Q4 2023 S&W Seed Company Earnings Call

Speaker 1: Hello and welcome to the SNW Seed Company Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Hello, and welcome to the F N W seed company fourth quarter and fiscal year 2023 financial results Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Star T.

Zero after today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw from the question queue. Please press Star then two.

Speaker 1: To ask a question, you may press star then one on your telephone keypad. To withdraw from the question queue, please press star then two. Please note this event is being recorded.

Please note this event is being recorded.

Speaker 1: I would now like to turn the conference over to Robert Bloom with LIFM Partners. Please go ahead.

I would now like to turn the conference Richard Robert Blum with Lytham Partners. Please go ahead.

Speaker 2: All right, thank you. And thank you all for joining us today to discuss S&W Seed Company's fourth quarter and fiscal year 2023 financial results for the period ended June 30, 2023. With us on the call representing the company today are Mark Herman, company's Chief Executive Officer and Vanessa Bowman, the company's interim Chief Financial Officer. At the conclusion of today's prepared remarks, we'll open the call for a question and answer session.

Alright, Thank you and thank you all for joining us today to discuss F. N W seed companies fourth quarter and fiscal year 2023 financial results for the period ended June 30th 2023 with us on the call representing the company today are Mark Harmon Company's Chief Executive Officer and NASA.

<unk> the company's interim Chief financial Officer at the conclusion of today's prepared remarks, we will open the call for a question and answer session.

Speaker 2: 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 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, affordable provisions of the Private Securities Litigation Reform Act of 1995.

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 27 eight of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act of 1930 for them.

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 it.

Speaker 2: 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,

Speaker 2: expected, anticipates, drafts eventually or projected.

<unk> 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 from those projected forward looking statements, including the risks that actual results may differ materially from those projected in the forward looking statements.

Speaker 2: Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties.

Speaker 2: that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that extra results made different 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 and its June 30th, 2023, and other filing subsequently made by the company with the Security and Exchange Commission.

As a result of various factors and other risks identified in the company's 10-K for the fiscal year ended June 30th 2023, and other filings subsequently made by the company with the security and Exchange Commission. In addition to supplement S. W. Financial results reported in accordance with U S generally accepted accounting principles or GAAP.

Speaker 2: In addition to supplement SNW's financial results reported in accordance with US generally accepted accounting principles or GAP.

Speaker 2: SNW will be discussing adjusted even on this call.

S and W will be discussing adjusted EBITA on this call. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measure and are not prepared under any comprehensive set of accounting rules or principles, a description of adjusted EBITDA and reconciliations of his.

Speaker 2: These non- GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable gap measure and are not prepared under any comprehensive set of accounting rules or principles. A description of adjusted EBITDA and reconciliation of historical adjusted EBITDA to net loss are included at the end of S&W's earnings release issued earlier today, which has been posted on the Investor Relations page of S&W's website.

<unk> adjusted EBITDA and net loss are included at the end of <unk> earnings release issued earlier today, which has been posted on the Investor Relations page of S. W's website, an audio recording and webcast replay for today's conference call will also be available online on the company's Investor Relations page with that said.

Speaker 2: an audio recording and webcast replay for Dave's conference call will also be available online on the company's investor relations page. With that said, let me turn the call over to Mark Herman, Chief Executive Officer for S&WC Company. Mark.

Let me turn the call over to Mark Hermann Chief Executive Officer for Us in WCS Company Mark.

Speaker 3: Hey, thank you, Robert, and good morning to all of you. As this is my first investor call as CEO , let me start by saying how excited I am to be leading this company. I believe SNW has a tremendous set of assets in terms of both our people and our products that provide innovative solutions to the challenges farmers.?

Great. Thank you Robert and good morning to all of you. As this is my first investor call as CEO , Let me start by saying how excited I am to be leading this company I believe that CDW has a tremendous set of assets in terms of both our people and our products that provide innovative solutions to the challenges farmer space.

Speaker 3: Our talented development team has led to the innovation of some of the industry's most impressive sorghum technologies. We have a variety of advanced novel crops and cropping systems which contribute to animal forage, renewable fuels, and cover crops which also provide unique benefits.

Our talented development team has led to the innovation of some of the industry's most impressive sorghum technologies and we have a variety of advanced novel crops, and cropping systems, which contribute to animal forage renewable fuels.

Cover crops, which also provide unique benefits to farmers. Our sales team has created strong customer connections with a desire to help farmers reduce their risk and increase productivity.

Speaker 3: Our sales team has created strong customer connections with a desire to help farmers reduce their risk and increase productivity.

Speaker 3: In the short time I've been CEO , I have become highly evident to me that this team has demonstrated a commitment to the best in class seed company across all functions. I look forward to leveraging my 35-year career experience in the seed industry to help guide this focus of seed company best So

In the short time I've been CEO .

Become highly it has become highly evident to me that this team has demonstrated a commitment to be best in class C company across all functions I'll look forward to leveraging my 35 year career experience in the seed industry to help guide this focus of seed company best practices going forward.

Speaker 3: My experience has been centered around working closely with farmers to understand their unique production needs and positioning value, building strong seed and trait brand.

Our experience has been centered around working closely with farmers to understand their unique production needs and positioning value.

Strong seed and trait branch.

Speaker 3: and facing industry operational challenges and delivering efficiencies while achieving operational.

And facing industry operational challenges.

Delivering efficiencies, while achieving operational excellence.

Speaker 3: I have also led the licensing of germplasm and traits to independent seed brands to enable farmers to purchase their seed from representatives and brands. They have come to no interest. Having an open technology platform inclusive of licensing for breakthrough traits in germplasm has proven to deliver the fastest penetration of valuable traits, benefiting farmers and the in-

Also led the licensing of germplasm and traits independent seed brands to enable farmers to purchase their she'd from representatives and branch they have come to know and trust, having an open technology platform inclusive of licensing for breakthrough trait and germplasm is proven to deliver the fastest penetration of value.

Both trades benefiting farmers and the industry.

Speaker 3: I see tremendous energies between where SNW is heading and my broader experience in my past.

I see tremendous synergies between where <unk> is heading.

And my broader experience and my passion.

Speaker 3: In terms of the agenda for today's call, we'll start with a quick look back at the accomplishments in fiscal 2023. I'll spend most of my time today discussing our strategies to drive growth and efficiencies in the-

In terms of the agenda for todays call will start with a quick look back at the accomplishments in fiscal 2023 I'll spend most of my time today discussing our strategies to drive growth and efficiencies in the company, but that's a Bowman will then provide a detailed analysis of both our fiscal 2023 results.

Speaker 3: But that's a moment we'll then provide a detailed analysis of both our fiscal 2023 results and our Go Forward Outlook and Expectations.

And our go forward outlook and expectations looking back to fiscal 2023, the company successfully executed a number of our strategic initiatives laid out at the beginning of last year to position <unk> for success going forward.

Speaker 3: Looking back to fiscal 2023, the company successfully executed a number of our strategic initiatives laid out at the beginning of last year to position SNW for success going full.

Speaker 3: These included the commercial scale launch of our high value double team service solutions, which saw sales increase to 6.5 million in fiscal 2023 compared to 2.4 million in fiscal 2022. This puts our first technology product on an estimated 6% of the total U.S. grain sorghum H.

These included the commercial scale launch of our high value double team sorghum solutions, which saw sales increased to $6 5 million in fiscal 2023 compared to $2 4 million in fiscal 2022.

This puts our first technology product on an estimated 6% of the total U S grain sorghum acreage.

Speaker 3: The expansion of our gross margins through improvement of our obsolescence cost and increased sales of our high margin double-trend products. Overall, gross margins went from 8.9% in fiscal 2022 to 19.8% in fiscal 2023. More than doubling our gross profit, Mark.

The expansion of our gross margins through improvement of our obsolescence costs and increased sales of our high margin doubled train products. Overall gross margins went from eight 9% in fiscal 2022 to 19, 8% in fiscal 2023 more than doubling.

Our gross profit margin.

Speaker 3: We also saw significant reduction in operating expenses as the company looked to better align its cost structure with our key areas of focus. Overall operating expenses decreased by nearly $7 million in fiscal 2023 or about a 17% improvement, even with the growth in our revenue.

We also saw a significant reduction in operating expenses as the company looked to better align its cost structure with our key areas of focus overall operating expenses decreased by nearly $7 million in fiscal 2023 or about a 17% improvement even with the growth in our revenues.

Speaker 3: And finally, we executed a partnership with SHEL to develop and produce sustainable bio-fuel feed stocks. This partnership strengthened our balance sheet through a 7 million upfront payment to SNW and additional 6 million that is scheduled to be paid to us in February 2024 and the assumption of a 6.9 million in debt tied to one of the facilities for a combined $20 million.

And finally, we executed a partnership with shell to develop and produce sustainable biofuel feedstocks. This purchase ship strengthened our balance sheet through a $7 million upfront payment to <unk>, an additional $6 million that is scheduled to be paid to us in February 2024.

Assumption of $6 9 million in debt tied to one of the facilities for a combined $20 million.

Speaker 3: The resulting factor of all these accomplishments was a 14.3 million dollar improvement in adjusted EBIDA growth and revenue and an approved balance sheet that should allow us to execute our strategic plans going poll.

The resulting factor of all of these accomplishments was a $14 $3 million improvement in adjusted EBITDA growth in revenue and an improved balance sheet that should allow us to execute our strategic plans going forward.

Speaker 3: Further, there was the announcement in May of this year that we are evaluating potential avenues to unlock what we believe is unrecognized value in our international appraisal.

Further there was the announcement in May of this year that we are evaluating potential avenues to unlock what we believe is unrecognized value in our international operations.

Speaker 3: which as a reminder, I had courted within our Australia subsidiary. A state upfront that we don't have any specific updates to share with you on this process. However, as managers, Minesh and I are fully focused on operating that segment of our business to its fullest potential going full.

Which as a reminder, headquartered within our Australia subsidiary subsidiary by State upfront that we don't have any specific updates to share with you on this process. However, as managers Vanessa and I are fully focused on operating that segment of our business to its fullest potential going forward.

Speaker 3: So that is a look back. Good progress made, which I believe we can build upon significantly going forward.

So that is a look back good progress made which I believe we can build upon significantly going forward.

Speaker 3: Since taking over is a CEO about two and a half months ago, I have worked to define our business strategies with financial targets that will be delivered based on operational effectiveness in optimizing our two key areas of focus, our Sorghum Technology Solutions, and its pipeline and forage products.

