Longmont, Colorado, USA
February 13, 2025
S&W Seed Company (Nasdaq: SANW), or S&W, today announced financial results for the three months ended December 31, 2024.
Operational Highlights
- Repositioned to exclusively focus on core Americas-based operations, led by its high margin Double Team sorghum solutions, following the completion of Voluntary Administration, or VA, process pertaining to S&W Australia.
- Closed new $25.0 million credit facility.
- Implemented operating optimization plan to align cost structure to drive the business toward near-term profitability.
- Commenced a process to explore and evaluate various strategic alternatives that may be available in an effort to enhance shareholder value.
Financial Highlights
- Revenue for the second quarter of fiscal 2025 was $5.1 million, a 38.5% decrease compared to the second quarter of fiscal 2024.
- Gross profit margin for the second quarter of fiscal 2025 was 37.1% compared to 42.8% in the second quarter of fiscal 2024.
- GAAP operating expenses were $6.2 million for the second quarter of fiscal 2025 compared to GAAP operating expenses for the second quarter of fiscal 2024 of $5.7 million.
- Net loss from continuing operations was ($6.3) million, or ($2.73) per basic and diluted share, for the second quarter of fiscal 2025 compared to net loss from continuing operations of ($3.8) million, or ($1.66) per basic and diluted share, for the second quarter of fiscal 2024.
- GAAP net loss was ($1.7) million, or ($0.72) per basic and diluted share, for the second quarter of fiscal 2025 compared to GAAP net loss of ($6.5) million, or ($2.85) per basic and diluted share, for the second quarter of fiscal 2024.
- Adjusted EBITDA (see Table B) was ($2.9) million for the second quarter of fiscal 2025 compared to ($1.1) million for the second quarter of fiscal 2024.
Management Discussion
"Over the past few months, we have completed a number of important steps to reposition S&W for future success by exclusively focusing our operations on our core, Americas-based business, led by our high margin Double Team sorghum solutions," commented S&W's CEO, Mark Herrmann. "We believe these actions, including the completion of the Australian VA process, entry into a new working capital facility, and implementation of an operating optimization plan to align our cost structure, have dramatically improved the long-term outlook for S&W. With a streamlined organization and focused management team, we feel we are poised to truly benefit from our pioneering research and development of sorghum and camelina, two globally important crops where S&W has differentiated technology."
"Our outlook for the remainder of fiscal 2025 remains optimistic, with expectations that we will have positive adjusted EBITDA for the six-month period of January through June 2025. We look forward to the successful execution of our operating objectives in this important spring planting season as we look to drive continued value for S&W," Herrmann concluded.
S&W Australia
As previously reported, S&W Australia adopted a voluntary plan of administration on July 24, 2024, and on October 11, 2024, creditors of S&W Australia approved a proposed Deed of Company Arrangement, or DOCA, pursuant to which, among other things, 100% of the shares in S&W Australia would be transferred to Avior Asset Management No. 3 Pty Ltd. In order to facilitate the satisfaction of certain conditions to the effectiveness of the DOCA, on November 22, 2024, the effective date of the DOCA, S&W entered into:
- a Business Transfer Agreement, which transferred certain intellectual property rights related to alfalfa and white clover seeds necessary for S&W Australia's continued operations, along with certain related inventory, to S&W Australia;
- a Transitional Services Deed, which provided certain services to S&W Australia on a temporary basis to support the transition of services from S&W to S&W Australia;
- a Deed of Settlement and Release with S&W Australia, releasing S&W from all its net intercompany liabilities and obligations owed to S&W Australia; and
- a Deed of Release of U.S. Corporate Guarantee with National Australia Bank Limited, or NAB, releasing S&W from all liability under S&W Australia's finance agreement with NAB, which was guaranteed by S&W up to a maximum of AUD $15.0 million.
Strategic Alternatives Review Process
On January 13, 2025, S&W announced that its board of directors commenced a process to explore and evaluate various strategic alternatives that may be available to S&W in an effort to enhance shareholder value. S&W expects to consider a broad range of potential opportunities, including, among others, a sale of S&W, a merger with another strategic partner, a recapitalization or continued execution of S&W's attractive long-term business plan. There are no assurances the review process will result in S&W pursuing any transaction or any other strategic outcome, nor is there a timetable for completion of this process.
