S&W Seed Company announced financial results for its third quarter of fiscal 2012, which ended March 31, 2012.
Third Quarter Highlights:
- Total revenue increased to $2.5 million from $440,000 in the comparable fiscal 2011 quarter, an increase of 480 percent;
- Seed revenue increased 1,143 percent to $2.5 million compared to $204,000 in the third quarter of fiscal 2011;
- EBITDA totaled $126,000 for the quarter, an improvement of $628,000 versus the EBITDA loss in comparable period of the prior year;
- Net income totaled $21,000, an improvement of $314,000 over the net loss in the comparable period of the prior year of ($294,000);
- Basic and diluted earnings per share was $0.00 versus a loss of ($0.05) per share in the comparable period of the prior year;
- Cash and cash equivalents was $6.2 million at the end of the third quarter;
- The company has secured a total of 4,664 acres of fall 2012 harvest, representing an increase of approximately 95 percent from the 2,400 acres harvested in fall 2011; and
- The company will be adding an additional 156 acres of land in the Central Valley of California dedicated to stevia production, more than doubling the current 114 acres of stevia planted.
Nine Months Ended March 31, 2012 Highlights:
- Nine month fiscal year 2012 revenue totaled $13.4 million compared to $2.3 million in the comparable period, a 487 percent increase;
- EBITDA was $1.8 million for the nine month period of fiscal year 2012, an improvement of $2.7 million versus the loss in the comparable period of the prior year; and
- Basic and diluted earnings per share for the first nine months ended March 31, 2012 totaled $0.17 compared to a loss of ($0.11) per share in the comparable period of the prior year.
For the third quarter of fiscal year 2012, S&W reported revenue of $2.5 million versus $0.4 million in the comparable quarter last year; an increase of 480 percent. These results reflect both the strong demand of the company's proprietary alfalfa seed, strong market conditions and strategic decisions made last year to more effectively market the company's products. S&W reported operating income of $59,000 versus an operating loss of $563,000 in the comparable period of the prior year. Net income totaled $21,000, or $0.00 per basic and diluted share compared to a net loss of $294,000 or $(0.05) per basic and diluted share in the third quarter of the prior year.
For the nine months ended March 31, 2012, S&W reported revenue of $13.4 million versus $2.3 million in the comparable period last year; an increase of 487 percent. S&W reported operating income of $1.6 million versus an operating loss of $1.1 million in the comparable period of the prior year. Net income totaled $986,000, or $0.17 per basic and diluted share compared to a net loss of $630,000 or $(0.11) per basic and diluted share in the nine months ended March 31, 2011.
During the third quarter, the company secured approximately 360 additional acres for production of S&W's proprietary alfalfa seed varieties. The additional acreage, which will be harvested in calendar 2012, is comprised of farmland of contract growers. The company has now secured a total of 4,664 acres for the fall 2012 harvest, representing an approximate 95 percent increase from the 2,400 acres harvested in fall 2011.
Recently, the company announced the expansion of its stevia development program through the lease of an additional 156 acres of land in the Central Valley of California. This second generation field more than doubles the company's current dedicated stevia acreage of 114 acres. Planting on the second generation field is expected to occur within the coming month. Additionally, the company expects to execute its second harvest on its first generation, 114-acre field, during the first quarter of fiscal year 2013.
Mark Grewal, president and chief executive officer of S&W Seed Company, commented, "We are very pleased that the strong trends of the first half of fiscal year 2012 continued into the traditionally weak third quarter. While the third quarter is typically geared towards preparations for the fall 2012 production harvest, our sales and marketing efforts continued to gain traction during what is a usually a slow quarter. There was much higher demand for our products than we are accustomed to seeing for the February planting season, which in turn prompted our local dealers and other customers to restock seed that sold through to those farmers."
During the quarter, the company sold almost 700,000 pounds of alfalfa seed and has sold over 3.3 million pounds during the first nine months of the fiscal year. International sales accounted for 70 percent of total revenue for the quarter, while domestic sales accounted for 30 percent.
According to the USDA, alfalfa hay is commanding record prices due to shortages and increased global demand. In March 2012, the USDA reported that the national average price was $201 per ton, compared with $142 per ton in the previous year. While not a direct correlation, with the significant increase in price for alfalfa hay, S&W expects increased demand for hay production in the future, which will, in S&W's opinion, also increase the demand and pricing for S&W's proprietary varieties.
Mr. Grewal continued, "In addition to the strong sales and marketing efforts during the quarter, we continued to execute on a number of strategic activities that will set the stage for growth into the future. Notably, we secured an additional 360 acres of land to produce alfalfa seed; we commenced operations to more than double our current stevia production capacity, and our plant breeders are working diligently to stay at the forefront of producing exceptional quality alfalfa seeds and stevia plants. I am very proud of the efforts our team has accomplished this quarter."
Matthew Szot, chief financial officer of S&W Seed Company, commented, "Our revenue growth was coupled with a continued focus on operational efficiencies as we managed to decrease operating expenses by 1 percent versus the comparable quarter of the prior year. Cash flow provided by operating activities totaled $2.8 million for the first nine months of the current fiscal year and our balance sheet remains strong with $6.2 million in cash and net working capital of $11.8 million. During the quarter, we were also successful in expanding the availability on our undrawn line of credit with Wells Fargo to $7.5 million."
Mr. Grewal concluded, "The success of the most recent quarters has been because of our strategy of building on the agricultural assets that S&W has put in place over the last 30 years. We believe there are great opportunities for additional expansion through both organic growth and acquisitions."