S&W Announces Second Quarter Fiscal 2022 Financial Results
S&W Seed Company (NASDAQ: SANW) reported a Core Revenue of $12.6 million for Q2 FY2022, a 14.5% increase from $11.0 million in Q2 FY2021, driven by growth in the Middle East, Argentina, and South Africa. Total revenue declined from $15.1 million to $12.6 million year-over-year, reflecting no sales to Pioneer in Q2 FY2022 compared to $4.1 million in the previous year. The net loss was $(9.8) million, unchanged per share from the prior year. The company projects fiscal 2022 Core and Total Revenue between $80 to $85 million, indicating a 15% to 20% increase from FY2021.
- 14.5% increase in Core Revenue to $12.6 million.
- Projected revenue growth of 15% to 20% for FY2022.
- Total revenue decreased from $15.1 million to $12.6 million.
- GAAP net loss increased to $(9.8) million from $(8.5) million year-over-year.
LONGMONT, Colo., Feb. 10, 2022 /PRNewswire/ -- S&W Seed Company (Nasdaq: SANW) today announced financial results for the second quarter of fiscal year 2022 ended December 31, 2021.
"We are gaining increased enthusiasm for the outlook of our Double Team sorghum trait technology solution, due to both the strong demand from farmers for the product and an increase in U.S. sorghum acres being planted during the most recent season," commented Mark Wong, President & CEO of S&W Seed Company. "The USDA recently reported a
Wong continued, "The December ending quarter was characterized by our traditional seasonality, which saw the majority of sales consisting of lower margin international alfalfa seed sales. Operationally, we remain focused on preparing for the key upcoming selling season, which we expect will consist of sales of our high margin sorghum products in the U.S., while also restructuring key elements of the company to improve our financial results going forward. We look forward to the second half of fiscal 2022 as we remain on track to achieve our previously stated revenue expectations for the year and improve overall gross margins."
Financial Results
Core Revenue (which we define as total revenue, excluding product revenue attributable to Pioneer) for the second quarter of fiscal 2022 was
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 discloses Core Revenue as a metric to track performance of its business for periods in which product revenue attributable to Pioneer is reflected. The increase in Core Revenue for the second quarter of fiscal 2022 can be primarily attributed to growth in the Middle East, Argentina and South Africa regions.
Total revenue for the second quarter of fiscal 2022 was
GAAP gross margins during the second quarter of fiscal 2022 were
GAAP operating expenses for the second quarter of fiscal 2022 were
GAAP net loss for the second quarter of fiscal 2022 was
Adjusted net loss (see Table A2) for the second quarter of fiscal 2022 was
Adjusted EBITDA (see Table B) for the second quarter of fiscal 2022 was
Fiscal 2022 Revenue Guidance
S&W continues to expect fiscal 2022 Core Revenue and Total Revenue to be within a range of
Conference Call
S&W Seed Company has scheduled a conference call for Thursday, February 10, 2021, at 11:00 am ET (8:00 am PT) to review these results. Interested parties can access the conference call by dialing (844) 861-5498 or (412) 317-6580 or can listen via a live Internet webcast, which is available in the Investor Relations section of the Company's website at http://www.swseedco.com/investors. A teleconference replay of the call will be available for three days at (877) 344-7529 or (412) 317-0088, confirmation #4299089. A webcast replay will be available in the Investor Relations section of the Company's website at http://www.swseedco.com/investors for 30 days.
Non-GAAP Financial Measures
In addition to financial results reported in accordance with accounting principles generally accepted in the United States of America ("GAAP"), we have provided the following non-GAAP financial measures in this release and the accompanying tables: adjusted gross margins; adjusted net loss; adjusted net loss per share; and adjusted EBITDA. We use these non-GAAP financial measures internally to facilitate period-to-period comparisons and analysis of our operating performance and liquidity, and believe they are useful to investors as a supplement to GAAP measures in analyzing, trending and benchmarking the performance and value of our business. However, these measures are not intended to be a substitute for those reported in accordance with GAAP. These measures may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures.
For reconciliations of historical non-GAAP financial measures to the most comparable financial measures under GAAP, see Tables A and B accompanying this release.
