S&W Seed (SANW) 9 Nov 232024 Q1 Earnings call transcript

Good morning, everyone, and welcome to the S&W Seed Company Reports First Quarter Fiscal Year 2024 Financial Results Conference Call. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Robert Blum, with Lisan Partners. begin. may you Sir,

September you to and First discuss financial quarter Year Thank the us the company conclusion Baughman, of joining Quarter you call remarks, open Interim representing today's and the us Chief for XXXX Officer; ended the Officer. the for session. today are prepared S&W today call Chief a results XXXX. Herrmann, very Financial Mark Executive right. With thank on much, for Fiscal XX, Vanessa All Seed company's the question-and-answer At Company's we'll

with Section XXA that contain course may begin of the of of the we S&W the made team Section call conference forward-looking provisions forward-looking Before made prepared statements statements remarks, Securities note management the the XXXX this statements the within amended please Seed of the Exchange Securities during as harbor Company of of are Litigation by such Act Securities meaning XXXX. Act safe as of XXXX and the XXE of amended, of Private Reform to and pursuant Act

filings that cautioned by eventually are differ future uncertainties projected. for statements identified to ended of the that with or strategies actual Securities preceded circumstances, risks generally made or various should, those from materially fiscal may company's and of including as are future projected planned, risks and XX, as events the and results XXXX, anticipates, XX-K and plan results words forward-looking company plans, results factors projected subject differ in such in expected, statements in to draft, Forward-looking result Commission. other a and June by year a subsequently forward-looking the may, are statements, the the those Exchange will materially statements or Listeners the future, the other expectations, that risks describe such or or multitude could cause from

will net as accepted to In GAAP, accounting non-GAAP reported measures or EBITDA comprehensive addition, meant GAAP EBITDA isolation of on this that loss adjusted principles. are to has the at on which Mark, of today's description the of issued call been generally Investor and today, call. reconciliations will available U.S. call comparable With let historical for me These accordance in in Investor replay substitute any and S&W S&W principles end Herrmann, Executive be are C or accounting Relations page. recording posted on under A not be EBITDA results Chief rules to discussing a financial be also or of the set included financial over turn for with not proceed. online supplement S&W's of adjusted to adjusted are earnings and S&W's conference Relations considered said, S&W's measure prepared the page An earlier for please audio Mark Company. webcast website. the company's release Officer

Robert, you, good Thank of to morning all and Yes. you.

improvement point is and in but overall laid I'm first heels bit comments and As to about rationalization management profit forage today's costs, initiatives operational Stevia the call. margin year instituting quarter, improved towards $X.X term, profitability to reduction level, I reduce resulted drive Q&A sales to business compared the certain during on a our higher in ago At the out XX.X%, of progress during first high the of including details solid made of quarter in key treatments, sales basis that initiative session seed the the we XXX cost early EBITDA. the a These a of our a of program DT improvement and lines million product than near with manufacturing which the last obsolescence such ago. more any margin certainly on to year-end our place gross plan. comes on took available my adjusted development along brief I call quarter, suspension that conference I'll life keep cycle this call call, days today Seed year-end the XX as a our did low-margin expand of and initiatives, alfalfa

quarter approximately As quarters, most of our primarily year, of of revenues shipments. quarter. one the is forage the point, of in you forage of that September, fiscal ends our know, revenues the first seasonally smallest first during which consisting To were XX%

I is progress throughout the the set made of up first our for ramp Sorghum during well continued the gross especially believe the fiscal particularly front, XXXX year, during Solutions. strong stage the quarter, on we quarters when Given shipments double-team of margin improvement the later

