Where Food Comes From Inc (WFCF) 2008 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the IMI Global first-quarter results conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (OPERATOR INSTRUCTIONS) This conference is being recorded today, May 14, 2008, and will be available for replay.

I would now like to turn the conference over to Mr. Jay Pfeiffer, Investor Relations. Please go ahead, sir.

Good morning and welcome to IMI Global's 2008 first-quarter financial results conference call. During the course of this call, we will be making forward-looking statements based our current expectations, estimates, and projections that are subject to risks. Specifically, our statements about future revenue, expenses, cash, and the Company's growth strategy, market acceptance of the Company's products and services, and potential growth and profitability are forward-looking statements.

Listeners should not place undue reliance on these statements. 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 about the Company.

I will now turn the call over to Dannette Boyd, Chief Financial Officer.

Good morning, everyone. During my recap, I will be rounding numbers to simplify the presentation. For specific numbers, please refer to our earnings release.

IMI Global reported record first-quarter revenue of $725,000 in the first quarter, a 54% increase over revenue of $471,000 in the first quarter of 2007.

We continued to enjoy strong demand for both out USVerified solutions and our network offerings. In addition, we had a nice contribution to revenue from our e-learning offerings which John will address in a few moments.

Specifically, USVerified revenue grew 52% in the first quarter to $430,000 from $284,000 in the same quarter last year, as we continue to add new customers on both the producer and field yard sites of the business. Revenue from our networks represented by our CattleNetwork.com and CattleStore.com businesses also continue to grow, up 33% to $250,000 from $188,000 in the same quarter last year. E-learning revenue contributed $45,000 in the first quarter.

Gross profit increased 37% in the first quarter to $374,000 from $273,000, in line with growing our top line. Gross profit as a percent of revenues declined by 6 basis points to 52% from 58% and is explained by the fact that we have added a significant number of dedicated personnel on the USVerified site to service our growing number of customer accounts and support higher revenue.

Our selling, general, and administrative expense improved 24% to $423,000 from $558,000 year-over-year as we continue to monitor the category closely, consistent with our objective of transitioning the Company to profitability.

In addition to spending less on contract labor in favor of increasing our dedicated USVerified staff, as I just explained, the lower SG&A number reflected lower stock-based compensation during the first quarter.

Higher revenue in combination with a lower expense base resulted in a 79% improvement in our bottom line, where we reported a reduced net loss of $61,000 or less than $0.01 per basic and diluted share versus a net loss of $291,000 or $0.02 per basic and diluted share in the same quarter a year ago.

As an aside, our steadily improving bottom line has enabled us to increase our line of credit to $125,000 from $75,000. With that, I will turn the call over to John.

Thank you, Dannette. I would like to get a little color to Dannette's recap of our growth achievements for the first quarter. It was the sixth consecutive quarter of double-digit year-over-year revenue growth since we transitioned to publicly-held status late in 2006.

We have continued to narrow our net loss with the objective of achieving sustainable profitability. That we have achieved such progress despite the lack of significant startup capital is a testament to the efficacy and growing popularity of our product and service offerings, as well as to the hard work and dedication of the entire IMI Global team.

In less than two years, we have grown IMI Global from a promising young innovator to a leading provider of third-party verification and related network solutions for the cattle and agriculture industries. We have increased our base of producer customers from less than 500 to more than 5,000 farmers and ranchers throughout the nation, and now provide services to roughly 125 feed yards as well as nearly all of the country's leading beef import packers.

As proud as we are of the Company's past success, we are even more excited about the future. Steady news of beef recalls domestically, increasingly stringent meat export standards, and ever-changing consumer preferences have ensured a market for the kind of third-party verification services that we excel at. As a result, we're focusing more than ever on growing this segment of our business.

We have expanded our offerings into other livestock areas and developed some very promising opportunities to leverage our brand awareness into new and potentially lucrative labeling programs.

At the beginning of the second quarter, we announced that IMI Global became the exclusive worldwide marketing partner for the Born & Raised in the USA labeling program. This agreement positions IMI's customers to comply with federal Country of Origin Labeling, or COOL, legislation that mandates that all retailers of meat products in the United States must display a label on the package that identifies the country of origin of the product.

Our partner in this project has registered trademarks on the distinctive American flag logo that reads Born & Raised in the USA, with separate versions for beef, pork, poultry, lamb, fish, and wild game. The label is currently being used on a voluntary basis in certain retail stores as a means of promoting domestic meat products, but soon will carry much more weight as a mandated confirmation of country of origin.

We believe IMI Global's strong customer relationships involving third-party verification, combined with Born & Raised in the USA's distinctive logo and head start in the business, give us an excellent chance to establish this brand as an industry standard. We're currently evaluating potential revenue models that take into account the 87 billion pounds of meat produced in the US annually.

Switching gears, for those of you who didn't see our news release late in the first quarter, IMI Global was featured on CNBC's Power Lunch program, Mike On America. We think this coverage underscores the fact that IMI has arrived as a major player in the industry and merits the recognition we're beginning to receive.

We have posted a video on our website, and you can watch it by going to our home page at www.imiglobal.com and scrolling down underneath the News column on the left-hand side.

I would like to make one last point before opening the call to questions. Dannette pointed out that we are now reporting sales in the e-learning category separately due to its increasing contribution to the overall revenue.

Our e-learning solution is a highly customizable tool that enables users to standardize training materials, provide access to remote location, easily automate training modules, quickly update and modify, and assess employee competency.

This solution has been available to existing IMI advertising and USVerified customers for some time, but due to increasing popularity and contribution to revenue, we are now breaking out the revenue to provide greater transparency for investors and to illustrate how we can leverage existing customer relationships with new offerings.

Again, I want to thank you for joining the call today and for supporting IMI Global. We look forward to updating you on our progress in our next conference call. Operator, you can now open the call to questions.

(OPERATOR INSTRUCTIONS) That will conclude today's question-and-answer session. I will turn the conference back to management for closing remarks. Please continue.

Again, we would like to thank you all for joining today and we will look forward to talking to you next quarter.

Ladies and gentlemen, that does conclude the IMI Global first-quarter results conference call. Today's conference is available for replay. ACT would like to thank you for your participation. Have a pleasant day. You may now disconnect.