Good morning, and welcome to the Where Food Comes From 2025 Fourth Quarter and Full Year 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 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.
Hello, and thank you for joining the call today. This morning, we announced 2025 financial results that included total revenue of $24.9 million and net income of $1.5 million or $0.30 per share. Once again, the steady growth we're achieving in new customer wins and non-beef-related revenue streams was offset by the impact smaller herd sizes and tariffs are having on our beef-related verification activity. Fourth quarter revenue was particularly impacted by the unexpected closing of a packing plant that has been an important contributor to our NHTC Natural and EU export certification programs. That closing had a significant impact on our prior internal projections management and the Board used to formulate discretionary bonuses for the year. Accordingly, executive management determined to return their bonus compensation to the company. As a result, the income statement in our first quarter 10-Q will benefit from a reduction to compensation expense in the selling, general and administrative category. As we've been discussing on our earnings call over the past couple of years, herd sizes have been steadily shrinking due to drought, increasing production costs and other factors. And today, the U.S. cattle supply is at a 70-year low. The shrinking supply in turn has led to record beef high prices. And in this environment, some ranchers have opted to reduce their investment in certain verifications that we provide, and this is impacting both our verification and tag sales. There are indications that the herd contraction phase of the cattle cycle is at or near a bottom and the industry should begin rebuilding the cattle supply over the next couple of years. In preparation for this recovery, we have been expanding our services portfolio with new certifications and working on other protein programs that we believe will position us for accelerated growth as the recovery gains momentum. I want to highlight a few of these initiatives to give you an idea of why we remain confident in the future of Where Food Comes From as both a growth company and as the food verification industry leader. Last month, we announced the launch of RaiseWell Certified, an innovative new standard for animal care verified natural raising practices and transparent fully traceable supply chains. The program is designed for brands, high-end retailers, and food service operators that want to differentiate their products based on integrity, quality, and certified production practices. RaiseWell requires animals to be responsibly raised at every stage of life with rigorous animal care requirements, no antibiotics or added hormones, and verified as a source of origin, all with the aim of creating traceability throughout supply chains that retailers and consumers can trust. We are rolling out RaiseWell in stages, beginning with beef and expanding over time to poultry, eggs, dairy, and pork. We followed up that news last week with an announcement that Whole Foods Market became the first major retailer to adopt the RaiseWell program. Whole Foods is widely recognized as a pioneer in advancing farm animal welfare, so its adoption of RaiseWell is an important endorsement for the program that we believe will lead to adoption by other leading retailers as time goes on. RaiseWell Certified seamlessly integrates with our CARE Certified standard, giving producers and retailers the option to bundle claims and create a unified audit-ready package that can include pasture-raised, outdoor access, grass-fed, and other verified livestock raising attributes. Another promising initiative on the beef side of things is a new collaboration with global automotive leather supplier, Pangea. In concert with Walmart and Prime Pursuits, we are introducing CARE Certified's sustainable leather to U.S. automotive brands. This first-of-its-kind program entitled Transparency in Motion leverages data-driven verifiable practices to confirm exactly how its materials are raised, cared for, and processed, making Pangea the first leather provider in North America to achieve traceability at this level. By becoming CARE Certified, ranchers can not only enhance the value of their herds but also connect with consumers who increasingly prioritize sustainable practices and ethical sourcing. I want to touch on one other beef-centric initiative that we continue to advance slowly but surely, and that involves animal disease traceability. I'll remind you that the United States is the only major cattle-producing country that does not have a mandatory traceability program, which is essential in managing and containing an animal disease outbreak. We have invested significant time and resources over the years to position ourselves as an integral player in what we believe is the inevitable adoption of a formal animal disease traceability program in the U.S. Our IMI Global unit is far and away the most experienced player in this space, having the technology, systems, and procedures already in place and in practice that can quickly be brought to bear in a comprehensive national animal disease traceability program. We are now working closely with U.S. CattleTrace, a producer-led private industry database to strengthen cattle traceability and support a secure U.S. beef supply. Unlike traditional point-to-point traceability systems, U.S. CattleTrace enables contact tracing, allowing animal health officials to identify animals and locations that may have been exposed during a disease event. This capability is critical for responding to highly contagious diseases such as foot and mouth disease. IMI Global serves as the administrator for U.S. CattleTrace. We provide the technical infrastructure and operational expertise needed to manage traceability securely while ensuring producers retain control, governance remains producer-driven, and data privacy is protected. Together, we are engaging with U.S. government representatives and entities to explore ways to advance and formalize an animal disease traceability solution. The cattle industry is going through a period of disruption unlike any other in our lifetime. As discussed, this has presented challenges so far that we are navigating successfully. But at the same time, it is creating opportunities for us to leverage our positioning and know-how to play a lead role in reshaping the industry as it begins the rebuilding process. Hopefully, some of this will give you a feel for why we're so optimistic about the long-term prospects for our beef-related business. In the meantime, our non-beef-related business lines continue to grow and prosper. For the past 10 years, we have been building out a highly diverse and dynamic solutions portfolio, adding new customers for new services, generating new revenue streams, and reducing our reliance on the beef industry. Verifications for pork, dairy, and egg operations all increased year-over-year, and our CARE Certified program continued to attract new customers in a variety of proteins. Similarly, certification activity for organic, non-GMO, gluten-free, and upcycled products all show gains. In addition, we continue to benefit from a unique ability to bundle services, a competitive advantage that saves our customers time and money and contributes to revenue growth while helping us strengthen our margins. Given the growth of our solutions portfolio and customer base and our optimism about our overall business prospects, we believe our shares remain an excellent value at these levels, and we expect to continue repurchasing stock in 2026. In 2025, we repurchased 183,016 shares, raising total share buybacks and private purchases since planned inception to 1,374,652 shares, totaling $15.2 million in value returned to shareholders. And with that, thank you again for joining the call today, and I'll open up the call to questions.
