S&W Seed Co Q1 FY2024 earnings call

• Instituted key operational initiatives including improved lifecycle management, rationalization of low-margin forage product lines and seed treatments, suspension of stevia development program, and seed manufacturing cost reduction plan.
• Achieved a gross profit margin of 30.5%, a 780 basis point improvement from the prior year's Q1, and a $0.2 million improvement in adjusted EBITDA.
• Double-team grain sorghum accounts for 6% of U.S. grain sorghum acres, with expectations to grow to over 10% next calendar year.
• Plans for forage sorghum expansion with early sales expected, prussic acid-free trait pilot launch with a few thousand acres planted this year, and development of second-generation traits.
• Australian operations undergoing restructuring to optimize production capabilities, reduce costs, and realign product categories.
• Partnership with Shell for renewable biofuels and joint development agreement with Atoma for crop protection solutions for camelina growers.

Total revenue for Q1 2024 was $16.4 million, down from $19.9 million in Q1 of the prior year. Forage revenues accounted for approximately 86% of Q1 revenues. International forage sales were $11.6 million in Q1 2024 compared to $14.3 million in the prior year's Q1. U.S. forage sales were $2.4 million in Q1 2024 versus $3.8 million in the prior year's Q1. Sorghum sales in Q1 2024 were $2.3 million, up from $1.8 million in the prior year's Q1, with double-team sorghum sales at $0.5 million in Q1 2024 compared to no sales in the prior year's Q1.

• Fiscal 2024 revenue expected between $76 million and $82 million, an increase from fiscal 2023's $73.5 million.
• Sorghum-related revenue expected between $22 million and $23 million, up from $18.5 million in fiscal 2023, with double-team sales expected between $11.5 million and $14 million, a 77% to 115% increase from fiscal 2023.
• International revenue expected between $45 million and $50 million, up from $43.6 million in fiscal 2023.
• U.S. forage revenue expected at approximately $9 million, down from $10.8 million in the prior year.
• Full year 2024 gross margins expected between 24% and 26%.
• Adjusted EBITDA guidance for fiscal 2024 between negative $7.5 million and negative $4.0 million.

• Alfalfa market with discounted seed potentially impacting margins.
• Geopolitical pressures in MENA affecting alfalfa sales.
• Dry planting conditions in Australia impacting sorghum sales.

Q: Ben Klieve asked about the timing of news flow from the ongoing restructuring of the Australian operation and whether it shifts the expected timing from late calendar '23.

A: Mark Herrmann stated it's consistent with previous discussions, with opportunities for efficiencies and profitability improvement, and announcements will be made as actions take place.

Q: Ben Klieve inquired about the alfalfa business and the impact of increased low-cost supply.

A: Mark Herrmann said they'll monitor the alfalfa market, with short-term risk of margin cuts due to discounted seed but longer term potential for more stability.

Q: Ben Klieve asked about the characterization of prussic acid acreage planted this year.

A: Mark Herrmann said the acreage is for grazing trials, customer views, and testing, with plans to ramp up production for commercial launch in 2025.