Since taking over as CEO about two and a half months ago I have work to define our business strategies with financial targets that will deliver be delivered based on operational effectiveness in optimizing our two key areas of focus our sorghum technology solutions and its pipeline and forge.

Products.

Speaker 3: Let me start with with Sorvum. First off, I think it's critical for everyone to understand just how special and unique I believe the double-king Sorvum solution truly is.

Let me start with with short them first off I think it's critical for everyone to understand just how special and unique I believe the double team.

Sorghum solution truly is launched on commercial scale in 2022 double team controls grassy weeds in sorghum that Rob water nutrients and ultimately yield from the crop.

Speaker 3: launched on commercial scale in 2022. Double-team controls grassy weeds in sorbum that rob water, nutrients, and ultimately yield from the crop.

Speaker 3: Prior to 2022, due to the lack of effective weed control options in SOARVUM, farmers continued to bear higher risk for yield and crop loss through the weed pressure.

Prior to 2022 due to the lack of effective weed control options in sorghum farmer, it's continued to bear higher risk for yield and crop loss due to weed pressure.

Speaker 3: Other crops offered options for weed control that ultimately led farmers to those crops, which in many cases are less suited for higher temperatures and more restricted water conditions that soar them as uniquely adapted.

The other crops offered options per week control that ultimately led farmers to those crops, which in many cases are less suited for higher temperatures and more restricted water conditions that sorghum is uniquely adapted to.

Speaker 3: This has been a contributing factor to the historical declines in US Sorgomakers from around 10 million acres to around 6.5 million acres current.

This has been a contributing factor to the historical declines in U S. Sorghum acreage from around 10 million acres to around $6 5 million acres. Currently in contrast, corn soybean and cotton growers have all benefited from research investments and advanced tools for weed control technologies.

Speaker 3: In contrast, corn, soybean and cotton growers have all benefited from research investments in advanced tools for weed control technology.

Speaker 3: with its limited launch in 2021 and broader commercial launching calendar year 2022. Double-team grain sorghum now accounts for what we estimate is approximately 6% of all grain sorghum makers in the US.

With its limited launch in 2021 and broader commercial launch in calendar year 2022 double team grain sorghum now accounts for what we estimate is approximately 6% of all grain sorghum acres in the U S. We believe this will grow to more than 10%.

Speaker 3: We believe this will grow to more than 10% this commits next year.

This next year.

Speaker 3: This is a tremendous achievement and highlights the value and demand for innovation in this critical crop. This increase in penetration and adoption of double team in SOARGOM is similar to historical penetration trends in technology launches of many of the large acre crops such as corn, soybeans, and cotton.

And a tremendous achievement and highlights the value and demand for innovation in this critical crowd. This increase in penetration and adoption of double team ensure gum is similar to historical penetration trends and technology launches of many of the large acreage crops, such as corn soybeans and cotton.

Speaker 3: Double team for grain sorghum is just the first leg of our plan sorghum technology portfolio stool for fiscal year 2024. As I'm happy to introduce two additional sorghum trade platforms from our R&D pipes.

Double team for grain sorghum is just the first leg of our planned sorghum technology portfolio stool for fiscal year 2024 is I'm happy to introduce two additional sorghum trade platforms from our R&D pipeline.

Speaker 3: First, we are introducing our double team forage or the solution.

First we are introducing our double team forage sorghum solution.

Speaker 3: in 2024. We expect that we will see the same rapid adoption for Ford Sorghum as we saw for grain sorghum. Early demand has been strong and we expected to sell out in its introductory year and continue on a penetration curve similar to what we have already seen with double-team grain sorghum.

Uh huh.

In 2024, we expect that we will see the same rapid adoption for forage sorghum as we saw for green shortly.

Early demand has been strong and we expect it to sell out in its introductory year and continue on our penetration curve similar to what we have already seen with double team grain sorghum.

Speaker 3: Secondly, we expect to commence a pilot launch of our pressic acid free trade for force for them. What we previous-

Secondly, we expect to commence a pilot launch of our precious asset free trade for sports for them.

What we previously called during free with a few thousand acres being planted this year as a background <unk> is a precursor to <unk> acid, which is highly toxic to room in animals that feed on fresh sorghum foliage.

Speaker 3: with a few thousand acres being planted this year. As a background, Durin is a precursor to prepsych acid, which is highly toxic to Roman animals that feed on fresh, sorghum,

Speaker 3: This essence is what I would define as a quality trait that has great value for risk reduction, enabling safe livestock grazing of forward servomates.

This in essence is what I would define as a quality trade that has great value for risk reduction, enabling safe livestock grazing of forage sorghum acres with the pilot launch this upcoming year, we plan on commercially launching our precious asset free trade in 2025, it will be initially introduced it.

Speaker 3: With the pilot launch this upcoming year, we plan on commercially launching our Pressic acid free trade in 2025. It will be initially introduced as a solo trade and then shortly thereafter, expected to be provided as a stack trade with double.

Solo tree and then shortly thereafter expected to be provided as a stacked trait with double team.

Speaker 3: Let me pause there for a second. What do I mean by a stack trait in why is it important?

Let me pause there for a second what do I mean by a stack trade and why isn't important yes.

Speaker 3: If some of you may know the biotech seed industry was built on developing new traits that address specific issues from weed control, pest control management above and below ground, quality and others.

Some of you may know the biotech seed industry was built on developing new traits that address specific issues from weed control pest control management above and below ground quality and others. The industry has addressed each of these specific issues by providing valuable sheet options to farmers through stack.

Speaker 3: The industry has addressed each of these specific issues by providing valuable seat options to farmers through stack trade offerings in a single seat.

Trade offerings in a single seat for farmers and incremental value being created by each new tree protects yield decreases crop risk increases crop quality and value and saves time to ultimately improve acre productivity.

Speaker 3: For farmers, there's an incremental value being created by each new trade that protects yield, decreases crop risk, increases crop quality and value, and saves time to ultimately improve acre productivity.

Speaker 3: As such, she companies can deliver increased value to farmers versus forcing them to choose between valuable individual traits.

As such she companies can deliver increased value to farmers versus forcing them to choose between valuable individual trades.

Speaker 3: Through the research, investment, and productivity, we can increase the value of the seed while production costs typically remain about the same.

Through the research investment and productivity, we can increase the value of the seed production costs typically remain about the same.

Speaker 3: The result is a margin and profit improvement per bag of sheep's sold.

The result is a margin and profit improvement per bag of seats sold.

Speaker 3: That's why we believe trait related R&D is so important. And the investment hasn't W has made over the years our beginning to pay off.

That's why we believe trade related R&D is so important and the investments has been W has made over the years are beginning to pay off.

Speaker 3: On top of our double team weed control system and now prehistic acid-free quality trade, we are also unplanned to develop a second-generation post-grasp herbicide trade, which we plan to launch in 2025. Further, we are in discovery stage for an insect tolerant to resistant traits and broad spectrum herbicide trade as well.

On top of our double team weed control system and now pressing acid free quality trade. We are also on plan to develop a second generation post grass herbicide trait, which we plan to launch in 2025 further we are in discovery stage, Brian insect tolerant to resistant trades.

And broad spectrum herbicide trait as well.

Speaker 3: We are clearly becoming the key technology provider in this critical nutrient-packed crop. As the fifth largest serial crop globally, it can be used as a substitute for many grains on the market today.

We are clearly becoming the key technology provider in this critical nutrient packed crowd.

The fifth largest cereal crops globally. It can be used as a substitute for many greens on the market today.

Speaker 3: We are excited about SOARGOM because it is a crop that is uniquely equipped to handle higher temperatures and drier climates better than many other crops.

We are excited about sort of them because it is a crop that is uniquely equipped to handle higher temperatures and drier climates better than many other crops, but as I mentioned it hasnt benefitted from the historic research investments to successfully launch tools to support step change to improve the perhaps productivity as.

Speaker 3: But as I mentioned, it hasn't benefited from the historic research investments to successfully launch tools to support step change to improve the crop's productivity.

Speaker 3: As farmers increasingly recognize the risk reduction with new tools to control grasses and increase crop raising safety technologies, I believe we will see continued share growth in the current Sorgomakers as well as an increase in Sorgomakers planted on dry land and limited water availability acres moving back to Sorgom due to its improved adaptability to these conditions.

Farmers increasingly recognize the risk reduction with new tools to control grasses and increased crop raising safety technologies I believe we will see continued share growth in the current sorghum acres as well as an increase in sorghum acres planted on dry land and limited water availability the acres.

Moving back to serve them due to its improved adaptability to these conditions.

Speaker 3: From a sales and marketing perspective, we plan to continue to drive sales through our SNW-owned Sorvan Partners brand and align with independent seat companies with current market leading brands in key grain and forward sorvan markets to maximize market penetration through licensing, SNW germplasm and or trade.

From a sales and marketing perspective, we plan to continue to drive sales through our S. N. W owned sorghum partners brand and align with independent seek companies with current market, leading brands in key grain and forage sorghum markets to maximize market penetration through licensing Edison W. Germ plasm.

Operator: Hello and welcome to the S&W Seed Company fourth quarter and fiscal year 2023 financial results conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

<unk> traits.

Speaker 3: So even where SNW does not have market presence, we will be working with brands that have presence to deliver our technologies to their customers, to optimize availability to farmers and adopt.

So even where <unk> does not have market presence, we will be working with brands that have presence to deliver our technologies and their customers to optimize availability to farmers and adoption.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your telephone keypad. To withdraw from the question queue, please press star, then two. Please note, this event is being recorded.

Speaker 3: This will not only be in the United States, but internationally as well. Today there are approximately 8.7 million acres of soar of them being grown in four key countries where we have been developing relationships with sea companies, with strong German pleasant pools and established farm, farmer relationships in Mexico, Argentina, Brazil, and Australia.

This will not only be in the United States, but internationally as well today. There are approximately $8 7 million acres of sorghum being grown in four key countries, where we have been developing relationships with seed companies with strong germplasm pools and established farm farmer relationships in Mexico, Argentina.

Robert Blum: I would now like to turn the conference over to Robert Blum with lithium partners. Please go ahead.

Robert Blum: All right, thank you and thank you all for joining us today to discuss S&W Seed Company's fourth quarter and fiscal year 2023 financial results for the period ended June 30, 2023.

Brazil, and Australia, our strategy here will be to out license, our germplasm <unk> trades with well established brands in each key sorghum market to reach the global sorghum market and accelerated adoption look for more on this to come.