Our focus detail as point, of products. forage delivered expand result guidance annual on targets our momentarily. a we numbers by areas that key To Technology that our based on financial our Solutions that quarter the our year-end X with our fall effectiveness within strategies business support management operational focus, more expectations be the define team has call. and first optimizing Vanessa the will been of Sorghum to during and in provided will

industry are Beyond best-in-class progress sorghum align continued S&W standards making our seed excellence to and developmental both Team Double grain sorghum. to off trait build forage solution, our on momentum focus product within of technology with that operational first lines, we

and on Team response value we sorghum critical his large from robs of been the accounts been and has acres launch than estimate XXXX, Double based team, in we ultimately only sales control not water, companies. United innovation Double X% most in This States grain the tremendous taking green void the as product all has next which special unique of crop. for calendar In the and in which its positive. and year of conversations Team achievement the by in weeds for CEO, this to you to innovation for Double point broader our XXXX to since calendar what crop, with a for customers today my launch only sorghum in universally be is sorghum, will any to grassy commercial year a agricultural believe more over product this Team nutrients, also limited the yield demand know, demand Since the As available but truly highlights grow XX% product. and is

said have all cotton for past, from investments corn technologies. benefited advanced I growers weed research control in soybeans, tools have As in the and

to has is this from simply cereal to not being sorghum benefit S&W However, despite positioned innovation benefited ideally globally, point the from fifth-largest this. crop

revenue to compared sorghum, execute to million between we Team While on would we we to be fiscal sorghum remember, $XX.X XX% increase ensure $XX XXXX. to Double represent million, fiscal objectives XXX% expecting for sales our XXXX are trade of total which grain an

sorghum new of also traits. We introduction are through innovate looking to with the continually

expansion we system control in sales its has have expected similar introduced we to already of is it sorghum sell the out the of year grain Team seen with a continue strong, Double what and Double penetration curve in this year. sorghum. forage First inventory weed this been to expect demand Team Q on Early being initial with and

Second, with and to for on acid-free previously we dhurrin-free, then prussic a prussic acres What acid-free we trait shortly few called with Double Team. pilot commercially as we our trait trait XXXX, year. thousand are set to launch commence launching being a trade a expect sorghum. a stack plan We solo initially be providing our in after, this of planted

broad-spectrum developing as in insect-tolerant stage XXXX resistance our trait a for in herbicide and we launch a which an are to pipeline, second-generation in and trade herbicide post-grass trade plan discovery Finally, well. trade, we

better key clearly today a profile are can key than temperatures the climates and in nutrient due other the becoming as the provider its dryer We key that a global for many to be sorghum, market of technology crop crops. to used higher on ability handle substitute grains and

today we the these our traits expansion While remain through focused independent on on traits international focus of our Partners sales our companies, driving and is well. of brand S&W-owned seed domestic with as partners through Sorghum

Mexico, grown As X.X I acres key there are mentioned Australia. Argentina, of the X there million being Remember, sorghum quarter, about are Brazil, X.X acres and last in U.S. in million countries: approximately

and S&W it for was XXXX the to driver would breeding X traits. from X the this with back regions, opportunity. years, is about key that market drive and/or market-leading executing may on will typically is double in while spending to as addressable align And U.S. take with. focused of strategies long-term process segment. are than valuation as in the a contributor creation penetration not to we with through licensing recently look in Within A we we came maximize Australia. us to to germplasm So mine seed process growth X efficiencies a operations, I implement this more to have independent these revenue growth This of In weeks same internationally and brands forage it our be many companies market focus current can our underway. non-U.S.

that and world. forage capabilities to production developing Specifically, to of of the highlights we sold, our benefit sales down looking our approach while the around a goods optimize are drive cost marketing solutions

and streamlined elements is reaffirmed of is of throughput to To the sales business chain core operations. efficient is key has and portfolio passers help cost. One begun more business this existing of export headcount strategy all to into and some the is of MENA at sure this domestic include more that the tightly focused footprint and The alfalfa overall this drivers region. and with profit, support the facilities, process can commitment reduced this into its affirmation. alfalfa Australian supply now is which which Australian of product result sales forage both reduction closure into of strategy, on accommodate the align reinvestment has underutilized Australian the facilities to rightsizing this also making some remain its Further categories the

leading protection to you As update seen for Shell crop one world's may a announcing agreement press to to bring the renewable they solutions the of Camelina that Adama, protection growers. a with market development joint and quick BBO companies release issued have of crop new biofuels, our into suite a for entered partnership

sorghum solution a with herbicide. partnered our first-act with As also is their Adama Double Team cropping background,

