Where Food (WFCF) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 12, 2026

CALL PARTICIPANTS

• Director of Investor Relations - Jay Pfeiffer
• Chief Executive Officer - John Saunders
• Chief Financial Officer - Dannette Henning

TAKEAWAYS

• Total Revenue -- $7.3 million, representing a 4% increase driven by demand in core verification services.
• Verification and Certification Revenue -- 6% growth, reflecting resurgent demand for multiple solutions within the core segment.
• RaiseWell Certified Cattle -- 347,000 head, following the market uptake of the standard introduced earlier in the year.
• RaiseWell Network -- 368 cattle ranchers across 26 states, including 52 backgrounders, 31 finishing locations, and four processors.
• Cattle Premium -- $100 per head, captured by ranchers using third-party verified standards despite high market prices and low herd sizes.
• Organic Operations -- 1,500 operations, representing more than 1 million organic acres of land under certification.
• Organic Customer Growth -- 94 new customers through the first nine months of the year, driven by service responsiveness and bundling.
• Gross Margin -- 42.1%, an increase of 380 basis points over 38.3% in the prior-year period due to gains in certification and product sales.
• Nine-Month Gross Margin -- 40.5%, up from 38.9% in the same period last year.
• Nine-Month SG&A Expense -- $1.9 million, a 3% or nearly $200,000 decline resulting from effective cost control measures.
• Operating Income -- $1 million, a 68% increase compared to $600,000 in the prior-year quarter.
• Nine-Month Operating Income -- $1.9 million, rising 52% from $1.3 million on higher revenue and cost containment.
• Third-Quarter Share Buybacks -- 21,170 shares, as part of the company's ongoing capital return strategy.
• Year-to-Date Share Buybacks -- 110,651 shares, repurchased based on profitability and cash generation.
• Total Capital Returned -- $17.5 million, representing the cumulative value returned to shareholders through buybacks since plan initiation.
• RaiseWell Expansion -- Oct. 2026 extension to poultry, pork, and lamb, increasing the addressable market within a major retail supply chain.
• Transfer Customers -- 30 established operations, which moved to the company from other certification bodies during the year.

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RISKS

• Saunders stated, "We are seeing resurgent demand in our beef-related business despite continued pressure resulting from smaller herd sizes and fewer cattle moving through the system," identifying macro livestock supply challenges.

SUMMARY

Where Food Comes From, Inc. (NASDAQ:WFCF) reported growth in third-quarter revenue driven by resurgent demand in the beef-related business and strong performance in the organic certification segment. Management attributed the success to the uptake of new standards developed internally to address emerging producer and consumer trends in animal protein. The company expanded its RaiseWell animal welfare standard through a strategic partnership with Whole Foods Market, extending the program to poultry, pork, and lamb. Cost control measures kept operating expenses stable for the quarter, supporting an increase in operating income. Management continued to execute its capital return strategy through ongoing share repurchases.

• Whole Foods Market serves as a strategic partner with 540 stores and extended the RaiseWell standard to cover its poultry, pork, and lamb supplies in Oct. 2026.
• The company's bundling program allows customers to combine organic with other certifications in a single audit experience to improve efficiency.
• Management indicated expectations for a recovery in the cattle supply cycle following a period of record-low herd sizes.
• The SOW Organic online tool functions as an automated system for the annual organic qualification process to attract new customers.
• John Saunders stated, "As with our CARE program, RaiseWell was expanded to include other proteins," highlighting the strategy to reduce reliance on legacy protein solutions.
• CEO Saunders noted, "The feedback we're getting from these operations highlight the responsiveness and timeliness of our service team."

INDUSTRY GLOSSARY

• RaiseWell Certified: An animal welfare standard developed internally and adopted by major retailers to verify humane handling claims.
• CARE Certified: A sustainability program that verifies claims related to animal husbandry, environmental stewardship, and community involvement.
• SOW Organic: A proprietary online tool designed to streamline the annual certification process for organic producers.
• Backgrounders: Intermediary livestock operations that prepare young cattle for finishing by increasing their weight and improving health.
• Finishing Locations: Facilities where livestock are fed a specific diet to reach market weight before processing.

Full Conference Call Transcript

Operator: Greetings, and welcome to Where Food Comes From Third Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Jay Pfeiffer, Director of Investor Relations. Thank you. You may begin.

