S&W Seed Company Q3 2023 Earnings Call
Speaker 1: Welcome to the S&W Seed Company Third Quarter Fiscal Year 2023 Financial Results Conference Call.
Speaker 2: All participants will be in listen-only mode.
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Speaker 4: After today's presentation, there will be an opportunity to ask questions. To ask a question.
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Speaker 7: Please note this event is being recorded.
Speaker 8: I would now like to turn the conference over to Robert Bloom with LIFM Partners. Go ahead.
Speaker 9: All right, thank you for joining us today to discuss S&W Seed Company's third quarter fiscal year 2023 financial results for the quarter ended March 31, 2023. With us on the call representing the company today are Mark Wong, President and Chief Executive Officer
Speaker 10: Betsy Horton, Chief Financial Officer, and Vanessa Bowman, the company's Interim Chief Financial Officer.
Speaker 11: At the conclusion of today's prepared remarks, we will open the call for a question and answer session.
Speaker 12: Before we begin with prepared remarks, please note that statements made by the management team of S&W Seed Company during the course of this conference call may contain forward looking statements within the meaning of section 27A of the Securities Act 1933 as amended.
Speaker 13: and Section 21E of the Securities Exchange Act 1934 is 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.
Speaker 14: and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft eventually or projected. Listeners 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.
Speaker 15: 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 the company's 10K for the fiscal year ended June 30th, 2022, and other filings subsequently made by the company.
Speaker 16: with the Securities Exchange Commission.
Speaker 17: In addition to supplement SNW's financial results reported in accordance with the US Generally Accepted Accounting Principles or GAP, SNW will be discussing adjusted operating expenses and adjusted EBITDA on this call. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable.
Speaker 18: the end of SNW's earnings release issued earlier today which we have been posted on the investor relations page of SNW's website.
Speaker 19: An audio recording and webcast replay for today's conference call will also be available online and on the company's investor relations page.
Speaker 20: With that said, let me turn the call over to Mark Wong, Chief Executive Officer for S&W Seed Company. Mark?
Speaker 21: Thank you, Robert, and good morning to all of you.
Speaker 22: At a high level, we continue to execute against our goals of operational improvements across our organization and execute against key centers of value we have identified during the past year including. For more information contact us at tow saddle.com or thegh error zero at 10 Ind ml at 5 4 256 10 D
Speaker 23: Our proprietary double-team trait solution in Sorghum
Speaker 24: The exciting announcement of our partnership agreement with Shell, which we signed in February for the purpose of developing novel plant genetics and supply chain and biofuels, green diesel and jet fuel production, and our international alfalfa and forage operations, which will enable aDoctor who CAKES THE E Portland Tech
Speaker 25: All have likely seen in the press release, which we issued this morning, looking to unlock unrecognized value and maximize shareholder value.
Speaker 26: I will hit on each of these in more detail.
Speaker 27: Operationally, we continue to see a significant increase in our gross margins as they improved to 25.1% during the third quarter compared to 11.7% in the year-ago quarter, an improvement of 1,340 basis points.
Speaker 28: Year to date, gross margins are 23.2% compared to 14.6%.
Speaker 29: This gross margin improvement has led to a $4.2 million year-to-date improvement in our gross profits. This improvement is being driven in part by growth in our higher margin double-team sorghum solutions but also strategic actions.
Speaker 30: We are now taking to better control our costs and hold the line on pricing for our forage products particularly in MENA.
Speaker 31: I will come back to this last point in a moment as it pertains to our guidance. We also continue to meet our goals of realigning the cost structure of the organization.
Speaker 32: with a year-to-date reduction of 3.7 million in adjusted OpEx and expectation that we will hit our annual goal of 5 million in annual operating expense reduction.
Becky will run through the full details in a moment in her section.
We have also significantly improved our balance sheet through the shell transaction with the infusion of cash, relief of debt, and the equity interest in the Go Forward Partnership VBO. Total tolls are shareholders' equity increased by $33.7 million.
or 79 cents per share compared to the most recent quarter.
