FRESNO, Calif., Feb. 11, 2016 /PRNewswire/ -- S&W Seed
Company (Nasdaq: SANW) today announced financial results
for the second quarter of fiscal year 2016 ended December 31, 2015.
Second Quarter Fiscal 2016 Financial Highlights:
- Quarterly revenue increased 75.0% to $24.1 million compared to $13.8 million in the comparable quarter of fiscal
2015;
- Quarterly gross profit margins improved to 16.7% compared to
gross profit margins of 14.2% (16.2% on an adjusted basis) for the
second quarter of fiscal 2015;
- Quarterly Adjusted EBITDA (see Table B) improved to
$1.3 million compared to $0.4 million in the second quarter of fiscal
2015;
- Net income totaled $1.4 million
for the second quarter of fiscal 2016 compared to a net loss of
$(1.5) million in the second quarter
of fiscal 2015;
- Adjusted non-GAAP net income (see Table A-1) of $0.2 million for the second quarter of fiscal
2016 compared to an adjusted non-GAAP loss of $(0.2) million in the year ago period;
- GAAP EPS of $0.10 per diluted
share for the second quarter compared to a loss of $(0.13) per diluted share in the second quarter
of fiscal 2015; and
- Adjusted Non-GAAP EPS (see Table A-1) for the second quarter of
$0.01 per diluted share compared to
$(0.02) per diluted share in the
second quarter of fiscal 2015.
Quarterly Results
For the second quarter of fiscal
year 2016, revenue increased 75.0% to $24.1
million versus $13.8 million
in the comparable period of the prior year. The increase in second
quarter revenue was primarily attributable to sales under the
Company's distribution and production agreements with DuPont
Pioneer, which were ahead of seasonal shipping expectations as the
Company was able to process and ship seed earlier than
anticipated.
Gross profit margins during the second quarter of fiscal 2016
were 16.7% compared to gross profit margins of 14.2% in the second
quarter of fiscal 2015, and adjusted gross profit margins of 16.2%
in the second quarter of last year. Gross profit margins increased
during the second quarter of fiscal 2016 primarily due to sales of
the Company's dormant seed varieties to DuPont Pioneer, which were
not included in the comparable period of the prior year. The sale
of the Company's dormant varieties to DuPont Pioneer generally
carry a higher margin profile than its non-dormant business. While
the Company benefitted from sales and margin contributions from its
DuPont Pioneer agreements, these benefits were offset by higher
seed costs within the Company's non-dormant operations, driven by
lower than expected yields on the recent alfalfa seed harvests.
Selling, general and administrative (SG&A) expenses for the
second quarter of fiscal 2016 totaled $2.3
million compared to $3.0
million (or $1.8 million after
excluding non-recurring one-time transaction expenses of
$1.2 million associated with the
acquisition of the DuPont Pioneer assets) for the comparable period
in fiscal 2015. Research and development (R&D) expenses for the
second quarter increased to $733,000
from $217,000 in the year ago period.
The increase in SG&A and R&D expenses was primarily due to
the addition of activities associated with the acquired DuPont
Pioneer operations.
Total operating expenses for the second quarter of fiscal 2016
were $3.8 million compared to
$4.0 million (or $2.4 million after excluding non-recurring
one-time transaction expenses of $1.2
million associated with the acquisition of the DuPont
Pioneer assets and the $0.5 million
impairment charge) in the year ago period. The increase in total
operating expenses is primarily associated with the addition of
activities associated with the acquired DuPont Pioneer
operations.
In conjunction with the implementation of the Company's
international tax planning strategy, the Company recorded a tax
benefit during the second quarter of fiscal 2016 related to an
unrealized foreign currency exchange loss incurred on an
inter-company loan to its wholly owned subsidiary in Australia.
Adjusted non-GAAP net income (see Table A-1) for the second
quarter of fiscal 2016, excluding various items (change in
derivative warrant liabilities, change in contingent consideration
obligation, gain on sale of marketable securities, loss on equity
method investment, and interest expense - amortization of debt
discount), was $164,000, or
$0.01 per basic and diluted share.
