LONGMONT, Colo., May 11, 2023
/PRNewswire/ -- S&W Seed Company (Nasdaq: SANW) today announced
financial results for the three months ended March 31, 2023.
Q3 2023 Financial and Recent Highlights
- Revenue for the third quarter of fiscal 2023 was $17.7 million, a 23.8% decrease compared to the
third quarter of fiscal 2022.
- GAAP gross profit margin for the third quarter of fiscal 2023
was 25.1%, a strong improvement from 11.7% in the third quarter of
2022, reflective of the Company's execution on its gross margin
expansion initiatives.
- Operating expenses decreased by $0.6
million for the third quarter of fiscal 2023 to $8.3 million compared to $8.9 million for the third quarter of fiscal
2022, as the Company worked to align its cost structure to support
its key centers of value.
- GAAP net income was $32.1
million, or $0.75 per basic
share and $0.74 per diluted share,
for the third quarter of fiscal 2023, compared to GAAP net loss of
$(7.3) million, or $(0.19) per basic and diluted share, for the
third quarter of fiscal 2022. The Company experienced a gain on the
sale of business interest of $38.3
million related to the establishment of a partnership with
Equilon Enterprises LLC (dba Shell Oil Products US, or Shell).
- Adjusted EBITDA (see Table B) improved by $4.1 million to $(0.4)
million for the third quarter of fiscal 2023, compared to
the third quarter of fiscal 2022, primarily driven by gross margin
expansion and cost structure alignment in addition to the
recognition of the Employee Retention Credit.
- S&W entered into a partnership with Shell to develop and
produce sustainable biofuel feedstocks.
Shell Partnership
On February 7, 2023, S&W
announced the execution of an agreement to establish a partnership
with Shell for the purpose of developing novel plant genetics for
oil seed cover crops as feedstocks for biofuel production. The
partnership company, named Vision Bioenergy Oilseeds LLC, or Vision
Bioenergy, is 66% owned by Shell and 34% owned by S&W.
The partnership intends to develop Camelina ("Camelina
sativa") and other oilseed species from which oil and meal can
be extracted for future processing into animal feed, biofuels, and
other bioproducts. The partnership expects to carry out initial
grain production in late calendar year 2023.
S&W contributed its expertise in seed research, technology,
production, and processing to the partnership, including its seed
processing and research facilities in Nampa, Idaho, and certain key personnel.
At closing, Shell contributed $13.2
million to Vision Bioenergy, and is required to make an
additional $12.0 million cash
contribution to the partnership in February
2024. These capital contributions are expected to fund
Vision Bioenergy's operations for a few years. Shell also paid
$7.0 million to S&W and paid off
S&W's $6.8 million promissory
note with Rooster Capital, LLC, which was secured by a priority
security interest in the property, plant and fixtures located at
the Nampa facilities. In
February 2024, Shell will be required
to pay an additional $6.0 million to
S&W, subject to adjustment in certain circumstances. S&W
also received a one-time purchase option, exercisable at any time
on or before the fifth anniversary of the closing of the
partnership transaction to purchase an additional 6% membership
interest from Shell for a purchase price ranging between
$7.1 million and $12.0 million. Upon the achievement of certain
specified milestones, S&W is eligible to receive up to an
additional aggregate 10% interest in Vision Bioenergy from
Shell.
Management Discussion
"We continue to execute against our goals to drive operational
improvements across our organization, with gross margins improving
to 25.1% during the third quarter of fiscal 2023 compared to 11.7%
in the year ago quarter, driven by revenue growth in our high
margin Double Team sorghum solutions. Further, we saw continued
alignment of our cost structure, with Adjusted Operating Expenses
(see Table A1) down $1.0 million
during the quarter, and $3.7 million
through the third quarter of fiscal 2023. Overall, Adjusted EBITDA
improved by $4.1 million for the
quarter, and $8.4 million so far this
fiscal year. That said, revenue was impacted during the quarter
by weather related issues in our alfalfa, pasture and sorghum
products both in the U.S. and Australia, as well as geopolitical unrest in
Sudan, which we also expect will
have an impact on the fourth quarter with approximately
$10.0 million of revenue expected to
shift to the first half of fiscal 2024.
"We also executed on a critical partnership with Shell to
advance our capabilities within biofuels which was finalized in the
third quarter. This partnership not only partners us with a world
leader, but significantly improved our balance sheet with the
infusion of cash, relief of debt, and equity interest in the go
forward venture. All told, our stockholders' equity increased by
$33.7 million, or $0.79 per share, compared to the most recent
sequential quarter. We believe this new key center of value
significantly enhances the outlook for S&W going forward."
