Longmont, Colorado, USA
November 14, 2022
S&W Seed Company (Nasdaq: SANW) today announced financial results for the three months ended September 30, 2022.
Q1 2023 Financial and Recent Highlights
- Revenue for the first quarter of fiscal 2023 was $19.9 million, an increase of 28% compared to the first quarter of fiscal 2022, driven primarily by the Company's international and U.S. forage operations.
- GAAP gross profit margin for the first quarter of fiscal 2023 was 22.7%, an improvement of 260 basis points compared to the first quarter of 2022, reflective of the Company's execution on its gross margin expansion initiatives.
- Operating expenses decreased by $1.0 million for the first quarter of fiscal 2023 to $7.9 million compared to the first quarter of fiscal 2022, as the Company worked to align its cost structure to support its key centers of value.
- GAAP net loss was $(4.5) million, or $(0.11) per basic and diluted share for the first quarter of fiscal 2023, compared to GAAP net loss of $(6.4) million, or $(0.17) per basic and diluted share for the first quarter of fiscal 2022.
- Adjusted EBITDA (see Table B) improved by $2.4 million to $(1.6) million for the first quarter of fiscal 2023, compared to the first quarter of fiscal 2022, primarily driven by revenue growth, gross margin expansion, and cost structure alignment.
- S&W is reiterating its fiscal year 2023 revenue and adjusted EBITDA guidance.
- Extended and increased credit facilities with National Australia Bank Limited to a combined maximum of AUD $49 million (approximately USD $31.8 million as of September 30, 2022), an increase of AUD $9 million (approximately USD $5.8 million as of September 30, 2022).
- Increased U.S. based credit facility with CIBC to $21 million, up from $18 million, with support of MFP Partners, L.P., the Company's largest shareholder, who provided an amended letter of credit for the benefit of CIBC with a face amount increased from $9 million to $12 million.
Management Discussion
"For fiscal year 2023, we are focused on commercial execution as we begin to leverage all the hard work and investment of the past few years and work towards our goal of achieving profitability. We believe the results of the first quarter, including 28% revenue growth, expanded gross margins, reduced operating costs, and improved adjusted EBITDA, put us on the path to achieve the goals set forth for fiscal 2023," commented Mark Wong, CEO of S&W Seed Company.
"As we progress through and beyond fiscal 2023, we plan to remain intensely focused on the four key centers of value, including our Sorghum Technology operations, led by Double Team™, a next generation non-GMO herbicide tolerant sorghum solution; our international forage operations which primarily operate out of Australia and provide products around the world; our U.S. forage operations; and our Specialty Crops, which includes our focus on camelina biofuel applications and stevia. We believe each of these centers represents a potentially unique opportunity for S&W to drive value for shareholders. I am pleased with the progress made during the quarter and look forward to the continuation of these trends in the future."
Financial Results
Total revenue for the first quarter of fiscal 2023 was $19.9 million, compared to total revenue for the first quarter of fiscal 2022 of $15.5 million. The $4.4 million increase in revenue for the three months ended September 30, 2022 was primarily driven by the increase in product revenue from alfalfa sales to the Middle East North Africa, or MENA, region of $5.0 million, a $1.5 million increase in North America alfalfa and sorghum sales, partially offset by a decrease of $0.9 million Australia pasture product revenue, a decrease of $0.7 million United States service revenue and a decrease in pasture and alfalfa sales to South Africa of $0.3 million.
GAAP gross margins for the first quarter of fiscal 2023 were 22.7% compared to GAAP gross margins of 20.1% in the first quarter of fiscal 2022. Adjusted gross margins, excluding the impact of inventory write-downs (see Table A1), were 25.4% in the first quarter of fiscal 2023 compared to 22.1% in the first quarter of fiscal 2022.
GAAP operating expenses for the first quarter of fiscal 2023 were $7.9 million, compared to $8.9 million in the first quarter of fiscal 2022. The $1.0 million decrease in operating expenses for the first quarter of fiscal 2023 can primarily be attributed to a $0.5 million decrease in selling, general and administrative expenses and a $0.5 million decrease in research and development. The decrease is a result of the Company's focus on aligning its cost structure to support its key centers of value.
GAAP net loss for the first quarter of fiscal 2023 was $(4.6) million, or $(0.11) per basic and diluted share, compared to GAAP net loss of $(6.4) million, or $(0.17) per basic and diluted share, in the first quarter of fiscal 2022.
Adjusted net loss (see Table A2) for the first quarter of fiscal 2023 was $(4.3) million, or $(0.10) per basic and diluted share, excluding interest expense - amortization of debt discount, and dividends accrued for participating securities and accretion. Adjusted net loss (see Table A2) for the first quarter of fiscal 2022, excluding change in contingent consideration obligation, and interest expense - amortization of debt discount, was $(6.3) million, or $(0.17) per basic and diluted share.
Adjusted EBITDA (see Table B) for the first quarter of fiscal 2023 was $(1.6) million, compared to adjusted EBITDA of $(4.0) million in the first quarter of fiscal 2022.
Fiscal 2023 Guidance
S&W is reiterating its previously issued guidance for revenue and adjusted EBITDA. The Company expects fiscal 2023 revenue to be within a range of $80 to $92 million, representing an expected increase of 12% to 29% compared to fiscal 2022 revenue of $71.4 million. Adjusted EBITDA is expected to be in the range of $(7.0) million to $(2.0) million for fiscal 2023, compared to adjusted EBITDA of $(23.8) million in fiscal 2022.
Financial Tables
For a complete press release including financial tables, please view online at: https://www.prnewswire.com/news-releases/sw-announces-first-quarter-fiscal-2023-financial-results-301676300.html
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