Speaker 3: Our strategy here will be to outlicence our germplasm and our traits with well-established brands in each key Sorgom market to reach the global Sorgom market in accelerated adoption. Look for more on this.

Robert Blum: With us on the call, representing the company today are Mark Herrmann, company's chief executive officer, and Vanessa Baughman, the company's interim chief financial officer. At the conclusion of today's preparator marks, we'll open the call for a question and answer session. Before we begin with preparator marks, 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 and section 21E of the Securities Exchange Act 1934 as amended and such forward looking statements are made pursuant to the State Department of Provisions of the Private Securities Livigation Reform Act of 1995.

Speaker 3: Operationally, we have developed an operational plan for this upcoming year that is intended to challenge all aspects of our organization to approve upon last.

Operationally, we have developed and operational plan for this upcoming year that is intended to challenge all aspects of our organization to approve upon last year, whether it be in production sales and marketing for fulfillment to deliver on the promise that our sorghum technology.

Robert Blum: For looking statements, subscribe, 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. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to different materially from those projected in the forward looking statements, including the risks that extra results made different 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 2023 and other filing subsequently made by the company with the Security and Exchange Commission.

Speaker 3: Whether it be in production, sales, marketing, or fulfillment, to deliver on the promise that a Sergum Technology portfolio provides the farm.

Folio provides the farmers I believe we have worked through many of the bottlenecks that were presented to the company last year and achieving our original goals.

Speaker 3: I believe we have worked through many of the bottlenecks that were presented to the company last year in achieving our original goal.

Speaker 3: As you likely saw on our press release, it is my expectation that revenue from double team serve solutions is expected to be $11.5 to $14 million in sales, representing an increase of 77% to 115% to compared to fiscal 2023.

As you likely saw in our press release. It is my expectation that revenue from double team sorghum solutions is expected to be 11 $5 million to $14 million in sales, representing an increase of 77% to 115% to compared compared to fiscal 2000.

23.

Speaker 3: With 70% of margins on double team, this is expected to be a big contributor to our bottom line improvement.

With 70% plus margins on double team. This is expected to be a big contributor to our bottom line improvement.

Speaker 3: When we break this all down, we see fiscal 2024 as being strong for our SRGM operations, with the expectation for significant growth going full.

When we break this all down we see fiscal 2024 as being strong for our sorghum operations with the expectation for significant growth going forward.

Speaker 3: We are in a leadership position today with our trade portfolio. And with the impressive pipeline I just touched on, we plan to maintain leadership of this important crop for many years.

We are in a leadership position today with our trade portfolio and with the impressive pipeline I just touched on we plan to maintain leadership of this important crop for many years to come.

Robert Blum: In addition, to supplement S&W's financial results reported in accordance with US generally accepted accounting principles or GAAP, S&W will be discussing 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 GAAP measure and are not prepared under any comprehensive set of accounting rules or principles. A description of adjusted EBITDA and reconciliation of historical adjusted EBITDA to net loss are included at the end of S&W's earnings release issued earlier today, which has been posted on the Investor Relations page of S&W's website.

Speaker 3: Transitioning, let me quickly touch on our international operations and our partnership with Shell before turning it over to the NASA for review of the finance.

Transitioning let me quickly touch on our international operations and our partnership with shell before turning it over to Vanessa for a review of the financials.

Speaker 3: As I mentioned at the beginning, there are no updates I can share with you on the process we are going through to look to unlock value within our international app.

As I mentioned at the beginning there are no updates I can share with you on the process, we're going through to look to unlock value within our international operations. We will certainly provide an update if and when something may transpire in the meantime, we are looking to implement many of the same strategies internationally.

Speaker 3: We will certainly provide an update if and when something may transpire.

Speaker 3: In the meantime, we are looking to implement many of the same strategies internationally as we are in the U.S. to drive growth and efficiencies in this segment. We are looking to optimize our production capabilities to drive down the cost of goods sold while developing a sales and marketing approach that highlights the benefit of our forward solutions around the world.

As we are in the U S to drive growth and efficiencies in this segment, we are looking to optimize our production capabilities to drive down the cost of goods sold while developing a sales and marketing approach that highlights the benefit of our forged solutions around the world. While total results are expected to be slightly higher.

Operator: An audio recording and webcast replay for days conference call will also be available online on the company's Investor Relations page.

Robert Blum: With that said, let me turn the call over to Mark Herman, Chief Executive Officer for S&W's seed company.

Speaker 3: While total results are expected to be slightly higher, we do look for growth in our Al-Qaqqa and forward to lagoon business in the years.

Robert Blum: Mark?

Mark Herrmann: Hey, thank you, Robert, and good morning to all of you.

We do look for growth in all of the enforced lagoon business in the years to come.

Mark Herrmann: This is my first Investor call as CEO. Let me start by saying how excited I am to be leading this company. I believe S&W has a tremendous set of assets in terms of both our people and our products that provide innovative solutions to the challenges farmers. Space. Our talented development team has led to the innovation of some of the industry's most impressive Sorghum technologies. And we have a variety of advanced novel crops and cropping systems, which contribute to animal forage, renewable fuels, and cover crops, which also provide unique benefits to farmers.

Speaker 3: As had been the case in our international operations for a few years, there are various factors that are largely outside of our control, namely the geopolitical risk in certain jurisdictions we sell in.

As had been the case in our international operations for a few years. There are various factors that are largely outside of our control, namely the geopolitical risk in certain jurisdictions, we sell into.

Speaker 3: That said, we are looking to mitigate those risks, especially when we think about our guidance for the year. We are placing minimal independence on the riskiest markets for us to achieve our state of guidance going cold.

That said, we are looking to mitigate those risks, especially when we think about our guidance for the year, we're placing minimal dependence on the riskiest markets for us to achieve our stated guidance going forward.

Speaker 3: We certainly hope there to be an upside if certain markets materialize, but are providing what we believe to be a conservative you into.

We certainly hope there to be an upside if certain markets materialized, but are providing what we believe to be a conservative view into this segment as mentioned Vanessa will touch on our guidance in detail momentarily.

Mark Herrmann: Our sales team has created strong customer connections with a desire to help farmers reduce their risk and increase productivity. In the short time I've been CEO, it has become highly evident to me that this team has demonstrated a commitment to the best in class seed company across all functions. I look forward to leveraging my 35-year career experience in the seed industry to help guide this focus of seed company best practices going forward.

Speaker 3: As mentioned, Vanessa will touch on our guidance in detail momentarily.

Speaker 3: Vision Bioenergy Seed Oil Seeds LLC is the partnership between SNW Seeds and Shell for the purpose of developing novel plant genetics for oil seed cover crops as a feedstock for biofuels, green diesel, and SAF sustainable

Vision bioenergy seed oil seeds L. L. C is the partnership between <unk> and WCS and shell for the purpose of developing novel plant genetics for oilseed cover crops as a feedstock for biofuel screen D. So and.

S a F.

Sustainable aviation fuel.

Speaker 3: VBO intends to develop tambalina where oil and meal can be extracted for future processing biofuels, animal feed and other bio products.

Mark Herrmann: My experience has been centered around working closely with farmers to understand their unique production needs and positioning value, building strong seed and trade brands and facing industry operational challenges and delivering efficiencies while achieving operational excellence. I have also led the licensing of germplasm and trade-independent seed brands to enable farmers to purchase their seed from representatives and brands. They have come to no interest. Having an open technology platform inclusive of licensing for breakthrough traits in germplasm has proven to deliver the fastest penetration of valuable traits, benefiting farmers in the industry. I see tremendous energies between where S&W is heading and my broader experience and my passions.

<unk> intends to develop Campbell, Ina, where oil and meal can be extracted for future processing.

<unk> fuels animal feed and other bio products on the Biofuels front, there's not a lot that we can expand on here except to say the partnership remains on track from what was communicated during the last conference call. The entity <unk> is expected to carry out initial brain production later this calendar year and more than 7000 acreage.

Speaker 3: On the biofuels front, there's not a lot that we can expand on here, except to say the partnership remains on track from what was communicated during the last conference call. The entity VBO is expected to carry out a missile brain production later this calendar year and more than 7,000 acres of gambling the plan.

Gambling planted.

Speaker 3: To this point, the partnership has met or exceeded all cropping acre thresholds originally laid out. As has been discussed in the past, Shell is expected to buy all the grain that BBO produces through an offtake agreement that isn't.

So at this point the partnership has met or exceeded all cropping acreage thresholds originally laid out.

As has been discussed in the past show is expected to buy all the grain that DBO producers through an offtake agreement that is in place.

Speaker 3: The Nessa will remind everyone of its impact to the income statement going forward, but I am certainly pleased with the progress being made and believe this represents a tremendous long-term opportunity for SNW and its share.

But that's how we're remained every one of its impact to the income statement going forward, but I am certainly pleased with the progress being made and believe this represents a tremendous long term opportunity for <unk> and its shareholders.

Mark Herrmann: In terms of the agenda for today's call, we'll start with a quick look back at the accomplishments in fiscal 2023. I'll spend most of my time today discussing our strategies to drive growth and efficiencies in the company. But that's a moment we'll then provide a detailed analysis of both our fiscal 2023 results and our go forward outlook and expectations. Looking back to fiscal 2023, the company successfully executed a number of our strategic initiatives laid out at the beginning of last year to position S&W for success going forward.

Speaker 3: As I mentioned on the onset, we are striving to become a best in class sheet.

As I mentioned on the onset we are striving to become a best in class seed company every organizational decision. We make is expected to be data driven to ensure it will have a positive impact on our customers and our shareholders going forward. We are instilling increased engagement with the finance team.

Speaker 3: Every organizational decision we make is expected to be data driven to ensure it will have a positive impact on our customers and our shareholders going forward. We are instilling increase engagement with the finance team and financial analyses with all decisions that impact cost margin and cash management.

And financial analyses.

With all decisions that impact cost margin and cash management.

Mark Herrmann: These included the commercial scale launch of our high-value double-team sorghum solutions, which saw sales increase to 6.5 million in fiscal 2023 compared to 2.4 million in fiscal 2022. This puts our first technology product on an estimated 6% of the total U.S, grain sorghum acres. The expansion of our gross margins through improvement of our obsolescence cost and increased sales of our high margin double-team products. Overall, gross margins went from 8.9% in fiscal 2022 to 19.8% in fiscal 2023.