"While the various factors that are largely outside our control
are having some impact on top line results, significant progress
was made this quarter and fiscal year to date, including gross
margin expansion, operating expense reduction, the launch of our
high value Double Team sorghum business, and execution of a
strategic partnership with Shell to advance our biofuel
capabilities. I look forward to continuing our efforts aimed toward
these positive trends as we finish the fiscal year," Wong
concluded.
Financial Results
Total revenue for the third quarter of fiscal 2023 was
$17.7 million, compared to total
revenue for the third quarter of fiscal 2022 of $23.2 million. The $5.5
million decrease in revenue was primarily due to a
$3.9 million decrease in product
revenue from alfalfa sales to the MENA, United States, European, Asian, and South
African regions, a $2.0 million
decrease in pastures and forages sales in Australia, and a $1.1
million decrease in conventional sorghum sales to
the United States. The decreases
were largely caused by a wet La Nina spring in Australia and overall flooding in Eastern Australia and cold temperatures which
are slowing plantings in the western corn belt in the United States. This was partially offset
by a $1.5 million increase in Double
Team sorghum sales in the United
States.
GAAP gross margins for the third quarter of fiscal 2023 were
25.1% compared to GAAP gross margins of 11.7% in the third quarter
of fiscal 2022. The improvement in GAAP gross margins
was primarily driven by the increased sales of the Company's
higher margin Double Team sorghum solution in North America, reduced sales of lower margin
dormant alfalfa sales in the United
States, and lower inventory write-downs in fiscal 2023.
Inventory write-downs during the three months ended March 31, 2023, decreased to $0.4 million from $1.1
million in the previous year quarter when we experienced a
higher level of certain inventory lots that had deteriorated in
quality and germination rates.
GAAP operating expenses for the third quarter of fiscal 2023
were $8.3 million, compared to
$8.9 million in the third quarter of
fiscal 2022. The $0.6 million
decrease in operating expenses for the third quarter of fiscal 2023
was primarily attributed to a $0.7
million decrease in research and development expenses. The
decrease is a result of the Company's focus on aligning its cost
structure to support its key centers of value.
Adjusted operating expenses for the third quarter of fiscal 2023
were $6.5 million, compared to
$7.5 million in the third quarter of
fiscal 2023. The $1.0 million
decrease in adjusted operating expenses for the third quarter of
fiscal 2023 was primarily attributed to the $0.7 million decrease in research and development
expenses.
GAAP net income for the third quarter of fiscal 2023 was
$32.1 million, or $0.75 per basic share and $0.74 per diluted share, compared to GAAP net
loss of $(7.3) million, or
$(0.19) per basic and diluted share
in the third quarter of fiscal 2022.
Adjusted net loss (see Table A2) for the third quarter of fiscal
2023 was $(3.1) million, or
$(0.07) per basic and diluted share,
excluding interest expense - amortization of debt discount, other
finance expenses, non-recurring transaction costs, dividends
accrued for participating securities and accretion, gain on sale of
business interest, and equity in loss of equity method investee
(Vision Bioenergy), net of tax. Adjusted net loss for the third
quarter of fiscal 2022, excluding interest expense - amortization
of debt discount, the change in contingent consideration
obligation, and dividends accrued for participating securities and
accretion was $(7.3) million, or
$(0.19) per basic and diluted
share.
Adjusted EBITDA for the third quarter of fiscal 2023 was
$(0.4) million, compared to adjusted
EBITDA of $(4.5) million in the third
quarter of fiscal 2022.
Fiscal 2023 Guidance
S&W is updating its previously issued guidance for fiscal
2023 revenue and adjusted EBITDA. The Company expects fiscal 2023
revenue to be within a range of $65.0
million to $75.0 million,
compared to fiscal 2022 revenue of $71.4
million. The Company currently expects about $10.0 million of revenue to shift from the fourth
quarter of fiscal 2023 to the first half of fiscal 2024 due to
delayed plantings as a result of weather in Australia and the U.S., as well as
geopolitical issues in MENA. Adjusted EBITDA is now expected to be
in the range of $(12.0) million to
$(8.0) million for fiscal 2023,
compared to adjusted EBITDA of $(23.8)
million in fiscal 2022.
As the partnership with Shell is accounted for as an equity
method investment, it is not expected to have a material impact on
S&W's full-year financial results for fiscal 2023.
