S&W Seed pany(SANW) - 2025 Q3 - Quarterly Results

S&W Third Quarter Fiscal 2025 Financial Results S&W reported a 2.0% increase in Q3 FY2025 revenue to $9.6 million, achieving a positive Adjusted EBITDA of $0.2 million, while revising down its full fiscal year 2025 guidance due to new tariffs impacting sorghum exports to China Financial Highlights S&W reported a 2.0% increase in Q3 FY2025 revenue to $9.6 million, a significant improvement in gross margin to 37.7%, and a reduction in GAAP net loss to ($2.2) million Q3 Fiscal 2025 vs Q3 Fiscal 2024 Key Metrics | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $9.6 million | $9.4 million | +2.0% | | Gross Profit Margin | 37.7% | 24.6% | +13.1 p.p. | | GAAP Operating Expenses | $4.3 million | $5.5 million | -21.8% | | Net Loss from Continuing Operations | ($2.2) million | ($4.8) million | Improved | | Net Loss per Share (Continuing Ops) | ($1.04) | ($2.11) | Improved | | Adjusted EBITDA | $0.2 million | ($2.2) million | Improved | Management Discussion The CEO stated that the strategic repositioning towards high-margin sorghum technology is showing clear results, evidenced by Q3's revenue growth and the first positive Adjusted EBITDA in many years - The strategic shift to high-value, high-margin sorghum trait technology is beginning to deliver positive results, including year-over-year revenue growth and improved gross margins[3] - Tariffs effective April 2025 have negatively impacted the Q4 outlook due to a decline in customer exports to China, which has historically been the largest export buyer of sorghum[3] - The company is optimistic about the long-term potential of sorghum, believing its nutritional profile (high protein, non-GMO, gluten-free) will drive future demand[5] Detailed Financial Results Q3 revenue grew by $0.2 million to $9.6 million, primarily driven by increased sales of non-dormant alfalfa in Mexico and conventional grain sorghum in the U.S - Revenue growth was driven by a $0.6 million increase in non-dormant alfalfa sales in Mexico and a $0.4 million increase in U.S. conventional grain sorghum sales, partially offset by declines in other areas[6] - The gross margin improvement was primarily due to better life cycle management and a product mix shift from conventional sorghum to higher-margin Prussic Acid Free sorghum[7] - GAAP operating expenses decreased to $4.3 million from $5.5 million, driven by a $1.0 million reduction in SG&A and a $0.2 million decrease in depreciation and amortization[8] - Adjusted EBITDA turned positive to $0.2 million for Q3 FY2025, compared to a loss of ($2.2) million in Q3 FY2024[11] Fiscal 2025 Guidance The company has updated its fiscal 2025 guidance, lowering expectations due to market disruptions in the U.S. sorghum market caused by decreased exports to China Updated Fiscal 2025 Guidance | Metric | Updated FY2025 Guidance | FY2024 Comparable Revenue | | :--- | :--- | :--- | | Revenue | $29.0 million - $31.0 million | $38.0 million (from continuing ops) | | Adjusted EBITDA | ($8.5 million) - ($7.0 million) | N/A | - The change in guidance is primarily attributed to expected disruptions in the U.S. sorghum market following decreased customer exports to China[12] Non-GAAP Financial Measures S&W utilizes non-GAAP financial measures, including Adjusted EBITDA, adjusted operating expenses, and adjusted net loss, to supplement its GAAP results - The company uses non-GAAP measures like Adjusted EBITDA and adjusted net loss to facilitate period-to-period comparisons and analyze operating performance[15] - Key adjustments to GAAP figures include excluding non-recurring transaction costs, depreciation and amortization, net loss on discontinued operations, and equity in loss of investee (Vision Bioenergy)[18][19][24] - Guidance for Adjusted EBITDA is not reconciled to GAAP net loss because certain reconciling items are uncertain and cannot be reasonably predicted[17] Financial Tables This section presents the unaudited consolidated financial statements, including the Statements of Operations, Balance Sheets, and Statements of Cash Flows, along with reconciliations of GAAP to non-GAAP financial measures for the periods ended March 31, 2025 Consolidated Statements of Operations For the third quarter of fiscal 2025, S&W reported revenue of $9.6 million, a slight increase from $9.4 million in the prior-year quarter Q3 Statement of Operations Summary (Unaudited) | Metric (Three Months Ended March 31) | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Revenue | $9,552,427 | $9,367,984 | | Gross Profit | $3,605,332 | $2,305,624 | | Loss from Operations | ($662,601) | ($3,238,077) | | Net Loss from Continuing Operations | ($2,225,117) | ($4,810,077) | | Net Loss per Share (Continuing Ops) | ($1.04) | ($2.11) | Consolidated Balance Sheets As of March 31, 2025, the company's total assets stood at $69.6 million, a significant decrease from $120.7 million at June 30, 2024 Balance Sheet Summary (Unaudited) | Metric | March 31, 2025 (USD) | June 30, 2024 (USD) | | :--- | :--- | :--- | | Total Current Assets | $31,475,931 | $63,374,490 | | Total Assets | $69,613,381 | $120,725,541 | | Total Current Liabilities | $31,407,244 | $69,242,324 | | Total Liabilities | $36,636,066 | $75,694,416 | | Total Stockholders' Equity | $26,820,009 | $39,262,360 | Consolidated Statements of Cash Flows For the nine months ended March 31, 2025, net cash provided by operating activities from continuing operations was $1.1 million, a substantial improvement from the $4.0 million used in the prior-year period Cash Flow Summary (Nine Months Ended March 31, Unaudited) | Metric | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($347,965) | ($5,581,822) | | Net cash used in (provided by) investing activities | ($143,563) | $5,797,347 | | Net cash provided by (used in) financing activities | $553,186 | ($3,443,005) | | Cash and cash equivalents, end of period | $354,497 | $171,009 | Reconciliation of Non-GAAP Measures The tables provide detailed reconciliations from GAAP to non-GAAP metrics, showing that after adjustments, Q3 FY2025 Adjusted EBITDA was a positive $0.2 million, a significant improvement from the prior year Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA (Q3) | Metric (Three Months Ended March 31) | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Net loss attributable to S&W Seed Company | ($2,236,034) | ($5,500,537) | | Adjustments (Interest, Taxes, D&A, etc.) | $2,482,769 | $3,277,199 | | Non-GAAP adjusted EBITDA | $246,735 | ($2,223,338) | Reconciliation of Net Loss to Non-GAAP Adjusted Net Loss (Q3) | Metric (Three Months Ended March 31) | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Net loss attributable to S&W Seed Company | ($2,236,034) | ($5,500,537) | | Non-GAAP adjusted net loss | ($1,215,236) | ($4,081,246) | | Non-GAAP adjusted net loss per share | ($0.57) | ($1.79) |