Speaker 3: As such, we have implemented a new series of operational initiatives to drive business towards customer satisfaction and profitability in the near term, including improved life cycle management to reduce obsolescence costs and cash management.

As such we have implemented a new series of operational.

Initiatives to drive business towards customer satisfaction and profitability in the near term, including improved lifecycle management to reduce obsolescence cost and cash management and rationalization of certain low margin product lines and effective seed treatment strategy.

Speaker 3: rationalization of certain low margin product lines and effective C treatment strategy.

Speaker 3: A seed manufacturing cost reduction plan through improved deficiencies that align with best in class standards. Cost controls in the seed industry are key and often the difference between being profitable and not. It is my goal to have best in class costs of goods and operating costs going full.

<unk> manufacturing cost.

Our reduction plan through improved efficiencies that align with best in class standards cost controls in the seed industry are key and often the difference between being profitable and not.

It is my goal to have best in class cost of goods and operating costs going forward.

Mark Herrmann: More than doubling our gross profit margin. We also saw a significant reduction in operating expenses as the company looked to better align its cost structure with our key areas of focus. Overall, operating expenses decreased by nearly $7 million in fiscal 2023, or about a 17% improvement even with the growth in our revenue. News. And finally, we executed a partnership with Shell to develop and produce sustainable bio-fuel feedstocks. This partnership strengthened our balance sheet through a $7 million upfront payment to S&W, an additional $6 million that is scheduled to be paid to us in February 2024 and the assumption of a $6.9 million in debt tied to one of the facilities for a combined $20 million.

Speaker 3: We also made the decision to suspend our continued investment in the Stevie as Joint Plasma Development Program.

We also made the decision to suspend our continued investment in the stevia germ Plasm development program.

Speaker 3: As we evaluate changes in the sweetener space, options between lead for fermentation processes driven largely by cost.

As we evaluate changes in the sweetener space options between leave for fermentation processes driven largely by cost.

Speaker 3: Until we have a food or ingredient partner or commitment, or we can entertain a buyer option for proprietary germplasm and pro.

Until we have a food or ingredient partner or commitment or we can entertain a buyer option for our proprietary germplasm and program.

Speaker 3: As you will see from our guidance, we are guiding revenue for fiscal 2024 to be between 76 and 82 million.

As you will see from our guidance, we are guiding revenue for fiscal 2024 to be between 76 and $82 million.

Speaker 3: Representing expected increase of 3 to 12% compared to fiscal 2023 revenue of 73.5.

Representing expected increase of 3% to 12% compared to fiscal 2023 revenue of $73 5 million.

Speaker 3: Again, we have tried to take a conservative view into our international operations and believe the pathway to achieving our state of objectives in the US are achievable.

Again, we have tried to take a conservative view into our international operations and believe the pathway to achieving our stated objectives and the U S are achievable.

Mark Herrmann: The resulting factor of all these accomplishments was a $14.3 million improvement in adjusted EBIDA growth and revenue and an approved balance sheet that should allow us to execute our strategic plans going forward. Further, there was the announcement in May of this year that we are evaluating potential avenues to unlock what we believe is unrecognized value in our international operations, which as a reminder, are headquartered within our Australia subsidiary. A state upfront that we don't have any specific updates to share with you on this process. However, as managers, Vanessa and I are fully focused on operating that segment of our business to its fullest potential going forward.

Speaker 3: Importantly on gross margin front, based on the strategies we've discussed and expect to continue growth from our double team, we see consolidated gross margins moving from 20% in 2023 to between 24 and 26% in fiscal 2024. Further, we expect operating expenses to remain flat despite growth in revenue.

Importantly on gross margin front based on the strategies, we've discussed and expect to continued growth from our double team. We see consolidated gross margins moving from 20% in 2023 to between 24 and 26% in fiscal 2024.

Further we expect operating expenses to remain flat despite growth in revenues.

Speaker 3: The result is an approximate 2 to 5.5 million anticipated improvement in our adjusted EBITDAQ compared to fiscal 2023.

The result is an approximate 2% to $5 5 million anticipated improvement in our adjusted EBITDA compared to fiscal 2023.

Speaker 3: We know there is still work to be done, but feel good about the strategies being implemented to drive continuous growth and improvement across the organization.

We know there is still work to be done, but feel good about the strategies being implemented to drive continuous growth and improvement across the organization.

Mark Herrmann: So that is a look back. Good progress made, which I believe we can build upon significantly going forward.

Speaker 3: I mean, I'll turn it over to the NASA to review the financials in detail. I will then provide a few final words and then we can address your questions.

Let me now turn it over to Vanessa to review the financials in detail I will then provide a few final words and then we can address your questions Vanessa.

Mark Herrmann: Since taking over is a CEO about two and a half months ago, I have worked to define our business strategies with financial targets that will be delivered based on operational effectiveness and optimizing our two key areas of focus, our Sorghum technology solutions and its pipeline and forage products. Let me start with Sorghum. First off, I think it's critical for everyone to understand just how special and unique I believe the double beam Sorghum solution truly is.

Speaker 1: Thank you, Mark. Good morning to everyone on the call to that.

Thank you Mark good morning to everyone on the call today.

Speaker 1: As this is a year-end conference call, I'm going to focus most of my comments on the results for the fiscal year. A breakout of fourth quarter results is included in the press release, and I would be happy to answer specific questions on the fourth quarter numbers where needed. Thank you.

This is a year end conference call I'm going to focus most of my comments on the results for the fiscal year.

A breakout of fourth quarter results is included in the press release and I would be happy to answer specific questions on the fourth quarter numbers wearing.

Starting with revenue.

Speaker 1: Total revenue for fiscal 2023 was 73.5 million. Compared to total revenue for fiscal 22 of 71.4 million.

Total revenue for fiscal 2023, what $73 5 million compared to total revenue for fiscal 'twenty two of $71 4 million.

Mark Herrmann: Launched on commercial scale in 2022, double beam controls grassy weeds in Sorghum that rob water, nutrients, and ultimately yield from the crop. Prior to 2022 due to the lack of effective weed control options in Sorghum, farmers continued to bear higher risk for yield and crop loss through the weed pressure. Other crops offered options for weed control that ultimately led farmers to those crops, which in many cases are less suited for higher temperatures and more restricted water conditions that Sorghum is uniquely adapted to.

Speaker 1: The 2.1 million increase in revenue, which primarily due to the 4 million increase in double-team sorghum sales in the US domestic market.

Mark Herrmann: This has been a contributing factor to the historical declines in US Sorghum acres from around 10 million acres to around 6.5 million acres currently. In contrast, corn, soybean, and cotton growers have all benefited from research investments in advanced tools for weed control technologies. With its limited launch in 2021 and broader commercial launching calendar year 2022, double beam grain Sorghum now accounts for what we estimate is approximately 6% of all grain Sorghum acres in the US. We believe this will grow to more than 10% this next year. This is an tremendous achievement and highlights the value and demand for innovation in this critical crop.

$2 1 million increase in revenue was primarily Q.

4 million increase in double team. So are you going to sales in the U S domestic market.

Speaker 1: A 4 million increase in non-dormant alfalfa sales in the Middle East and North Africa. And a 3.8 million increase in non-dormant alfalfa and grain-sortam sales in Latin America.

A 4 million increase in non dormant alfalfa fail in the middle East and North Africa.

And at 3.8 million increase in non dormant alfalfa and grant sorry can fail.

In America.

Speaker 1: This was then offset by a 4.3 million decrease in the Australian domestic pasture sales due to flooding and keep planting regions that lowered sales expectations in the first half of fiscal 2023.

This was then offset by a $4.3 million decrease in the Australian domestic passenger sale.

Due to flooding and keep planting reagents that lower sales expectations in the first half of fiscal 2023.

Speaker 1: a 3 million decrease in revenue in the Asia region due to logistical delays and international shipping and COVID-related impacts in China during the prior year that affected distributor demand.

<unk> 3 million decrease in revenue in the Asia region.

Two logistical delays in international shipping and Covid related impacts in China during the prior year that affected distributor demand.

Speaker 1: a 1.7 million decrease in U.S. domestic alpha revenue due to a decline in demand, and finally a 1 million decrease in non-double-chain sorghum revenue.

And 1.7 million decrease in U S domestic alfalfa revenue due to a decline in demand and finally, a $1 million decrease in non <unk>. So our gum revenue.

Mark Herrmann: This increase in penetration and adoption of double beam and Sorghum is similar to historical penetration trends in technology launches of many of the large acre crops such as corn, soybeans, and cotton, double team for grain sorghum is just the first leg of our plan sorghum technology portfolio stool for fiscal year 2024 as I'm happy to introduce two additional sorghum trade platforms from our R&D pipeline. First, we are introducing our double team forage sorghum solution in 2024.

Speaker 1: As Mark mentioned, as we looked at fiscal 2024, we are expecting revenue of 76 to 82 million, representing an expected increase of 2.5 to 8.5 million compared to fiscal 2023 revenue of 73.5 million.

As Mark mentioned as we look to fiscal 2024, we are expecting revenue of 76 to 82 million, representing an expected increase of 2.5 to $8 5 million compared to fiscal 2023 revenue.

$73 5 million.

Speaker 1: Writing this down further, we are anticipating double team to be between 11.5 to 14 million. An increase of 77 to 115% compared to fiscal 2023.

Breaking this down further we are anticipating devilkin could be between $11.5 million to $14 million, an increase of 77% to 115% compared to fiscal 2023.

Mark Herrmann: We expect that we will see the same rapid adoption for forward sorghum as we saw for grain sorghum. Early demand has been strong and we expected to sell out in its introductory year and continue on a penetration curve similar to what we have already seen with double team grain sorghum. Secondly, we expect to commence a pilot launch of our pressic acid free trade for sorghum. What we previously called during free with a few thousand acres being planted this year as a background during is a precursor to pressic acid which is highly toxic to rumen animals that feed on fresh sorghum foliage.

Speaker 1: There will be some offset to non double team related sorghum sales as we transition customers to our higher valued product.

There will be some offset to nine double team related so are you going to sales as we transition customers to our higher valued products.

Speaker 1: As such, overall, Sorghum-related revenue is expected to be between 22 and 23 million in total compared to 18.5 million in fiscal 2023.

Such overall sorghum related revenue is expected to be between 22, and 23 million in total compared to $18 5 million in fiscal 2023.

