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Where Food Comes From Stock Declines Since Reporting Mixed Q3 Results
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Shares of Where Food Comes From, Inc. (WFCF - Free Report) have declined 0.52% since the company reported its earnings for the third-quarter ended Sept. 2024. This compares to the S&P 500 index’s 0.03% decline over the same time frame. Over the past month, the stock has lost 2.5% versus the S&P 500’s 3.3% decline.
Q3 Earnings & Revenue Performance
The company reported third-quarter 2024 diluted earnings per share of 9 cents, down 30.8% from 13 cents in the year-ago quarter.
For the quarter ended Sept. 30, 2024, WFCF reported total revenues of $7.1 million, up 1% from $7 million in the prior-year period. The revenue mix included a 2% increase in verification and certification services, and a 9% rise in product revenues, offset by a decline in professional services’ revenues.
Segmental Performance
Verification & Certification Segment: This segment’s revenue grew 2% year over year to $5.5 million, supported by rising consumer demand for food verification across multiple categories. However, growth was tempered by challenges in the beef verification market, wherein herd contraction impacted revenues tied to per-head pricing.
Product Revenue: The segment saw a 9% year-over-year increase to $1.3 million in revenues. The rise was driven by higher sales of cattle identification ear tags. However, the smaller beef cow herd size, reflective of the ongoing contraction in the cattle cycle, remains a limiting factor.
Professional Services Segment: Revenues from the segment declined 32% to $0.3 million from $0.4 million in the prior-year quarter, reflecting lower demand for consulting and data solutions. This drop was offset by improvements in profitability, as the segment’s gross margin increased to 30.1% from 20.9% in the prior-year quarter due to operational realignments.
Management Commentary
The company acknowledged the headwinds in the beef verification segment but highlighted opportunities from new USDA regulations requiring electronic tags for certain cattle classes. These tags are expected to expand participation in WFCF’s programs, offering long-term growth opportunities.
Where Food Comes From is focused on growing verification and certification revenues despite challenges from cyclical pressures in the cattle industry. As indicated by reduced beef cow inventories, the ongoing contraction phase in the cattle cycle continues to weigh on revenues tied directly to herd sizes.
Additionally, while professional services’ revenues declined, management credited the improvement in the segment margins to a realignment of resources, which resulted in better operation efficiency.
Factors Impacting Results
The company’s gross profit declined year over year to $2.8 million from $2.9 million, and the gross margin contracted from 41% to 39%. This was primarily led by higher costs in product revenues and verification services. Selling, general and administrative expenses increased 13% year over year to $2.2 million, attributed to expanded marketing efforts, higher personnel costs and increased travel expenses.
Operating income fell 36% year over year to $0.6 million and adjusted EBITDA declined 29% to $0.8 million from $1.2 million.
Cash & Debt
As of Sept. 30, 2024, Where Food Comes From reported cash and cash equivalents of $2.8 million, an increase from $2.6 million at the end of 2023.
The company maintains a minimal debt position, with a total debt of $2.71 million. This financial standing reflects WFCF's prudent cash management and conservative approach to leveraging debt.
Other Developments
In the third quarter, Where Food Comes From repurchased 66,620 shares of its common stock for $734,000. Through the first nine months of 2024, the company bought back 216,039 shares, showcasing its commitment to returning value to shareholders.
WFCF delivered modest revenue growth, driven by strength in its verification and product segments despite challenges in professional services and beef market dynamics. While profitability metrics declined, strategic initiatives and regulatory changes are expected to support long-term growth. The company's active share buyback program highlights confidence in its prospects.
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Where Food Comes From Stock Declines Since Reporting Mixed Q3 Results
Shares of Where Food Comes From, Inc. (WFCF - Free Report) have declined 0.52% since the company reported its earnings for the third-quarter ended Sept. 2024. This compares to the S&P 500 index’s 0.03% decline over the same time frame. Over the past month, the stock has lost 2.5% versus the S&P 500’s 3.3% decline.
Q3 Earnings & Revenue Performance
The company reported third-quarter 2024 diluted earnings per share of 9 cents, down 30.8% from 13 cents in the year-ago quarter.
For the quarter ended Sept. 30, 2024, WFCF reported total revenues of $7.1 million, up 1% from $7 million in the prior-year period. The revenue mix included a 2% increase in verification and certification services, and a 9% rise in product revenues, offset by a decline in professional services’ revenues.
Segmental Performance
Verification & Certification Segment: This segment’s revenue grew 2% year over year to $5.5 million, supported by rising consumer demand for food verification across multiple categories. However, growth was tempered by challenges in the beef verification market, wherein herd contraction impacted revenues tied to per-head pricing.
Product Revenue: The segment saw a 9% year-over-year increase to $1.3 million in revenues. The rise was driven by higher sales of cattle identification ear tags. However, the smaller beef cow herd size, reflective of the ongoing contraction in the cattle cycle, remains a limiting factor.
Professional Services Segment: Revenues from the segment declined 32% to $0.3 million from $0.4 million in the prior-year quarter, reflecting lower demand for consulting and data solutions. This drop was offset by improvements in profitability, as the segment’s gross margin increased to 30.1% from 20.9% in the prior-year quarter due to operational realignments.
Management Commentary
The company acknowledged the headwinds in the beef verification segment but highlighted opportunities from new USDA regulations requiring electronic tags for certain cattle classes. These tags are expected to expand participation in WFCF’s programs, offering long-term growth opportunities.
Where Food Comes From is focused on growing verification and certification revenues despite challenges from cyclical pressures in the cattle industry. As indicated by reduced beef cow inventories, the ongoing contraction phase in the cattle cycle continues to weigh on revenues tied directly to herd sizes.
Additionally, while professional services’ revenues declined, management credited the improvement in the segment margins to a realignment of resources, which resulted in better operation efficiency.
Factors Impacting Results
The company’s gross profit declined year over year to $2.8 million from $2.9 million, and the gross margin contracted from 41% to 39%. This was primarily led by higher costs in product revenues and verification services. Selling, general and administrative expenses increased 13% year over year to $2.2 million, attributed to expanded marketing efforts, higher personnel costs and increased travel expenses.
Operating income fell 36% year over year to $0.6 million and adjusted EBITDA declined 29% to $0.8 million from $1.2 million.
Cash & Debt
As of Sept. 30, 2024, Where Food Comes From reported cash and cash equivalents of $2.8 million, an increase from $2.6 million at the end of 2023.
The company maintains a minimal debt position, with a total debt of $2.71 million. This financial standing reflects WFCF's prudent cash management and conservative approach to leveraging debt.
Other Developments
In the third quarter, Where Food Comes From repurchased 66,620 shares of its common stock for $734,000. Through the first nine months of 2024, the company bought back 216,039 shares, showcasing its commitment to returning value to shareholders.
WFCF delivered modest revenue growth, driven by strength in its verification and product segments despite challenges in professional services and beef market dynamics. While profitability metrics declined, strategic initiatives and regulatory changes are expected to support long-term growth. The company's active share buyback program highlights confidence in its prospects.