Adjusted non-GAAP net loss (see Table A-1) for the second quarter
of fiscal 2015, excluding various items (non-seed farming related
losses, impairment charges and acquisition / transaction related
expenses) was $(247,000), or
$(0.02) per basic and diluted
share.
GAAP net income for the second quarter of fiscal 2016 was
$1.4 million, or $0.10 per basic and diluted share, compared to a
net loss of $(1.5) million, or
$(0.13) per basic and diluted share,
in the second quarter of fiscal 2015. The increase in the Company's
net income for the second quarter of fiscal 2016 primarily resulted
from the increase in gross profit and the tax benefit recorded in
that period.
Adjusted EBITDA, a non-GAAP metric (see Table B), for the second
quarter of fiscal 2016 was $1.3
million compared to Adjusted EBITDA of $396,000 in the second quarter of fiscal
2015.
Outlook
Based upon the evaluation of information
currently available to management, the Company continues to expect
to generate annual revenue of approximately $95 million for the fiscal year ending
June 30, 2016, reflecting an increase
of approximately 17% over fiscal 2015.
Management Discussion
Mark
Grewal, president and chief executive officer of S&W
Seed Company, commented, "We are pleased with the results of the
second quarter, as alfalfa seed markets continue to be
characterized by improved demand and decreased supply on a global
basis. The acquisition of our dormant alfalfa seed operations
continues to be a tremendous strategic driver for S&W.
Particularly, we are seeing enhanced cross-selling opportunities as
we introduce our expanded product portfolio into our existing
distribution channels, as well as a broadening of contracted
growers to increase our seed production capabilities. We are
anticipating an approximate 15% increase in contracted acreage
during calendar year 2016 as compared to 2015, which will be a key
contributor to both revenue growth and improved margins."
Matthew Szot, chief financial
officer of S&W Seed Company, commented, "During the second
quarter, we successfully processed and shipped product ahead of
schedule to our largest customer, DuPont Pioneer. While demand
remains strong, our gross profit margins continue to be impacted
during the current year as the weaker than anticipated seed yields
have increased our seed production costs. As we move to fiscal 2017
and beyond, we have terminated production contracts where we carry
farming and yield risk, which should result in expanded margins
going forward."
Mr. Szot continued, "We continue to make strides to strengthen
our balance sheet. Our original convertible debt balance of
$27 million has been paid down to
$12.5 million through today. We look
forward to retiring the remaining convertible debt balance over the
next 12 months."
Mr. Grewal concluded, "Fiscal 2016 is on target to finish with
record revenue of approximately $95
million as we see continued strength in our end markets.
With strong progress being made within our distribution and
production platforms this year, we continue to make investments to
maintain a leadership position into the future. Our diverse product
portfolio continues to be bolstered as we make progress bringing
next generation seed varieties to the market through our various
collaborations. Overall, we have made tremendous strides over the
last year to position S&W as one of the leading alfalfa seed
companies in the world, and look forward to continued progress into
the future."
Conference Call
S&W Seed Company has scheduled a
conference call for today, Thursday,
February 11, 2016, at 4:30pm
ET (1:30pm PT) to review the
results of its most recent quarter. Interested parties can access
the conference call by dialing (844) 861-5498 or (412) 317-6580 or
can listen via a live Internet webcast, which is available in the
Investor Relations section of the Company's website at
http://www.swseedco.com/investors. A teleconference replay of the
call will be available for three days at (877) 344-7529 or (412)
317-0088, confirmation # 10079828. A webcast replay will be
available in the Investor Relations section of the Company's
website at http://www.swseedco.com/investors for 30 days.
Non-GAAP Financial Measures
In addition to financial
results reported in accordance with accounting principles generally
accepted in the United States of
America ("GAAP"), the Company has provided the following
non-GAAP financial measures in this release and the accompanying
tables: adjusted gross profit margin, adjusted EBITDA,
adjusted net income (loss) and adjusted earnings (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 S&W's 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 these measures where applicable to the most
applicable financial measures under GAAP, see Tables A-1, A-2, and
B included in the tables accompanying this release.