Speaker 1: On the international side, we are expecting revenue to be between 45 to 50 million compared to 43.6 million in fiscal 2023. And finally, on the US forage operation, we see revenue of about 9 million compared to 10.8 million last year.

On the international side, we are expecting revenue to be between 45 to 50 million compared to $43 6 million in fiscal 2023 and.

Mark Herrmann: This in essence is what I would define as a quality trade that has great value for risk reduction enabling safe livestock grazing of forward sorghum acres. With the pilot launch this upcoming year we plan on commercially launching our pressic acid free trade in 2025. It will be initially introduced as a solo trade and then shortly thereafter expected to be provided as a stack trade with double team.

And finally on the U S Forge operation, we see revenue of about 9 million compared to $10 8 million last.

Last year.

Now turning to margin.

Speaker 1: Gat Gross margins for fiscal 2023 were 19.8%. Compared to Gat Gross margins of 8.9% in fiscal 2022.

GAAP gross margin for fiscal 2020 training were 19, 8% compared to GAAP gross margins of 8.9% in fiscal 2022.

Speaker 1: The strong improvement of Gap gross margin was primarily driven by the increased sales of a higher margin double team sorghum solution in North America. In addition to the favorability of non-cash inventory write down due to improved inventory life cycle mass.

The strong improvement of gross margin was primarily driven by the increased sales of our higher margin double teens Starcom solution in North America. In addition to the favorability of noncash inventory write downs due to improved inventory lifecycle.

Mark Herrmann: Let me pause there for a second. What do I mean by a stack trade and why is it important? If some of you may know the biotech seed industry was built on developing new trades that address specific issues from weed control pest control management above and below ground quality and others the industry has addressed each of these specific issues but providing valuable seed options to farmers through stack trade offerings in a single seed.

Right.

Speaker 1: Inventory write down or what we've referred to as LCM expenses during 2023 were 2.8 million compared to 6.4 million in fiscal 2022, where we experienced a higher level of certain lots that had deteriorated in quality and germination rates.

Inventory write downs are what we refer to as healthy.

Spencers during 2023 were $2 8 million compared to $6 4 million in fiscal 2022, where we experienced a higher level of certain lots that had deteriorated in quality and germination rate.

Mark Herrmann: For farmers there's an incremental value being created by each new trade protects yield decreases crop risks increases crop quality and value and saves time to ultimately improve acre productivity. As such sea companies can deliver increased value to farmers versus forcing them to choose between valuable individual trades. Through the research investment and productivity we can increase the value of the seed while production costs typically remain about the same. The result is a margin and profit improvement per bag of seed sold.

Speaker 1: As Mark mentioned, the E-Live cycle management will continue to be a focus area for us, as we have reduced our product offerings going into 2024 to customers through seed treatment rationalization.

As Mark mentioned.

Lifecycle management will continue to be a focus area for us as we have reduced our product offering going into 2024 to customers through seed treatment right rationalization.

Speaker 1: Looking to fiscal 2024, we see continued improvement with growth smart.

Looking to fiscal 2024, we see continued improvement with gross margin.

Speaker 1: Inclusive of any LCM charges, margins are expected to be between 24 and 26 percent.

Mark Herrmann: That's why we believe trade related R&D is so important and the investments as NW has made over the years are beginning to pay off. On top of our double team weed control system and now pressic acid free quality trade we are also on plan to develop a second generation post-grasp service site trade which we launch in 2025. Further we are in discovery stage for an insect tolerant to resistant trades and broad spectrum herbicide trade as well.

Inclusive inclusive of any LCM charges margins are expected to be between 24 and 26%.

Speaker 1: compared to the 19.8% we saw in fiscal 2023. Again, the biggest driver here is expected to be the growth in our high margin double team product. Now we...

Compared to the 19.8% we saw in fiscal 2023.

Again, the biggest driver here is expected to be the growth in our high margin double team product.

Now, we don't transition to operating expenses.

Speaker 1: Gap operating expenses for fiscal 2023 were 32.5 million compared to 39.2 million in fiscal 2022. The decrease is a result of the company's focus on aligning its cost structure to support its key centers of value, as Mark mentioned at the end.

GAAP operating expenses for fiscal 2023 were $32 5 million compared to $39 2 million in fiscal 2022.

Mark Herrmann: We are clearly becoming the key technology provider in this critical nutrient pack crop. As the fifth largest cereal crop globally it can be used as a substitute for many grains on the market today. We are excited about SOARGOM because it is a crop that is uniquely equipped to handle higher temperatures and drier climates better than many other crops. But as I mentioned, it hasn't benefited from the historic research investments to successfully launch tools to support step change to improve the crop's productivity.

The decrease is the result of the company's focus on aligning its cost structure to support its key centers of value as Mark mentioned at the onset.

Mark Herrmann: As farmers increasingly recognize the risk reduction with new tools to control grasses and increase crop raising safety technologies, I believe we will see continued share growth in the current SOARGOM acres, as well as an increase in SOARGOM acres planted on dry land and limited water availability acres, moving back to SOARGOM due to its improved adaptability to these conditions. From a sales and marketing perspective, we plan to continue to drive sales through our S&W-owned SOARGOM partners brand and aligned with independent Seed companies with current market leading brands in key grain and forward SOARGOM markets to maximize market penetration through licensing S&W germplasm and or trades.

Speaker 1: breaking it down further. There was a 2.5 million decrease in research and development expenses, a 2 million decrease in selling general and administrative expenses, and a 1.5 million decrease from a goodwill impairment charge recognized in fiscal 2022, and a 0.7 million decrease in depreciation and amortization.

Breaking it down further.

There was a two and a half million decrease in research and development expenses eight 2 million decrease in selling general and administrative expenses and a $1 5 million decreased from a goodwill impairment charge recognized in fiscal 2022.

And a point 7 million decrease in depreciation and amortization.

Speaker 1: This level of 32.5 million, which is inclusive of depreciation and amortization, is the level we feel we can maintain in fiscal 2024, even though we see revenue growing. We are intent on driving efficiencies across the entire enterprise.

This level of $32 5 million, which is inclusive of depreciation and amortization is a level. We feel we can maintain fiscal 2024, even though we see revenue growing we are intent on driving efficiencies across the entire enterprise.

Speaker 1: Betsy Horton mentioned this in the past, but I think it bears reminding that with the creation of the Tribal and VBO partnership, we would be playing an administrative role for both new ventures, handling things such as finance accounting, HR, and IT, under a service level agreement.

That's the Horton mentioned this in the past, but I think it bears reminding that with the creation of the triangle and V. B O partnership.

We'd be playing an administrative role for both new ventures handling things such as finance accounting HR and 19 under a service level agreement.

Mark Herrmann: So even where S&W does not have market presence, we will be working with brands that have presence to deliver our technologies to their customers to optimize availability to farmers and adoptions. This will not only be in the United States, but internationally as well. Today, there are approximately 8.7 million acres of SOARGOM being grown in four key countries where we have been developing relationships with Seed companies, with strong germplasm tools and established farm farmer relationships in Mexico, Argentina, Brazil, and Australia. Our strategy here will be to out license our germplasm and or trades with well-established brands in each key SOARGOM market to reach the global SOARGOM market and accelerate adoption. Look for more on this to come.

Established this year.

Speaker 1: In our financial statements, these items are presented as services revenue and an offsetting cost in XGNA, which we believe enhances the visibility into our operating expense reduction emissions.

In our financial statements. These items are presented as services revenue and an offsetting cost in SG&A, which we believe enhances the visibility into our operating expense reduction initiatives.

Speaker 1: During fiscal 2023, we had approximately 800,000 of service revenue pertaining to our partnership and an offsetting cost of S-GNA of the same 800,000.

During fiscal 2023, we had approximately 800000 of service revenue pertaining to our partnership and an offsetting cost of SG&A.

Saying 800000.

Speaker 1: As we look to fiscal 2024, we expect about 0.6 million in revenue to come from the partnership, which was a similar offset to the cost of SGNM.

As we look to fiscal 'twenty 'twenty four we expect about point $6 million in revenue to come from the partnership which with a similar offset to the cost.

Now to EBITDA.

Mark Herrmann: Operationally, we have developed an operational plan for this upcoming year that is intended to challenge all aspects of our organization to approve upon last year, whether it be in production, sales, marketing, or fulfillment to deliver on the promise that our SOARGOM technology portfolio provides the farmers. I believe we have worked through many of the bottlenecks that were presented to the company last year in achieving our original goals. As you likely saw on our press release, it is my expectation that revenue from double team SOARGOM solutions is expected to be $11.5 to $14 million in sales, representing an increase of 77% to 115% compared to fiscal 2023.

Speaker 1: Adjusted EBITDA for fiscal 2023 was a negative 9.3 million compared to adjusted EBITDA of negative 23.6 million for fiscal 2022. An improvement of 14.3 million.

Adjusted EBITDA for fiscal 2023, with a negative $9 3 million compared to adjusted EBITDA of negative $23 6 million for fiscal 2022.

An improvement.

$14 3 million.

Speaker 1: A full reconciliation is available in the press alert. Press.

A full reconciliation is available in the press release.

Speaker 1: As we look to fiscal 2024, our guidance is a negative adjusted EBITDA of $7.5 million to negative form.

As we look to fiscal 2024, our guidance is a negative adjusted EBITDA of $7 5 million to negative $4 million. This would represent an improvement of approximately two to five 5 million compared to fiscal 2020.

Speaker 1: This would represent an improvement of approximately two to five and a half million compared to fiscal 2023.

Three.

Speaker 1: The data-sensitificated driver here would be the gross profit leverage from double-team, grain, and forage soar them safe.

This anticipated driver here would be the gross profit leverage from double team grain and forage sorghum sales.

Mark Herrmann: With 70% of margins on double team, this is expected to be a big contributor to our bottom line improvement. When we break this all down, we see fiscal 2024 as being strong for SOARGOM operations with the expectation for significant growth going forward. We are in a leadership position today with our trade portfolio and with the impressive pipeline I just touched on, we plan to maintain leadership of this important crop for many years, to come.

Speaker 1: Finally, on the net income line, GAT net income for fiscal 2023 was 14.4 million, or 34 cents per basic and diluted share, compared to GAT net loss of 36.4 million, or a negative 93 cents per basic and diluted share for fiscal 2020.

Finally on the net income line GAAP net income for fiscal 2023 was $14 4 million.

Or 34 cents per basic and diluted share compared to GAAP net loss of $36 4 million or a negative 93 cents per basic and diluted share for fiscal 2022.

