WFCF

Core Business Positioning & Growth Strategy

• The company is the most diverse provider of food claims verification and certification globally, offering audits for over 50 standards across categories including animal proteins, wine grapes, and upcycled foods, covering popular claims such as animal welfare, sustainable practices, non-GMO, gluten-free, and organic.
• Growth has been driven by a mix of acquisitions and internal development aligned with evolving consumer preferences and industry trends, with a long-term strategy to build a one-stop shop for verification and certification services.

New Program Updates

• The new RaiseWell Certified program, which verifies animal welfare, natural practices, and end-to-end traceability, was adopted by Whole Foods Market for its beef supply in early 2026, with over 270,000 head of cattle already enrolled by participating ranchers. The company is currently expanding the program to cover chicken, turkey, pork, lamb, and eggs.
• CARE Certified and RaiseWell are core to the company's service bundling strategy, often paired with organic services to deliver customer cost and time savings while improving the company's revenue and gross margins.

New Initiative Highlights

• The company has partnered with the Potato Sustainability Alliance to provide on-farm sustainability audits that benchmark metrics including GHG emissions reduction, water management, food waste minimization, soil health, biodiversity, and responsible pesticide use.
• In May 2026, the company supported USAgrichar to become the first biochar producer in Colorado to earn USDA certification; biochar production supports soil health, long-term carbon sequestration, and reduces wildfire risk by using dead fire-damaged timber as raw material.

Capital Return & M&A Strategy

• The company continued aggressive share repurchases in Q2 2026, buying back approximately 65,000 shares, bringing year-to-date repurchases to nearly 89,500 shares. Since the 2019 program launch, the company has returned over $17.2 million to shareholders.
• After a roughly 3-year pause in acquisitions, the company is renewing its focus on M&A to accelerate growth, with the key requirement that any transaction be immediately or near-term accretive. No transactions are imminent at this time.
• The company will file a shelf registration statement in the near term to gain greater financial flexibility and faster access to capital for opportunistic M&A, which is particularly useful during periods of market volatility.

Management did not provide specific numeric financial guidance for full-year 2026 or future quarters, nor did they announce any upward, downward, or maintained revisions to prior guidance. The only forward-looking statements relate to strategic initiatives: the company will expand the RaiseWell Certified program to additional protein categories, pursue accretive M&A opportunities after a multi-year pause, and file an upcoming shelf registration to position for potential M&A activity.

The call does not provide separate reported financial results for the company's three business segments. Total company Q2 2026 revenue increased slightly year-over-year to $6.6 million, with core verification and certification revenue reaching $5.4 million (up from $5.3 million in Q2 2025). Gross profit grew 9% YoY to $2.7 million, with gross margin expanding to 40.6% from 37.5% due to cost efficiencies across all three segments. Operating income rose 21% YoY to $665,000. Net income was $413,000 ($0.08 per share), down from $562,000 ($0.11 per share) in the prior year quarter, due to a $240,000 noncash negative swing from fair market value adjustments of digital assets and the loss of $50,000 in dividend income from a divested stake. For the first half of 2026, total revenue increased 1% YoY to $12 million, verification and certification revenue grew 3% YoY to $9.8 million, and operating income increased to $963,000 from $691,000. As of the end of Q2, beef-related business makes up roughly 50% of total company revenue, with non-beef certification and verification making up the remaining 50%.

The primary risk discussed is ongoing headwinds to the company's flagship beef business, driven by fewer cattle moving through the supply chain and record high beef prices, which creates volatility in this large revenue segment. Other risks noted include the uncertainty of forward-looking statements, as many factors could cause actual results to differ materially from management expectations. There is also inherent risk associated with potential M&A transactions, and no guarantee that opportunistic deals will be completed on accretive terms. The company also cited unidentifiable speculative volatility in its public stock price, which created two recent spikes above $20 per share with no clear company-specific cause.

Q: What caused the two recent price spikes that pushed Where Food Comes From's stock above $20 per share?

A: Management worked with NASDAQ market surveillance and investors, but cannot pinpoint a specific cause for the spikes. Their best deduction is that a speculative investor wanted to accumulate a position in the stock and was willing to bid up the price to do so, with no identifiable insider or fundamental catalyst.

Q: How is the company positioned to capitalize on renewed industry focus on food safety and animal disease outbreaks like Cyclospora and screwworm?

A: For animal diseases like screwworm, the company administers activity for CattleTrace, a nonprofit focused on voluntary animal identification and traceability, and has years of experience conducting biosecurity audits and building secure beef supply plans. All of the company's beef programs require electronic identification, which supports outbreak response, and management has held direct discussions with the USDA on this topic. For broader food safety, the Validus Verifications division is a leader in Safe Quality Food (SQF) on-farm audits, which are increasingly required by large retailers like Walmart. The company does not currently provide food safety verification for leafy greens and low-value vegetables due to high associated risk.

Q: Will the company consider breaking out financial results for non-beef certification separately from the beef business to help investors see non-beef growth more clearly?

A: Management confirmed that beef currently makes up roughly 50% of total company revenue. They appreciated the suggestion and will take the request to separately report segment results under consideration, noting that the full portfolio of beef and non-beef services allows the company to provide complementary full-range offerings to large retail customers like Whole Foods and Walmart.