In order to calculate these non-GAAP financial measures, the
Company makes targeted adjustments to certain GAAP financial line
items found on its Consolidated Statement of Operations, backing
out non-recurring or unique items or items that otherwise distort
the underlying results and trends of the ongoing business. The
Company has excluded the following items from one or more of our
non-GAAP financial measures for the periods presented:
Cost of revenue. We exclude a portion of cost of
revenue representing losses incurred in connection with the farming
of various non-seed crops. These amounts are non-recurring and
unrelated to our core performance during any particular period, and
therefore, we believe it is useful to exclude these amounts in
order to better understand our business performance and allow
investors to compare our results with peer companies.
Selling, general and administrative expenses. We exclude
a portion of SG&A expense for non-recurring transaction
expenses related to the acquisition and financing.
Acquisition-related expenses include transaction fees, due
diligence costs and other direct costs associated with our
acquisition completed on December 31,
2014. These amounts are unrelated to our core performance
during any particular period and are impacted by the timing of the
acquisition. We exclude acquisition-related expenses to provide
investors a method to compare our operating results to prior
periods and to peer companies because such amounts can vary
significantly based on the frequency of acquisitions and magnitude
of acquisition expenses.
Impairment charges - Disposal of property, plant and
equipment loss (gain). We exclude the impairment charge of
$500,000 attributable to the
unrecovered stand establishment and growing crop costs that were
incurred on the farmland sold in March
2015. These amounts are non-recurring charges and are
unrelated to our core performance during any particular period, and
therefore, we believe it is useful to exclude these amounts in
order to better understand our business performance and allow
investors to compare our results with peer companies.
Changes in derivative warrant liabilities. Change
in derivative warrant liabilities are related to the change in fair
value of the warrants issued in conjunction with our Convertible
Debentures issued in December 2014.
These amounts are non-cash gains and/or losses and are unrelated to
our core performance during any particular period, and therefore,
we believe it is useful to exclude these amounts in order to better
understand our business performance and allow investors to compare
our results with peer companies.
Changes in contingent consideration obligation.
Change in contingent consideration obligation is related to the
change in fair value of the contingent consideration to DuPont
Pioneer for the December 2014
acquisition. These amounts are non-cash gains and/or losses and are
unrelated to our core performance during any particular period, and
therefore, we believe it is useful to exclude these amounts in
order to better understand our business performance and allow
investors to compare our results with peer companies.
Gain on sale of marketable securities. Gain on the
sale of marketable securities is related to a gain on purchase and
subsequent sale of certain bonds. These amounts are unrelated to
our core performance during any particular period, and therefore,
we believe it is useful to exclude these amounts in order to better
understand our business performance and allow investors to compare
our results with peer companies.
Loss on equity method investment. Losses (gains)
from our equity method investment are related to our portion of
losses incurred at our 50% owned Joint Corporation in Argentina. These amounts are unrelated to our
core performance during any particular period, and therefore, we
believe it is useful to exclude these amounts in order to better
understand our business performance and allow investors to compare
our results with peer companies.
Interest expense – amortization of debt discount.
Amortization of debt discount and issuance costs are related to our
Convertible Debentures and warrants issued in December 2014. These amounts are non-cash charges
and are unrelated to our core performance during any particular
period, and therefore, we believe it is useful to exclude these
amounts in order to better understand our business performance and
allow investors to compare our results with peer companies.
Non-GAAP Tax Rate. The estimated non-GAAP effective
tax rate adjusts the tax effect to quantify the excluded tax
consequences of the excluded non-GAAP items.
Descriptions of the non-GAAP financial measures included in this
release and the accompanying tables are as follows:
Adjusted gross profit margin is a non-GAAP financial
measure that we have calculated by deducting losses incurred in
connection with the farming of various non-seed crops. These
amounts are unrelated to our core performance during any particular
period, and therefore, we believe it is useful to exclude these
amounts in order to better understand our business performance and
allow investors to compare our results with peer companies.
Adjusted net income (loss) and non-GAAP earnings (loss) per
share. We define non-GAAP net income (loss) as net income
(loss) less losses incurred on farming of non-seed crops,
acquisition related expenses, impairment charges, change in
derivative warrant liabilities, change in contingent consideration
obligation, interest expense - amortization of debt discount, gain
on sale of marketable securities and loss on equity method
investment. However, in order to provide a complete picture of our
recurring core business operating results, we also exclude from
non-GAAP net income the tax effects of these adjustments. We used
an effective tax rate that we believe would be applied had our
income reached the non-GAAP levels represented to calculate
non-GAAP net income (loss) for the presented periods. Investors
need to recognize that the effects to tax rates are made by
management's best estimates. We believe that these non-GAAP
financial measures provide useful supplemental information for
evaluating our operating performance.
