Longmont, Colorado, USA
November 11, 2021
S&W Seed Company (Nasdaq: SANW) today announced financial results for first quarter of fiscal year 2022 ended September 30, 2021.
"The various strategic initiatives we are implementing to improve operating results were highlighted during the first quarter of fiscal 2022, as we reported core revenue growth of 26% and strong improvements in gross margins," commented Mark Wong, President & CEO of S&W Seed Company. "These initiatives, which include price increases on the majority of our products, modification of the terms and conditions of standard customer contracts to address the volatility and increased costs of freight and transportation, and improved logistical and supply chain management are expected to show continued improvement in operating results going forward."
Wong continued, "Overall, we are seeing strong demand for our products, including our next generation non-GMO herbicide tolerant sorghum solution, Double Team™, which saw excellent field results during the last several months. Due to the positive reception by targeted customers, we have maximized commercial seed production of our Double Team™ solution this fall in preparation for the spring selling season to address the expected growing demand for the product. Additionally, our product development efforts are advancing, with progress made on our stevia pilot production program with Ingredion, as well as our Improved Quality Alfalfa (IQ™) and Dhurrin Free Sorghum (DF™) programs. We are excited to have started fiscal 2022 off on strong footing and remain focused on operational execution against our strategic plan to evolve S&W into an integrated agricultural seed technology company."
Financial Results
Core Revenue (which we define as total revenue, excluding product revenue attributable to Pioneer) for first quarter of fiscal 2022 was $15.5 million, compared to Core Revenue for the first quarter of fiscal 2020 of $12.2 million, an increase of $3.3 million or 27.0%. Due to continued logistical challenges, approximately $5.0 million of revenue that the Company originally expected to recognize in the fourth quarter of fiscal 2021 was instead recognized in the first quarter of fiscal 2022.
As announced in May 2019, S&W entered into a termination agreement and an alfalfa license agreement with Pioneer Hi-Bred International, a subsidiary of Corteva Agriscience, to replace its prior alfalfa distribution agreement with Pioneer. Due to these agreements with Pioneer, S&W plans to disclose Core Revenue as a metric to track performance of its business on a go-forward basis until product revenue attributable to Pioneer is no longer reflected in comparisons between fiscal periods. The increase in Core Revenue for the first quarter of fiscal 2022 can be primarily attributed to growth in the Middle East, North Africa and Australia regions.
Total revenue for the first quarter of fiscal 2022 was $15.5 million, compared to total revenue for first quarter of fiscal 2021 of $13.9 million, an increase of 11.5%. As of March 31, 2021, we had fully recorded all revenue from Pioneer under the May 2019 agreement. During the three months ended September 30, 2021 we recorded no sales to Pioneer, compared to $1.6 million for the three months ended September 30, 2020.
GAAP gross margins during the first quarter of fiscal 2022 were 20.1% compared to GAAP gross margins of 12.9% in first quarter of fiscal 2021. Adjusted gross margins, excluding the impact of inventory write-downs (see Table A1), were 22.1% in first quarter of fiscal 2022 compared to 19.4% in first quarter of fiscal 2021.
GAAP operating expenses for first quarter of fiscal 2022 were $8.9 million, compared to $8.1 million in first quarter of fiscal 2021. The increase in operating expenses for first quarter of fiscal 2022 can primarily be attributed to a $0.7 million increase in employee related expenses.
GAAP net loss for first quarter of fiscal 2022 was $(6.4) million, or $(0.17) per basic and diluted share, compared to GAAP net loss of $(7.2) million, or $(0.21) per basic and diluted share, in first quarter of fiscal 2021.
Adjusted net loss (see Table A2) for first quarter of fiscal 2022 was $(6.3) million, or $(0.17) per basic and diluted share, excluding change in contingent consideration obligation and interest expense – amortization of debt discount. Adjusted net loss (see Table A2) for first quarter of fiscal 2021, excluding transaction costs, change in contingent consideration and interest expense – amortization of debt discount, was $(6.9) million, or $(0.21) per basic and diluted share.
Adjusted EBITDA (see Table B) for first quarter of fiscal 2022 was $(4.0) million, compared to adjusted EBITDA of $(4.6) million in first quarter of fiscal 2021.
Fiscal 2022 Revenue Guidance
S&W expects fiscal 2022 Core and Total Revenue to be within a range of $80 to $85 million, representing an expected increase of approximately 15% to 20% compared to fiscal 2021 Core Revenue of $69.8 million.
Topics
Species