development We and the are and to this farmer see dividends to VBO developing be that brought customers. Camelina industry excited to the can

from are this the forward. organizational going you ensure will and company. best-in-class the last hope it a Every becoming as shareholders keenly C on we focused data-driven took our we call customers I to and make decision operationally impact one As is on away positive well, have

operational geared that in with instilled cash near a margin initiatives The the first both towards engagement results done. margin, the the term. pleased long creation We business still finance customer and I know and value gross decisions but is be increased allow of on the we have instituted analysis satisfaction lot financial and management. of we work to to quarter, have particularly with shareholder there am are both for the improvement, cost, with drive all impact team

we then it now then and I'll Vanessa? review to Vanessa can turn provide your detail. to questions. Let address a in me over final few financials the words,

Thank today. you, everyone Mark. call the morning to on Good

me in through to details million of sales year. run million international sorghum in starting and revenue QX sales of quarter, versus $X.X it was $XX.X sales for million forage having to Team $X.X compared this, further, versus Breaking Let million basically the were QX year. of the million Total $X.X were last were $X.X million down year. compared last QX million million the prior U.S. XXXX $XX.X $XX.X $XX.X compared Of year. revenue. sales in last to forage Double million $X.X was sales no with

QX primarily is quarter. a As fiscal Mark forage said,

the $X.X conditions geographically, disrupted to market. planting. causing discount not due $X.X we our million saw nondormant wet had a in mass nondormant million alfalfa a Looking decision MENA at Mexico maintained we decrease We as European to alfalfa cheaper in as see decrease it

a and from increase of sorghum historically a X.Xmillion Double increase alfalfa customer, lost increase We logistical carryover the planting $X.X a in inventory fiscal million $X.X been was And new in using Asia a Team sort sort million mentioned pushed South of sales. that sales to in QX decrease XXXX, into due related delivered $X XXXX challenges of decreases previously prior sales year in also to were by Australia dry COVID a $X.X to had million million sales revenue. Africa QX the conditions. XXXX, due had offset in in These leading decrease into to addition

we fiscal $XX for guidance fiscal year we revenue XXXX mentioned, million compared are an million which $X.X Mark with As and maintaining provided represents to in expected $X.X expected million. to the increase to September, be XXXX of $XX.X million, revenue $XX million of between

to million anticipating million revenue is are $XX million Within an million between Sorghum-related to reminder, double sales in total $XX.X million, a be increase $XX sorghum, compared to As teen $XX.X to and in XX% XXX% XXXX. fiscal XXXX. $XX expected of to fiscal compared to be we

to be U.S. in to revenue on see side, the And $X million million forage are million compared to On XXXX. we we about operations, $XX compared million to the year. last $XX.X international revenue expecting of finally, $XX.X $XX million fiscal

GAAP do higher the the solution sorghum of North charges activity Further, alfalfa highlighting life of double in Now were we of margin note XX.X% by XX.X% first of competitors. America. XXXX. 'XX due to some in certain LCM and to global our margins. the improved better to for market want margins from gross turning nontraded nondormant pricing to quarter seeing margins market, fiscal improved that cycle primarily our inventory in quality seed increased decrease, quarter a margins, to teen the the driven The was sorghum within to first GAAP gross fiscal of global improvement compared the sales management. I in due continue alfalfa hitting are discounted inventory margin recent market

to to ensure inventory pricing achieve best our invested We on will maintaining on management the our look against focus we return manage strong capital.

clarity rather coming XXXX, the alfalfa fiscal between XXXX. XX.X% taken revise more conservative expectations in full-year want potential or account the believe extent maintain X, gross quarter and a have strong in fiscal compares XX%. to to on any for market expectations, have this XX% quarter, view charges first at we to Remember, we the any to despite will we factors. we that we be LCM inclusive for Looking these the needs these but look to of our To to margins,

were expenses improvement $X.X $X.X provided down amortization. a the and transition to it this from expenses This and of a last for for we which Again, $X.X is is inclusive to a quarter for first expectations Breaking Operating saw in in which expenses. we'll calls by million depreciation improvement total in amortization. quarter with operating of consistent million, million, the and first expenses with the was million fiscal our consistent depreciation September, administrative selling, year. increase Now bit, a R&D is and be $X.X expenses. $XX.X operating offset which year general million