Conference Call
S&W Seed Company has scheduled a conference call for
Thursday, May 11, 2023, 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 seven days at (877)
344-7529 or (412) 317-0088, confirmation # 6401214. 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 EBITDA; adjusted operating
expenses; as well as adjusted net loss and adjusted net loss per
share. 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 A1,
A2, and B accompanying this release. We have not reconciled our
guidance for adjusted EBITDA for fiscal 2023 to net income (loss)
because the reconciling line items that impact net income (loss),
including interest expense, non-cash stock-based compensation, and
foreign currency (gain) loss, among others, are uncertain or out of
our control and cannot be reasonably predicted. The actual amount
of these items during fiscal 2023 will have a significant impact on
net income (loss). Accordingly, a reconciliation of this non-GAAP
measure to its most directly comparable GAAP measure is not
available without unreasonable efforts.
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 other finance expenses, benefit from
income taxes, depreciation and amortization, and non-recurring
transaction costs.
Gain on disposal of intangible assets. The gain is the
result of our transfer of certain intellectual property rights
under a license agreement to Trigall Australia as part of our
equity investment in the partnership. This is a unique item
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.
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.
Other finance expenses. This amount represents the
costs incurred when S&W was pursuing other lenders (prior to
continuing with CIBC), which were written off in March 2023. 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.
Dividends accrued for participating securities and
accretion. Dividends accrued for participating securities and
accretion relates to dividends accrued for the Series B convertible
preferred stock and the accretion for the discount related to the
warrants issued in conjunction with the Series B convertible
preferred stock. 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.
Gain on sale of business interest. The gain on the sale
of business interest relates to the gain S&W recognized from
the Vision Bioenergy transaction, for which we have a 34%
membership interest. We believe it is useful to exclude this amount
in order to better understand our business performance and allow
investors to compare our results with peer companies.
Equity in loss of equity method investee (Vision Bioenergy),
net of tax. This loss represents S&W's percentage of
Vision Bioenergy's loss for the quarter ended March 31, 2023, as it has significant influence
in the Company. We believe it is useful to exclude this amount in
order to better understand our business performance and allow
investors to compare our results with peer companies.
Descriptions of the non-GAAP financial measures included in this
release and the accompanying tables are as follows:
Adjusted Operating Expenses. We define adjusted operating
expenses as GAAP operating expenses, adjusted to exclude
depreciation and amortization, loss on disposal of property, plant
and equipment, and one-time expenses related to our two partnership
transactions. We believe that the use of adjusted operating
expenses 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 depreciation and
amortization and amounts that are not expected to recur.
Adjusted net loss and loss per share. We define adjusted
net loss as net loss attributable to S&W Seed Company less
interest expense – amortization of debt discount, other finance
expenses, non-recurring transaction costs, change in contingent
consideration obligation, dividends accrued for participating
securities and accretion, gain on sale of business interest and
equity in loss of equity method investee (Vision Bioenergy), net of
tax. 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 interest expense, net, interest expense –
amortization of debt discount, other finance expenses, provision
for (benefit from) income taxes, depreciation and amortization,
non-recurring transaction costs, non-cash stock-based compensation,
foreign currency loss, gain on disposal of intangible assets, gain
on sale of business interest, gain on sale of equity investment,
equity in loss of equity method investee (Vision Bioenergy), net of
tax, change in contingent consideration obligation, and dividends
accrued for participating securities and accretion. 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 multi-crop,
middle-market 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 is currently
focused on commercializing stevia products, entering the camelina
market and developing products to address unmet market needs
through high-value improved traits in its crops. 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 "ability," "aim," "believe," "may," "future," "plan,"
"should" or "expects." Forward-looking statements in this release
include, but are not limited to: our guidance on revenue and
adjusted EBITDA for the fiscal year ending June 30, 2023; the expected timing of initial
grain production by the partnership; the anticipated impact of the
partnership on our business and future prospects, including our
positioning to be at the forefront of sustainable low carbon energy
solutions as well as our financial outlook going forward; the
ability of Shell's cash contributions to the partnership company to
fund the partnership's operations for a few years; 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 risks and uncertainties
related to: market adoption of products designed to
support the energy transition and customer demand for the
partnership's products; the effects of unexpected weather and
geopolitical and macroeconomic events, such as global inflation,
bank failures, supply chain disruptions, uncertain market
conditions, the armed conflict in Sudan, and the ongoing military conflict
between Russia and Ukraine and related sanctions, on our business
and operations as well as those of the partnership, and the extent
to which they disrupt the local and global economies, as well as
our business and the businesses of the partnership, our customers,
distributors and suppliers; sufficiency of the partnership's cash
and access to capital in order to develop its business; the
sufficiency of our cash and access to capital in order to meet our
liquidity needs, including our ability to pay our growers as our
payment obligations come due; our need to comply with the financial
covenants included in our loan agreements, refinance certain of our
credit facilities and raise additional capital in the future and
our ability to continue as a "going concern"; our potential
transactions under negotiation may not result in consummated
transactions; 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, including Double Team™, may not yield their
anticipated benefits, including with respect to their impact on
revenues and gross margins; 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 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;
we may be unable to achieve our efforts to drive growth, improve
gross margins and reduce operating expenses; the inherent
uncertainty and significant judgments and assumptions underlying
our financial guidance for fiscal 2023; 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, 2022 and in other filings
subsequently made by us 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.