Jay Pfeiffer: Good morning, and welcome to the Where Food Comes From 2026 Third Quarter Earnings Call. Joining me on the call today are CEO, John Saunders, and CFO, 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 Saunders: Hello, and thank you for joining the call this morning. We were pleased to report strong financial results in our news release issued before the market opened. Total revenue in the third quarter increased 4% to $7.3 million. That increase included 6% growth in our core verification and certification segment, which is benefiting from strong demand for multiple services across our solutions portfolio. As highlighted in our press release, we are seeing resurgent demand in our beef-related business despite continued pressure resulting from smaller herd sizes and fewer cattle moving through the system.

The primary drivers of this growth are new standards we have developed internally to address emerging producer and consumer trends that are changing the way shoppers make decisions about animal protein purchases. Recently, RaiseWell Certified has enjoyed strong market uptake and has begun to make a meaningful contribution to revenue. Introduced in January of this year, RaiseWell was adopted a month later by Whole Foods Market as a recognized animal welfare standard. As with our CARE program, RaiseWell was expanded to include other proteins. And in October, we announced that Whole Foods had extended the standard to cover its poultry, pork and lamb supplies.

We view Whole Foods as a strategically important relationship due to its size, 540 stores and millions of retail customers, as well as its reputation as a pioneer in sustainability and humane handling practices, along with increased transparency into claims their food suppliers make. There are currently 347,000 head of cattle approved under the RaiseWell standard, and we are adding to that number almost daily. Today, 368 cattle ranchers are RaiseWell approved across 26 states. We also count 52 backgrounders, 31 finishing locations and 4 processors among our growing list of customers, as we have recently begun onboarding poultry operations and processors as we expand our focus to other proteins.

The beef industry today is characterized by record high prices, record low herd sizes and strong consumer demand for beef products. So, it may seem counterintuitive that ranchers continue to invest in various certifications available to them, but that's exactly what is happening. Based on direct customer feedback and video sale data, ranchers are capturing premiums of $100 per head for cattle that have been third-party verified to one or more of our standards. So, with the growth of our new offerings and in the belief that recovery of the cattle supply cycle is on the horizon, we remain bullish on the long-term prospects for our beef-related business.

As we've been emphasizing for some time, our work over the past 10 years to expand our solutions portfolio beyond animal proteins has been paying off for us in the form of new revenue streams that reduce our reliance on legacy verification solutions and reduce the risks associated with the limited product portfolio. Our organic certification business has in particular experienced strong growth this year. We now cover more than 1,500 organic operations, an increase of over 94 customers through the first 9 months of 2026. These customers represent more than 1 million organic acres of land.

New customer wins this year include fledgling organic food makers and more than 30 established operations that transferred to us from other certification bodies. The feedback we're getting from these operations highlight the responsiveness and timeliness of our service team and the advantages of our bundling program that combines organic with other certifications in a single audit experience. Our SOW Organic online tool, think TurboTax for what is an annual qualification process for organic certification, is also cited as a key factor in our customers choosing us for this work. The improvement we have made in gross margins is a great barometer of our success in this area.

In the third quarter, overall gross margins increased by 380 basis points to 42.1% from 38.3%. That included margin gains in both our certification business and product sales category. Through 9 months, gross margins improved to 40.5% from 38.9%. We're also pleased to note that sales, general and administrative expense in the third quarter was flat year-over-year and for the 9-month period actually declined by 3% or nearly $200,000. Operating income in the third quarter increased 68% to $1 million from $600,000. Through 9 months, operating income was up 52% to $1.9 million from $1.3 million. These increases are the direct result of higher revenue in conjunction with effective cost control measures.

As we noted last quarter, due to anomalous items below the operating income line involving digital asset valuation swings and a 2025 asset divestiture, we believe income from operations is really the most attractive measure of our profitability. Based on our solid profitability and strong cash generation, we continued our stock repurchase program in the third quarter, buying back 21,170 shares. That raised year-to-date buybacks to 110,651 shares and increased to $17.5 million the total value we have returned to shareholders since our buyback plan was initiated. And with that, thank you again for joining the call today, and I'll open the call to questions. Operator?

Operator: [Operator Instructions] Mr. Saunders, it seems there are no questions at this time. I'll turn the floor back to you for final comments.

John Saunders: Well, thank you all for joining the call today. We had a great quarter. We look forward to talking to you after the first of the year. Take care.

Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

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