Good morning, and welcome to the Where Food Comes From 2024 Year-End Earnings Call. Joining me on the call today are CEO, John Saunders; President, Leann Saunders; and Chief Financial Officer, Dannette Henning. During this call, we'll make forward-looking statements based on current expectations, estimates and projections that are subject to risk. Statements about current and future 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.
Good morning, and thanks for joining the call today. Total revenue in the fourth quarter was basically flat at $6.7 million year-over-year. Verification and certification services revenue was down slightly at $5.4 million versus $5.5 million. Product revenue increased 6% to $922,000 from $871,000, and professional services revenue was $360,000 versus $391,000. Gross profit in the fourth quarter declined 7% to $2.8 million from $3 million. SG&A expense decreased slightly to $2 million from $2.1 million. Net income increased to $961,000 or $0.18 per diluted share from $776,000 or $0.14 per diluted share. In addition to an $80,000 or 47% increase in Progressive Beef dividend income, net income benefited from a $345,000 gain in the fair market value of bitcoin holdings. As you may recall, we invested $178,000 in bitcoin a few years ago when units were trading in the $25,000 range. At December 31, year-end, bitcoin was trading at more than 3x that level in the $93,000 range, and thus, the gain in fair market value. On to our full year results. Total revenue for the year increased 2% to $25.7 million from $25.1 million a year ago. That total included verification and certification services, up 6% to $20.6 million from $19.4 million. Product revenue of $3.8 million, down 5% from $4 million. And professional services revenue of $1.4 million versus $1.7 million. By now, you know that our traditional beef-related source and age business has been hard hit by cyclical herd size reductions over the past couple of years, and that is what's responsible for the slowing growth in our top line. We believe the decline in beef source and age verifications and related hardware sales is a temporary cyclical occurrence. And fortunately, in the meantime, we are experiencing rising demand in a number of other service offerings that has more than offset the lower than source and age activities. For example, we are seeing good growth in our CARE Certified program in beef and other proteins. And as announced last month, our Upcycled Certified program has become our fastest-growing service with the 17% year-over-year increase in 2024. We're also seeing upticks in organic certifications, California Prop 12-related audits and poultry and egg-laying hens, on-farm security and worker care audits in the dairy industry. And finally, we continue to benefit from more customers taking advantage of our bundling capabilities made possible by our expanding services portfolio, the largest and most diverse in the industry. Gross profit for the full year was up slightly to $10.6 million from $10.5 million, and our gross margins remained generally stable year-over-year. The big impact to profitability came in SG&A expenses, which grew by $530,000 year-over-year. I want to provide some context around that increase because a significant amount of this additional expense was allocated to areas that enhance our ability to execute on our growth plans. Although some of the increase was due to wage inflation in a very competitive job market, the bulk of the increase was due to stepped-up marketing activities and some strategic hires of technical personnel who are strengthening our technology platform and tools to ensure we can manage the expected customer growth in both the short and long term. Net income for the year was down slightly to $2.1 million or $0.40 per diluted share versus net income of $2.2 million or $0.39 per diluted share in 2023. The company generated $2.7 million in cash from operations in 2024 versus $2.8 million in 2023. We entered 2025 with cash and cash equivalents of $2 million and working capital of $2.4 million. Turning now to our efforts to return value to stockholders. For the full year, including stock buybacks and private purchase transactions, the company repurchased a total of 273,057 shares of its stock for $3.3 million or approximately $11.97 per share. Aggregate buyback since planned inception 21 quarters ago, including private purchases, totaled 1,191,636 shares at a purchase price of $13 million or approximately $10.92 per share. Our pace of buybacks and private purchases has accelerated with 73% of that total coming in the last 3 years. And finally, total value returned to stockholders via buybacks, private purchases and special dividend over the past 21 quarters totaled $13.9 million. We expect to continue taking advantage of solid cash flows to further reduce our float, while at the same time, investing in new programs and services designed to strengthen our beef business and accelerate the growth of other service offerings. We look forward to providing more specifics on these initiatives in the coming months. In closing, we are now celebrating our 30th year anniversary in business. Our evolution has been steady, deliberate and very gratifying. In the founding stage, we identified a need in the cattle industry for traceability and began developing software to fill that need. In our next phase of growth, we made a bet that consumer demand for transparency would extend to other areas of the food supply chain, and we began building out our verification services portfolio to address other food groups and the growing trend of food claims labeling. We also rapidly grew our cattle business and established our IMI Global unit as the undisputed leader in cattle traceability in claims verification in North America. We invested heavily in a technology platform capable of managing a diverse services portfolio and ultimately, the much larger business that we expect to become. And we accomplished all of this through a combination of ground-up organic initiatives and strategic acquisitions. That whole process took years to accomplish due to regulatory and a myriad of other issues. Becoming an authorized certification body for a single standard, for example, can take up to 3 years to complete and begin generating a return on financial and human capital. That's why, as of today, we have a large moat around our business and a business that would be very difficult to replicate. Additionally, we are supported by consumer tailwinds around food safety, food traceability and food claims verification. We believe we are uniquely positioned as the go-to provider for producers, consumer packaged goods, distributors and retailers. As a result of these years of innovation and investment, we now audit to more than 50 different standards, far and away the most of any food verification businesses. And we can bundle any number of verifications to lower compliance cost prices for our customers and food prices for consumers in general. We believe virtually all of these individual standards, including a number of new offerings we have in the works, have the potential for strong growth in the coming years, and that bodes well for our stockholders.
