Fresno, California, USA
September 16, 2015
S&W Seed Company (Nasdaq: SANW) today announced financial results for the fourth quarter and fiscal year ended June 30, 2015.
Fourth Quarter Financial Highlights:
- Quarterly revenue increased 46.8% to $28.7 million compared to $19.6 million in the comparable quarter of fiscal 2014;
- Quarterly gross margins improved to 21.6% compared to 18.6% for the fourth quarter of fiscal 2014;
- Quarterly Adjusted EBITDA (see Table B) increased to $3.0 million compared to $1.6 million in the fourth quarter of fiscal 2014;
- Adjusted EBITDA margins improved to 10.6% during the fourth quarter of fiscal 2015 compared to 8.4% in the fourth quarter of the prior year;
- Adjusted non-GAAP net income (see Table A) of $614,000 for the fourth quarter of fiscal 2015 versus $620,000 in the year ago period;
- Adjusted Non-GAAP EPS (see Table A) for the fourth quarter was $0.05 per diluted share compared to $0.05 per diluted share in the fourth quarter of fiscal 2014;
Fiscal Year 2015 Financial Highlights:
- The Company posted record annual revenue of $81.2 million compared to $51.5 million in fiscal 2014, an increase of 58% year over year;
- Adjusted annual gross margins improved to 20.8% compared to 19.4% a year ago;
- Annual Adjusted EBITDA (see Table B) increased to $7.5 million compared to $3.2 million in fiscal 2014;
- Adjusted EBITDA margins improved to 9.3% for fiscal 2015 compared to 6.2% for fiscal 2014;
- Adjusted Non-GAAP EPS (see Table A) for fiscal 2015 was $0.12 per diluted share compared to $0.03 per diluted share in fiscal 2014.
Outlook:
- For the fiscal year ended June 30, 2016, S&W expects to report record annual revenue of approximately $95 million, reflecting an increase of approximately 17% over fiscal 2015.
Quarterly Results
For the fourth quarter of fiscal year 2015, S&W reported revenue of $28.7 million compared to $19.6 million in the comparable period of the prior year. This was a record fourth quarter for the company following a record third quarter. The $9.2 million increase in fourth quarter revenue was attributable to an increase in sales of the Company's elite S&W varieties and approximately $4.9 million of incremental sales contribution from the Company's distribution and production agreements with DuPont Pioneer.
Gross margins during the fourth quarter of fiscal 2015 were 21.6% compared to gross margins of 18.6% in the fourth quarter of fiscal 2014. The increase in gross profit margin is due to improvements in seed pricing, as well as optimization initiatives enacted by the Company.
Adjusted selling, general and administrative (SG&A) expenses for the fourth quarter of fiscal 2015, excluding non-recurring transaction expenses associated with the DuPont Pioneer alfalfa acquisition, totaled $2.5 million compared to $2.0 million for the comparable period in fiscal 2014. SG&A expenses for the quarter included $35,000 of non-recurring transaction expenses associated with the DuPont Pioneer alfalfa acquisition. Research and development (R&D) expenses for the fourth quarter increased to $838,000 from $194,000 in the year ago period. The increase in SG&A and R&D expenses was primarily due to the addition of activities associated with the acquired DuPont Pioneer operations.
Adjusted non-GAAP net income (see Table A) for the fourth quarter of fiscal 2015, excluding non-recurring transaction expenses for the DuPont Pioneer alfalfa acquisition, as well as amortization of debt discount, change in derivative warrant liabilities associated with the convertible debentures and warrants issued to fund the acquisition, and change in the fair value of contingent consideration, was $614,000, or $0.05 per basic and diluted share, compared to $620,000, or $0.05 per basic and diluted share, in the fourth quarter of fiscal 2014. GAAP net loss for the fourth quarter of fiscal 2015 was $(270,000), or $(0.02) per basic and diluted share.
Adjusted EBITDA, a non-GAAP metric (see Table B), for the fourth quarter of fiscal 2015 was $3.0 million compared to Adjusted EBITDA of $1.6 million in the fourth quarter of fiscal 2014.