Adjusted EBITDA is a non-GAAP financial measure that we
define as GAAP net income (loss), adjusted to exclude non-recurring
cost of revenue charges, acquisition related expenses, impairment
charges, depreciation and amortization, non-cash stock-based
compensation, foreign currency (gain) loss, change in derivative
warrant liabilities, change in contingent consideration obligation,
interest expense – amortization of debt discount, interest expense
– convertible debt and other, loss on equity method investment,
gain on sale of marketable securities and provision (benefit) for
income taxes. We believe that the use of adjusted EBITDA is useful
to investors and other users of its financial statements in
evaluating our operating performance because it provides them with
an additional tool to compare business performance across companies
and across periods. We use adjusted EBITDA in conjunction with
traditional GAAP operating performance measures as part of our
overall assessment of our performance, for planning purposes,
including the preparation of our annual operating budget, to
evaluate the effectiveness of our business strategies and to
communicate with our board of directors concerning our 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.
About S&W Seed Company
Founded in 1980, S&W
Seed Company is a global agricultural company, headquartered in
Fresno, California. The Company's
vision is to be the world's preferred proprietary seed company,
which supplies a range of forage and specialty crop products
supporting the growing global demand for animal proteins and
healthier consumer diets. The Company is the global leader in
alfalfa seed, with unrivaled research and development,
production and distribution capabilities. S&W's capabilities
span the world's alfalfa seed production regions, with operations
in the San Joaquin and Imperial
Valleys of California, five other U.S.
states, Australia, and three provinces
in Canada, and S&W sells its seed products in more than 30
countries around the globe. Additionally, the Company is
utilizing its research and breeding expertise to develop and
produce stevia, the all-natural, zero calorie sweetener for the
food and beverage industry. For more information, please visit
www.swseedco.com.
Safe Harbor Statement
This release contains
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended and such
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
"Forward-looking statements" describe future expectations, plans,
results, or strategies and are generally preceded by words such as
"may," "future," "plan" or "planned," "will" or "should,"
"expected," "anticipates," "draft," "eventually" or "projected."
Forward-looking statements in this release include, but are not
limited to, statements concerning annual revenue, gross profit
margins and adjusted EBITDA for the fiscal year ending June 30, 2016, diversification of our business
and a strengthening alfalfa seed market. You are cautioned that
such statements are subject to a multitude of risks and
uncertainties that could cause future circumstances, events, or
results to differ materially from those projected in the
forward-looking statements, including the risks that actual results
may differ materially from those projected in the forward-looking
statements as a result of various factors and other risks
identified in our filings with the Securities and Exchange
Commission, including our Annual Report on Form 10-K for the fiscal
year ended June 30, 2015, and in
other filings subsequently made by the Company with the Securities
and Exchange Commission. We do not undertake any obligation to
publicly update any forward-looking statements, whether as a result
of the receipt of new information, the occurrence of future events
or otherwise.