Please remember that with this partnership, S&W received $7 million in upfront dollars and is scheduled to receive another $6 million in cash at the end of one year. We also have the remaining portion of our mortgage.
to the operations of the partnership.
So, we do not expect any incremental cash contributions from S&W to be required in the near future.
We also finalized the partnership with Trigull Genetics to develop and market high-performing wheat varieties for the Australian market. Leveraging our existing commercial and breeding footprint with Florimonde De Pre, wheat germplasm base and BioSeries Crop Solutions HB4 gene for drought tolerance.
SNW received a $2 million upfront payment as part of this transaction.
by letter of credit to back up the IBC facility.
We greatly appreciate the commitment from MSP and CIBC as we continue to execute our initiatives to drive value in S&W.
So certainly we feel that a ton of progress has been made in proprietary products and adding liquidity to S&W.
However, this is agriculture and there is always challenges, most of which are largely outside of our control. Currently export sales have been negatively impacted by the recent war in Sudan.
We certainly have orders for the Sudan set for shipment in Q4 that we need to rework for a new market need to be found.
Also in Saudi Arabia, unregistered lower price and lower quality European-produced seed is currently being dumped into the country which has
created a short-term imbalance in supply and demand.
Despite this, our sales team believes inventory levels will normalize following the quick flushing out of the seed and are making strategic decisions not to discount our high value seed to compete with this low quality product. As a result of the Sudan geopolitical...
will move to the first half of fiscal year 24.
Also, as I mentioned, last quarter, due to the wet La Nina spring in Australia, our overall and overall flooding in eastern Australia.
Sales within Australia have been slow and most of our completed sales have been in relatively lower value products. With little incentives to replant farms with higher value pasture blends, farmers chose quickly growing forage cereal based options instead.
The positive side of this is that it has allowed us to clear out the entire carrier or forage serial stocks we had in inventory. Other good news is that La Nina has been declared finished by the Bureau of Meteorology. A return to a normal dry weather pattern is expected to return.
of approximately $5 million in our domestic Australian operations in fiscal 2023 from our original expectations.
Finally, in the U.S. we are being impacted by drought conditions and cold temperatures which are slowing plantings in the western corn belt in the United States. Many of you likely saw the devastating best storms.
in places like Illinois caused by dry out soil following well below normal precipitation.
As a result of these delayed plantings, we will see more movement, we will see some movement excuse me, of our fiscal 2023 sales into next year. These delayed plantings coupled with genetic, generally weak domestic
Stormin' Alphapha Market is impacting us as well.
Combined, we could see an impact of up to $8 million in the U.S. Given all the positive momentum we had achieved in the first half of the year, it is certainly frustrating to have these largely geopolitical and weather-related issues impacted so severely
during the important spring and frantic season. But this is certainly not isolated to SNW.
We believe less than 10% of the intended corn acres for this year have been planted in the key markets of Nebraska, Kansas, and Colorado.
And fertilizer companies are also seeing some of the same impacts on their sales. Transitioning to double team, one of our key centers of value.
Demand for double-teams continues to be strong with tremendous farmer feedback.
Double team revenues during the third quarter was $3.8 million. The largest grain sorghum state in the U.S., Kansas, is anticipated to end the fiscal year and end the fiscal year in the U.S.
at 3x of double team sales as compared to the previous fiscal year. Importantly, we are maintaining conventional sales of grain sorghum and tanzas at the same time.
Meaning all market share gains in Canvas is the result of double-team traits without cannibalization.
We currently have six private label companies accounting for a third of total double team sales, including one of the largest ag retail's, Nutreon, under their Dyna-Gro brand.
We are also successfully piloting double-team forage sorghum this spring with key influencers, universities and third parties in advance of a full launch plan in year 2024. So a lot of positive development.
and we already talked about some of the weather related delays to planting.
At the moment, we are basically sold out of one of these three primary hybrids.
