Where Food Comes From Incurs Loss in Q4 Amid Beef Industry Headwinds

Shares of Where Food Comes From, Inc. WFCF have declined 2.7% since reporting earnings for the fourth quarter of 2025. This compares with the S&P 500 index’s 0.3% growth over the same time frame. Over the past month, the stock has risen 7.3% against the S&P 500’s 1% decline.

In the fourth quarter, revenues declined to $6 million from $6.7 million, and the company reported a net loss of $0.2 million, or 4 cents per diluted share, against net income of $1 million, or 18 cents per diluted share, in the prior-year quarter.

For 2025, total revenues declined to $24.9 million from $25.7 million in 2024, reflecting softer activity across the key segments. Verification and certification revenues, the company’s largest business line, slipped to $20.1 million from $20.6 million, while product sales decreased to $3.6 million from $3.8 million. Net income fell to $1.5 million, or 30 cents per diluted share, from $2.1 million, or 40 cents per diluted share, a year earlier.

Where Food Comes From Inc. Price, Consensus and EPS Surprise

 

Where Food Comes From Inc. price-consensus-eps-surprise-chart | Where Food Comes From Inc. Quote

Other Key Business Metrics

Gross profit for 2025 decreased to $9.5 million from $10.6 million in 2024, reflecting lower revenues and higher relative costs. Selling, general and administrative (SG&A) expenses edged down to $8.3 million from $8.4 million, helping partially offset the gross profit decline. Cash generated from operations totaled $1.6 million compared with $2.7 million in 2024.

Despite lower earnings, liquidity improved. Cash and cash equivalents soared 59% year over year to $3.2 million from $2 million at the end of 2024. On the capital allocation front, the company repurchased 183,016 shares in 2025, bringing total buybacks since plan inception to 1,374,652 shares at aggregate costs of $15.2 million. In the fourth quarter alone, 66,469 shares were repurchased.

Segment-level results for the fourth quarter showed verification and certification revenues declining to $5 million from $5.4 million, product revenues decreasing to $0.7 million from $0.9 million, and professional services revenues falling to $0.3 million from $0.4 million. Gross profit for the quarter dropped to $2.2 million from $2.8 million, while SG&A increased to $2.2 million from $2 million.

Management Commentary

Management attributed the year’s performance primarily to pressures in the U.S. cattle industry. CEO John Saunders said total revenues of $24.9 million and net income of $1.5 million were achieved as growth in customer wins and non-beef-related revenue streams was offset by reduced beef-related verification activity, driven by smaller herd sizes and tariffs.

Saunders noted that the U.S. cattle supply is at a 70-year low, leading to record beef prices and prompting some ranchers to scale back spending on certain verifications, affecting verification and tag sales.

He also highlighted that fourth-quarter revenues were affected by the unexpected closing of a packing plant that had been a key contributor to NHTC Natural and EU export certification programs. In response, executive management opted to return their discretionary bonuses, which will reduce SG&A expenses in the first quarter.

Factors Influencing the Results

The primary headwind remained contraction in cattle herd sizes due to drought and higher production costs, which management believes is near a cyclical bottom. While beef-related activity weakened, the company reported that verifications for pork, dairy and egg operations increased year over year, and certification activity in organic, non-GMO, gluten-free and upcycled categories showed gains. The ability to bundle services was cited as a competitive advantage that supports revenue growth and margin strength.

Other Developments

Strategically, the company launched RaiseWell Certified, a new animal care and traceability standard beginning with beef and expected to expand to poultry, eggs, dairy and pork. The Whole Foods Market became the first major retailer to adopt the RaiseWell program, which management views as an endorsement likely to drive broader adoption. Additionally, the company continues to advance its role in U.S. CattleTrace, serving as administrator and providing technical infrastructure to support animal disease traceability efforts.

Management expressed optimism about long-term growth, citing signs that the cattle cycle may stabilize and rebuild over the next couple of years. The company plans to continue repurchasing shares in 2026, reflecting confidence in its valuation and prospects.

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This article originally published on Zacks Investment Research (zacks.com).

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