S&W Seed Company Q4 2024 Earnings Report

In a recent earnings call, S&W Seed Company (SANW) reported mixed financial outcomes for the fourth quarter of fiscal 2024. The company saw significant growth in its Americas business, with its Double Team sorghum technology generating $10.9 million in revenue, marking a 68% increase from the previous year. Despite the positive performance in the Americas, the company faced challenges internationally, particularly with its Australian subsidiary entering voluntary administration. Total revenue for the fiscal year was down to $60.4 million from $73.5 million in the prior year, with a reported GAAP net loss of $30.1 million.

Key Takeaways

• Americas Sorghum-related revenue increased to $20.4 million, up 10% from the previous year.
• Company-wide gross margins improved to 26.2%, exceeding the forecast range.
• Operating expenses were below expectations at $30 million.
• The Australian subsidiary's sales significantly decreased, leading to voluntary administration.
• S&W plans to launch new sorghum traits, including the second-generation Double Team trait (DT2) and Prussic Acid Free sorghum.

Company Outlook

• S&W Seed Company is focusing on launching high-value products, such as DT2 and Prussic Acid Free sorghum, expected to add significant farm value.
• The company is working on optimizing inventory to enable aggressive sales growth.
• A detailed operational outlook will be provided during the first quarter fiscal 2025 release in mid-November 2024.

Bearish Highlights

• International operations faced challenges, with the Australian subsidiary entering voluntary administration.
• Total revenue for fiscal 2024 decreased to $60.4 million from $73.5 million in the previous year.
• The company reported a significant GAAP net loss of $30.1 million for fiscal 2024.

Bullish Highlights

• Double Team sorghum sales increased by 68%, with high expectations for market coverage in the coming year.
• Gross profit margins improved due to higher-margin product sales and cost savings initiatives.
• The Vision Bioenergy partnership with Shell is anticipated to develop Camelina for biofuels, with a commercial launch expected in 2025.

Misses

• Sales in the Australian subsidiary were significantly below the forecast range of $45 million to $50 million.
• A GAAP net loss of $30.1 million was reported, compared to a net income of $14.5 million in the prior year.

Q&A Highlights

• CEO Mark Herrmann remains enthusiastic about the Double Team technology, projecting it to cover 13% to 15% of U.S. sorghum acres.
• The full launch of Prussic-Free is anticipated to drive further market growth.
• The company is maintaining cost disciplines and evaluating corporate expenses in preparation for the new fiscal year.
• Discussions with a new lender suggest funding is secure for the upcoming year.

S&W Seed Company's mixed results reflect a year of transition and strategic positioning. While the Americas business shows promising growth, the international challenges underscore the need for continued innovation and market expansion. The company's upcoming product launches and cost management strategies aim to bolster its financial health and market presence in the future.

InvestingPro Insights

S&W Seed Company's recent financial report reveals a complex picture, with promising growth in certain areas offset by significant challenges. SANW's market capitalization stands at $5.18 million, reflecting struggles, and the stock's price-to-book ratio of 0.13 indicates market skepticism about the company's prospects. Concerns arise from SANW's significant debt burden and poor stock performance, with a decline of 82.76% over the past year. However, analysts anticipate sales growth, driven by Double Team sorghum technology and upcoming product launches. SANW does not pay dividends, focusing on growth amidst its financial challenges.

Full transcript – S&W Seed Company (SANW) Q4 2024

Operator: Good day, and welcome to the S&W Seed Fourth Quarter 2024 Earnings Conference Call.

Robert Blum: Thank you for joining us today to discuss S&W Seed Company's financial results for the period ended June 30, 2024.

Mark Herrmann: I'm excited to speak with you today. The Americas business shows strong growth, especially in Double Team, which increased 68% year-over-year.

Vanessa Baughman: Total revenue for the year was $60.4 million compared to $73.5 million last year. Overall, good progress was made despite challenges in Australia.

Mark Herrmann: The upcoming innovations like DT2 and Prussic-Free will play a crucial role in our growth.

Operator: We will now begin the question-and-answer session.

Ben Klieve: Regarding Australian operations, could you break down the EBITDA loss embedded within Australia?

Vanessa Baughman: We’ll disclose segment reporting with the filing of our 10-K today.

Mark Herrmann: We're confident in growth and our new product launches.

Operator: This concludes the call. Thank you all for attending.