In order to calculate these non-GAAP financial measures, we make targeted adjustments to certain GAAP financial line items found on our Consolidated Statement of Operations, backing out non-recurring or unique items or items that we believe otherwise distort the underlying results and trends of the ongoing business. We have excluded the following items from one or more of our non-GAAP financial measures for the periods presented:
Selling, general and administrative expenses; operating expenses. We exclude from operating expenses a portion of SG&A expense related to non-recurring transaction expenses related to acquisitions. Such acquisition-related expenses include non-recurring transaction fees, due diligence costs and other direct costs associated with our acquisitions. These amounts are unrelated to our core performance during any particular period and are impacted by the timing of the acquisition. We exclude acquisition-related expenses from our SG&A expense and total operating expenses to provide investors a method to compare our operating results to prior periods and to peer companies, as such amounts can vary significantly based on the frequency of acquisitions and the magnitude of acquisition expenses.
Change in contingent consideration obligation. The change in contingent consideration obligation represents our estimated change in the value of contingent earn-out related to the February 2020 acquisition of Pasture Genetics. These amounts are non-cash and are unrelated to our core performance during any particular period. We believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.
Interest expense – amortization of debt discount. Amortization of debt discount and debt issuance costs are primarily related to our working capital lines of credit and term loans. These amounts are non-cash charges and are unrelated to our core performance during any particular period. We believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.
Non-GAAP Tax Rate. The estimated non-GAAP effective tax rate adjusts the tax effect to quantify the tax consequences of the excluded non-GAAP items.
Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:
Adjusted gross margins. We define adjusted gross margins as gross margins, adjusted to exclude the impact of inventory write-downs. We believe that the use of adjusted gross margins is useful to investors and other users of our financial statements in evaluating our operating performance because it provides a method to compare our operating results to prior periods and to peer companies after making adjustments for amounts that can vary significantly from period to period.
Adjusted net loss and loss per share. We define non-GAAP net loss as net loss less non-recurring transaction costs, change in contingent consideration obligation and interest expense - amortization of debt discount. However, in order to provide a complete picture of our recurring core business operating results, we also exclude from non-GAAP net loss the tax effects of these adjustments. We used an estimated Non-GAAP Tax Rate that we believe would be applied had our income approximated the non-GAAP net loss for the presented periods. We caution investors that the tax effects of these adjustments are based on management's estimates. We believe that these non-GAAP financial measures provide useful supplemental information for evaluating our operating performance.
Adjusted EBITDA. We define Adjusted EBITDA as GAAP net loss, adjusted to exclude non-recurring transaction costs from SG&A, depreciation and amortization, non-cash stock-based compensation, foreign currency (gain) loss, change in contingent consideration obligation, interest expense – amortization of debt discount, interest expense, and provision for income taxes. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We use adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. Management does not place undue reliance on adjusted EBITDA as its only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP.
Financial Tables
For a complete press release including financial tables, please view online at: https://swseedco.com/investors/press-releases/
About S&W Seed Company
Founded in 1980, S&W Seed Company is a global agricultural company headquartered in Longmont, Colorado. S&W's vision is to be the world's preferred proprietary seed company which supplies a range of forage and specialty crop products that supports the growing global demand for animal proteins and healthier consumer diets. S&W is a global leader in proprietary alfalfa, sorghum and pasture seeds, with significant research and development, production and distribution capabilities. S&W's product portfolio also includes hybrid sunflower and wheat and the company is utilizing its research and breeding expertise to develop and produce stevia, the all-natural, zero calorie sweetener for the food and beverage industry. For more information, please visit www.swseedco.com.
Safe Harbor Statement
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." Forward-looking statements in this release include, but are not limited to: our belief regarding continued benefit our Double Team sorghum solution will have on increased sorghum acreage in future years; anticipated farmer demand for this sorghum solution; expected mix of sales in upcoming selling season; our guidance on Core Revenue and Total Revenue for the fiscal year ending June 30, 2022 as well as anticipated improvements in gross profits; and our plans for the advancement of our business strategy. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including: the effects of the COVID-19 pandemic on our business and operations; risks related to our need to raise additional capital in the future and our ability to continue as a "going concern"; changes in market conditions, including any unexpected decline in commodity prices, may harm our results of operations and revenue outlook; our proprietary seed trait technology products may not yield their anticipated benefits; changes in the competitive landscape and the introduction of competitive products may negatively impact our results of operations; demand for our Double Team sorghum solution may not be as strong as initially expected; our business strategic initiatives may not achieve the expected results; previously experienced logistical challenges in shipping and transportation of our products may become amplified, delaying our ability to recognize revenue and decreasing our gross margins; and the risks associated with our ability to successfully optimize and commercialize our business. These and other risks are identified in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended June 30, 2021 and in other filings subsequently made by the Company with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made and are based on management's assumptions and estimates as of such date. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.
