S&W Announces Results for the Year Ended June 30, 2012
FIVE POINTS, Calif., Sept. 27, 2012 /PRNewswire/ — 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.”
S&W Seed Company has scheduled a conference call that same day, Thursday, September 27, 2012, at 11:00am ET (8:00am PT) to review the results. Interested parties can access the conference call by dialing (877) 317-6789 or (412) 317-6789 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.htm. A teleconference replay of the call will be available for three days at (877) 344-7529 or (412) 317-0088, confirmation #10018752. A webcast replay will be available in the Investor Relations section of the Company’s website at http://www.swseedco.com/investors.htm for 30 days.
About S&W Seed Company
Founded in 1980 and headquartered in the Central Valley of California, S&W Seed Company is a leading producer of warm climate, high yield alfalfa seed varieties, including varieties that can thrive in poor, saline soils, as verified over decades of university-sponsored trials. S&W also offers seed cleaning and processing at its 40-acre facility in Five Points, California. Additionally, the company has recently launched a business expansion initiative centered on its plan to mass produce stevia leaf in the U.S. in response to growing global demand for the all-natural, zero calorie sweetener from the food and beverage industry. 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 “may,” “future,” “plan” or “planned,” “will” or “should,” “expected,” “anticipates,” “draft,” “eventually” or “projected.” 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 the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011, its Quarterly Report on Form 10-Q for the period ended December 31, 2011, and in other filings made by the Company with the Securities and Exchange Commission.
This press release includes certain financial information which constitutes “non-GAAP financial measures” as defined by the SEC. A full reconciliation of the non-GAAP measures to GAAP can be found in the tables of today’s press release.
??Contact: Robert Blum, Joe Dorame, Joe Diaz Matt Szot Lytham Partners, LLC Chief Financial Officer 602-889-9700 S&W Seed Company email@example.com 559-884-2535 www.lythampartners.com www.swseedco.com
S&W SEED COMPANY (A NEVADA CORPORATION) CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended June 30, -------- 2012 2011 ---- ---- Revenue Seed and crop revenue $13,261,853 $2,664,256 Milling and other revenue 885,764 977,124 ------- ------- Total revenue 14,147,617 3,641,380 Cost of revenue Cost of seed and crop revenue 9,912,781 2,027,188 Cost of milling and other revenue 327,133 253,667 ------- ------- Total cost of revenue 10,239,914 2,280,855 Gross profit 3,907,703 1,360,525 Operating expenses Selling, general and administrative expenses 2,772,711 2,166,375 Research and development expenses 242,523 450,016 Depreciation and amortization 272,855 242,431 ------- Total operating expenses 3,288,089 2,858,822 --------- --------- Income (loss) from operations 619,614 (1,498,297) Other (income) expense Loss on disposal of fixed assets 24,532 5,706 Interest (income) expense, net 20,937 (6,978) ------ Net income (loss) before income tax expense (benefit) 574,145 (1,497,025) Income tax expense (benefit) 199,310 (685,577) Net income (loss) $374,835 $(811,448) ======== ========= Net income (loss) per common share: Basic $0.06 $(0.14) ===== ====== Diluted $0.06 $(0.14) ===== ====== Weighted average number of common shares outstanding: Basic 5,904,110 5,800,000 ========= ========= Diluted 5,906,899 5,800,000 ========= =========
S&W SEED COMPANY (A NEVADA CORPORATION) ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME Years Ended June 30, -------- 2012 2011 ---- ---- GAAP Net income (loss) 374,835 (811,448) ------- -------- Non-GAAP Cost of revenue adjustment (1) 277,325 - Non-GAAP Income tax provision adjustments (2) (96,232) - Non-GAAP Net income (loss) 555,928 (811,448) ======= ======== Net income (loss) per common share: Basic $0.09 $(0.14) ===== ====== Diluted $0.09 $(0.14) ===== ====== Weighted average number of common shares outstanding: Basic 5,904,110 5,800,000 ========= ========= Diluted 5,906,899 5,800,000 ========= =========
Summary of Reconciliation between GAAP and Non- GAAP Net Income (1) Add back the one-time non- recurring charges to cost of revenue associated with wheat and triticale crops. (2) Add back the non-GAAP additional tax expense had the $277,000 non-recurring loss not occur.
S&W SEED COMPANY (A NEVADA CORPORATION) CONSOLIDATED BALANCE SHEETS June 30, June 30, 2012 2011 ---- ---- ASSETS CURRENT ASSETS Cash and cash equivalents $8,235,495 $3,738,544 Accounts receivable, net 2,716,985 1,803,909 Inventories 6,116,785 5,664,119 Prepaid expenses and other current assets 138,236 58,451 Deferred tax asset 215,688 352,393 ------- TOTAL CURRENT ASSETS 17,423,189 11,617,416 Property, plant and equipment, net of accumulated depreciation 2,441,186 2,299,306 Other intangibles, net 606,653 502,436 Crop production costs 1,098,292 220,431 Deferred tax asset - long term 464,375 517,672 TOTAL ASSETS $22,033,695 $15,157,261 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $1,141,162 $207,074 Accounts payable - related party 307,589 218,863 Accrued expenses and other current liabilities 454,512 169,060 TOTAL CURRENT LIABILITIES 1,903,263 594,997 --------- ------- TOTAL LIABILITIES 1,903,263 594,997 --------- ------- STOCKHOLDERS' EQUITY Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding - - Common stock, $0.001 par value; 50,000,000 shares authorized; 6,873,000 issued and outstanding at June 30, 2012; 5,800,000 issued and outstanding at June 30, 2011 6,873 5,800 Additional paid-in capital 19,796,976 14,604,716 Retained earnings (deficit) 326,583 (48,252) ------- ------- TOTAL STOCKHOLDERS' EQUITY 20,130,432 14,562,264 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $22,033,695 $15,157,261 =========== ===========
S&W SEED COMPANY (A NEVADA CORPORATION) CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended June 30, -------- 2012 2011 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $374,835 $(811,448) Adjustments to reconcile net income (loss) from operating activities to net cash provided by (used in) operating activities Stock-based compensation 187,022 122,185 Change in allowance for doubtful accounts (3,587) 3,587 Depreciation and amortization 272,855 242,431 Loss on disposal of fixed assets 24,532 5,706 Changes in: Accounts receivable (909,489) 307,372 Inventories (452,666) (2,947,680) Prepaid expenses and other current assets (79,785) 17,450 Crop production costs (877,861) (220,431) Deferred tax asset 190,002 (685,577) Accounts payable 934,088 (87,403) Accounts payable - related party 88,726 217,081 Accrued expenses and other current liabilities 285,452 137,712 ------- ------- Net cash provided by (used in) operating activities 34,124 (3,699,015) CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (384,984) (397,458) Acquisition of customer list (165,000) - Proceeds from disposal of property, plant and equipment 6,500 4,500 ----- ----- Net cash used in investing activities (543,484) (392,958) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from public offering 5,006,311 - --------- --- Net cash provided by financing activities 5,006,311 - --------- --- NET INCREASE OR (DECREASE) IN CASH 4,496,951 (4,091,973) CASH AND CASH EQUIVALENTS, beginning of the period 3,738,544 7,830,517 --------- --------- CASH AND CASH EQUIVALENTS, end of period $8,235,495 $3,738,544 ========== ==========
SOURCE S&W Seed Company