Company
Contact:
|
Investor
Contact:
|
Matthew Szot, Chief
Financial Officer
|
Joe Dorame, Robert
Blum, Joe Diaz
|
S&W Seed
Company
|
Lytham Partners,
LLC
|
Phone: (559)
884-2535
|
Phone: (602)
889-9700
|
www.swseedco.com
|
sanw@lythampartners.com
|
|
www.lythampartners.com
|
TABLE A-1
S&W SEED
COMPANY
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Three Months
Ended
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP
|
|
NON-GAAP
|
|
|
|
|
|
NON-GAAP
|
|
NON-GAAP
|
|
|
|
GAAP
|
|
Adjustments
|
|
Adjusted
|
|
|
|
GAAP
|
|
Adjustments
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
24,141,257
|
|
-
|
$
|
24,141,257
|
|
|
$
|
13,793,766
|
|
-
|
$
|
13,793,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
20,109,824
|
|
-
|
|
20,109,824
|
|
|
|
11,832,557
|
|
(270,048)
|
|
11,562,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
4,031,433
|
|
-
|
|
4,031,433
|
|
|
|
1,961,209
|
|
(270,048)
|
|
2,231,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
2,306,144
|
|
-
|
|
2,306,144
|
|
|
|
2,991,501
|
|
(1,145,064)
|
|
1,846,437
|
Research and
development expenses
|
|
|
732,607
|
|
-
|
|
732,607
|
|
|
|
217,180
|
|
-
|
|
217,180
|
Depreciation and
amortization
|
|
|
791,242
|
|
-
|
|
791,242
|
|
|
|
310,552
|
|
-
|
|
310,552
|
Impairment
Charges
|
|
|
-
|
|
-
|
|
-
|
|
|
|
500,198
|
|
(500,198)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
|
3,829,993
|
|
-
|
|
3,829,993
|
|
|
|
4,019,431
|
|
(1,645,262)
|
|
2,374,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
|
201,440
|
|
-
|
|
201,440
|
|
|
|
(2,058,222)
|
|
(1,415,112)
|
|
(142,912)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
(gain) loss
|
|
|
(335,159)
|
|
-
|
|
(335,159)
|
|
|
|
35,148
|
|
-
|
|
35,148
|
Change in derivative
warrant liabilities
|
|
|
(943,000)
|
|
943,000
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
Change in contingent
consideration obligation
|
|
|
47,811
|
|
(47,811)
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
Gain on sale of
marketable securities
|
|
|
(123,038)
|
|
123,038
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
Loss on equity method
investment
|
|
|
129,341
|
|
(129,341)
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
Interest expense -
amortization of debt discount
|
|
|
1,055,202
|
|
(1,055,202)
|
|
-
|
|
|
|
13,107
|
|
-
|
|
13,107
|
Interest expense -
convertible debt and other
|
|
|
537,749
|
|
-
|
|
537,749
|
|
|
|
174,635
|
|
-
|
|
174,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
(167,466)
|
|
(166,316)
|
|
(1,150)
|
|
|
|
(2,281,112)
|
|
(1,415,112)
|
|
(365,802)
|
Benefit from income
taxes
|
|
|
(1,529,252)
|
|
(1,363,624)
|
|
(165,628)
|
|
|
|
(738,452)
|
|
(620,033)
|
|
(118,419)
|
Net income
(loss)
|
|
$
|
1,361,786
|
|
1,197,308
|
$
|
164,478
|
|
|
$
|
(1,542,660)
|
|
(795,079)
|
$
|
(247,383)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.10
|
|
|
$
|
0.01
|
|
|
$
|
(0.13)
|
|
|
$
|
(0.02)
|
Diluted
|
|
$
|
0.10
|
|
|
$
|
0.01
|
|
|
$
|
(0.13)
|
|
|
$
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
14,120,650
|
|
|
|
14,120,650
|
|
|
|
11,634,469
|
|
|
|
11,634,469
|
Diluted
|
|
|
14,120,650
|
|
|
|
14,120,650
|
|
|
|
11,634,469
|
|
|
|
11,634,469
|
TABLE A-2
S&W SEED
COMPANY
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP
|
|
NON-GAAP
|
|
|
|
|
|
NON-GAAP
|
|
NON-GAAP
|
|
|
|
GAAP
|
|
Adjustments
|
|
Adjusted
|
|
|
|
GAAP
|
|
Adjustments
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
36,396,169
|
|
-
|
$
|
36,396,169
|
|
|
$
|
21,957,999
|
|
-
|
$
|
21,957,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
30,389,855