Three Months Ended | Six Months Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||
Revenue | $ | 12,631,409 | $ | 15,051,331 | $ | 28,163,090 | $ | 28,906,717 | ||||||||||||
Cost of revenue | 10,971,045 | 13,013,171 | 23,376,057 | 25,087,625 | ||||||||||||||||
Gross profit | 1,660,364 | 2,038,160 | 4,787,033 | 3,819,092 | ||||||||||||||||
Operating expenses | ||||||||||||||||||||
Selling, general and administrative expenses | 7,091,093 | 5,920,286 | 12,678,727 | 10,605,030 | ||||||||||||||||
Research and development expenses | 2,110,413 | 2,109,303 | 4,105,541 | 4,125,989 | ||||||||||||||||
Depreciation and amortization | 1,373,653 | 1,411,890 | 2,704,698 | 2,789,978 | ||||||||||||||||
Gain on disposal of property, plant and equipment | (17,773) | (41,068) | (35,840) | (42,068) | ||||||||||||||||
Total operating expenses | 10,557,386 | 9,400,411 | 19,453,126 | 17,478,929 | ||||||||||||||||
Loss from operations | (8,897,022) | (7,362,251) | (14,666,093) | (13,659,837) | ||||||||||||||||
Other expense | ||||||||||||||||||||
Foreign currency gain | 258,482 | (203,770) | 421,028 | (104,553) | ||||||||||||||||
Change in contingent consideration obligation | (466,376) | 330,699 | (528,630) | 435,519 | ||||||||||||||||
Interest expense - amortization of debt discount | 221,196 | 257,523 | 413,391 | 367,660 | ||||||||||||||||
Interest expense | 613,465 | 606,059 | 1,131,950 | 1,178,342 | ||||||||||||||||
Loss before income taxes | (9,523,789) | (8,352,762) | (16,103,832) | (15,536,805) | ||||||||||||||||
Provision for income taxes | 257,776 | 42,480 | 91,974 | 44,312 | ||||||||||||||||
Net loss | $ | (9,781,565) | $ | (8,395,242) | $ | (16,195,806) | $ | (15,581,117) | ||||||||||||
Net income (loss) attributed to noncontrolling interests | 13,537 | 71,210 | (729) | 58,095 | ||||||||||||||||
Net loss attributable to S&W Seed Company | $ | (9,795,102) | $ | (8,466,452) | $ | (16,195,077) | $ | (15,639,212) | ||||||||||||
Net loss attributable to S&W Seed Company per common share: | ||||||||||||||||||||
Basic | $ | (0.25) | $ | (0.25) | $ | (0.43) | $ | (0.47) | ||||||||||||
Diluted | $ | (0.25) | $ | (0.25) | $ | (0.43) | $ | (0.47) | ||||||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||||||
Basic | 38,461,049 | 33,547,868 | 37,617,457 | 33,498,952 | ||||||||||||||||
Diluted | 38,461,049 | 33,547,868 | 37,617,457 | 33,498,952 | ||||||||||||||||
TABLE A1 | |||||||||||||||||
S&W SEED COMPANY | |||||||||||||||||
ITEMIZED RECONCILIATION BETWEEN GROSS PROFIT AND NON-GAAP ADJUSTED GROSS PROFIT | |||||||||||||||||
(UNAUDITED) | |||||||||||||||||
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
Gross profit | $ | 1,660,364 | $ | 2,038,160 | $ | 4,787,033 | $ | 3,819,092 | |||||||||
Inventory write-downs | 435,035 | 37,251 | 742,035 | 945,748 | |||||||||||||
Non-GAAP adjusted gross profit | $ | 2,095,399 | $ | 2,075,411 | $ | 5,529,068 | $ | 4,764,840 | |||||||||
Non-GAAP adjusted gross margin | 16.6 | % | 13.8 | % | 19.6 | % | 16.5 | % | |||||||||
TABLE A2 | |||||||||||||||||
S&W SEED COMPANY | |||||||||||||||||
ITEMIZED RECONCILIATION BETWEEN NET LOSS AND NON-GAAP ADJUSTED NET LOSS | |||||||||||||||||
(UNAUDITED) | |||||||||||||||||
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
Net loss attributable to S&W Seed Company | $ | (9,795,102) | $ | (8,466,452) | $ | (16,195,077) | $ | (15,639,212) | |||||||||
Non-recurring transaction costs | - | - | - | 20,000 | |||||||||||||
