S&W Seed Co (SANW) Reports Mixed Q1 Fiscal 2024 Results Amid Operational Challenges
First-quarter fiscal 2024 revenue decreased by 17.3% year-over-year to $16.4 million.
Gross profit margin improved to 30.5% in Q1 fiscal 2024, up from 22.7% in the prior year.
GAAP net loss widened to ($6.0) million, or ($0.14) per share, compared to a net loss of ($4.5) million, or ($0.11) per share in Q1 fiscal 2023.
Adjusted EBITDA showed a slight improvement to ($1.4) million from ($1.6) million year-over-year.
On November 9, 2023, S&W Seed Co (NASDAQ:SANW) released its financial results for the first quarter of fiscal 2024, revealing a mixed performance with revenue declines but improved profitability metrics. The company faced several challenges, including market disruptions and adverse weather conditions, which impacted sales in key regions.
Financial Performance Overview
For the quarter ended September 30, 2023, S&W Seed Co reported a 17.3% decrease in revenue to $16.4 million, down from $19.9 million in the same period last year. This decline was primarily due to reduced sales in the Middle East and North Africa region, Mexico, and Asia, partially offset by increased sales in South Africa and the introduction of Double TeamTM sorghum revenue. Despite the revenue drop, the company's gross profit margin saw a significant improvement, rising to 30.5% from 22.7% in the first quarter of fiscal 2023.
Operating expenses remained flat at $7.9 million, while the GAAP net loss widened to ($6.0) million, or ($0.14) per share, compared to a net loss of ($4.5) million, or ($0.11) per share in the prior year's quarter. Adjusted EBITDA improved slightly to ($1.4) million from ($1.6) million in the first quarter of fiscal 2023.
Management Commentary
CEO Mark Herrmann commented on the quarter's results and the company's strategic initiatives, stating:
We have made good progress during the first quarter instituting key operational initiatives to drive the business towards profitability in the near-term... These initiatives, along with early Double Team sales and higher margin alfalfa sales, resulted in a gross profit margin of 30.5%, which was a 780-basis point improvement and a $0.2 million improvement to our adjusted EBITDA compared to the year ago first quarter."
Herrmann also highlighted the company's focus on becoming a key technology provider in the sorghum market and the planned introduction of new trait technologies in the upcoming fiscal years.
International Operations and Future Outlook
S&W Seed Co is exploring options to unlock value in its international operations, including a potential IPO or strategic transaction involving its Australian subsidiary. However, there is no assurance that this evaluation will result in a completed transaction.
For fiscal 2024, S&W Seed Co anticipates revenue to be in the range of $76 to $82 million, representing a 3% to 12% increase compared to fiscal 2023. Adjusted EBITDA is expected to be between $(7.5) million to $(4.0) million, an improvement from $(9.3) million in fiscal 2023.
Conference Call and Non-GAAP Financial Measures
The company held a conference call on November 9, 2023, to discuss the results. S&W Seed Co also provided non-GAAP financial measures, including adjusted EBITDA, adjusted operating expenses, and adjusted net loss, which are intended to supplement GAAP measures in analyzing the company's performance.
For detailed financial tables and a complete press release, please visit S&W Seed Co's investor relations website.
Investors are encouraged to review the full financial statements and consider the company's potential as it navigates through its strategic initiatives and focuses on improving its profitability.
Explore the complete 8-K earnings release (here) from S&W Seed Co for further details.
This article first appeared on GuruFocus.
