Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Double Team revenue increased by 68% to $10.9 million, indicating strong growth in the Americas market.
- Company-wide gross margins improved to 26.2%, exceeding the stated outlook of 24% to 26%.
- Total operating expenses, excluding impairments, were reduced to $30 million, below the guidance of $32.5 million.
- Sorghum technology, including Double Team, is expected to be planted on 10% of U.S. sorghum acres in 2024, up from 6% in 2023.
- The company is recognized as a leader in sorghum technology, working with over 15 independent companies in the U.S. market.
Negative Points
- International operations faced significant challenges, with Australian subsidiary entering voluntary administration.
- Australia domestic and international sales fell to $29.1 million, down 33% from the previous year.
- The company experienced a severe and abrupt shift in the MENA markets, with over $5 million in orders canceled due to Saudi Arabia's import restrictions.
- Net loss for fiscal 2024 was $30.1 million, compared to a net income of $14.49 million in the previous year.
- The voluntary administration process in Australia has led to an event of default under S&W's debt facilities, requiring ongoing negotiations with creditors.
Q & A Highlights
Q: Could you break down the EBITDA loss embedded within the Australian operations?
A: Vanessa Baughman, Chief Financial Officer, mentioned that the segment reporting needed for the reconciliation of EBITDA losses is included in the 10-K filing. However, she did not provide specific numbers during the call.
Q: What is the maximum liability associated with the Australian business once the VA process is completed?
A: Vanessa Baughman explained that the maximum liability is expected to be AUD 15 million, approximately $10 million. This is part of the ongoing discussions with the National Australia Bank (NAB) and is expected to be resolved by November.
Q: How do you view the financial outlook for the Americas, given the lack of cash flows from VBO and the wheat JV?
A: Vanessa Baughman stated that they expect continued growth in the Double Team platform and Prussic-free pilot. They are also in discussions with a new lender, so funding is not a concern. More specifics will be provided in mid-November.
Q: Can you provide more details on the expected growth of the Double Team sorghum trait technology?
A: Mark Herrmann, Chief Executive Officer, indicated that Double Team is expected to grow to 13% to 15% share of the US sorghum acres next year, driven by positive farmer experiences and operational improvements.
Q: What are the expectations for the Prussic-free sorghum launch?
A: Mark Herrmann noted that last year was a pilot, and this year is a full launch of Prussic-free sorghum. They anticipate continued growth in the market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