Change in contingent consideration obligation | (466,376) | 330,699 | (528,630) | 435,519 | |||||||||||||
Interest expense - amortization of debt discount | 221,196 | 257,523 | 413,391 | 367,660 | |||||||||||||
Non-GAAP adjusted net loss | $ | (10,040,282) | $ | (7,878,230) | $ | (16,310,316) | $ | (14,816,033) | |||||||||
Non-GAAP adjusted net loss attributable to S&W Seed Company per | |||||||||||||||||
Basic | $ | (0.26) | $ | (0.23) | $ | (0.43) | $ | (0.44) | |||||||||
Diluted | $ | (0.26) | $ | (0.23) | $ | (0.43) | $ | (0.44) | |||||||||
Weighted average number of common shares outstanding: | |||||||||||||||||
Basic | 38,461,049 | 33,547,868 | 37,617,457 | 33,498,952 | |||||||||||||
Diluted | 38,461,049 | 33,547,868 | 37,617,457 | 33,498,952 | |||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
December 31 | December 31 | |||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||
Net loss attributed to S&W Seed Company | $ | (9,795,102) | (8,466,452) | $ | (16,195,077) | $ | (15,639,212) | |||||||||||||
Non-recurring transaction costs | - | - | - | 20,000 | ||||||||||||||||
Non-cash stock-based compensation | 1,014,203 | 561,216 | 1,408,515 | 881,625 | ||||||||||||||||
Depreciation and amortization | 1,373,653 | 1,411,890 | 2,704,698 | 2,789,978 | ||||||||||||||||
Foreign currency gain | 258,482 | (203,770) | 421,028 | (104,553) | ||||||||||||||||
Change in contingent consideration obligation | (466,376) | 330,699 | (528,630) | 435,519 | ||||||||||||||||
Interest expense - amortization of debt discount | 221,196 | 257,523 | 413,391 | 367,660 | ||||||||||||||||
Interest expense | 613,465 | 606,059 | 1,131,950 | 1,178,342 | ||||||||||||||||
Provision for income taxes | 257,776 | 42,480 | 91,973 | 44,312 | ||||||||||||||||
Non-GAAP adjusted EBITDA | $ | (6,522,703) | (5,460,355) | $ | (10,552,152) | $ | (10,026,329) | |||||||||||||
December 31, | June 30, | |||||||||
2021 | 2021 | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS | ||||||||||
Cash and cash equivalents | $ | 2,722,066 | $ | 3,527,937 | ||||||
Accounts receivable, net | 16,421,053 | 19,389,213 | ||||||||
Inventories, net | 67,700,645 | 63,395,256 | ||||||||
Prepaid expenses and other current assets | 1,361,838 | 1,555,530 | ||||||||
TOTAL CURRENT ASSETS | 88,205,602 | 87,867,936 | ||||||||
Property, plant and equipment, net | 17,677,729 | 17,740,974 | ||||||||
Intangibles, net | 35,671,019 | 37,130,942 | ||||||||
Goodwill | 1,599,649 | 1,651,634 | ||||||||
Other assets | 7,096,984 | 7,079,490 | ||||||||
TOTAL ASSETS | $ | 150,250,983 | $ | 151,470,976 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
CURRENT LIABILITIES | ||||||||||
Accounts payable | $ | 16,727,229 | $ | 15,947,918 | ||||||
Deferred revenue | 5,888,138 | 385,328 | ||||||||
Accrued expenses and other current liabilities | 8,691,302 | 9,134,869 | ||||||||
Current portion of working capital lines of credit, net | 15,153,160 | 33,946,565 | ||||||||
Current portion of long-term debt, net | 8,508,018 | 1,681,166 | ||||||||
TOTAL CURRENT LIABILITIES | 54,967,847 | 61,095,846 | ||||||||
Long-term working capital lines of credit, less current portion | 22,344,308 | — | ||||||||
Long-term debt, net, less current portion | 4,854,778 | 11,590,500 | ||||||||
Contingent consideration obligation | 183,002 | 741,552 | ||||||||
Other non-current liabilities | 3,740,519 | 3,649,885 | ||||||||
TOTAL LIABILITIES | 86,090,454 | 77,077,783 | ||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Preferred stock, | — | — | ||||||||
