1ST QTR: S&W SEED CO REVENUES UP 10%; PROFITS DOWN 39%
Nov. 15, 2012
Source: S&W Seed Co news release
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First Quarter Fiscal Year 2013 and Other Highlights:
Record quarterly revenues of $6.7 million;
Diluted EPS of $0.01 during the quarter compared to $0.09 a year ago affected by lower gross margins on seed sales due to higher costs of production on fields operating less than one year;
Completed acquisition of Imperial Valley Seeds ("IVS") on October 1, 2012 to significantly expand production capabilities and diversify sales channels; IVS had audited revenues of $16.3 million and $1.7 million of pre-tax income for the 12 months ended December 31, 2011;
Announced agreement with Monsanto and Forage Genetics, Inc. ("FGI") on October 2, 2012 to incorporate the Roundup Ready® trait into specific S&W-developed varieties;
Acquired rights to dormant alfalfa genetics to expand the company's addressable market;
Company expects revenues for the second quarter of fiscal year 2013 to have approximately $5 million in contribution from IVS.
For the first fiscal quarter ended September 30, 2012, S&W reported revenues of $6.7 million versus $6.1 million in the prior year; an increase of 10%.
Revenues for the quarter were restricted by limited seed available for shipment due to the timing of the 2012 fall harvest as well as lower beginning inventory balances.
Due to continued strong demand for seed, the company anticipates that it will see continued sell through of seed in the second quarter that was not available for shipment during the first quarter.
Gross profits decreased to $1.1 million during the first quarter of fiscal 2013 compared to $1.8 million in the quarter a year ago.
The decrease in gross profits was primarily affected by higher costs of production on fields operating less than one year, as well as delayed follow through in selling price increases intended to partially offset the overall increases in cost of production.
The company is already obtaining additional increases in average pricing compared with that obtained in the first quarter and anticipates that it will be able to obtain higher gross margins in its core business for the remainder of the year.
As a result of the effect on gross profits described above, S&W reported operating income of $155,000 for the quarter versus $879,000 in the comparable quarter in the prior year.
Net income for the quarter totaled $89,000, or $0.01 per basic and diluted share, compared to a net income of $523,000, or $0.09 per basic and diluted share, in the fiscal quarter ended September 30, 2011.
Mark Grewal, president and chief executive officer of S&W Seed Company, commented, "The strategic actions we have taken during the course of the last few months have positioned S&W to become one of the leaders in the alfalfa seed industry for years to come. Our acquisition of IVS brings an established grower base for production, customer channels, and management infrastructure that will significantly benefit S&W."
"Our agreement with Monsanto and FGI will allow us to meet the needs of our domestic customers who desire the benefits of biotechnology along with our high yielding, salt tolerant traits.
"Finally, our acquisition of certain dormant alfalfa varieties will allow us to expand into a previously untapped marketplace. Overall, this has been a transformational few months and we are dedicated to leveraging these recent developments to continue driving shareholder value for years to come," Grewal said.