We will have to see how this plays itself out with our remaining inventory, but the coming weeks could be tight.
Even if we don't get it shipped this year, the germination remains strong and we should be able to use the excess inventory to sell next year.
with shipments oftentimes moving one week or on either side of June 30th.
Betsy will bridge our original expectations to what we now see with 50 days remaining in the fiscal year.
Despite the delayed shipments to Saudi and Sudan, due to the tremendous operational progress we have made in every aspect of our business.
We are seeing less impact in our expected adjusted EBITDA guidance for this year.
This is a strong testament to the work everyone has put to drive efficiencies across the organization.
testament to the work everyone has put to drive efficiencies across the organization and put in place.
the processes and procedures that allow us to make better decisions, especially on pricing and overall production costs. We feel we are in a much better position going forward with expectations and expectations for the future.
for a positive operational trends to continue as we look forward to a strong year in fiscal 2024.
Let me just make a couple comments on the progress we've made with BBO on this call.
First, those that may have missed it, we are quickly – let me quickly summarize the opportunity.
SNW has contributed our expertise in seed genetics, technology, production, and processing to VBO, including our seed processing and research facilities in Napa, Idaho. SNW has also contributed our camelina germpla-
with the potential to be a sustainable feedstock source for the energy transition to greener transportation fuels.
Camelina also is recognized as a low greenhouse gas cover crop around the world.
Biofuels such as these made from camelina oil are expected to be an effective way to help decarbonize customers in hard-to-abate sectors.
where energy density in fuels is key, including the aviation and marine...
was originally targeted
to plant 5,000 acres in the first year and we have already surpassed this goal with 7,000 acres currently in the ground.
meaning that Shell buys all of the grain that VBO produces. It is potentially a much simpler and lower risk business model than our traditional seed business.
Therefore, we expect less volatility and more consistent growth than we have historically seen in our seed revenue. As we have talked about over the past year or so.
We are all about creating centers of value.
creating centers of value. This agreement now. This agreement now.
creates a potential for high value opportunities for S&W. As part of our review of our business last May, we are looking to maximize value for shareholders through our business units.
whether it be in the US, International,iveness, comments from teachers or Live
Australia is a large and important agricultural market and plays an integral role in the global food supply chain.
It has a vibrant public and private equity agricultural investment community as well as several mid-sized agricultural companies.
Having been approached by various parties in the past.
We believe it is now prudent for us to begin a formal operational review to evaluate potential strategic opportunities.
As part of the process, we have identified a number of potential strategic opportunities that we are continuing to evaluate that may include a merger, a reverse merger, a
other business combinations.
licensing or other strategic transactions such as an IPO or Australian public listing at the right time.
Obviously, there can be no assurances that the operational review will result in any strategic alternatives.
or any assurance as to outcome or timing.
We expect to complete the process in the second half of the calendar year and do not intend to disclose developments.
We expect to complete the process in the second half of the calendar year and do not intend to disclose developments related to the process.
unless and until we execute a definitive agreement or our board otherwise determines that future disclosure is appropriate or required.
Before I turn it over to Betsy to walk through the financials, as I am sure all of you know...
Betsy will be transitioning from her CFO role to that of a member of the S&W Board of Directors.
Betsy has done an incredible job leading the financial team at S&W and has provided valuable guidance and insight to the entire organization since she has joined.
Betsy has done an incredible job leading the financial team at S&W and has provided valuable guidance and insight to the entire organization since she has joined. I am extremely excited.
that we will not be saying goodbye to Betsy and will continue to be able to lean on her counsel going forward.
Equally exciting is that we have brought on Vanessa Bowman to take over as interim chief financial officer. Vanessa is a highly accomplished agricultural CFO with experience at two of the largest sheep companies in the world.
Monsanto and Ag Reliant Genetics. I have asked Vanessa to join us on the call and introduce herself. Vanessa?
Thank you, Mark, and hello to everyone on the call today.