S & W SEED
COMPANY
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
March
31,
|
|
|
|
March
31,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
2023
|
|
|
2022
|
|
Revenue
|
|
$
|
17,662,307
|
|
|
$
|
23,186,877
|
|
|
|
$
|
50,465,974
|
|
|
$
|
51,349,967
|
|
Cost of
revenue
|
|
|
13,231,836
|
|
|
|
20,481,463
|
|
|
|
|
38,781,701
|
|
|
|
43,857,520
|
|
Gross profit
|
|
|
4,430,471
|
|
|
|
2,705,414
|
|
|
|
|
11,684,273
|
|
|
|
7,492,447
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
5,990,651
|
|
|
|
5,582,060
|
|
|
|
|
17,289,120
|
|
|
|
18,260,785
|
|
Research and
development expenses
|
|
|
1,208,038
|
|
|
|
1,904,631
|
|
|
|
|
4,226,891
|
|
|
|
6,010,172
|
|
Depreciation and
amortization
|
|
|
1,107,206
|
|
|
|
1,379,856
|
|
|
|
|
3,697,544
|
|
|
|
4,084,554
|
|
Loss on disposal of
property, plant and equipment
|
|
|
37,325
|
|
|
|
49,796
|
|
|
|
|
32,914
|
|
|
|
13,957
|
|
Total operating
expenses
|
|
|
8,343,220
|
|
|
|
8,916,343
|
|
|
|
|
25,246,469
|
|
|
|
28,369,468
|
|
Loss from
operations
|
|
|
(3,912,749)
|
|
|
|
(6,210,929)
|
|
|
|
|
(13,562,196)
|
|
|
|
(20,877,021)
|
|
Other (income)
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
loss
|
|
|
331,889
|
|
|
|
146,935
|
|
|
|
|
699,428
|
|
|
|
567,963
|
|
Government grant
income
|
|
|
(1,444,044)
|
|
|
|
—
|
|
|
|
|
(1,444,044)
|
|
|
|
—
|
|
Gain on disposal of
intangible assets
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(1,796,252)
|
|
|
|
—
|
|
Gain on sale of
business interest
|
|
|
(38,323,506)
|
|
|
|
—
|
|
|
|
|
(38,323,506)
|
|
|
|
—
|
|
Gain on sale of equity
investment
|
|
|
—
|
|
|
|
(68,967)
|
|
|
|
|
(32,030)
|
|
|
|
(68,967)
|
|
Change in contingent
consideration obligation
|
|
|
—
|
|
|
|
(185,800)
|
|
|
|
|
—
|
|
|
|
(714,429)
|
|
Interest expense -
amortization of debt discount
|
|
|
697,840
|
|
|
|
246,801
|
|
|
|
|
1,559,595
|
|
|
|
660,191
|
|
Interest expense,
net
|
|
|
1,163,533
|
|
|
|
592,853
|
|
|
|
|
3,042,539
|
|
|
|
1,735,392
|
|
Other
expenses
|
|
|
1,641,406
|
|
|
|
(3,157)
|
|
|
|
|
1,601,697
|
|
|
|
(13,746)
|
|
Income (loss) before
income taxes
|
|
|
32,020,133
|
|
|
|
(6,939,594)
|
|
|
|
|
21,130,377
|
|
|
|
(23,043,425)
|
|
Provision for (benefit
from) income taxes
|
|
|
(500,118)
|
|
|
|
322,661
|
|
|
|
|
(884,078)
|
|
|
|
414,636
|
|
Equity in loss of
equity method investees, net of tax
|
|
|
406,678
|
|
|
|
—
|
|
|
|
|
406,678
|
|
|
|
—
|
|
Net income
(loss)
|
|
|
32,113,573
|
|
|
|
(7,262,255)
|
|
|
|
|
21,607,777
|
|
|
|
(23,458,061)
|
|
(Loss) income
attributable to noncontrolling interests
|
|
|
(5,792)
|
|
|
|
42,668
|
|
|
|
|
(16,642)
|
|
|
|
41,939
|
|
Net income (loss)
attributable to S&W Seed Company
|
|
$
|
32,119,365
|
|
|
$
|
(7,304,923)
|
|
|
|
$
|
21,624,419
|
|
|
$
|
(23,500,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of net loss
for loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to S&W Seed Company
|
|
$
|
32,119,365
|
|
|
$
|
(7,304,923)
|
|
|
|
$
|
21,624,419
|
|
|
$
|
(23,500,000)
|
|
Dividends accrued for
participating securities and accretion
|
|
|
(121,137)
|
|
|
|
(53,195)
|
|
|
|
|
(349,260)
|
|
|
|
(53,195)
|
|
Net income (loss)
attributable to common shareholders
|
|
$
|
31,998,228
|
|
|
$
|
(7,358,118)
|
|
|
|
$
|
21,275,159
|
|
|
$
|
