S&W Seed pany(US:SANW)2021-11-11 19:28Financial Data and Key Metrics Changes - Core revenue for Q1 2022 was $15.5 million, a 27% increase from $12.2 million in Q1 2021, primarily driven by growth in the MENA and Australia regions [31] - GAAP gross margins improved to 20.1% from 12.9% in the prior year, while adjusted gross margins rose to 22.1% from 19.4% [37] - The company expects annual fiscal 2022 revenue to be in the range of $80 million to $85 million, representing a year-over-year growth of approximately 15% to 20% [34] Business Line Data and Key Metrics Changes - The demand for seeds, particularly for the Double Team trait in sorghum, is high, with expectations of being sold out in the 2022 fiscal year [23] - The company is experiencing strong pricing improvements in non-dormant alfalfa, especially in the MENA region, contributing to gross margin improvements [52] Market Data and Key Metrics Changes - Commodity prices for corn, soybean, sorghum, and wheat are at record highs, positively impacting farmer profitability and increasing demand for seeds [7][8] - The logistics challenges have resulted in approximately $5 million of sales orders shifting from Q4 2021 to Q1 2022, complicating shipment forecasts [33] Company Strategy and Development Direction - The company is focusing on maximizing sales and profits in the third and fourth quarters, which are its largest sales periods [46] - There is a strategic push to license the Double Team trait to other seed companies, indicating a focus on expanding market reach [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the agricultural markets, noting that high grain prices are changing farmers' purchasing behavior and increasing demand for S&W's products [55][58] - The company is actively managing logistics issues and has passed some freight costs onto customers to mitigate challenges [22] Other Important Information - The company completed a $5 million equity raise in October, which is expected to support operations through the fiscal year [44] - The company is in discussions with Ingredion regarding the potential construction of a new production facility for stevia in the U.S. [84] Q&A Session Summary Question: Can you help me understand the cadence of the margin build? - Management indicated that about 70% of revenues occur in the back half of the year, with Q1 and Q2 primarily focused on lower-margin alfalfa sales [51][52] Question: How do you see farmers considering the tradeoff between corn and sorghum? - Management noted that rising nitrogen prices may lead farmers to consider sorghum more favorably, especially with the introduction of the Double Team trait [61][62] Question: Can you elaborate on expectations around communicating results from the stevia pilot plots? - Preliminary information on yields from the North Carolina plots is expected by the end of the fiscal year, but full results will take longer due to the nature of agricultural production [65][66] Question: Was there any carryover from the first quarter into the second quarter? - Management confirmed that ongoing logistical challenges have pushed some orders from Q1 to Q2, but they are focused on ensuring timely delivery for planting seasons [73][74]