Common stock, | 38,915 | 36,773 | ||||||||
Treasury stock, at cost, 25,000 shares | (134,196) | (134,196) | ||||||||
Additional paid-in capital | 155,853,135 | 149,684,357 | ||||||||
Accumulated deficit | (85,506,986) | (69,311,909) | ||||||||
Accumulated other comprehensive loss | (6,058,604) | (5,850,826) | ||||||||
Noncontrolling interests | (31,735) | (31,006) | ||||||||
TOTAL STOCKHOLDERS' EQUITY | 64,160,529 | 74,393,193 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 150,250,983 | $ | 151,470,976 | ||||||
Six Months Ended December 31, | ||||||||||
2021 | 2020 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
Net loss | $ | (16,195,806) | $ | (15,581,117) | ||||||
Adjustments to reconcile net loss from operating activities to net | ||||||||||
cash used in operating activities | ||||||||||
Stock-based compensation | 1,408,515 | 881,625 | ||||||||
Change in allowance for doubtful accounts | 221,163 | (32,180) | ||||||||
Inventory write-down | 742,035 | 945,748 | ||||||||
Depreciation and amortization | 2,704,698 | 2,789,978 | ||||||||
Gain on disposal of property, plant and equipment | (35,840) | (42,068) | ||||||||
Change in foreign exchange contracts | 239,713 | (489,504) | ||||||||
Change in contingent consideration obligation | (528,630) | 435,519 | ||||||||
Amortization of debt discount | 413,391 | 367,660 | ||||||||
Changes in: | - | - | ||||||||
Accounts receivable | 2,513,639 | 6,774,943 | ||||||||
Inventories | (5,741,778) | (6,939,539) | ||||||||
Prepaid expenses and other current assets | 170,844 | (28,889) | ||||||||
Other non-current asset | (95,186) | 53,188 | ||||||||
Accounts payable | 1,131,032 | 5,004,596 | ||||||||
Deferred revenue | 5,504,147 | 721,595 | ||||||||
Accrued expenses and other current liabilities | (505,240) | (2,507,353) | ||||||||
Other non-current liabilities | (12,521) | (241,281) | ||||||||
Net cash used in operating activities | (8,065,824) | (7,887,079) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||
Additions to property, plant and equipment | (1,227,368) | (346,980) | ||||||||
Proceeds from disposal of property, plant and equipment | 21,113 | 629,449 | ||||||||
Net cash (used in) provided by investing activities | (1,206,255) | 282,469 | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
Net proceeds from sale of common stock | 4,920,693 | 1,385,926 | ||||||||
Taxes paid related to net share settlements of stock-based compensation awards | (158,288) | (47,686) | ||||||||
Borrowings and repayments on lines of credit, net | 3,911,452 | 6,045,840 | ||||||||
Borrowings of long-term | 875,683 | - | ||||||||
Debt issuance costs | (112,084) | (92,727) | ||||||||
Repayments of long-term debt | (737,843) | (1,462,798) | ||||||||
Net cash provided by financing activities | 8,699,613 | 5,828,555 | ||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (233,405) | 579,040 | ||||||||
NET DECREASE IN CASH & CASH EQUIVALENTS | (805,871) | (1,197,015) | ||||||||
CASH AND CASH EQUIVALENTS, beginning of the period | 3,527,937 | 4,123,094 | ||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 2,722,066 | $ | 2,926,079 | ||||||
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SOURCE S&W Seed Company
FAQ
What were S&W Seed Company's Q2 FY2022 financial results?
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What was the net loss reported by S&W Seed Company for Q2 FY2022?