million. $X.X is to Now QX improvement XXXX $X.X to press for a $X.X fiscal in of EBITDA. an adjusted $X.X approximately $X $X.X we are of between maintaining XXXX represent to to negative the was of guidance This Adjusted million. XXXX, of improvement Again, fiscal would compared adjusted our million be million million negative release. an to negative EBITDA negative million A for EBITDA XXXX. negative of reconciliation $X to EBITDA fiscal available QX million in compared full

last was income diluted negative a net XXXX net QX negative share of GAAP the diluted or net on negative line. per Finally, basic the loss GAAP $X.X for and or compared $X.XX of to $X.XX loss million fiscal and million year. a in share negative $X a fiscal QX basic per

previous to in As a due loss discussed we calls, incur of equity DLF. interest will method in our

amounted that is S&W. $X.X expense of During This this year, QX to to a noncash million.

number level calculation. some adjust DLF in will all agreement for in the continue said, to as adjusted non-GAAP last and net adjusted out it will buy losses EBITDA, grain only noncash place press in it such, carried not but And equity be a the with partnership Shell that a this to confirm, EBITDA track grain more offtake release, but the our out adjusted produces on provided That of touched remains our that planted. see in well. quarter, net Mark income initial as is Camelina this acres to X,XXX expected on our therefore, this to of we number. later of upon production will be calendar than we just in and through have to similarly year the We the is reconciliation future. adjusted for adjustment method

from discussed expected this also million operating from of negative our we closely As our we last year. payment receive adjusted Despite to February translates cash a any Shell $X expectations, EBITDA the in needs payment utilization, is quarter, to which cover are XXXX. scheduled cash to rather Shell

position and parts across continue initiatives is containment that our in XXXX benefits growth organization, sorghum the thought is and remaining able cost on the will fiscal of we're it stability to achieve technology a Beyond the the of the Again, portfolio I the call the or positive up back details flow a to turn in follow in me happy through. went any of with be cash questions near let am future. any Mark. With the over to we that,

fiscal all in to as Thank Australia. sorghum, you, higher from was The a from with introduced create the even team functions best-in-class to your and to crop S&W plan want thank making Operator? to and what practices excitement S&W's progress stating have taking is questions. of technological their I progress focus to S&W benefit introduce company therefore, over continued today to standpoint, for your until leading and commercial from I We I'm support to just my to with and innovation a you on XXXX and wrap we severely future. continued development took a S&W, a date by be trip making I look I from commitment look underserved pleased especially dedication recent to recent throughout is ripe to evident, forward in up laser after with Vanessa. up that operating set across passion forward the my in best-in-class July. bottom. than drive progress we're top and the this traits to

at time, [Operator begin gentlemen, we'll the Instructions]. and this Ladies question-and-answer session.

today comes Street. Klieve from question Ben first Lake Our from

recent operation. down kind to making couple efforts to like Mark, your a Australian Australia ask and some on there. restructuring the First, of I'd you trip noted

the kind that, is which of been flow kind fact there's type that timing late an review calendar 'XX last strategic ongoing of there event? a ongoing as had does of an Given of news communicated shift restructuring of operation expected that the out that

down With I talked is of high margin we've the the create a Australia level it's And evaluation position. of one key the opportunities about, what and say consistent trip there, opportunities of to strong efficiency with would value. of

So Triangle them, with regardless is Research station. There's our you I across any traveled site was there of which stretch opportunities But others, weeks, the for had exception miles of as significant every visit, Ben, every with to and Australia. we a minor been turn. position of other the X one

that because of was as I it's and that think to effectively highly forward. as those business but are there to brought we at at including And have profitability overall As was members, putting looking you streamline we efficiently team it was lead those looks highly there look be at moving the how opportunity and contribution as a or several with take together. year for to in facilities, strong and like opportunities, looking go of of actions as at was businesses as what Australia improvement actually And the with business, all But needs in traveled together, probably drives it it Henley, seems run the through for new organization and consistent talked got Australia, of place. before going a company I to plans going with. all it all about acquired lot be profits recall, how who to gross is if forward a the announcements lot and primarily I opportunities works handle we'll are on they he's Cameron efficiencies, the profit to what place