Speaker 1: We experienced again on the sale of the business interest of $38.2 million related to the establishment of a partnership with Shell and VBS.

We experience experienced the gain on the sale of the business interests of 38.2 million related to the establishment of a partnership with shell and D. B L.

Mark Herrmann: Transitioning, let me quickly touch on our international operations and our partnership with Shell before turning it over to Vanessa for a review of the financials. As I mentioned at the beginning, there are no updates I can share with you on the process we are going through to look to unlock value within our international operations. We will certainly look to implement many of the same strategies internationally as we are in the U.S, to drive growth and efficiencies in this segment.

Speaker 1: One final note. As Mark mentioned earlier, we are scheduled to receive a six million payment from Shell in February of 2024. Despite our negative-adjusted EBITDA expectation, which translates rather closely to our cash utilization, the payment from Shell is expected to cover any operating cash needs. This...

One final note as Mark mentioned earlier, we are scheduled to receive 6 million payment from shell in February of 'twenty 'twenty four despite our negative adjusted EBITDA expectation, which translates rather closely to our cash utilization the payment from shallow.

Expected to cover any operating cash needs this year.

Speaker 1: beyond fiscal 2024. If we're able to continue the growth in our Sorghum Technology portfolio and achieve the benefits of the stability and cross containment initiatives across the remaining parts of the organization, it is our thought that we will be in a positive cash flow position in the near future.

Beyond fiscal 2024, if we're able to continue the growth in our sorghum technology portfolio and achieved the benefit of the stability and cost containment initiatives across the remaining parts of the organization. It is I thought that we will be in a positive cash flow position.

Mark Herrmann: We are looking to optimize our production capabilities to drive down the cost of goods sold while developing a sales and marketing approach that highlights the benefit of our forward solutions around the world. While total results are expected to be slightly higher, we do look for growth in our Okaopa and Ford's Lagoon business in the years to come. As had been the case in our international operations for a few years, there are various factors that are largely outside of our control, namely the geopolitical risk in certain jurisdictions we sell into.

The near future.

Speaker 1: Again, I am happy to follow up with any of the details we went through if you should have additional questions. With that, let me turn it back.

Again, I am happy to follow up with any of the details. We went through if you should have additional questions.

Let me turn it back over to Mark.

Speaker 3: Thank you, Vanessa. In summary, I hope you take away from this call that we are laser focused on operating this business with best in class practices from top to bottom. We have a significant growth opportunity ahead of us.

Thank you Vanessa in summary, I hope you take away from this call that we are laser focused on operating this business with best in class practices from top to bottom we have a significant growth opportunity ahead of us.

Mark Herrmann: That said, we are looking to mitigate those risks, especially when we think about our guidance for the year. We are placing minimal independence on the riskiest markets for us to achieve our state of guidance going forward. We certainly hope there to be an upside if certain markets materialize, but are providing what we believe to be a conservative view into this segment.

Speaker 3: Not only from our double team Sorgon technology solutions, but our broader Sorgon technology portfolio.

Not only from our double team sorghum technology solutions, but our broader sorghum technology portfolio.

Speaker 3: Unique opportunities to be the sole technology leader in a crop doesn't come along very often.

Unique opportunities to be the sole technology leader and a crop doesn't come along very often but when they do they tend to see rapid adoption and value creation for both customer and shareholders.

Speaker 3: But when they do, they tend to see rapid adoption and value creation for both customer and share.

Mark Herrmann: As mentioned, Vanessa will touch on our guidance in detail momentarily. Vision, bioenergy seed, oil seeds, LLC is the partnership between SNW seeds and Shell for the purpose of developing novel plant genetics for oil seed cover crops as a feedstock for biofuels, green diesel, and SAF sustainable aviation fuel. VBO intends to develop cambolina where oil and meal can be extracted for future processing biofuels, animal feed and other bio products. On the biofuels front, there's not a lot that we can expand on here except to say the partnership remains on track from what was communicated during the last conference call.

Speaker 3: I simply couldn't be more enthusiastic to be leading this company at this exciting time. I thank you for your continued support of SNW seeds, and I look forward to taking your questions.

Simply couldnt be more enthusiastic to be leading this company at this exciting time I. Thank you for your continued support of S and WCS and I look forward to taking your questions.

Operator.

Speaker 4: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys.

Thank you.

We'll now begin the question and answer session.

Ask a question you May press Star then one 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 two.

Speaker 4: To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

At this time, we will pause momentarily to assemble our roster.

Speaker 4: Today's first question comes from Ben Cleve with Lake Street Capital Market.

Today's first question comes from Ben Clean with Lake Street capital market.

Mark Herrmann: The entity VBO is expected to carry out a missile grain production later this calendar year and more than 7,000 acres of cambolina planted. To this point, the partnership has met or exceeded all cropping acre thresholds originally laid out. As has been discussed in the past, Shell is expected to buy all the grain that VBO produces through an offtake agreement that is in place. Vanessa will remind every one of its impact to the income statement going forward, but I am certainly pleased with the progress being made and believe this represents a tremendous long term opportunity for SNW and its shareholders.

Speaker 5: All right, thanks for taking my questions. A few for me this morning, first of all, on Gobble Team.

Go ahead.

Alright, thanks for taking my questions.

For me. This morning first of all on double team I'm wondering if you can talk about kind of expectations versus reality in 'twenty three from this product isn't a half million dollars.

Speaker 5: I'm wondering if you can talk about kind of expectations versus reality in 23 from this product. This is half million dollars is a great year over year clip, but relative to the kind of $12 million target that was laid out a few quarters ago, you know, certainly felt short. I'm wondering if you can talk about what what right what were poorly with double team this year and then kind of how the realities of 23.

Great year over year clip, but relative to the kind of $12 million target that was laid out a few quarters ago.

This all sports I'm wondering if you could talk about what went right what one of the top poorly with double team this year.

And then kind of how are you.

But the reality of 'twenty three.

Mark Herrmann: As I mentioned on the onset, we are striving to become a best in class C company. Every organizational decision we make is expected to be data driven to ensure it will have a positive impact on our customers and our shareholders going forward. We are instilling increase engagement with the finance team and financial analyses, with all decisions that impact cost, margin, and cash management. As such, we have implemented a new series of operational initiatives to drive business towards customer satisfaction and profitability in the near term, including improved life-cycle management to reduce obsolescence costs and cash management.

Speaker 5: You know, give you components in your expectations for 24.

Give you confidence in your expectations for 'twenty four.

Yeah.

Speaker 3: Hey Ben, thank you very much for joining this morning, but also for the question. I think it's an excellent place to discuss because I don't see it at all as a...

Hey, Ben.

Thank you very much for joining this morning, but also for the question.

I think it's a it's a excellent place to discuss because I don't see it at all as a.

Speaker 3: step back for a concern around double team itself.

Step back for a concern around double team itself as we look at the launch of double team in 2021. It was on very small volumes with I believe 23 different distribution points <unk> customers.

Speaker 3: As we look at the launch of Double Team in 2021, it was on very small volumes with, I believe, 23 different distribution points.

Speaker 3: and or customers. And as we looked at the growth going from 21 to 22, it grew to 2.4 million. And then this last year to your point, double team grew from 2.4 to 6.5 million dollars. I mean, it's a tremendous growth curve as far as demand. And what we've seen from the 23 distribution points that trialed and sold a very small amount in 2021.

And as we looked at the growth going from 21 to 'twenty two it grew to $2 4 million and then this last year to your point double team grew from 2.4 to $6 $5 million I mean, it's a tremendous growth curve as far as demand and what we've seen from the 23 distribution points that debt.

Mark Herrmann: Rationalization of certain low margin product lines and effective seed treatment strategy a seed manufacturing cost reduction plan through improved efficiencies that align with best-in-class standards. Cost controls in the seed industry are key and often the difference between being profitable and not. It is my goal to have best-in-class costs of goods and operating costs going forward.

Trialed and sold a very small amount in 2021.

Speaker 3: is their success rate and positive experience, right? With a solid growth curve from every one of those 23 distribution points, except for one that actually changed their distribution makeup, which was no longer a part of SNW under the same name.

Is is their success rate and positive experience right with a solid growth curve from every one of those 23 distribution points.

Mark Herrmann: We also made the decision to suspend our continued investment in the stevia's germplasm development program. As we evaluate changes in the sweetener space, options between leave-for-fermentation processes driven largely by cost. Until we have a food or ingredient partner or commitment, or we can entertain a buyer option for proprietary germplasm and program.

Except for one that actually changed their distribution makeup, which was no longer part of F. N W. Under the same name.

Speaker 3: So as far as growers utilizing and trialing it and then expanding their use, I mean, it was just a tremendous success. I do believe potentially there was a little bit of over-exuberance.

So as far as growers utilizing and Trialing. It and then expanding their use I mean, it was just a tremendous success I do believe potentially there was a little bit of of over exuberance.

Speaker 3: looking for farmers to make a significant growth or significant introductory explanation.

Looking for farmers to make a significant growths are significant introductory experience without that opportunity to do a trial experience. It on their farm and then grow from there.

Mark Herrmann: As you will see from our guidance, we are guiding revenue for fiscal 2024 to be between $76.82 million, representing expected increase of free to 12% compared to fiscal 2023 revenue of $73.5 million. Again, we have tried to take a conservative view into our international operations and believe the pathway to achieving our state objectives in the U.S, are achievable. Importantly, on gross margin front, based on the strategies we've discussed and expect to continue growth from our double team, we see consolidated gross margins moving from 20% in 2023 to between 24% and 26% in fiscal 2024.

Speaker 3: without that opportunity to view a trial, experience it on their farm, and then grow from there. But as I look at other traits that have been involved with in the launches.

But as I look at other traits that I've been involved with in the launches.

Speaker 3: If I look at double team and the growth curve that it's had from introduction to what we're expecting this coming year of double team being on more than 10% of the US sort of makers, it's definitely demonstrating a positive impact in the market. And I really have very little to no concern about the performance of the product itself.

Look at double team and the growth curve that its had from introduction to what we're expecting this coming year of double team being on more than 10% of the U S sorghum acres.

It's definitely demonstrating a.

Positive impact in the market and I really have very little to no concern about the performance of the product itself being on 6% of the U S acres this year and we're pretty well through.

Speaker 3: Being on 6% of the U.S. acres this year, and we're pretty well through the application of First Act over those acres for grass control and the number of service calls that we've received. I'd say are very limited versus what I would have expected for a new technology in the market, but feedback from the field and others has been very, very positive on performance.

