predict really like. a us hard for going out, pretty be as that confident us. So But what plus to for look that's feel pretty we going

Eddie Reilly

to Saunders turn you. for Thank Okay, I'll closing the Thank time, this call great. John back remarks. you. At over

John Saunders

have Thanks year. holiday look end a to of to great again. forward Everybody season. at talking the We'll the you

Operator

today. This now conference. in everyone attendance today's to you concludes Thank

disconnect at may this your You lines time.

Where Food Comes From (WFCF) 6 Nov 212021 Q3 Earnings call transcript