As Mark mentioned, my background is in agriculture, most recently serving as CFO of AgriLiant Genetics, the largest North American company focused solely on seed.
Before that, I held numerous finance roles supporting various business segments at Monsanto and exorcremacy.
I share Mark's enthusiasm for the future of SNW and the progress that is being made.
I am keenly aware of the nuances of running an agricultural feed company and the need to focus on long-term value creation.
I spent the past few weeks side by side with Betsy and the finance team both in the US and Australia having hit the ground running. I look forward to more proactively speaking with all of you in the future. Mark, let me turn it back over to you.
Thank you Vanessa. The financial operations of SNW are certainly in great hands. And with all that being said, Betsy, can you please run through the numbers and then I will come back with some closing remarks.
Thanks Mark. Good morning to everyone on the call today. Let me also first add how appreciative I am of the nominating and governance committee's recommendation to have me join the board of SNW. As Mark had discussed
We've made tremendous progress over the past year and I look forward to working with the team to build upon the momentum into the future.
tremendous progress over the past year and I look forward to working with the team to build a condom momentum into the future. Okay, let's start on the revenue line.
Revenue was $17.7 million for the quarter, a decrease of 23.8% compared to $23.2 million in the prior year's third quarter. The $5.5 million decrease in revenue was primarily due to a $3.9 million decrease in product revenue from alfalfa sales to Mina and the U.S.
as well as European, Asian, and South African freedoms. A $2 million decrease in pastures and forage sales in Australia, and a $1.1 million decrease in traditional sorghum sales to the US.
This was offset by a million and a half increase in double team sorghum sales in the US. Mark discussed the various items already, but to reiterate, the decreases almost all pertain to weather or geopolitical events, whether it be the heavy rains in Australia, the drought in the US, or the unrest in Sudan. Due to these items, we believe it is prudent to revise our revenue expectations for the
the change in our guidance starting with our US sorghum operations. Our original expectations for fiscal 2023 were revenue of $22 to $25 million. Our revised guidance for US sorghum is $17 to $21 with approximately $8 to $10 million coming from double team.
As Mark mentioned, we are completely sold out of one of the three double-team varieties, but expect the other varieties to potentially be impacted by the delayed planting taking place in Kansas, Nebraska, and Colorado.
We are committed to maintaining our price and margin on this premium product, so we are choosing lower revenue versus resorting to deep discounts to drive sales for fiscal year 2023. For our international forage and alfalfa operations, our original expectations were for revenue of $47-56 million.
Due to the rains in Australia, the unrest in Sudan, and the dumping of unregistered and lower-priced seed in Saudi Arabia, we are now expecting revenue of $40 to $45 million. We anticipate the seed to Saudi Arabia to ship instead in fiscal 2024, when we also expect to sell the seed originally planned for Sudan.
Combined, this amounts to about $10 million shifting to the first half of next fiscal year. Finally, in our U.S. forage and alfalfa operations, we originally expected revenue of $11 million. We are now expecting revenue of $8 to $9 million as the dormant alfalfa market continues to be soft. While turning to margins, gap gross margins...
of lower margin dormant alfalfa sales in the US and lower inventory write downs in fiscal 23.
Inventory write-down during the three months and in March 31, decreased to $0.4 million from 1.1 million in the previous year quarter when we first established our inventory reserve policy. As Mark mentioned, we have made tremendous progress controlling our
in the long run.
Now we'll transition to operating expenses. Our gap operating expenses for Q3 2023 were $8.3 million compared to the $8.9 million in the prior year's third quarter, a decrease of $0.6 million. The decrease in OPEX is entirely due to decreased R&D as we focus on aligning our cost to the
role for both new ventures handling things such as finance and accounting, HR and IT under service level agreements.
We expected we would have expenses that we would incur within our operating expense line but then be reimbursed by the partnership's other income line.