(23,553,195)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to S&W Seed Company per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.75
|
|
|
$
|
(0.19)
|
|
|
|
$
|
0.50
|
|
|
$
|
(0.62)
|
|
Diluted
|
|
$
|
0.74
|
|
|
$
|
(0.19)
|
|
|
|
$
|
0.50
|
|
|
$
|
(0.62)
|
|
Weighted average number
of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
42,790,693
|
|
|
|
39,515,547
|
|
|
|
|
42,681,201
|
|
|
|
38,240,917
|
|
Diluted
|
|
|
43,166,148
|
|
|
|
39,515,547
|
|
|
|
|
42,873,830
|
|
|
|
38,240,917
|
|
TABLE
A1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S&W SEED
COMPANY
|
ITEMIZED
RECONCILIATION BETWEEN OPERATING EXPENSES AND NON-GAAP ADJUSTED
OPERATING EXPENSES
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
|
2023
|
|
|
2022
|
|
|
Operating
expenses
|
|
$
|
8,343,220
|
|
|
$
|
8,916,343
|
|
|
|
$
|
25,246,469
|
|
|
$
|
28,369,468
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
(1,107,206)
|
|
|
|
(1,379,856)
|
|
|
|
|
(3,697,544)
|
|
|
|
(4,084,554)
|
|
|
Loss
on disposal of property, plant and equipment
|
|
|
(37,325)
|
|
|
|
(49,796)
|
|
|
|
|
(32,914)
|
|
|
|
(13,957)
|
|
|
Non-recurring transaction costs
|
|
|
(703,221)
|
|
|
|
—
|
|
|
|
|
(965,840)
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted
operating expenses
|
|
$
|
6,495,468
|
|
|
$
|
7,486,691
|
|
|
|
$
|
20,550,171
|
|
|
$
|
24,270,957
|
|
|
TABLE
A2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S&W SEED
COMPANY
|
ITEMIZED
RECONCILIATION BETWEEN NET LOSS AND NON-GAAP ADJUSTED NET INCOME
(LOSS)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
|
2023
|
|
|
2022
|
|
|
Net income (loss)
attributable to S&W Seed Company
|
|
$
|
32,119,365
|
|
|
$
|
(7,304,923)
|
|
|
|
$
|
21,624,419
|
|
|
$
|
(23,500,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
amortization of debt discount
|
|
|
697,840
|
|
|
|
246,801
|
|
|
|
|
1,559,595
|
|
|
|
660,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other finance
expenses
|
|
|
1,458,168
|
|
|
|
—
|
|
|
|
|
1,458,168
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring
transaction costs
|
|
|
703,221
|
|
|
|
—
|
|
|
|
|
965,840
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in contingent
consideration obligation
|
|
|
—
|
|
|
|
(185,800)
|
|
|
|
|
—
|
|
|
|
(714,429)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends accrued for
participating securities and accretion
|
|
|
(121,137)
|
|
|
|
(53,195)
|
|
|
|
|
(349,260)
|
|
|
|
(53,195)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
business interest
|
|
|
(38,323,506)
|
|
|
|
—
|
|
|
|
|
(38,323,506)
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
equity method investee (Vision Bioenergy), net of tax
|
|
|
323,538
|
|
|
|
—
|
|
|
|
|
323,538
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net
income (loss)
|
|
$
|
(3,142,511)
|
|
|
$
|
(7,297,117)
|
|
|
|
$
|
(12,741,206)
|
|
|
$
|
(23,607,433)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net
income (loss) attributable to
S&W Seed Company per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.07)
|
|
|
$
|
(0.18)
|
|
|
|
$
|
(0.30)
|
|
|
$
|
(0.62)
|
|
|
Diluted
|
|
$
|
(0.07)
|
|
|
$
|
(0.18)
|
|
|
|
$
|
(0.30)
|
|
|
$
|
(0.62)
|
|
|
Weighted average number
of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
42,790,693
|
|
