Longmont, CO (November 26, 2024) - S&W Seed Company (Nasdaq: SANW) announced it has filed its 10-Q for the three months ended September 30, 2024. S&W previously issued preliminary first quarter fiscal 2025 financial results on November 19, 2024. The financial results filed in the 10-Q are in line with the preliminary financial results previously released.

In addition to the filing of the 10-Q, the Company announced yesterday that it has finalized the voluntary plan of administration, or VA, process for its subsidiary, S&W Seed Company Australia Pty Ltd, or S&W Australia.

In the announcement on November 19, 2024, the Company also introduced new guidance for fiscal 2025, which includes adjusted EBITDA for the remaining three quarters of fiscal 2025 (period from October 1, 2024 to June 30, 2025) to be between approximately ($1.9) million and $0.1 million. The Company is maintaining that guidance as a result of the filing of the 10-Q and finalization of the VA process.

"As a result of the VA process being completed, on a go forward basis S&W is exclusively focused on its core U.S.-based operations led by our high margin Double Team sorghum solutions as well as our biofuels joint venture with Shell," commented S&W Seed Company's CEO, Mark Herrmann. "As we announced during our preliminary earnings call on November 19, 2024, we believe we have a robust commercial plan in place to drive continued adoption of Double Team and other high value sorghum trait solutions, including the planned launch of our Prussic Acid Free trait this fiscal year. We are similarly focused on driving efficiencies across our production and operating operations. Our guidance indicates continued strong improvement in gross margins, coupled with a reduction in operating expenses, which is paving the way for us to approach positive adjusted EBITDA performance. In fact, we are expecting the high end of our range to be at adjusted EBITDA breakeven for the rest of fiscal 2025. This would be a significant potential milestone if we can achieve our expectations."

Financial Results

Total revenue for the first quarter of fiscal 2025 was $8.3 million compared to total revenue for the first quarter of fiscal 2024 of $10.8 million. This decrease was driven by a $1.5 million decrease in non-dormant alfalfa sales in the Middle East and North Africa region driven by the import ban on alfalfa in Saudi Arabia, a $0.8 million decrease in sorghum sales in Mexico related to tightening of credit policies and carryover seed from the prior year in the market, a $0.5 million decrease in Double Team sorghum revenue, a $0.4 million decrease in sorghum sales to South Africa due to limited inventory supply of compatible hybrids, and a $0.3 million decrease in conventional sorghum sales due to an extended sales season in the prior year. This decrease was offset by a $0.5 million increase in non-dormant alfalfa sales in the United States, a $0.3 million increase in non-dormant alfalfa sales in Mexico, and a $0.3 million increase in dormant alfalfa sales in the United States.

Gross profit margin for the first quarter of fiscal 2025 was 16.1% compared to gross profit margin for the first quarter of fiscal 2024 of 25.3%. The gross profit percentage decrease was primarily driven by an estimated 6.5 point decrease attributable to the Company's International segment, with an estimated 3.8 point decrease related to lower selling prices in the Middle East North Africa region due lower demand, and an estimated 2.7 point decrease in margin related to South Africa sorghum sales due to the available supply of reduced quality and low cost seed in the prior year. The net gross profit for the Americas segment decreased primarily due to inventory write-offs.

GAAP operating expenses for the first quarter of fiscal 2025 were $5.6 million compared to GAAP operating expenses for the first quarter of fiscal 2024 of $5.7 million. This decrease was due to a $0.1 million decrease in selling, general, and administrative expenses.

Adjusted operating expenses (see Table A1) for the first quarter of fiscal 2025 were $4.5 million compared to $4.8 million for the first quarter of fiscal 2024. The $0.3 million decrease in adjusted operating expenses for the first quarter of fiscal 2025 was largely attributed to a $0.2 million decrease in selling, general, and administrative expenses after excluding non-recurring transaction costs.