After consultation with our auditors, it was determined that these items would be service revenue and an offsetting cost of goods sold, which makes the visibility into our operating expense reduction initiatives more easily visible. During the third quarter, we had approximately $130,000 of service revenue.
pertaining to our partnerships. We are introducing the concept of adjusted operating expenses to allow us to effectively compare on a year-over-year basis by removing the one-time expenses related to our two partnership transactions. We are introducing the concept of adjusted operating expenses to allow us to effectively
As noted in the earnings release, we define adjusted operating expenses as GAAP operating expenses adjusted to exclude depreciation and amortization, disposal of property, plants, and equipment loss or gain, and one-time expenses related to our two partnership transactions. With the clarification for the year, we are maintaining our guidance.
Now to EBITDA. At the adjusted EBITDA line, we had a negative adjusted EBITDA of $0.4 million for the third quarter compared to negative adjusted EBITDA of $4.5 million in the prior year's third quarter, an improvement of $4.1 million.
This improvement layers on to the $4.4 million improvement to the adjusted EBITDA that we saw in the first half of the fiscal year for a cumulative year-to-date improvement of $8.4 million.
Given the change in our revenue guidance, we do expect adjusted EBITDA to be below guidance, but a smaller impact than you see with revenues due to our effective strategies on both pricing and costs.
Our original expectations for adjusted EBITDA was a negative $2 million to a negative $7 million for fiscal 2023.
Our revised guidance is negative 8 million to negative 12 million.
This all compares to a negative adjusted EBITDA of $24 million for fiscal 2022. So all in all, we still believe we're on track to have a tremendous year of progress. Let's walk through the various buckets we had for improvements.
Originally, we expected a $4 to $5 million improvement to our lower of cost or market or LCM charges. We now expect a $3 to $4 million improvement. We continue to monitor our potential carryover of inventory through the fiscal year end when we will make the appropriate adjustments to LCM at that time.
Next, we believe we will see a $5 million improvement from our cuts to annual operating expenses. We remain on track to achieve this goal.
Next, we believe that we would see a $6 to $7 million improvement in incremental gross profits due to our US sorghum operations. We now believe we'll see an improvement of $47 million.
Finally, we estimated we would see $2 to $5 million in incremental gross profit from our international forage operations. Due to the combined impact from Australia, Sudan, and Saudi Arabia, our forecast shows we will be flat to up $1 million in this area.
So while not what we originally expected, we still see growth margin improvement in each of the key areas of focus. And if we shift the 10 million shifts in the first half of that fiscal year 2024 as we move forward, we would be well on our way to achieving our goal.
A couple of other quick items before I turn it back to Mark. As Mark mentioned, we've made tremendous progress improving our balance sheet and expanding our banking relationships.
The execution of our agreement with Shell, coupled with the support from our lead shareholder, MFP, and our banking partners in the US, the IBC, and in Australia with NAB, puts S&W in a much stronger position today than we were a year ago.
I am proud of the progress that's been made and while various factors that are largely outside of our control are having some impact.
I feel that factors that we have within our control were successfully executed on this year to date, including our expense reduction plans, inventory management initiatives, gross margin expansion, execution of the two partnerships, new bank facilities, and the launch of double team.
On a personal note, I have thoroughly enjoyed my interactions with those of you on this call and I look forward to continuing to support SNW as a member of the board.
And of personal note, I have thoroughly enjoyed my interactions with those of you on this call and I look forward to continuing to support SNW as a member of the board. With that, I will turn the call back over to Mark.
Thank you Betsy.
As you just mentioned, great progress has been made with the outlook remains positive. On a whole, I want investors to understand that we are keenly focused on creating value for shareholders through our key centers of value.
Amalina are two significant developments this year.
reviewing all potential value-enhancing opportunities.
As always, we thank you for your continued support of S&W and look forward to taking your questions..
Operator? We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.
If you are using a speakerphone, please pick up your handset before pressing the keys.
To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble the roster.
And our first question will come from Ben Cleave of Lake Street. Please go ahead. All right, thanks for taking my questions. Plenty to discuss here. I'd like to focus first on the strategic announcement around your international operations. A couple questions, but first I want to ask a clarifying question.
