S&W Seed Co Q2 FY2024 earnings call

• Vanessa Baughman's permanent CFO role was highlighted, having served as Interim CFO since May 2023.
• Operational initiatives include improved lifecycle management, rationalization of low-margin forage product lines and seed treatments, suspension of stevia development, and cost reduction. Gross margins were above 30% for the second consecutive quarter, and operating expenses were reduced by over $1 million.
• Double Team Grain Sorghum sales in Q2 2024 were up 233% to $4 million, with strong farmer satisfaction, and it's estimated to account for 6% of US grain sorghum acres planted in spring 2023, expected to grow to over 10% in 2024.
• Plans to introduce Double Team forage sorghum solution and prussic acid-free trait for sorghum, with initial Double Team forage sorghum sales expected in fiscal 2024 and a pilot launch of prussic acid-free trait this year.
• Agreement with Shell to develop Camelina as a feedstock for biofuels, green diesel, and SAF jet fuel production, with $6 million payment received in February 2024.
• Monitoring geopolitical conflicts in MENA region impacting international alfalfa operations and Australia pasture supply shortages, with cost-cutting and production optimization initiatives underway.

Total revenue for Q2 2024 was $10.9 million, down from $12.9 million in Q2 2023. Sorghum sales were $5.5 million vs $2 million last year, with Double Team sorghum at $4 million vs $1.2 million in Q2 last year, a 233% increase. International forage sales were $3.6 million vs $8.6 million, down $5 million. US forage sales were $1.4 million vs $2.3 million, down $900,000. GAAP gross margins for Q2 2024 were 30.3% vs 21.3% in Q2 2023, the second consecutive quarter above 30%.

• Fiscal 2024 revenue expected on the lower end of the previously communicated range of $76 million to $82 million.
• Sorghum-related revenue expected to be between $22 million and $23 million, with Double Team expected to be $11.5 million to $14 million.
• International revenue expected on the low end of $45 million to $50 million.
• US forage operations revenue expected at about $9 million vs $10.8 million last year.
• Full year gross margins expected between 24% and 26%.
• Adjusted EBITDA guidance: negative $7.5 million to negative $4 million for fiscal 2024.

• Geopolitical conflicts in the MENA region causing disruptions to normal farming operations and seed distribution channels, impacting international alfalfa operations.
• Shortage in supply within the Australia pasture business, limiting ability to meet demand.

Q: Please provide an update on the status of the strategic review for Australian operations and its relation to macro dynamics in Australia.

A: On the strategic review, several initiatives were deemed not beneficial for shareholders, and eight significant cost-streamlining initiatives are being implemented by the local team, with financial benefits mostly in the 2025 fiscal year.

Q: Regarding Double Team sorghum, was the second quarter revenue of this magnitude anticipated, and any uncertainty around inventory for hitting the high-end of the full-year target?

A: The 233% increase in Double Team sorghum revenue in Q2 was consistent with forecasts. Inventory is solid, with good supply of Double Team sorghum products and confidence in meeting the high-end revenue target for Double Team.

Q: Regarding Vision Bio, is it still expected that it won't consume S&W cash in the near future?

A: Yes, it's still consistent with the original deal, with Shell's funding and Vision Bio's milestones, and it's anticipated to be cash neutral for the near term.