Okay.

at a Is increased kind the kind in you dynamic this called bit could thinking couple impact a you a out the short-time for On sustainable coming midterm? Can this a a for low-cost business quarters? on the the may that here that here be several supply alfalfa for quarters. kind impact business elaborate Alfalfa the this? next could of of maybe is of just that you're of Or event least business,

recent on derisked something last the lessened about for definitely guidance weeks we'll talked by obviously that watch. have continue months. based over our or it's heard the And But you with we which not, as concerns we even pressures geography, MENA geopolitical any right, means, our call the to Yes. have fact with quarter,

and alfalfa alfalfa we pretty of a and typical have seen period, the in missed of but has forward. in and significantly in margin we've the orders the years. over some mindset low would business participated be profits alfalfa filled not that The in positive a which price, recent market, position, to led So have low is orders shifted volume the the quality better that go shift actually has which as time margins, orders better we we

happens the exited on that portion Corteva in call well as germplasm So selling a again the aware I'm sure a varieties the of alfalfa as all portion has the the as to question leaves individuals of DLF. that with and the business, are to volume. in inventory happens that DLF ones acquired products what those also by But weren't what that still with

at get clearly there's a So volumes at potentially as those short-term of price risk go out points. some cut least margins below-cost-of-production that

player as players we'll you monitoring So no Corteva being be major really alfalfa. one, significant looking at again, a mentioned, with that. now the only multinational then X But exiting leaves that now business in alfalfa it, longer term, with and S&W

actually could that longer stability more it to So term marketplace. offer

we're see pricing to lineup, down. or got plays. we position to drive closely. monitor signaling But the very, in chosen longer-term term and I it's place to going We've varieties for market the high working profitability some on that out versus margin. margins So have having going we're to very change future in the it's change alfalfa could also then the to the is more not, general, drive participate region and our them but volumes monitor maintain but revenue positive something potentially for to something than the purely high-valued there both and in not volume our We've in versus quality low very short

get then for in queue. more and me back One I'll

build planned plan for type excuse of to for of of inventory next inventory have R&D year. really excuse just Can can characterize ahead earmarked we level now acid-free, year kind testing that you out production forward called right -- because Yes. be sales. me, thousand We or acid prussic-free acres look as several into launch? for uses we build any between how didn't next build You you the me, sales, 'XX ongoing for build acreage, versus this prussic being production commercial year that a for plan for much for

forward. forage value is either it in product quickly the volume that and technology, to the And then forage well the all grazing we targeted broader particularly production it why move to as S&W. views And really, excited be us which see opportunity is launch going as was customer as trials, acid-free for year to a for as will next positioned which being sorghum forward. So farm, be look opportunity testing a this to pilot really the broad-acre at add ramping we'll offers margin as we for production farmers side, up pieces, as prussic think add continue it well a And is launch. year to as come I we're DT sorghum, to stacking for also broad we to

remarks. showing time, additional the this [Operator questions. I'd management any over floor to Instructions]. at Ladies closing gentlemen, and for turn I'm to back no like

for efforts. of I at team a get cost it, And those cost year, get moves Well, only thought portion implementing this everybody we S&W know one, savings implemented maybe savings leadership midyear. as we'll been joining. going significant But are in I because point didn't that they're taking being also through could brought I a question the were up. The I appreciate a conversation, on have but

as out as what significant pointed position should into we that forward, to we or As next well. we contributors should there to well, Vanessa as go profitable look be moving cash-positive year a be

again, overall we full-year we thank to look moving look very everybody forward about and discussions which joining also for call at really But move I be forward. ongoing As excited contributors next our there want to we're the year, will forward. results, to as

and gentlemen, We conference we'll thank be joining. for concluding and today's call you with that, Ladies presentation.

may lines. You now your disconnect