|
|
(259,566)
|
|
30,130,289
|
|
|
|
18,682,998
|
|
(265,890)
|
|
18,417,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
6,006,314
|
|
(259,566)
|
|
6,265,880
|
|
|
|
3,275,001
|
|
(265,890)
|
|
3,540,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
4,780,121
|
|
-
|
|
4,780,121
|
|
|
|
4,788,628
|
|
(1,145,064)
|
|
3,643,564
|
Research and
development expenses
|
|
|
1,422,980
|
|
-
|
|
1,422,980
|
|
|
|
431,838
|
|
-
|
|
431,838
|
Depreciation and
amortization
|
|
|
1,580,038
|
|
-
|
|
1,580,038
|
|
|
|
630,311
|
|
-
|
|
630,311
|
Impairment
Charges
|
|
|
-
|
|
-
|
|
-
|
|
|
|
500,198
|
|
(500,198)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
|
7,783,139
|
|
-
|
|
7,783,139
|
|
|
|
6,350,975
|
|
(1,645,262)
|
|
4,705,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(1,776,825)
|
|
(259,566)
|
|
(1,517,259)
|
|
|
|
(3,075,974)
|
|
(1,911,152)
|
|
(1,164,822)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
(gain) loss
|
|
|
(251,813)
|
|
-
|
|
(251,813)
|
|
|
|
82,889
|
|
-
|
|
82,889
|
Change in derivative
warrant liabilities
|
|
|
(1,482,000)
|
|
1,482,000
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
Change in contingent
consideration obligation
|
|
|
(47,473)
|
|
47,473
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
Gain on sale of
marketable securities
|
|
|
(123,038)
|
|
123,038
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
Loss on equity method
investment
|
|
|
223,703
|
|
(223,703)
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
Interest expense -
amortization of debt discount
|
|
|
1,961,454
|
|
(1,961,454)
|
|
-
|
|
|
|
26,142
|
|
-
|
|
26,142
|
Interest expense -
convertible debt and other
|
|
|
1,233,984
|
|
-
|
|
1,233,984
|
|
|
|
408,250
|
|
-
|
|
408,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
(3,291,642)
|
|
(792,212)
|
|
(2,499,430)
|
|
|
|
(3,593,255)
|
|
(1,911,152)
|
|
(1,682,103)
|
Benefit from income
taxes
|
|
|
(2,779,195)
|
|
(1,774,413)
|
|
(1,004,782)
|
|
|
|
(1,176,279)
|
|
(625,630)
|
|
(550,649)
|
Net loss
|
|
$
|
(512,447)
|
|
982,201
|
$
|
(1,494,648)
|
|
|
$
|
(2,416,976)
|
|
(1,285,522)
|
|
(1,131,454)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.04)
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.21)
|
|
|
$
|
(0.10)
|
Diluted
|
|
$
|
(0.04)
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.21)
|
|
|
$
|
(0.10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
13,792,002
|
|
|
|
13,792,002
|
|
|
|
11,629,766
|
|
|
|
11,629,766
|
Diluted
|
|
|
13,792,002
|
|
|
|
13,792,002
|
|
|
|
11,629,766
|
|
|
|
11,629,766
|
TABLE B
S&W SEED
COMPANY
|
ITEMIZED
RECONCILIATION BETWEEN NET INCOME (LOSS) AND NON-GAAP ADJUSTED
EBITDA
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
1,361,786
|
|
$
|
(1,542,660)
|
|
$
|
(512,447)
|
|
$
|
(2,416,976)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring cost of
revenue charges
|
|
|
-
|
|
|
270,048
|
|
|
259,566
|
|
|
265,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
791,242
|
|
|
310,552
|
|
|
1,580,038
|
|
|
630,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
charges
|
|
|
-
|
|
|
500,198
|
|
|
-
|
|
|
500,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring
transaction costs
|
|
|
-
|
|
|
1,145,064
|
|
|
-
|
|
|
1,145,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock based
compensation
|
|
|
324,561
|
|
|
228,063
|
|
|
628,173
|
|
|
447,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
(gain) loss
|
|
|
(335,159)
|
|
|
35,148
|
|
|
(251,813)
|
|
|
82,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in derivative
warrant liabilities
|
|
