CASTLE ROCK, CO--(Marketwired - Mar 4, 2014) - Where Food Comes From, Inc. (d.b.a. IMI Global, Inc.) (
Fourth Quarter Revenue Up 39% to $1.8 Million From $1.3 Million Last Year
Full Year Revenue Up 5% to $5.5 Million From $5.3 Million in Prior Year
Company Adds 4,000 New Producer Customers Through M&A and Strategic Partnership Deals During 2013
Where Food Comes From, Inc. (d.b.a. IMI Global, Inc.) (
"We are pleased to report renewed revenue growth in both the fourth quarter and 12-month period," said John Saunders, chairman and CEO. "This growth reflects M&A activity along with increased demand for the Company's non-hormone treated cattle (NHTC) and Verified Natural Beef programs as well as an increase in source verifications in international markets. These growth factors combined to more than offset a sharp decline in Japanese age and source verification revenue in 2013 due to Japan's easing of import restrictions. We believe most of the impact of Japan's action will have been absorbed by the end of the first quarter of 2014 and that we can reestablish a consistent long-term revenue growth trend.
"While we continue to generate positive cash from operations and positive operating income, our bottom line has been impacted over the past year by M&A-related costs and expenses along with the effects of Japan. Our M&A activity, which included one acquisition and one strategic partnership, added more than 4,000 new customers and strengthened our position as the nation's leader in verification in the food industry. With transaction costs behind us and as we progress through the integration process with these new businesses, we expect to achieve increased efficiencies and improved profitability over the long term."
Fourth Quarter Results
Fourth quarter revenue increased 39% to $1,797,000 from revenue of $1,289,700 in the fourth quarter last year. Verification services revenue was $1,583,800, up 48% from $1,073,000 year-over-year, while hardware revenue, consisting primarily of cattle identification tags, was down slightly to $179,200 from $183,100 due to fewer ear tags sold in conjunction with age and source verification for Japan. Labeling revenue in the fourth quarter was up slightly to $34,000 from $33,600 in the same quarter last year.
Gross profit in the fourth quarter increased 14% to $798,400 from $700,100 year over year. Selling, general and administrative expenses in the fourth quarter were $773,200, a 32% increase over $585,600 in the same quarter last year. The increase was primarily attributable to assumption of ongoing SG&A costs for Validus.
Net loss attributable to Where Food Comes From, Inc. in the fourth quarter was $11,300, or less than one cent per share, compared with net income of $140,300, or $0.01 cent per share, in the same quarter a year ago. The year-ago fourth quarter included an income tax benefit of $28,500.
Full Year Results
2013 full year revenue increased 5% to $5,533,500 from $5,261,400 last year. Verification revenue increased 8% to $4,682,700 from $4,328,300 year over year. Hardware revenue was $723,400, down 11% from $809,100 a year ago. Revenue from Where Food Comes From labeling and other sources increased slightly to $127,300 from $124,000. The increase in verification revenue reflected M&A activity along with increased demand for the Company's non-hormone treated cattle (NHTC) and Verified Natural Beef programs as well as an increase in source verifications in international markets. These growth factors combined to more than offset a sharp decline in Japanese age and source verification revenue in 2013.
Selling, general and administrative expense increased 14% in 2013 to $2,679,100 from $2,341,700. This increase reflected legal and advisory costs associated with the Validus acquisition, partially offset by general cost reduction measures undertaken by the Company.
Inclusive of $218,700 in transaction costs associated with the Validus acquisition, the Company reported a net loss attributable to Where Food Comes From, Inc. of $33,600, or less than one cent per share, versus net income of $870,400, or $0.04 per share, in the prior year. The 2012 net income of $870,400 included an income tax benefit of $391,500.
Balance Sheet Highlights
Cash and cash equivalents at December 31, 2013, totaled $1.1 million, which is up from $1.0 million in the third quarter of 2013 but down from $1.4 million at 2012 year-end due to cash consideration paid in the Validus acquisition and transaction costs associated with all M&A activity. Working capital was $1.5 million at 2013 year-end versus $1.7 million in working capital at the end of 2012.
Conference Call and Webcast
The Company will conduct a conference call today at 10:00 a.m. Mountain Time.