The.

Occasion of our first stack over those acres for grass control and the number of number of service calls that we've been that we've received I would say a very limited versus what I would've expected for new technology in the market, but feedback from the field and others has been very very positive on.

Mark Herrmann: Further, we expect operating expenses to remain flat despite growth in revenues. The result is an approximate 2 to 5.5 million anticipated improvement in our adjusted EBIDOT compared to fiscal 2023. We know there is still work to be done, but feel good about the strategies being implemented to drive continuous growth and improvement across the organization.

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Yeah.

Speaker 5: Great. That's helpful call it. Thanks Mark. And in your prepared comments, method touched on these kind of

Great. That's helpful color. Thanks, Mark.

In your prepared comments.

Mark Herrmann: Let me now turn it over to Vanessa to review the financials in detail. I will then provide a few final words and then we can address your questions.

That's a question on the kind of.

Speaker 5: movement of legacy non double team sorghum farmers to double team double team variety team and talk about on a high level what your expectation is for

Yeah.

Movement of legacy non double team sorghum farmers to double team.

Vanessa Baughman: Vanessa. Thank you, Mark.

Vanessa Baughman: Good morning to everyone on the call today. As this is a year-end conference call, I'm going to focus most of my comments on the results for the fiscal year. A breakout of four-quarter results is included in the press release, and I would be happy to answer specific questions on the four-quarter numbers we're needing. Starting with revenue, total revenue for fiscal 2023 was 73.5 million compared to total revenue for fiscal 2022 of 71.4 million.

Double-team variety can you guys talked about from a high level. What your expectation is for sorghum that does not have either double team or the prostate free trade introduced over the next few years is that a business that you think is going to just kind of naturally go away or do you think theres going to be some material level of revenue from.

Speaker 5: that does not have either double team or the profit-free trade introduced over the next few years. Is that a business that you just think is gonna just kind of naturally go away or do you think there's gonna be some material level of revenue from non-technology sore gum for the foreseeable future?

Non technology.

Oregon for the foreseeable future.

Speaker 3: Yeah, that's a great question, Ben. And I do think it's part of a life cycle management.

Yeah. That's that's a great question, Ben and I do think it's part of the lifecycle management that.

Speaker 3: that both Vanessa and I talked to as well. Because I do believe as we look at double team and it's continued growth on overall big. you

Both Vanessa and I talked to as well.

Because I do believe as we look at double team and its continued growth on overall sorghum acres.

Vanessa Baughman: The 2.1 million increase in revenue was primarily due to the 4 million increase in double-team sales in the U.S, domestic market. A 4 million increase in non-dormant alfalfa sales in the Middle East and North Africa, and a 3.8 million increase in non-dormant alfalfa and grain sales in Latin America. This was then offset by a 4.3 million decrease in the Australian domestic pasture sales due to flooding and keep planting regions that lowered sales expectations in the first half of fiscal 2023.

Speaker 3: I do believe it'll obviously be replacing. One of its growth factors are replacing current Sorghum acres that really have a traditional term plasement place, right? Which we also have our entire Sorghum business started out as that at 2021 introduction.

I do believe it will obviously be replacing.

One of its growth factors are replacing current sorghum acres that really have a traditional germplasm in place right, which we also have.

Our entire sorghum business started out as that.

At 2021 introduction.

Speaker 3: Now that product or product line is much lower margin, but I do anticipate that it will shrink. I believe our share within those non-double team acres.

Now that that product or product line is much lower margin, but I do anticipate that.

It will shrink I believe our share within those non double team acres.

Speaker 3: will and should remain the same. If not increasing our share amongst those acres because of a stronger brand position and distribution with farmers due to the double team.

Will and should remain the same if not increasing our share amongst those acres because of a stronger brand.

Vanessa Baughman: A 3 million decrease in revenue in the Asia region due to logistical delays and international shipping and COVID-related impacts in China during the prior year that affected distributor demand, a 1.7 million decrease in U.S, domestic alfalfa revenue due to a decline in demand and finally a 1 million decrease in non-double-team sorghum revenue. As Mark mentioned, as we looked at fiscal 2024, we are expecting revenue of 76 to 82 million, representing an expected increase of 2.5 to 8.5 million compared to fiscal 2023 revenue of 73.5 million.

Position in distribution with farmers due to the double team Trey.

Speaker 3: trade, but I do anticipate non double team acres in Sorgon to be a smaller portion of the Sorgon market. And I believe as Vanessa went through, you know, our guidance going forward, she did touch on, we do expect a small decrease.

Trade, but I do anticipate non double team acres in sorghum to be a smaller portion of the short term market and I believe is Vanessa went through.

Our guidance going forward. She did touch on we do expect a small decrease in non double team nonpregnant acid grain and forage sorghum as these products show superior performance going forward the positive to US is on the D T. Our assortment position it.

Speaker 3: in non double team, non-prethic acid, grain and forage sorghum, as these products show superior performance going forward. The positive to us is on the DT sorghum position, it puts...

Speaker 3: Product margin in the above 60 to 70.

Puts the product margin in the above 60 to 70.

Speaker 3: percent margin in the conventional Sorgan market. We're looking at margins closer to that 20 to 25, right? So it's a great impact for us as it's moving the product line up to higher value, but we need to be very smart about how we manage.

<unk> percent margin in the conventional sorghum market, we're looking at margins closer to that $20 to 25 right. So it's a great impact for US is it's moving the product line up to higher value, but we need to be very smart about how we manage the non double team market to ensure we don't build supply.

Vanessa Baughman: Breaking the sound further, we are anticipating double-team to be between 11.5 to 14 million, an increase of 77 to 115 percent compared to fiscal 2023. There will be some offset to non-double-team-related sorghum sales as we transition customers to our higher valued products. As such, overall sorghum-related revenue is expected to be between 22 and 23 million in total compared to 18.5 million in fiscal 2023. On the international side, we are expecting revenue to be between 45 to 50 million compared to 43.6 million in fiscal 2023. And finally, on the U.S, forge operation, we see revenue of about 9 million compared to 10.8 million. Last year.

Speaker 3: the non double team market to ensure we don't build supplies based on historical experiences in a market that is likely to be a decreasing size market, right? So I think the key thing you call out there is we need to maintain our margin on that non-DT market in our presence, but recognize it needs to be with tighter access accessories, planning on a shrinking market.

<unk> based on historical experiences.

In a market that is likely to be a decreasing size market right. So I think the key thing you'd call out there as we need to maintain our margin on that non BT market and our presence, but recognize that needs to be with tighter excess inventories planning on shrinking market.

Speaker 5: Got it. Got it. Very helpful. Last one for me, and then I'll get back into you. And you talked about exiting some kind of lower margin forage crops and, you know, seed treating applications. I'm wondering if you can talk about the level of revenue contribution from these exited business, exited businesses in 23. And, you know,

Got it.

Got it very helpful.

Last one for me and I'll get back in queue.

And you talked about exiting some lower margin.

Four is promising and featuring an application.

I'm wondering if you can talk about the.

Level of revenue contribution from these exited business.

Business is in 'twenty three and.

Vanessa Baughman: Now turning to margins. Gat gross margins for fiscal 2023 were 19.8 percent compared to Gat gross margins of 8.9 percent in fiscal 2022. The strong improvement of Gat gross margins was primarily driven by the increased sales of a higher margin double-team sorghum solution in North America in addition to the favorability of non-cash inventory write down due to improved inventory life cycle management. Inventory write down are what we refer to as LCM expenses during 2023 were 2.8 million compared to 6.4 million in fiscal 2022 where we experienced a higher level of certain lots that had deteriorated in quality and germination rates.

Speaker 5: What if any revenue contribution from these businesses that you're vegetable leaving is included in your 24-hour?

What what if any revenue contribution from these businesses, but we're leaving is included in your 'twenty guidance.

Speaker 3: Yeah, that's a great question as well. And I would say as general practice, a healthy company will look at everything that's lower than our overall average.

Yeah. That's that's a great question as well and I would say as general packet practice, a healthy company, we'll look at everything that's lower than our overall average margin and really question look are there things that either one we can address within our own system, that's driving costs that can improve.

Speaker 3: And really question, look are there things that either one we can address within our own system that's driving costs that can improve its margin position?

Its margin position or to.

Is it diluting the overall business and diluting focus.

Two product lines.

That may be resources could be moved from those applied to other.

Speaker 3: applied to other areas where clearly the growth in the product line would deliver more results to the company and the shareholders, right? So I would say this is a standard practice that I've really been involved with most of my career. So I don't think the focus itself is highly unusual. But we will be evaluating all these product lines. And you're asking the right question, which I don't have answers for you as we evaluate these.

Areas, where clearly the growth in the product line would deliver more results to the company and a shareholder's rights. So I would say this is a standard practice that I've really been involved with most of my career. So I don't think the the focus itself is a highly unusual but we.

Vanessa Baughman: As Mark mentioned, the Eli's cycle management will continue to be a focus area for us, as we have reduced our product offerings going into 2024 to customers through seed treatment rationalization. Looking to fiscal 2024, we see continued improvement with gross margins. Inclusive of any LCM charges, margins are expected to be between 24 and 26% compared to the 19.8% we saw in fiscal 2023. Again, the biggest driver here is expected to be the growth in our high margin double team products.

Speaker 3: is highly unusual, but we will be evaluating all these product lines. And you're asking the right question, which I don't have direct answers for you as we evaluate these. And we're fairly early in stage.

We'll be evaluating all of these product lines and you're asking the right question, which I don't have direct answers for you is as we evaluate these and we're fairly early in stage.

Speaker 3: with really drilling down on some and asking the questions. Do we change our focus and redirect resources? But it is a process we're going to go heavily through as we move forward in the business.

With really drilling down on some and asking the questions do we change.

Our focus and redirect resources, but it is a it is a process we're going to go heavily through.

As we move forward in the business.

Speaker 5: Okay, very good. That's a direction that's very helpful. Very good. Well, I felt a lot with all these initiatives and things were taking my questions and I'll get back in line. Thank you.

Okay very good.

Very helpful.

Very good well best of luck with all of these initiatives and thanks for taking my questions and I'll get back in line.

Okay. Thank you Ben.

Speaker 4: As a reminder to ask a question, you may press star than one.

As a reminder to ask a question you May Press Star then one.