When you discuss this operation, is this entirely represented by, Betsy, the business that you described as international forage that is $40 to $45 million this fiscal year, or does that include business elsewhere?
Yeah, Ben, hi. I can take that. Yes, it is completely international forage. That includes our business in Australia as well as all of our international forage to the Middle East and other areas across the globe.
any kind of profitability metrics around this business.
Betsy, do you want me to take that or you?
Otherwise, I can chime in. Yeah, go ahead. Okay. So for that business, I would say that that is a – if you remember our Centers of Value presentation that we gave last year at this time, it's the one that is less volatile, slower growing, but moving –
And one last question on this initiative. Mark you talked about the level of inbound that you've had on this business for some time and how robust the potential pipeline is. Can you dig into that a little bit more? What gives you confidence that the Australian market either...
from M&A or the public market would be willing to give you guys a more fair value for this business than you are seeing today? Is there any kind of metrics you can provide or any kind of benchmarks that can really point to the magnitude of the value potential from this business in the Australian market? Yeah, I mean we don't have a sort of…
final number target in mind. We're just going through a process to ask the market to tell us what the value is. You know, we think as Betsy said that it's a business that is going to be profitable here next year and especially with the
10 million in sales that would normally have been in this year, except for the war in Sudan and these problems in Saudi.
we just want to see what the value looks like. We have a problem. We've made huge progress on lots of fronts in our forage margins, in our international business. Again, Betsy has given detail on Australia and how the weather patterns there.
basically precluded farmers from planting our high value forage mixes, and instead they planted cheaper materials, basically because it rained and they didn't need to replant. The pastures grew back without new reseeding. And so, you know, this general theme of sort of...
the markets undervaluation of our assets including you know our fast-growing high margin Trade business and sorghum we have two traits there. We're going to be stacking them and also selling them singly in in grain sorghum and forage sorghums and then our you know obviously our deal with this show where we're pointing out that you know we're
moving towards millions of acres of camelina. And, you know, we just feel like the market doesn't really want to look at our individual pieces of our business that we're building and gives us, you know, really a very, very low value for those. I mean, $54 million market cap, I believe is low.
So we're going through the process just to see if we can unlock things that maybe we've missed that the market would value in each of our three businesses. But first we are going to look at Australia and sort of see what the opportunities are there. Got it. And last question, I'll go back in the.
would determine payment of seven versus 12. I mean, what needs to happen to hit one side of that range versus the other?
we negotiated had us.
eventually if our targets for performance were achieved, being 50-50% partners.
And so our 50% is the current 34% that we own currently, plus two additional pieces. One is the right just to buy at a predetermined price, about 6% or 7% back. That relates to the mortgage that was paid by Shell.
paid off by Shell on our plant that we contributed to the JV. And the other is just performance metrics. So we don't have to buy back the equity. We are granted the equity based on performance. And that performance is –
directly related to the number of acres that we put in the market. And so we're doing very well as I said in our first year with acres significantly above our target and we would expect that over the next three or four years where those incentives are available to us.
that we would increase our ownership backed up sort of to the low 40s, mid 40s percentage wise and that the JV would be very successful in terms of planting acres and then this very simple process where all of those acres, all of the grain that comes off those acres.
because the diesel and jet fuel markets are so big, Shell will purchase that. And so it's a much simpler business model than our seed businesses where we have to have branding, have field demonstrations for farmers.
Show the performance of our traits and our hybrids in terms of yield per acre and the herbicide resistance. All of those steps are simplified in that Shell is our customer and Shell buys the grain at a predetermined price based on the soybean futures price.
And it's a very simple model for us and for Shell, and it gets Shell a source of vegetable oils that they may convert to green diesel and jet fuel.
That was very helpful. Thank you, Mark. I appreciate you guys taking my questions and I'll get back in line.