Net loss from continuing operations for the first quarter of fiscal 2025 was ($6.2) million, or ($2.73) per basic and diluted share, compared to ($5.0) million, or ($2.22) per basic and diluted share for the first quarter of fiscal 2024. Net loss from discontinued operations for the first quarter of fiscal 2025 was ($10.0) million, or ($4.38) per basic and diluted share, compared to ($0.9) million, or ($0.41) per basic and diluted share, for the first quarter of fiscal 2024. GAAP net loss for the first quarter of fiscal 2025 was ($16.2) million, or ($7.11) per basic and diluted share, compared to ($6.0) million, or ($2.63) per basic and diluted share, for the first quarter of fiscal 2024.

Adjusted net loss (see Table A2) for the first quarter of fiscal 2025 was ($4.9) million, or ($2.15) per basic and diluted share, excluding the loss from discontinued operations, interest expense - amortization of debt discount, non-recurring transaction costs, dividends accrued for participating securities and accretion, and equity in loss of equity method investee (Vision Bioenergy), net of tax. Adjusted net loss (see Table A2) for the first quarter of fiscal 2024 was ($3.8) million, or ($1.70) per basic and diluted share, excluding the loss from discontinued operations, interest expense - amortization of debt discount, non-recurring transaction costs, dividends accrued for participating securities and accretion, and equity in loss of equity method investee (Vision Bioenergy), net of tax.

Adjusted EBITDA (see Table B) for the first quarter of fiscal 2025 was ($3.1) million compared to adjusted EBITDA for the first quarter of fiscal 2024 of ($1.7) million.

S&W Australia

As previously reported, S&W Australia adopted a voluntary plan of administration on July 24, 2024, and on October 11, 2024, creditors of S&W Australia approved a proposed Deed of Company Arrangement, or DOCA, pursuant to which, among other things, 100% of the shares in S&W Australia would be transferred to Avior Asset Management No. 3 Pty Ltd. The effective date of the DOCA was November 22, 2024.

In order to facilitate the satisfaction of certain conditions to the effectiveness of the DOCA, on November 22, 2024, S&W entered into a settlement agreement in exchange for a release from the intercompany obligations owed to S&W Australia. S&W will transfer ownership of certain white clover and alfalfa (lucerne) intellectual property, provide the associated inventory, repay insurance proceeds received on behalf of S&W Australia, and provide transitional support to S&W Australia necessary to assist in the changeover of business operations to a standalone entity. S&W also entered into an agreement with National Australia Bank Limited that releases S&W from the AUD $15.0 million guarantee and obtained a release of certain applicable liens from CIBC Bank USA.

Fiscal 2025 Guidance

S&W expects fiscal 2025 revenue to be within a range of $34.5 to $38.0 million. This includes approximately $4.1 million of international sales in the just completed first quarter of fiscal 2025. Adjusted EBITDA is expected to be in the range of ($5.0) million to ($3.0) million for fiscal 2025. Adjusted EBITDA for the first quarter of fiscal 2025 was ($3.1) million indicating that the Company expects adjusted EBITDA for the remaining three quarters of the fiscal year to be in a range of ($1.9) to $0.1 million.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with accounting principles generally accepted in the United States of America ("GAAP"), S&W has provided the following non-GAAP financial measures in this release and the accompanying tables: adjusted EBITDA; adjusted operating expenses; as well as adjusted net loss and adjusted net loss per share. S&W uses these non-GAAP financial measures internally to facilitate period-to-period comparisons and analysis of its operating performance and liquidity, and believes they are useful to investors as a supplement to GAAP measures in analyzing, trending and benchmarking the performance and value of its business. However, these measures are not intended to be a substitute for those reported in accordance with GAAP. These measures may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures.

For reconciliations of historical non-GAAP financial measures to the most comparable financial measures under GAAP, see Tables A1, A2, and B accompanying this release.