Annual Results
For fiscal year ended June 30, 2015, S&W reported record revenue of $81.2 million compared to $51.5 million in the prior year. The increase in annual revenue was primarily attributable to sales from the Company's distribution and production agreements with DuPont Pioneer, as well as slight increases from the Company's legacy seed operations.
Adjusted gross margins during fiscal 2015 were 20.8% compared to gross margins of 19.4% in fiscal 2014. The increase in gross profit margins is due to higher margins from the sale of dormant alfalfa seed lines acquired from DuPont Pioneer, improvement in seed pricing, as well as the benefits of the Company's on-going optimization program.
Adjusted selling, general and administrative expenses for fiscal 2015, excluding non-recurring transaction expenses associated with the DuPont Pioneer alfalfa acquisition, totaled $8.3 million compared to $6.8 million in fiscal 2014. SG&A expenses for the fiscal year included $1.3 million of non-recurring transaction expenses associated with the DuPont Pioneer alfalfa acquisition. Research and development (R&D) expenses for the fiscal year increased to $1.9 million from $841,000 in the year ago period. The increase in SG&A and R&D expenses was primarily due to the addition of activities associated with the acquired DuPont Pioneer operations.
Adjusted non-GAAP net income (see Table A) for fiscal 2015, excluding non-recurring transaction expenses for the DuPont Pioneer alfalfa acquisition, as well as amortization of debt discount, and change in derivative warrant liabilities associated with the convertible debentures and warrants issued to fund the acquisition and change in the fair value of contingent consideration, was $1.5 million, or $0.12 per basic and diluted share, compared to $373,000, or $0.03 per basic and diluted share, in fiscal 2014. GAAP net loss for fiscal 2015 was $(3.2) million, or $(0.24) per basic and diluted share.
Adjusted EBITDA, a non-GAAP metric (see Table B), for fiscal 2015 was $7.5 million compared to Adjusted EBITDA of $3.2 million in fiscal 2014.
Outlook
Based upon the evaluation of information currently available to management, the Company expects to generate revenue of approximately $95 million for the fiscal year ending June 30, 2016.
Management Discussion
Mark Grewal, president and chief executive officer of S&W Seed Company, commented, "Fiscal year 2015 has truly been transformational for S&W Seed Company. We are executing on our vision to be the world's largest and most diversified alfalfa seed company that can leverage its operational assets to drive growth in revenue and adjusted EBITDA. During the year, we saw the successful integration of our dormant alfalfa seed acquisition from DuPont Pioneer, continued execution on our gross margin enhancement strategies and the commencement of two critical product development agreements with Bioceres and Calyxt to supplement our enhanced seed development efforts internally. These and other initiatives have resulted in record revenue and adjusted EBITDA that we believe will continue into fiscal 2016."
Mr. Grewal expanded, "During the quarter, we saw a continuation of tightening of alfalfa seed supplies around the globe. This tightening was exacerbated by the recent 2015 Australian seed harvest that came in lighter than previously expected, which we suspect will have a continued beneficial impact on alfalfa seed pricing throughout the year. Our ability to diversify our seed production and product offerings, while maintaining appropriate seed inventories, has allowed us to benefit from these market factors."
Matthew Szot, chief financial officer of S&W Seed Company, commented, "During the fourth quarter, we experienced significant year over year improvements from our legacy S&W operations, where organic revenues increased by 21.8% compared to the year ago period. We shipped significant quantities of seed at higher margins compared to what we believe would have been achieved had they been sold earlier in the year. We are extremely pleased that our focus on driving year over year growth in revenues, while improving gross margins and adjusted EBITDA, is coming to fruition as we expected. With a focus on both top and bottom line expansion in 2016, we believe we are on track for another strong year in fiscal 2016."
Mr. Grewal concluded, "The team at S&W has done a tremendous job throughout fiscal 2015. We have navigated through some difficult agricultural and alfalfa seed markets to achieve annual organic revenue growth, record annualized revenues and adjusted EBITDA, and strong improvements in gross margins due to management strategies that were put in place over the last 18 months. With the acquisition of DuPont Pioneer's alfalfa seed operations fully integrated, we begin fiscal 2016 executing at a high level from both an operational and financial perspective. I look forward to continue capitalizing off the opportunities that we have to build a great company that benefit from the expanding global need for protein consumption."
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