|
|
39,515,547
|
|
|
|
|
42,681,201
|
|
|
|
38,240,917
|
|
|
Diluted
|
|
|
43,166,148
|
|
|
|
39,515,547
|
|
|
|
|
42,873,830
|
|
|
|
38,240,917
|
|
|
TABLE
B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S&W SEED
COMPANY
|
|
|
ITEMIZED
RECONCILIATION BETWEEN NET INCOME (LOSS) AND NON-GAAP ADJUSTED
EBITDA
|
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
March
31,
|
|
March
31,
|
|
|
|
|
|
2023
|
|
|
|
2022
|
|
|
|
2023
|
|
|
|
2022
|
|
|
Net income (loss)
attributable to S&W Seed Company
|
|
$
|
|
32,119,365
|
|
|
$
|
|
(7,304,923)
|
|
|
$
|
|
21,624,419
|
|
|
$
|
|
(23,500,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
|
1,163,533
|
|
|
|
|
589,696
|
|
|
|
|
3,042,539
|
|
|
|
|
1,721,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
amortization of debt discount
|
|
|
|
697,840
|
|
|
|
|
246,801
|
|
|
|
|
1,559,595
|
|
|
|
|
660,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other finance
expenses
|
|
|
|
1,458,168
|
|
|
|
|
—
|
|
|
|
|
1,458,168
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes
|
|
|
|
(500,118)
|
|
|
|
|
322,661
|
|
|
|
|
(884,078)
|
|
|
|
|
414,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
1,107,206
|
|
|
|
|
1,379,856
|
|
|
|
|
3,697,544
|
|
|
|
|
4,084,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring
transaction costs
|
|
|
|
703,221
|
|
|
|
|
—
|
|
|
|
|
965,840
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock-based
compensation
|
|
|
|
620,887
|
|
|
|
|
413,293
|
|
|
|
|
1,382,894
|
|
|
|
|
1,821,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
loss
|
|
|
|
331,889
|
|
|
|
|
146,935
|
|
|
|
|
699,428
|
|
|
|
|
567,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of
intangible assets
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(1,796,252)
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
business interest
|
|
|
|
(38,323,506)
|
|
|
|
|
—
|
|
|
|
|
(38,323,506)
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of equity
investment
|
|
|
|
—
|
|
|
|
|
(68,967)
|
|
|
|
|
(32,030)
|
|
|
|
|
(68,967)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
equity method investee (Vision Bioenergy), net of tax
|
|
|
|
323,538
|
|
|
|
|
—
|
|
|
|
|
323,538
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in contingent
consideration obligation
|
|
|
|
—
|
|
|
|
|
(185,800)
|
|
|
|
|
—
|
|
|
|
|
(714,429)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends accrued for
participating securities and accretion
|
|
|
|
(121,137)
|
|
|
|
|
(53,195)
|
|
|
|
|
(349,260)
|
|
|
|
|
(53,195)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted
EBITDA
|
|
$
|
|
(419,114)
|
|
|
$
|
|
(4,513,643)
|
|
|
$
|
|
(6,631,161)
|
|
|
$
|
|
(15,065,793)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S & W SEED
COMPANY
|
|
CONSOLIDATED BALANCE
SHEETS
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
June
30,
|
|
|
|
|
2023
|
|
|
|
2022
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
|
1,569,463
|
|
|
$
|
|
2,056,508
|
|
Accounts receivable,
net
|
|
|
|
20,424,589
|
|
|
|
|
19,051,236
|
|
Inventories,
net
|
|
|
|
55,666,627
|
|
|
|
|
54,515,894
|
|
Prepaid expenses and
other current assets
|
|
|
|
10,748,580
|
|
|
|
|
1,605,987
|
|
TOTAL CURRENT
ASSETS
|
|
|
|
88,409,259
|
|
|
|
|
77,229,625
|
|
Property, plant and