In order to calculate these non-GAAP financial measures, S&W makes targeted adjustments to certain GAAP financial line items found on its condensed consolidated statement of operations, backing out non-recurring or unique items that we believe otherwise distort the underlying results and trends of the ongoing business. S&W has excluded the following items from one or more of its non-GAAP financial measures for the periods presented:

Selling, general and administrative expenses; operating expenses. S&W excludes from operating expenses depreciation and amortization and a portion of SG&A expense related to non-recurring transaction costs and, for its adjusted EBITDA calculation, also non-cash stock-based compensation. S&W excludes non-recurring transaction costs from S&W's total operating expenses to provide investors a method to compare its operating results to prior periods and to peer companies, as such amounts can vary significantly based on the frequency of restructuring or acquisition events and the magnitude of restructuring or acquisition expenses.

Net loss on discontinued operations: S&W excludes the net loss on discontinued operations, as this is outside of the scope of normal operations and is related to the disposal and operations of S&W Australia, which is no longer applicable. S&W believes it is important to exclude this amount in order to better understand its business performance.

Foreign currency loss. The foreign currency loss represents fluctuations from changes in exchange rates that are uncertain or out of S&W's control and cannot be reasonably predicted. S&W believes it is useful to exclude this amount in order to better understand its business performance and allow investors to compare its results with peer companies.

Interest expense – amortization of debt discount. Amortization of debt discount and debt issuance costs are primarily related to S&W's working capital lines of credit and term loans. These amounts are non-cash charges and are unrelated to its core performance during any particular period. S&W believes it is useful to exclude these amounts in order to better understand its business performance and allow investors to compare its results with peer companies.

Interest expense, net. Interest expense, net primary consists of interest incurred on S&W's working capital credit facilities, the MFP Loan, the AgAmerica loan, and equipment capital leases. S&W believes it is useful to exclude these amounts in order to better understand its business performance and allow investors to compare its results with peer companies.

Dividends accrued for participating securities and accretion. Dividends accrued for participating securities and accretion relates to dividends accrued for the Series B convertible preferred stock and the accretion for the discount related to the warrants issued in conjunction with the Series B convertible preferred stock. S&W believes it is useful to exclude these amounts in order to better understand its business performance and allow investors to compare its results with peer companies.

Equity in loss of equity method investee (Vision Bioenergy), net of tax. This loss represents S&W's percentage of Vision Bioenergy's loss for the three months ended September 30, 2024 and 2023, as it has significant influence in Vision Bioenergy. S&W believes it is useful to exclude these amounts in order to better understand its business performance and allow investors to compare its results with peer companies.

Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:

Adjusted Operating Expenses. S&W defines adjusted operating expenses as GAAP operating expenses adjusted to exclude depreciation and amortization, loss (gain) on disposal of property, plant and equipment, and non-recurring transaction costs. S&W believes that the use of adjusted operating expenses is useful to investors and other users of its financial statements in evaluating its operating performance because it provides a method to compare its operating results to prior periods and to peer companies after making adjustments for depreciation and amortization and amounts that are not expected to recur.

Adjusted net loss and loss per share. S&W defines adjusted net loss as net loss attributable to S&W less interest expense – amortization of debt discount, non-recurring transaction costs, dividends accrued for participating securities and accretion, and equity in loss of equity method investee (Vision Bioenergy), net of tax. S&W believes that these non-GAAP financial measures provide useful supplemental information for evaluating its operating performance.

Adjusted EBITDA. S&W defines adjusted EBITDA as net loss attributable to S&W adjusted to exclude the loss from discontinued operations, interest expense, net, interest expense – amortization of debt discount, provision for (benefit from) income taxes, depreciation and amortization, non-recurring transaction costs, non-cash stock-based compensation, foreign currency loss, equity in loss of equity method investee (Vision Bioenergy), net of tax, and dividends accrued for participating securities and accretion. S&W believes that the use of adjusted EBITDA is useful to investors and other users of its financial statements in evaluating its operating performance because it provides them with an additional tool to compare business performance across companies and across periods. S&W uses adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of its overall assessment of its performance, for planning purposes, including the preparation of its annual operating budget, to evaluate the effectiveness of its business strategies and to communicate with its Board concerning its financial performance. Management does not place undue reliance on adjusted EBITDA as its only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP.

Financial Tables

For a complete press release including financial tables, view online at: https://swseedco.com/investors/press-releases/.