Where Food Comes From, Inc.

Greetings. Welcome to Where Food Comes From First Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Jay Pfeiffer of X Relations. Thank you. You may begin.

Good morning and welcome to the Where Food Comes From 2026 first quarter earnings call. Joining me on the call today are CEO John Saunders and Chief Financial Officer Danette 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, please go ahead.

Hello, and thank you for joining the call today. This morning in our first quarter results news release, we were pleased to announce year-over-year growth and return to profitability. Verification and certification revenue increased 6% in the quarter to 4.4 million from 4.2 million, while product sales edged up slightly to 713,000 from 702,000. Total revenue increased nearly 2% year-over-year to 5.4 million. This growth, which we achieved despite persistent headwinds around tariffs and a smaller herd size, was driven by steady new customer wins based on increasing demand for a range of certifications we provide. And for all the challenges on the beef side, I'm happy to report that many of our new customers are for beef-related services. A highlight on the beef side has been the Raise Well program that we launched in the first quarter of 2026. RaiseWell offers branched high-end retailers and food service operators a great way to attract consumers seeking premium protein products that have been verified back to the source of origin as having been responsibly raised, meaning they have not been given antibiotics or added hormones and have complied with rigorous animal care requirements throughout the life of the animal. The RaiseWell launch has gone very well thus far. market as the first major retailer to adopt the program for its beef supplier. And we are generating meaningful revenue now. Raised well is also available for other proteins, including pork, bison, lamb, poultry, eggs, and dairy. In terms of product sales, we are experiencing lower volumes in line with fewer head of cattle being put through the system and temporary tag subsidies offered to ranchers. Despite that, our product revenue is slightly higher year over year, reflecting increased demand for premium tags that offer more features that our ranchers are looking for. As we mentioned last quarter, the cattle industry is going through an unusual period of disruption due to confluence of many factors. But with this disruption comes many opportunities. One of those is a potential opportunity to demonstrate our unique capabilities in response to an animal disease outbreak. As you know, the Mexican cattle industry is experiencing an outbreak of what is known as New World Screw Worm. This outbreak has been steadily moving north and now involves several Mexican states bordering Texas.