Where Food Comes From, Inc. ($WFCF)

Greetings. Welcome to Where Food Comes From First Quarter 2026 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Jay Pfeiffer, Investor Relations. Thank you. You may begin.

Good morning, and welcome to the Where Food Comes From 2026 First Quarter Earnings Call. Joining me on the call today are CEO, John Saunders; and Chief Financial Officer, Dannette Henning. During this call, we'll make forward-looking statements based on current expectations, estimates and projections that are subject to risk. Statements about financial performance, growth strategy, customers, business opportunities, market acceptance of our products and services and potential acquisitions are forward-looking statements. Listeners should not place undue reliance on these statements as there are many factors that could cause actual results to differ materially from our forward-looking statements. We encourage you to review our publicly filed documents as well as our news releases and website for more information. I'll now turn the call over to John Saunders. John, please go ahead.

Hello, and thank you for joining the call today. This morning, in our first quarter results news release, we were pleased to announce year-over-year growth and a return to profitability. Verification and certification revenue increased 6% in the quarter to $4.4 million from $4.2 million, while product sales edged up slightly to $713,000 from $702,000. Total revenue increased nearly 2% year-over-year to $5.4 million. This growth, which we achieved despite persistent headwinds around tariffs and a smaller herd size was driven by steady new customer wins based on increasing demand for a range of certifications we provide. And for all the challenges on the beef side, I'm happy to report that many of our new customers are for beef-related services. A highlight on the beef side has been the RaiseWell program that we launched in the first quarter of 2026. RaiseWell offers brands, high-end retailers and food service operators a great way to attract consumers seeking premium protein products that have been verified back to the source of origin as having been responsibly raised, meaning they have not been given antibiotics or added hormones and have complied with rigorous animal care requirements throughout the life of the animal. The RaiseWell launch has gone very well thus far. We secured Whole Foods market as the first major retailer to adopt the program for its beef supply, and we are generating meaningful revenue now. RaiseWell is also available for other proteins, including pork, Bison, lamb, poultry, eggs and dairy. In terms of product sales, we are experiencing lower volumes in line with fewer head of cattle being put through the system and temporary tag subsidies offered to ranchers. Despite that, our product revenue was slightly higher year-over-year, reflecting increased demand for premium tags that offer more features that our ranchers are looking for. As we mentioned last quarter, the cattle industry is going through an unusual period of disruption due to a confluence of many factors. But with this disruption comes many opportunities. One of those is a potential opportunity to demonstrate our unique capabilities in response to an animal disease outbreak. As you know, the Mexican cattle industry is experiencing an outbreak of what is known as New World screwworm. This outbreak has been steadily moving north and now involves several Mexican states border in Texas. [Technical Difficulty]

I think we're having an issue with John's line. John, can you hear me? Okay. Just give me a moment. We'll try to reconnect.

[indiscernible] reconnect with John, if not, I can pick it up [indiscernible]

I apologize. John Saunders is traveling internationally, and we believe we've lost connection with him. I'm Dannette Henning, the CFO. I'm going to go ahead and take over where he kind of left off. And -- here we go. So picking back up on where the Mexican cattle industry was experiencing an outbreak of what is known as New World screwworm. The outbreak has been steadily moving north and now involved a couple of Mexican states bordering Texas. The USDA is working hard to prevent the cross-border spread, but should a spread occur, we are ideally positioned to help manage the response. Our IMI Global unit maintains the most advanced animal traceability system. And with our growing partnership with CattleTrace, the producer-led private industry database, we can quickly deploy a system that enables contact, tracing and allow animal health officials to identify livestock and locations that may have been exposed to disease. In the meantime, we are seeing solid growth in a number of non-beef business lines. Verifications for pork, dairy and egg operations all extended their growth momentum in the first quarter. Certification activity for organic, non-GMO, gluten-free, and upcycled also showed gains. And again, we continue to leverage our extensive solutions portfolio to our advantage through bundling incentives that save our customers time and money. In closing, we remain optimistic about our ability to profitably grow our business over the long term and accordingly plan to continue our stock repurchase program. We bought back 24,469 shares of our common stock during the first quarter at a cost of $293,000. Total buybacks since planned inception, including private purchases are 1,399,121 shares at a cost of approximately $15.5 million. And with that, I'll thank you again for joining the call today and open the call for questions. Operator?

[Operator Instructions] There are no questions at this time. I would like to turn the conference back over to John for some closing remarks.

Well, thank you all very much. I'm sorry. Thank you, Dannette, very much for finishing for me. I apologize to all of you for the technical difficulty. I want to say welcome to all the new shareholders, and we will make you very proud and look forward to talking to you in 3 months. Take care, everyone.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.