Financial Results
Total revenue for the second quarter of fiscal 2025 was $5.1 million compared to total revenue for the second quarter of fiscal 2024 of $8.3 million. This decrease was driven by a $2.1 million decrease in Double Team grain sorghum sales based on timing of private label shipping, a $0.9 million decrease in non-dormant alfalfa sales in the Middle East North Africa region driven by the import ban on alfalfa in Saudi Arabia, a $1.1 million decrease in sorghum sales in Mexico related to tightening of credit policies and carryover seed from the prior year in the market, a $0.5 million decrease in non-dormant alfalfa sales due to lower domestic demand, and a $0.3 million decrease in sorghum sales in South Africa due to limited supply of lower quality inventory compared to prior year. These decreases were offset by a $0.9 million increase in dormant alfalfa sales due to a strategic bulk sale of conditioned alfalfa, a $0.6 million increase in conventional sorghum sales in the United States due to increased available supply in the current year, and a $0.3 million increase in millet sales in the United States.
Gross profit margin for the second quarter of fiscal 2025 was 37.1% compared to gross profit margin for the second quarter of fiscal 2024 of 42.8%. The gross profit percentage decrease was primarily driven by an estimated 22.0 point decrease attributable to fewer sales of S&W's high margin Double Team sorghum, an estimated 7.0 point decrease attributable to the strategic sale of dormant alfalfa, and an estimated 3.0 point decrease attributable to the International segment related to lower selling prices in the Middle East North Africa region due to lower demand. This was offset by an estimated 26.0 point increase in margins attributable to the sale of North American conventional sorghum and S&W's non-dormant alfalfa business.
GAAP operating expenses for the second quarter of fiscal 2025 were $6.2 million compared to GAAP operating expenses for the second quarter of fiscal 2024 of $5.7 million. This increase was due to a $0.4 million increase in selling, general, and administrative expenses, a $0.1 million increase in research and development expenses, and a $0.1 million increase in loss (gain) on disposal of property, plant and equipment, partially offset by a $0.1 million decrease in depreciation and amortization costs.
Adjusted operating expenses (see Table A1) were $4.9 million for both for the second quarter of fiscal 2025 and the second quarter of fiscal 2024.
Net loss from continuing operations for the second quarter of fiscal 2025 was ($6.3) million, or ($2.73) per basic and diluted share, compared to ($3.8) million, or ($1.66) per basic and diluted share for the second quarter of fiscal 2024. Net income (loss) from discontinued operations for the second quarter of fiscal 2025 was $4.6 million, or $2.00 per basic and diluted share, compared to ($2.7) million, or ($1.21) per basic and diluted share, for the second quarter of fiscal 2024. GAAP net loss for the second quarter of fiscal 2025 was ($1.7) million, or ($0.72) per basic and diluted share, compared to ($6.5) million, or ($2.85) per basic and diluted share, for the second quarter of fiscal 2024.
Adjusted net loss (see Table A2) for the second quarter of fiscal 2025 was ($4.7) million, or ($2.05) per basic and diluted share, excluding the loss from discontinued operations, interest expense - amortization of debt discount, non-recurring transaction costs, dividends accrued for participating securities and accretion, and equity in loss of equity method investee (Vision Bioenergy), net of tax. Adjusted net loss (see Table A2) for the first quarter of fiscal 2024 was ($2.9) million, or ($1.27) per basic and diluted share, excluding the loss from discontinued operations, interest expense - amortization of debt discount, non-recurring transaction costs, dividends accrued for participating securities and accretion, and equity in loss of equity method investee (Vision Bioenergy), net of tax.
Adjusted EBITDA (see Table B) for the second quarter of fiscal 2025 was ($2.9) million compared to adjusted EBITDA for the second quarter of fiscal 2024 of ($1.1) million.
Fiscal 2025 Guidance
S&W expects fiscal 2025 revenue to be within a range of $34.5 to $38.0 million. This includes approximately $4.1 million of international sales in the first quarter of fiscal 2025. In fiscal 2024, comparable revenue from continuing operations was $38.0 million, which excludes S&W Australia activity.
Adjusted EBITDA is expected to be in the range of ($5.0) million to ($3.0) million for fiscal 2025. Adjusted EBITDA for the first half of fiscal 2025 was ($6.0) million, indicating that S&W expects adjusted EBITDA for the second half of the fiscal year to be in a range of $1.0 million to $3.0 million. In fiscal 2024, S&W's adjusted EBITDA, excluding S&W Australia activity, was ($6.4) million.
Financial Tables
For a complete press release including financial tables, please view online at: https://swseedco.com/investors/press-releases/.
Topics
Species