|
(943,000)
|
|
|
-
|
|
|
(1,482,000)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in contingent
consideration obligation
|
|
|
47,811
|
|
|
-
|
|
|
(47,473)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
marketable securities
|
|
|
(123,038)
|
|
|
-
|
|
|
(123,038)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on equity method
investment
|
|
|
129,341
|
|
|
-
|
|
|
223,703
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
amortization of debt discount
|
|
|
1,055,202
|
|
|
13,107
|
|
|
1,961,454
|
|
|
26,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
convertible debt and other
|
|
|
537,749
|
|
|
174,635
|
|
|
1,233,984
|
|
|
408,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit from income
taxes
|
|
|
(1,529,252)
|
|
|
(738,452)
|
|
|
(2,779,195)
|
|
|
(1,176,279)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted
EBITDA
|
|
$
|
1,317,243
|
|
$
|
395,703
|
|
$
|
690,952
|
|
$
|
(87,436)
|
S&W SEED
COMPANY
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
June
30,
|
|
|
|
2015
|
|
|
2015
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
5,221,238
|
|
$
|
3,535,458
|
Accounts receivable,
net
|
|
|
12,654,321
|
|
|
26,728,741
|
Inventories,
net
|
|
|
37,066,631
|
|
|
25,521,747
|
Prepaid expenses and
other current assets
|
|
|
1,189,941
|
|
|
797,199
|
Deferred tax
assets
|
|
|
280,280
|
|
|
286,508
|
TOTAL CURRENT
ASSETS
|
|
|
56,412,411
|
|
|
56,869,653
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
11,861,970
|
|
|
11,476,936
|
Intangibles,
net
|
|
|
36,536,619
|
|
|
38,004,916
|
Goodwill
|
|
|
9,496,202
|
|
|
9,630,279
|
Crop production
costs, net
|
|
|
-
|
|
|
212,231
|
Deferred tax
assets
|
|
|
7,303,609
|
|
|
4,060,156
|
Other
assets
|
|
|
2,617,830
|
|
|
2,088,896
|
TOTAL
ASSETS
|
|
$
|
124,228,641
|
|
$
|
122,343,067
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
14,982,183
|
|
$
|
13,722,900
|
Accounts payable -
related parties
|
|
|
5,287,224
|
|
|
1,128,630
|
Deferred
revenue
|
|
|
218,023
|
|
|
-
|
Accrued expenses and
other current liabilities
|
|
|
1,340,706
|
|
|
2,328,349
|
Foreign exchange
contract liabilities
|
|
|
-
|
|
|
59,116
|
Lines of
credit
|
|
|
11,732,202
|
|
|
13,755,800
|
Current portion of
long-term debt
|
|
|
2,657,687
|
|
|
2,223,465
|
Current portion of
convertible debt, net
|
|
|
9,461,477
|
|
|
9,265,929
|
TOTAL CURRENT
LIABILITIES
|
|
|
45,679,502
|
|
|
42,484,189
|
|
|
|
|
|
|
|
Contingent
consideration obligation
|
|
|
2,030,527
|
|
|
2,078,000
|
Long-term debt, less
current portion
|
|
|
10,585,363
|
|
|
10,682,072
|
Convertible debt,
net, less current portion
|
|
|
4,143,209
|
|
|
8,777,041
|
Derivative warrant
liabilities
|
|
|
4,776,000
|
|
|
6,258,000
|
Other non-current
liabilities
|
|
|
141,385
|
|
|
188,160
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
67,355,986
|
|
|
70,467,462
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding
|
|
|
|
|
|
-
|
Common stock, $0.001
par value; 50,000,000 shares authorized; 14,697,903 issued and 14,672,903 outstanding at
December 31, 2015; 13,479,101
issued and 13,454,101 outstanding at June 30, 2015;
|
|
|
14,698
|
|
|
13,479
|
Treasury stock, at
cost, 25,000 shares
|
|
|
(134,196)
|
|
|
(134,196)
|
Additional paid-in
capital
|
|
|
68,421,774
|
|
|
62,072,379
|
Accumulated
deficit
|
|
|
(5,491,918)
|
|
|
(4,979,471)
|
Accumulated other
comprehensive loss
|
|
|
(5,937,703)
|
|
|
(5,096,586)
|
TOTAL STOCKHOLDERS'
EQUITY
|
|
|
56,872,655
|
|
|
51,875,605
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$
|
124,228,641
|
|
$
|
122,343,067
|
S&W SEED
COMPANY
