Organic and sustainability certification provider Where Food Comes From Inc. has reported first quarter net loss of $243,000 on revenue of $3.9 million, down 1.1 percent.
“The first quarter is historically our slowest quarter of the year – and Q1 this year was additionally impacted by the devastating effects of Covid-19 on the food supply chain,” said CEO John Saunders.
The Castle Rock, Colo.-based company’s (OTCQB:WFCF) portfolio of organic and sustainability certification and verification businesses include organic certifiers A Bee Organic and International Certification Services, the nation’s oldest organic certification company.
Other WFCF businesses include IMI Global, Validus Verification Services, and Sterling Solutions, as well as providing farming information management software-as-a-service (SaaS) and traceability services through its Source Verified retail and restaurant labeling program using QR codes to let customers access information about food producers.
Most of WFCF’s revenue is generated by its Verification and Certification Services segment, which posted flat first quarter sales of $2.8 million.
“We experienced reduced verification activity due to our customers’ no visitor policies as they strive to keep their facilities open while dealing with workforce shortages and shelter in place government mandates,” Saunders explained.
He said lower verification sales have carried into the second quarter “and will likely continue to some extent for the remainder of 2020 even as the economy reopens.”
Revenues for WFCF’s other three business segments included:
- Product revenue, up 13 percent to $725,000
- Software license, maintenance and support services (including intercompany sales*), down 32 percent to $233,000
- Software-related consulting services (including intercompany sales*), up 20 percent to $265,000
(*Sales from WFCF’s SureHarvest subsidiary of software and services to support company-wide technology initiatives not directly related to SureHarvest.)
Saunders said the company’s software business was “impacted by supply chain disruptions and customers delaying purchasing decisions pending more clarity on the schedule for reopening the economy.”
Meanwhile, WFCF’s gross profit for the quarter ended March 31 was $1.6 million, down 3 percent, and gross margin declined 90 basis points to 41.2 percent, while adjusted EBITDA loss for the first quarter was $40,000 versus positive adjusted EBITDA of $82,000 for last year’s first quarter.
In March, WFCF reported a 68 percent increase in 2019 net income of $1.3 million, or $0.05 per share, on sales of $20.8 million, up 17 percent. Adjusted EBITDA shot up 40 percent in 2019 to $3.3 million.
WFCF also said at the time that it had entered into the seafood space with the acquisition of Postelsia Holdings, a Canada-based provider of environmental and social sustainability programs for the seafood industry.
The company’s stock closed Tuesday at $1.65. The shares have a 52-week range of $1.40 and $2.50. WFCF has a market cap of $41.1 million.