FULL YEAR: S&W SEED SALES SOAR 289%, GROSS PROFITS INCREASE 187%
Sep. 28, 2012
Source: S&W Seed Company news release
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S&W Seed Company (Nasdaq: SANW) today announced financial results for its fiscal year ended June 30, 2012.
Fiscal Year 2012 Highlights:
Revenue increased 289% to $14.1 million from $3.6 million in fiscal 2011;
Seed and crop revenue increased 398% to $13.3 million compared to $2.7 million in the previous fiscal year;
Initial stevia revenues were recognized after pilot commercial harvest;
EBITDA was $868,000 for the year, an improvement of $2.1 million versus the loss in comparable prior year;
Basic and diluted earnings per share was $0.06 versus a loss of ($0.14) per share in 2011;
Excluding the effects of a non-recurring loss, basic and diluted earnings per share for the year were $0.09;
Increased dedicated alfalfa seed acreage for the fall 2012 harvest by 94% to 4,664 acres;
Increased dedicated stevia acreage to more than 250 acres compared to 114 acres in the previous year.
For the fiscal year ended June 30, 2012, S&W reported revenue of $14.1 million versus $3.6 million in the prior year; an increase of 289%. The improved results for the year were driven by increased demand for the company's proprietary alfalfa seed, stemming from an increased sales and marketing focus on expanding the company's market share throughout the Middle East and Northern Africa (MENA), as well as the United States. S&W reported operating income of $620,000 for the year versus an operating loss of $1.5 million in the prior year. Net income totaled $375,000, or $0.06 per basic and diluted share, compared to a net loss of $811,000, or $(0.14) per basic and diluted share, in the fiscal year ended June 30, 2011. Included in the results for the fourth quarter and fiscal year 2012 was a write down and loss of $277,000 related to lower than anticipated yields on its non-core and non-recurring wheat and triticale crops that were primarily used for land reclamation to prepare for alfalfa seed production. Excluding the effects of the non-core and non-recurring write down and loss, net income for fiscal year 2012 would have been $556,000, or $0.09 per basic and diluted share. A full reconciliation of the non-GAAP measures to GAAP can be found in the tables of today's press release.
Mark Grewal, president and chief executive officer of S&W Seed Company, commented, "Fiscal year 2012 was a pivotal year for S&W Seed Company. We successfully executed on our strategy of dramatically increasing our presence throughout the United States and MENA through concerted sales and marketing efforts that focused customers on the economic advantages of utilizing S&W's proprietary alfalfa seed varieties. The net result of our successful execution was reporting the highest annual seed sales in the 30 year history of this company. If we are to continue to build on the results of fiscal 2012 we need to dramatically increase our seed production capabilities to meet strengthening demand. We are in the process of securing additional seed acreage for the fall 2013 harvest through contracted grower agreements, land leases and land purchases, as well as strategic acquisitions that could bring with a large, already established grower base. We have great confidence in the future of S&W going forward."
The company's seed revenue totaled $13.3 million for fiscal year 2012 compared to $2.7 million in the prior year, an increase of 398%. Revenue from the company's milling and processing operations totaled $886,000 for the year, compared to $977,000 a year ago. The company also recognized its first revenues from it stevia operation, which reflect the results of the company's test harvest in the Fall of 2011. The company expects revenue from stevia to increase as the field continues to mature and the company refines its harvesting techniques. During the year, the company sold 3.5 million pounds of alfalfa seed and ended the year with 0.65 million pounds in inventory. International sales accounted for 70% of sales, while domestic sales accounted for 30%.
Mr. Grewal commented on recent alfalfa initiatives, "During the fourth quarter and subsequent to the end of the year, we executed on a number of strategic initiatives. In May, we announced the acquisition and lease of 1,880 acres of land in Imperial Valley, California for the increased production of our alfalfa seed varieties. This land deal not only dramatically increases our production base for next year, but also helps to diversify the company from a geographical standpoint. Also, we announced the acquisition of a number of dormant alfalfa genetics which could double the size of the overall addressable market for S&W. The company will continue to be opportunistic in looking at ways in which it can leverage its expertise and market position to continue to grow the company."
Mr. Grewal commented on stevia, "We are in the process of finalizing our second harvest from our first generation field in the heart of California's Central Valley. We expect to complete the harvest in the coming weeks, and ship the dried stevia leaf to our partners at PureCircle by the end of the calendar year. Also by the end of this calendar year, we expect to harvest almost 150 acres of stevia currently growing on our second generation field. Our plans for fiscal year 2013 continue to call for increases in acreage and an increase in resources to research and development. While we are still at an early stage of development in our stevia program, we are progressing on a path that should lead to S&W becoming a leader in providing the stevia industry with high quality stevia leaf with consistent traits and exceptional levels of the critical Reb-A sweetener component."
Matt Szot, chief financial officer of S&W Seed Company, commented, "We successfully completed a $5.5 million public offering in May 2012 to assist in our efforts to continue to acquire additional farmland to expand our alfalfa seed production and meet the increased demands for our product. A few days ago we also raised $3.5 million in a private placement transaction whereby we sold 600,000 shares of restricted common stock at $5.85 per share. Additionally, we were able to increase our line of credit with Wells Fargo to $7.5 million, which remains untapped, to help facilitate our growth plans going forward. With a strong balance sheet, we continue to look for opportunities to expand upon the agricultural platform we are building at S&W."
Mr. Grewal concluded, "Last year I made the statement that fiscal year 2012 was shaping up to be a transformative year for the company, and it was just that. We obtained record alfalfa seed revenues, had significant gains in market share, expanded our operations geographically from a customer and grower base, and facilitated the ability to continue growing our alfalfa seed business by increasing our production capabilities. We also completed our first stevia harvest, while at the same time more than doubling our dedicated stevia acreage base to more than 250 acres."
"In fiscal year 2013, we are dedicated to expanding on the strong foundation that has been established. We will continue to increase our alfalfa seed production and stevia leaf acreage, and look for synergistic opportunities to leverage our business platform. We look forward to a successful fiscal year 2013 and beyond."