equipment, net
|
|
|
|
10,241,685
|
|
|
|
|
16,871,669
|
|
Intangibles,
net
|
|
|
|
30,328,212
|
|
|
|
|
34,095,827
|
|
Right of use asset -
operating leases
|
|
|
|
3,344,109
|
|
|
|
|
4,094,253
|
|
Equity method
investments
|
|
|
|
24,121,771
|
|
|
|
|
367,970
|
|
Other assets
|
|
|
|
2,038,618
|
|
|
|
|
1,128,507
|
|
TOTAL
ASSETS
|
|
$
|
|
158,483,654
|
|
|
$
|
|
133,787,851
|
|
LIABILITIES,
MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
|
17,441,428
|
|
|
$
|
|
15,901,116
|
|
Deferred
revenue
|
|
|
|
1,411,651
|
|
|
|
|
605,960
|
|
Accrued expenses and
other current liabilities
|
|
|
|
8,686,623
|
|
|
|
|
10,788,740
|
|
Current portion of
working capital lines of credit, net
|
|
|
|
42,783,136
|
|
|
|
|
12,678,897
|
|
Current portion of
long-term debt, net
|
|
|
|
1,058,051
|
|
|
|
|
8,316,783
|
|
TOTAL CURRENT
LIABILITIES
|
|
|
|
71,380,889
|
|
|
|
|
48,291,496
|
|
Long-term working
capital lines of credit, less current portion
|
|
|
|
—
|
|
|
|
|
21,703,286
|
|
Long-term debt, net,
less current portion
|
|
|
|
3,648,732
|
|
|
|
|
3,992,540
|
|
Other non-current
liabilities
|
|
|
|
2,575,442
|
|
|
|
|
3,587,041
|
|
TOTAL
LIABILITIES
|
|
|
|
77,605,063
|
|
|
|
|
77,574,363
|
|
MEZZANINE
EQUITY
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value; 3,323 shares authorized; 1,695 issued and
outstanding at December 31, 2022 and June 30, 2022
|
|
|
|
5,154,079
|
|
|
|
|
4,804,819
|
|
TOTAL MEZZANINE
EQUITY
|
|
|
|
5,154,079
|
|
|
|
|
4,804,819
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Common stock, $0.001
par value; 75,000,000 shares authorized; 42,788,423 issued and
42,763,423 outstanding at December 31, 2022; 42,608,758 issued and
42,583,758 outstanding at June 30, 2022
|
|
|
|
42,914
|
|
|
|
|
42,609
|
|
Treasury stock, at
cost, 25,000 shares
|
|
|
|
(134,196)
|
|
|
|
|
(134,196)
|
|
Additional paid-in
capital
|
|
|
|
167,297,153
|
|
|
|
|
163,892,575
|
|
Accumulated
deficit
|
|
|
|
(84,598,398)
|
|
|
|
|
(105,873,557)
|
|
Accumulated other
comprehensive loss
|
|
|
|
(6,908,157)
|
|
|
|
|
(6,560,600)
|
|
Noncontrolling
interests
|
|
|
|
25,196
|
|
|
|
|
41,838
|
|
TOTAL STOCKHOLDERS'
EQUITY
|
|
|
|
75,724,512
|
|
|
|
|
51,408,669
|
|
TOTAL LIABILITIES,
MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
|
|
$
|
|
158,483,654
|
|
|
$
|
|
133,787,851
|
|
S & W SEED
COMPANY
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
|
2023
|
|
|
|
2022
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
|
21,607,777
|
|
|
$
|
|
(23,458,061)
|
|
Adjustments to
reconcile net loss from operating activities to net cash used in
operating activities:
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
|
1,382,895
|
|
|
|
|
1,821,808
|
|
Allowance for doubtful
accounts
|
|
|
|
(76,575)
|
|
|
|
|
200,458
|
|
Inventory
write-down
|
|
|
|
1,125,715
|
|
|
|
|
1,877,229
|
|
Depreciation and
amortization
|
|
|
|
3,697,544
|
|
|
|
|
4,084,554
|
|
Loss on disposal of
property, plant and equipment
|
|
|
|
32,914
|
|
|
|
|
13,957
|
|
Gain on disposal of
intangible assets
|
|
|
|
(1,796,252)
|
|
|
|
|
—
|
|
Gain on sale of
business interest
|
|
|
|
(38,323,506)
|
|
|
|
|
—
|
|
Gain on sale of equity
investment
|
|
|
|
(32,030)
|
|
|
|
|
—
|
|
Equity in loss of
equity method investees, net of tax
|
|
|
|
406,678
|
|
