S&W Seed Company Q3 FY2025 earnings call

• The company has repositioned to focus exclusively on core Americas-based operations led by high-margin Double Team sorghum solutions. - Successfully completed the VA process in Australia in late November 2024, releasing from intercompany obligations and a $15 million guarantee. - Entered a new $25 million working capital facility with MFP as collateral. - Implemented cost savings initiatives leading to improved gross margins, reduced operating expenses, and lower working capital needs. - The third quarter had revenue growth, strong gross margin improvements, reduced operating expenses, and positive adjusted EBITDA despite tariff impacts. - Believes in long-term macro tailwinds for sorghum, including increased domestic demand due to healthier eating trends. - Product development includes the commercial launch of Prussic Acid Free, and future launches of DT2 Grain Sorghum, DT2 Forage Sorghum, etc. - Prussic Acid Free was launched with strong customer response and sold out launch supplies.

In the third quarter, revenue was $9.5 million, compared to $9.4 million in the third quarter of the previous year (excluding Australia). Americas sorghum revenue, including Double Team and conventional sorghum, was $7.1 million this year versus $7 million last year. Double Team generated $3.3 million this quarter compared to $3.4 million last year. Americas Forages brought in $1.5 million, up from $1.2 million last year. International sales shipping from the US to Mexico in the third quarter of fiscal 2025 totaled $700,000, down from approximately $1 million in the same period last year.

• Revised fiscal year 2025 revenue expectation to between $29 million and $31 million, down from the previous $34.5 million to $38 million. - Adjusted EBITDA is now expected to be between negative $8.5 million and negative $7 million, compared to the previous negative $5.6 million (excluding Australia business). - The revision is mainly due to tariff-related impacts on US sorghum exports to China, affecting high-margin Double Team sales and other product sales.

• Tariffs on US sorghum exports to China led to a significant drop in demand, causing oversupply in the US sorghum market, depressed farm gate prices, and prompting some farmers to switch cropping plants, disrupting the near-term US sorghum market.

Q: How has the recent tariff situation impacted the fourth quarter outlook?

A: The tariff situation is fluid. China's import cuts and retaliatory tariffs have led to an oversupply of sorghum in the US, depressed prices, and is affecting farmers' cropping decisions. It depends on timely resolution for the market to correct before planting finishes.

Q: How has the strategic review been affected by market uncertainty?

A: The strategic review process continues as expected. There are no major changes, and the company is still evaluating all potential strategic alternatives as previously positioned.

Q: Any updates on the international expansion of the traded sorghum portfolio?

A: International expansion targets other markets using a low-capital, low-cost intensive model with partnerships and licensing relationships. Trait introgression and herbicide registrations with ADAMA are ongoing, taking about 18 months to 2 years for product launch.

Q: Update on Vision Biofuels and Camelina?

A: VBO is moving forward positively with an exclusive herbicide position on camelina. They are ramping up herbicide-resistant inventories and demonstrating the technology to growers.