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S&W Seed Company announces results for the first quarter of fiscal 2016


Fresno, California, USA
November 12, 2015

S&W Seed Company (Nasdaq: SANW) today announced financial results for the first quarter of fiscal year 2016 ended September 30, 2015.

First Quarter Fiscal 2016 Financial Highlights:

  • Quarterly revenue increased 50.1% to $12.3 million compared to $8.2 million in the comparable quarter of fiscal 2015, driven primarily by organic revenue growth;
  • Quarterly adjusted gross profit margins improved to 18.2% compared to gross profit margins of 16.1% for the first quarter of fiscal 2015;
  • Quarterly Adjusted EBITDA (see Table B) of $(0.6) million compared to $(0.5) million in the first quarter of fiscal 2015;
  • Adjusted non-GAAP net income (loss) (see Table A) of $(1.7) million for the first quarter of fiscal 2016 versus $(0.9) million in the year ago period; and
  • Adjusted Non-GAAP EPS (see Table A) for the first quarter was $(0.12) per diluted share compared to $(0.08) per diluted share in the first quarter of fiscal 2015;

Quarterly Results
For the first quarter of fiscal year 2016, revenue increased 50.1% to $12.3 million versus $8.2 million in the comparable period of the prior year. The $4.1 million increase in first quarter revenue was driven by an increase in sales of the Company's non-dormant varieties due to a strengthening alfalfa seed market. The Company recorded sales of approximately $0.5 million from its distribution and production agreements with DuPont Pioneer, which was consistent with seasonal expectations for these agreements.

Adjusted gross profit margins during the first quarter of fiscal 2016 were 18.2% compared to gross profit margins of 16.1% in the first quarter of fiscal 2015. During the first quarter, the Company incurred losses of approximately $260,000 in connection with its decision to cease all non-seed crop farming in an effort to focus on its core competencies and the elimination of internal farming risk. Including the effects of non-seed farming related losses, gross profit margins for the first quarter were 16.1%.

Selling, general and administrative (SG&A) expenses for the first quarter of fiscal 2016 totaled $2.5 million compared to $1.8 million for the comparable period in fiscal 2015. Research and development (R&D) expenses for the first quarter increased to $690,000 from $223,000 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.

Total operating expenses for the first quarter of fiscal 2016 were $4.0 million, compared to $2.3 million in the year ago period. The increase in total operating expenses is primarily associated with the addition of activities associated with the acquired DuPont Pioneer operations.  Due to the seasonality of the DuPont Pioneer operations, these expenses, which are generally fixed in nature throughout the year, had minimal corresponding revenue associated with them. 

Adjusted non-GAAP net loss (see Table A) for the first quarter of fiscal 2016, excluding various items (losses incurred on farming of non-seed crops, change in derivative warrant liabilities, change in contingent consideration obligation, amortization of debt discount, and losses incurred due to equity method investment), was $(1.7) million, or $(0.12) per basic and diluted share. GAAP net loss for the first quarter of fiscal 2016 was $(1.9) million, or $(0.14) per basic and diluted share, compared to $(0.9) million, or $(0.08) per basic and diluted share, in the first quarter of fiscal 2015.

Adjusted EBITDA, a non-GAAP metric (see Table B), for the first quarter of fiscal 2016 was $(0.6) million compared to Adjusted EBITDA of $(0.5) million in the first quarter of fiscal 2015.

Outlook
Based upon the evaluation of information currently available to management, the Company continues to expect to generate annual revenue of approximately $95 million for the fiscal year ending June 30, 2016, reflecting an increase of approximately 17% over fiscal 2015.

Management Discussion
Mark Grewal, president and chief executive officer of S&W Seed Company, commented, "We are pleased with the progress made during the first quarter executing on our business plan. Fiscal 2016 is shaping up to be a good year for S&W as the alfalfa seed markets continue to strengthen due to improved demand and decreased supply on a global basis. S&W is uniquely positioned to capitalize on these trends due to our global diversification of both production and distribution capabilities, along with a broad product portfolio that allows us to meet the needs of farmers in nearly every region of the world."

Matthew Szot, chief financial officer of S&W Seed Company, commented, "During the first quarter, we experienced significant year-over-year improvements in our non-dormant operations. Organic revenues increased by 43.6% compared to the first quarter of the prior year as demand in key non-dormant regions continues to improve. Excluding expenses associated with the acquired DuPont Pioneer operations, which had minimal corresponding revenue due to the seasonality of that business during the first quarter, the Company's organic operations would have produced positive adjusted EBITDA compared to a loss in the prior year period.  We are very pleased with the results from our organic operations and look forward to the strong contributions from our acquired operations in the coming quarters."

Mr. Grewal concluded, "S&W is uniquely positioned to capitalize on the global trend of increased protein consumption in a large number of developing countries. Patterns of food consumption are becoming more similar throughout the world, incorporating higher-quality and more expensive foods such as meat and dairy products. Alfalfa is the core protein forage within dairy and meat livestock, and we expect to see continued growth in demand in the coming years. We are extremely pleased with the initiatives taken over the last few years to position S&W as the largest and most diversified alfalfa seed company in the world, and we are excited about the opportunities that this positioning will open to us in the coming years." 



More news from: S&W Seed Company


Website: http://www.swseedco.com/

Published: November 12, 2015

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