|
|
|
—
|
|
Government grant
income
|
|
|
|
(1,444,044)
|
|
|
|
|
—
|
|
Change in deferred tax
provision
|
|
|
|
(915,449)
|
|
|
|
|
—
|
|
Change in foreign
exchange contracts
|
|
|
|
(167,688)
|
|
|
|
|
46,157
|
|
Foreign currency
transactions
|
|
|
|
(1,320,052)
|
|
|
|
|
—
|
|
Change in contingent
consideration obligation
|
|
|
|
—
|
|
|
|
|
(714,429)
|
|
Amortization of debt
discount
|
|
|
|
1,559,595
|
|
|
|
|
660,191
|
|
Changes in:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
(347,874)
|
|
|
|
|
(4,272,470)
|
|
Unbilled accounts
receivable
|
|
|
|
(149,735)
|
|
|
|
|
—
|
|
Inventories
|
|
|
|
(2,961,203)
|
|
|
|
|
(10,256,441)
|
|
Prepaid expenses and
other current assets
|
|
|
|
1,470,258
|
|
|
|
|
363,963
|
|
Other non-current
asset
|
|
|
|
(786,506)
|
|
|
|
|
(152,621)
|
|
Accounts
payable
|
|
|
|
1,868,140
|
|
|
|
|
8,866,376
|
|
Deferred
revenue
|
|
|
|
806,691
|
|
|
|
|
2,670,287
|
|
Accrued expenses and
other current liabilities
|
|
|
|
(1,438,490)
|
|
|
|
|
360,147
|
|
Other non-current
liabilities
|
|
|
|
(27,198)
|
|
|
|
|
(117,524)
|
|
Net cash used in
operating activities
|
|
|
|
(15,828,395)
|
|
|
|
|
(18,006,419)
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
|
|
(925,747)
|
|
|
|
|
(1,637,547)
|
|
Proceeds from disposal
of property, plant and equipment
|
|
|
|
6,292
|
|
|
|
|
79,862
|
|
Net proceeds from sale
of equity investment
|
|
|
|
400,000
|
|
|
|
|
988,504
|
|
Proceeds from
partnership transaction
|
|
|
|
2,000,000
|
|
|
|
|
—
|
|
Capital contributions
to partnerships
|
|
|
|
(119,897)
|
|
|
|
|
—
|
|
Proceeds from sale of
business interest
|
|
|
|
7,000,000
|
|
|
|
|
—
|
|
Net cash provided by
(used in) investing activities
|
|
|
|
8,360,648
|
|
|
|
|
(569,181)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net proceeds from sale
of common stock
|
|
|
|
152,750
|
|
|
|
|
10,657,775
|
|
Net proceeds from sale
of Series B convertible preferred stock
|
|
|
|
—
|
|
|
|
|
5,000,250
|
|
Taxes paid related to
net share settlements of stock-based compensation awards
|
|
|
|
(25,663)
|
|
|
|
|
(178,727)
|
|
Borrowings and
repayments on lines of credit, net
|
|
|
|
7,825,838
|
|
|
|
|
2,757,274
|
|
Borrowings of long-term
debt
|
|
|
|
298,694
|
|
|
|
|
860,801
|
|
Capital contribution
from minority shareholder of subsidiary
|
|
|
|
—
|
|
|
|
|
—
|
|
Debt issuance
costs
|
|
|
|
(324,629)
|
|
|
|
|
(169,901)
|
|
Repayments of long-term
debt
|
|
|
|
(1,361,496)
|
|
|
|
|
(1,027,959)
|
|
Net cash provided by
financing activities
|
|
|
|
6,565,494
|
|
|
|
|
17,899,513
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
|
|
|
415,208
|
|
|
|
|
290,069
|
|
NET DECREASE IN CASH
& CASH EQUIVALENTS
|
|
|
|
(487,045)
|
|
|
|
|
(386,018)
|
|
CASH AND CASH
EQUIVALENTS, beginning of the period
|
|
|
|
2,056,508
|
|
|
|
|
3,527,937
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
|
1,569,463
|
|
|
$
|
|
3,141,919
|
|
Company Contact:
Betsy Horton , Chief Financial Officer
S&W Seed Company
Phone: (720) 593-3570
www.swseedco.com
Investor Contact:
Robert Blum
Lytham Partners, LLC
Phone: (602) 889-9700
sanw@lythampartners.com
www.lythampartners.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/sw-announces-third-quarter-fiscal-2023-financial-results-301821790.html
SOURCE S&W Seed Company