Once again, if you would like to ask a question, please press star then 1. And our next question will come from Jerry Sweeney of Roth Capital. Please go ahead.
Once again, if you would like to ask a question, please press star, then 1. And our next question will come from Jerry Sweeney of Roth Capital. Please go ahead. Good morning, Mark and Betsy. Thanks for taking my call. Thanks for taking my call.
I apologize, I was jumping on and off. If any of this was already asked or mentioned, I apologize. Just wanted to talk a little bit about the DT sorghum on a couple different fronts. It sounds like plantings are going slow in certain regions. As you said.
One of the varieties is sold out, the other two looks like it could be a little bit tight. Just wanted to get some clarity. This could be pushed into 2024, or will they actually get pushed to next season if that seed does not get planted? I think there's a couple questions embedded there, Jerry. Think of this with a
Most of the seed is going to be sold in this year. And so, you know, the season might have some rollover into July , but you know the majority of our seed sales for DT that we currently are projecting and are coming out of inventory that we're holding.
Those will be in this fiscal year. The problem is in the big states for us, which are Kansas is the biggest grain sorghum state actually in the US. Some people think it's Texas, but I think Kansas is a little bit bigger. But Texas is also a big state. Texas is pretty far in its planting of sorghum.
if people are following, has fallen into Sierras. So those huge rains and floods in Florida, excuse me, in California, are the rain that the western corn belt would have, in a more normal weather pattern, gotten. And it's been very cold. I don't think people realize how cold it's been. So soil temperatures are very cold. You can't really plant sorghum yet because it won't germinate, and you're afraid if you leave it in the spring,
that sales are starting to build again and we're just pushing as hard as we can trying to make every bag of sales because we want farmers to get the benefit of having this herbicide resistance and especially sorghum that's non-irrigated.
So we're pushing hard and you know, we're optimistic that the that the DT number will still be a strong number this year even though
It's been a bit slower season than we expected. Got it. Have you communicated your projections for next year?
That all taken into what you just said, taken into consideration. We have an extra capacity has been an issue, right? So this is carryover.
next year. Yeah we haven't yet I mean there are we believe that there will be continued strong growth right so right now you have BT in grain sorghum that's about six to seven million acres
in the US, Grand Sorghum is. Then we'll be introducing DT and Ford Sorghum, that's another 6 to 8 million potential market acres.
Then we have DF, which is our DURIN-free second trait that we licensed from Purdue on a worldwide basis. We have exclusive worldwide license. And that will be going into grain sorghum and forage sorghum in the next couple of years.
That product is going to be important in Australia because it is a forage market, so we're working hard to get the gene into Australia, true up our hybrids there so that we can begin sales. And worldwide, we're now starting our licensing effort now that people have seen how the product performs.
This is only at the beginning of its growth. This is just the beginning of its growth.
grain sorghum and forage sorghum.
some DT and forward sorghums, strong year for DT and Ukraine sorghums, and we'll start to see our first sales and forward sorghum. So, you know, we're only at the beginning of a big market.
And, you know, the trade is still performing really well. There are some technical issues with how you put a trade in a hybrid that I won't get into that, you know, all seed companies have gone through. Monsanto went through it when I was on their board in the 2000ish sort of years when Roundup Ready was first being put in.
significant sales of DT like I say in both grain and ford sorghum and then ETF in both grain and ford sorghum also
I have a couple more, but I'll follow up offline, so I appreciate it. Thank you.
This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
So thank you everyone for being on the call today and thank you for our employees for the great progress this year. We continue to build our main three centers of value as we have discussed our forage business and Australian internationally, our traded sorghum business in the US right now but spreading to their families.
Australia and South America and of course our big opportunity to deal with Shell. We just think that growing Camalina as a second crop, harvesting those oils and then having Shell convert them to Green Dueso and Jetfield is going to be a marvelous market for us. So we're very very excited about that.
So thanks everyone for the call today. Bye-bye now. The conference is now concluded. Thank you for attending today's presentation and you may now disconnect.