Benzinga | Aug 19, 2021 05:34PM EDT

S&W Seed Company Sees FY21 ~$69.8M

S&W Seed Company (Nasdaq: SANW) today announced certain unaudited preliminary financial results for the fiscal year ended June 30, 2021.

Preliminary Core Revenue (which the Company defines as total revenue, excluding product revenue attributable to Pioneer) for fiscal 2021 is expected to be approximately $69.8 million, compared to Core Revenue for fiscal 2020 of $59.9 million, an expected increase of approximately 16.5%. Preliminary Total Revenue for fiscal 2021 is expected to be approximately $84.0 million, compared to total revenue for fiscal 2020 of $79.6 million, an expected increase of approximately 5.5%.

The COVID-19 pandemic had a significant negative impact on logistics, as experienced in several industries across the globe, contributing to delayed shipments to the Company's customers and also increasing its costs of goods sold. In particular, the Company experienced challenges in shipping product during the fourth quarter, due to limited availability of trucks and marine containers for product deliveries and congestion at the ports, and rising shipping and transportation costs. The Company's strategy of concentrating its production to fewer, and larger facilities, became much more challenging by these industry-wide supply chain issues.

Approximately $5.0 million of revenue that the Company expected to recognize in the fourth quarter of fiscal 2021 is instead expected to be recognized in the first quarter of fiscal 2022. Additionally, the Company also experienced weakness in the Company's European sunflower program and delays in certain customer product registrations which had an impact on the annual results.

The Company expects gross profit margins to be approximately 16.3% for fiscal 2021, with an estimated impact of approximately $1.5 million from increased shipping and transportation costs. Adjusted EBITDA for fiscal 2021 is expected to be in a range of $(13.0) to $(13.2) million.

Historically, the Company publishes price lists to U.S. and Australian based customers prior to the commencement of the main sales season which limits the Company's ability to increase prices throughout the sales season. Additionally, the Company's existing customer terms and conditions did not provide for adjustment to the volatile and increasing freight costsincurred this fiscal year. The Company is modifying the terms and conditions of standard customer contracts to address the volatility and increased costs of freight and transportation. In addition, the Company is in the process of instituting price increases on the majority of its products to address additional rising costs and to more properly reflect the value of the Company's proprietary products. The Company has also made certain changes in management to increase its expertise in supply chain and logistics.

Taking into account the aforementioned initiatives, the Company expects gross margins in the first quarter of fiscal 2022 to show meaningful improvement over the first quarter of the prior year and fiscal 2021 in total.

"Similar to many other companies that rely upon international marine shipping, we encountered challenges towards the end of our fiscal year in shipping product to customers who had placed orders with an intent of accepting product prior to June 30, 2021," commented Mark Wong, President & CEO of S&W Seed Company. "As a result of these logistical and other operational challenges encountered throughout the fourth quarter and fiscal year as a whole, we have made several changes, including price increases and modification of our freight and transportation terms, to limit the impact of these challenges going forward."

Mr. Wong concluded, "I believe the overall strategic plan to evolve S&W into an integrated agricultural seed technology company remains strong. The demand for our products, especially our recently launched non-GMO herbicide tolerant sorghum solution, is high. It is clear we need to improve certain operational aspects of the organization to help our vision become a reality, and we believe we have implemented the necessary initiatives to continue the execution of our plan."

S&W Seed Company has not finalized its financial statements for the fourth quarter or full year of fiscal 2021. The preliminary financial information for the fourth quarter and full year of fiscal 2021 presented in this press release is based on S&W Seed Company's initial review of the information presented and its current expectations and are subject to adjustment as a result of, among other things, the completion of the Company's end-of-period reporting processes and annual audit procedures. As such, any financial information contained in this press release may differ materially from the information reflected in the Company's financial statements as of and for the year-ended June 30, 2021. Additional information and disclosures would be required for a more complete understanding of the Company's financial position and results of operations as of and for the quarter and year-ended June 30, 2021. Accordingly, undue reliance should not be placed on this preliminary information