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six months
ended
|
|
|
|
December
31,
|
|
|
|
2015
|
|
|
2014
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net loss
|
|
$
|
(512,447)
|
|
$
|
(2,416,976)
|
Adjustments to reconcile net loss to net cash
provided
|
|
|
|
|
|
|
by operating
activities
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
628,173
|
|
|
447,075
|
Change
in allowance for doubtful accounts
|
|
|
(7,350)
|
|
|
8,632
|
Impairment charges
|
|
|
-
|
|
|
500,198
|
Depreciation and amortization
|
|
|
1,580,038
|
|
|
630,311
|
Change
in deferred tax asset
|
|
|
(3,243,453)
|
|
|
(1,138,394)
|
Change
in foreign exchange contracts
|
|
|
(55,845)
|
|
|
173,977
|
Change
in derivative warrant liabilities
|
|
|
(1,482,000)
|
|
|
-
|
Change
in contingent consideration obligation
|
|
|
(47,473)
|
|
|
-
|
Amortization of debt discount
|
|
|
1,961,454
|
|
|
26,142
|
Gain on
sale of marketable securities
|
|
|
(123,038)
|
|
|
-
|
Loss on
equity method investment
|
|
|
223,703
|
|
|
-
|
Changes
in operating assets and liabilities, net:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
13,712,154
|
|
|
7,071,072
|
Inventories
|
|
|
(12,016,814)
|
|
|
4,838,843
|
Prepaid
expenses and other current assets
|
|
|
(389,135)
|
|
|
32,855
|
Crop
production costs
|
|
|
-
|
|
|
(1,567,276)
|
Other non-current assets
|
|
|
(140,569)
|
|
|
-
|
Accounts payable
|
|
|
1,764,241
|
|
|
(5,832,578)
|
Accounts payable - related parties
|
|
|
4,174,847
|
|
|
912,721
|
Deferred revenue
|
|
|
218,023
|
|
|
-
|
Accrued
expenses and other current liabilities
|
|
|
(945,516)
|
|
|
296,580
|
Other
non-current liabilities
|
|
|
(42,731)
|
|
|
4,445
|
Net
cash provided by operating activities
|
|
|
5,256,262
|
|
|
3,987,627
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
Additions to
property, plant and equipment
|
|
|
(903,825)
|
|
|
(693,311)
|
Acquisition of
business
|
|
|
-
|
|
|
(27,000,000)
|
Investment in
Bioceres
|
|
|
-
|
|
|
(4,982)
|
Purchase of
marketable securities
|
|
|
(316,000)
|
|
|
-
|
Sale of marketable
securities
|
|
|
439,038
|
|
|
-
|
Equity method
investment
|
|
|
(439,038)
|
|
|
-
|
Net cash used in investing activities
|
|
|
(1,219,825)
|
|
|
(27,698,293)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Net proceeds from
sale of common stock
|
|
|
4,872,794
|
|
|
4,236,943
|
Net proceeds from
exercise of common stock options
|
|
|
34,566
|
|
|
-
|
Taxes paid related to
net share settlements of stock-based compensation awards
|
|
|
(56,781)
|
|
|
(43,111)
|
Borrowings and
repayments on lines of credit, net
|
|
|
(1,820,939)
|
|
|
(1,763,375)
|
Borrowings of
long-term convertible debt
|
|
|
-
|
|
|
27,000,000
|
Debt issuance
costs
|
|
|
-
|
|
|
(1,726,543)
|
Borrowings of
long-term debt
|
|
|
440,179
|
|
|
-
|
Repayments of
long-term debt
|
|
|
(104,463)
|
|
|
(211,724)
|
Repayments of
convertible debt
|
|
|
(5,471,724)
|
|
|
-
|
Net cash (used in) provided by financing activities
|
|
|
(2,106,368)
|
|
|
27,492,190
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
|
|
(244,289)
|
|
|
(28,906)
|
|
|
|
|
|
|
|
NET INCREASE IN
CASH AND CASH EQUIVALENTS
|
|
|
1,685,780
|
|
|
3,752,618
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of the period
|
|
|
3,535,458
|
|
|
1,167,503
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
5,221,238
|
|
$
|
4,920,121
|
Logo - http://photos.prnewswire.com/prnh/20160124/325263LOGO
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visit:http://www.prnewswire.com/news-releases/sw-announces-results-for-the-second-quarter-of-fiscal-2016-300219098.html
SOURCE S&W Seed Company