The call-in numbers for the conference call:
Domestic Toll Free: 1-866-225-8754
Conference ID: 4671682
A telephone replay of the conference call will be available through April 4, 2014, as follows:
Domestic Toll Free: 1-800-406-7325
Conference Code: 4671682
About Where Food Comes From, Inc.
Where Food Comes From, Inc. (d.b.a. IMI Global) is America's trusted resource for third party verification of food production practices. The Company supports more than 10,000 farmers, ranchers, processors, retailers and restaurants with a wide variety of value-added services through its IMI Global, International Certification Services, and Validus Verification Services units. In addition, the Company's Where Food Comes From® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers to the sources of the food they purchase through product labeling and web-based information sharing and education. Go to www.wherefoodcomesfrom.com for additional information.
This news release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, based on current expectations, estimates and projections that are subject to risk. Forward-looking statements are inherently uncertain, and actual events could differ materially from the Company's predictions. Important factors that could cause actual events to vary from predictions include those discussed in our SEC filings. Specifically, statements in this news release about industry leadership; expectations to achieve profitable growth; the Company's belief that most of the impact of changes in Japan's import requirements has been absorbed; and the demand for, and impact and efficacy of, the Company's and its subsidiaries' products and services on the marketplace are forward-looking statements that are subject to a variety of factors, including availability of capital, personnel and other resources; competition; governmental regulation of the agricultural industry; the market for beef and other commodities; and other factors. Financial results for the fourth quarter and twelve-month period are not necessarily indicative of future results. Readers should not place undue reliance on these forward-looking statements. The Company assumes no obligation to update its forward-looking statements to reflect new information or developments. For a more extensive discussion of the Company's business, please refer to the Company's SEC filings at www.sec.gov.
|Where Food Comes From, Inc.|
|Statements of Income (Loss)|
|Three Months Ended||Year Ended|
|December 31,||December 31,|
|Costs of revenue|
|Labor and other costs of services||875,570||457,156||2,307,846||1,844,655|
|Costs of products||123,057||132,488||519,221||586,767|
|Total costs of revenue||998,627||589,644||2,827,067||2,431,422|
|Selling, general and administrative expenses||773,154||585,621||2,679,089||2,341,665|
|Income from operations||25,260||114,475||27,308||488,280|
|Other expense (income):|
|Gain (loss) on sale of marketable securities||-||263||-||(11,892||)|
|Gain on disposal of property and equipment||-||(3,208||)||-||(3,208||)|
|Other income, net||(244||)||(330||)||(1,469||)||(4,239||)|
|Income (loss) before income taxes||21,805||111,582||(4,811||)||481,690|
|Income tax expense (benefit)||10,355||(28,506||)||(1,778||)||(391,478||)|
|Net income (loss)||11,450||140,088||(3,033||)||873,168|
|Net income (loss) attributable to non-controlling interest||(22,765||)||253||(30,527||)||(2,810||)|
|Net income (loss) attributable to Where Food Comes From, Inc.||$||(11,315||)||$||140,341||$||(33,560||)||$||870,358|
|Net income (loss) per share:|
|Weighted average number of common shares outstanding:|
* Less than a penny ($0.01) per share
|Where Food Comes From, Inc.|
|December 31,||December 31,|
|Cash and cash equivalents||$||1,067,537||$||1,403,489|
|Accounts receivable, net||683,800||377,072|
|Prepaid expenses and other current assets||143,576||80,189|
|Deferred tax assets||190,184||242,944|
|Total current assets||2,085,097||2,103,694|
|Property and equipment, net||253,206||146,563|
|Intangible and other assets, net||1,716,115||303,810|
|Long-term deferred tax assets||480,294||277,177|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Accrued expenses and other current liabilities||56,091||58,808|
|Short-term debt and current portion of notes payable||24,782||22,873|
|Current portion of capital lease obligations||4,173||5,506|
|Total current liabilities||551,473||388,600|
|Capital lease obligations, net of current portion||10,808||14,981|
|Notes payable and other long-term debt, net||165,755||191,106|
|Notes payable, related party||-||200,000|
|Contingently redeemable non-controlling interest||1,018,396||-|
|Additional paid-in capital||5,216,327||3,668,556|
|Total Where Food Comes From, Inc. equity||3,767,611||2,281,559|
|Total liabilities and stockholders' equity||$||5,814,474||$||3,364,241|