Vanessa Baughman: Now, we'll transition to operating expenses, gap operating expenses for fiscal 2023 were 32.5 million compared to 39.2 million in fiscal 2022. The decrease is a result of the company's focus on aligning its cost structure to support its key centers of value as Mark mentioned at the onset. Breaking it down further, there was a 2.5 million decrease in research and development expenses, a 2 million decrease in selling general and administrative expenses, and a 1.5 million decrease from a goodwill impairment charge recognized in fiscal 2022, and a 0.7 million decrease in depreciation and amortization.

Speaker 4: The next question comes from Nelson Obis with Winfield Capital. Please go ahead.

The next question comes from Nelson <unk> with Winfield capital. Please go ahead.

Speaker 6: Yeah, hi there. General company, you know, this call has been more informative and granular than

Yeah, Hi, there.

General you know this call has been more informative and granular then.

Speaker 6: pass call so I find that very helpful.

Past call. So as I said I find that very helpful. I'm just.

Speaker 6: Just a quick question about R&D for fiscal 24. Do you expect it to hold even to where it was in fiscal 23?

Just a quick question about R&D for fiscal 'twenty four do you expect it to hold even to where it was in fiscal 'twenty three.

Speaker 3: Thanks Nelson. We are looking at relatively flat spending in research.

Thanks, Nelson, we are looking at relatively flat spending in research.

Speaker 3: Now some of what we talked about in the call is the exiting of some of either the product line or focus areas that we don't see a clear future of driving revenue and margins.

Some of what we talked about in the call is the exiting of of some of either the product line or focus areas that we don't see a clear future of driving revenues and margins, we're exiting and I'll use. The example of Steve you're right. So we've we've halted research activities with that product.

Speaker 3: We're exiting and I'll use the example of stevia, right? So we've halted research activities with that product.

Vanessa Baughman: This level of 32.5 million, which is inclusive of depreciation and amortization, is a level we feel we can maintain in fiscal 2024, even though we see revenue growing. We are intent on driving efficiencies across the entire enterprise. Betsy Horton mentioned this in the past, but I think it bears reminding that with the creation of the Tribal and VBO partnership, we would be playing an administrative role for both new ventures, handling things such as finance accounting, HR, and IT, under a service level agreement established this year.

Speaker 3: And that's enabled moving those to our Sorghum Pipeline, where with our Sorghum Pipeline, we've got much more demands as far as the amount of testing requirements due to the depth of the product line, as well as efforts with during plasm transformation processes to integrate.

And that's enabled moving those to our sorghum pipeline, where with our silicon pipeline, we've got much more demands as far as the amount of.

Testing requirements due to the depth of the product line as well as efforts with germ plasm transformation processes to integral trade. So there's been a a.

Speaker 3: So there's been a reduction in some areas, no, and then moving those to what we see is really our high margin drivers both for the short and for the long term. But for this year, our discussion is to keep spend very tight, be highly efficient. And as we're generating cash to Vanessa's point, we'll keep re-evaluating those on how we invest resources going forward.

Reduction in some areas Nelson and then moving those to what we see is really our high margin drivers both for the short end for the long term, but for this year our discussion is to keep spend.

Vanessa Baughman: In our financial statements, these items are presented as services revenue and an offsetting cost in FGNA, which we believe enhances the visibility into our operating expense reduction initiatives. During fiscal 2023, we had approximately 800,000 of service revenue pertaining to our partnership and an offsetting cost of FGNA of the same 800,000. As we look to fiscal 2024, we expect about 0.6 million in revenue to come from the partnership, which with a similar offset to the cost of FGNA.

Very tight be highly efficient and as we're generating cash to Vanessa point, we'll keep reevaluating those on how we invest.

Our resources going forward.

Speaker 6: So, when you look at the EBITDA connections you've given us, does that imply discontinued operation in the CV or those, or there might be some write down set? In other words,

So when you look at the EBITDA production that you've given us a does that imply a discontinued operation it's easier or those or are there might be some write downs of debt.

Another words.

Speaker 6: getting out of categories which could trigger a write down. Is that anticipated in the EBITDA projections or is that a separate issue to be dealt with when they come up?

Getting out of categories, which could trigger a write down.

Is that anticipated in any EBITDA projections or is that a separate issue to be dealt with when they come up.

Speaker 3: Yeah. I, I, I, I, I'll, I'll live Vanessa, uh, uh, refer to it.

Yeah.

I'll I'll, let Vanessa.

Vanessa Baughman: Now to EBITDA. Adjusted EBITDA for fiscal 2023 was a negative 9.3 million, compared to adjusted EBITDA of negative 23.6 million for fiscal 2022, an improvement of 14.3 million. A full reconciliation is available in the press release. As we look to fiscal 2024, our guidance is a negative adjusted EBIDA of $7.5 million to negative $4 million. This would represent an improvement of approximately two to five and a half million compared to fiscal 2023. The data-certificated driver here would be the gross profit leverage from double-team grain and forage sorghum sales.

Third to it.

Speaker 1: Yeah, there are no anticipated write downs Nelson from any of the product lines that were were pausing at the moment.

Yeah, there are no anticipated write downs Nelson from that.

That product line that we're we're pausing at the moment.

Speaker 1: The bearing on the income statement is pretty much all driven in OPEX, right? And so as Mark mentioned, just to put some dollars around it, pausing the STVIA R&D program is about 300,000 dollars per fiscal year that we're refocusing our efforts in that R&D space again towards our high

The bearing on on the income statement, it's pretty much all driven in Opex right and so as Mark mentioned just to put some dollars around it.

Pausing the stevia R&D program is about $300000 perfect school year that where we're refocusing our efforts in that R&D space again towards our high valued options for farmers going into the near future and longer term. So that's about 300000.

Speaker 1: options for farmers going into the near future and longer term. So that's about 300,000. But in our apex projections, there are no known write downs of any of the product lines that we're pausing at this.

But in our Opex.

Opex projections there are no known write downs of any of the product lines that we're pausing at this moment.

Speaker 3: Okay, got it. And with that, Nelson, we're also moving the material itself, right? Because we do have a platform of germplism that has been developed. We're moving it into cold storage as we look at the next step of where we go with the stevia germplism and progress.

Okay got it yes.

Vanessa Baughman: Finally, on the net income line, GAT net income for fiscal 2023 was 14.4 million or 34 cents per basic and diluted share compared to GAT net loss of 36.4 million or a negative 93 cents per basic and diluted share for fiscal 2022. We experienced the gain on the sale of the business interest of $38.2 million related to the establishment of a partnership with Shell and BBL. One final note. As Mark mentioned earlier, we are scheduled to receive a six million payment from Shell in February of 2024.

And with that Nelson, we're also moving the material itself right. Because we do have a platform of germ plasm that has been developed we're moving it into cold storage as we look at.

The next step of where we go with the stevia germ Plasm program.

Speaker 6: you're doing a lot of your revenue in the international realm and you touch on logistical delays in international shipping. It's been my observation that that caused an enormous number of problems with the years.

Fine.

Youre doing a lot of your revenue in the international realm, and you touch on logistical delays in international shipping.

It's been my observation that that's caused an enormous number of problems over the year.

Speaker 6: and i'm just wondering uh... you know whether i'm right and whether you're attacking this uh... cost area uh... it it obviously we went through a period of constraint capacity where you really had to be on the ball to avoid accelerated uh... costs i think that uh... trended down now looking at dry cargo costs but can you address that issue because it really is not in an area that we've excelled id

And I'm just wondering.

Whether I'm right and whether you're attacking with a cost.

Cost area.

Obviously, we went through a period of constrained capacity, where you really had to be on the ball to avoid accelerated cost I think that.

Vanessa Baughman: Despite our negative adjusted EBIDA expectation, which translates rather closely to our cash utilization, the payment from Shell is expected to cover any operating cash needs this year. Beyond fiscal 2024, if we're able to continue the growth in our sorghum technology portfolio and achieve the benefits of the stability and cross-containment initiatives across the remaining parts of the organization, it is our thought that we will be in a positive cash flow position in the near future. Again, I am happy to follow up with any of the details we went through if you should have additional questions.

It trended down now looking at dry cargo costs, but can you address that issue because it really has not been an area that we've excelled than in the past.

Speaker 3: Yeah, and international movement of seed is complex in itself.

Yeah.

International movement of ceded is complex in itself and then I know of recent years with adding some of the geopolitical pressures on top of it it's been exasperated. He even further so one of the steps that the Australian team, which leads this started on is breaking down every single step.

Speaker 3: And then I know of recent years with adding some of the geopolitical pressures on top of it.

Speaker 3: It's been exasperated even further. So one of the steps that the Australian team which leads this started on is breaking down every single step between an order and being received by the ordering entity.

Between an order and being received by the ordering entity.

Mark Herrmann: With that, let me turn it back over to Mark. Thank you, Vanessa. In summary, I hope you take away from this call that we are laser focused on operating this business with best-in-class practices from top to bottom. We have a significant growth opportunity ahead of us, not only from our double-team sorghum technology solutions, but our broader sorghum technology portfolio. Unique opportunities to be the sole technology leader in crop doesn't come along very often, but when they do, they tend to see rapid adoption and value creation for both customer and shareholders. I simply couldn't be more enthusiastic to be leading this company at this exciting time.

Speaker 3: every single step and looking at the timeline for each of the pieces between paperwork testing.

Every single step and looking at the timeline for each of the pieces between paperwork testing.

Speaker 3: quality, shipping and all the individual pieces and looking at trying to build answers to remove complexity in different steps or make sure that there's current activities wherever there can be. So it doesn't become the lengthy process that we've had in in to date. I shouldn't say in the past but really to date.

<unk>.

Quality shipping and all the individual pieces and looking at trying to build our answers to remove complexity and different steps or make sure that their current activities wherever there can be so it doesn't become.

The lengthy process that we've had them in to date I shouldn't say in the past, but really to date.

Speaker 3: So there's an effort going on with that right now, Nelson, to look at really streamlining process, streamlining step.

There's an effort going on with that right now Nelson to look at really streamlining process streamlining steps.

Speaker 3: to improve how we have fulfilled.

Two to improve how we have fulfillment.

Speaker 3: You guys are going to be a preventive? I'm sorry, go ahead. Some of the, yeah. Some of the, I would just say, some of the geopolitical issues, I mean, will continue to be a bit of a minefield that will try to address, you know, as they arise. But anything we can control, we want to make sure we have the most efficient processes possible.

Mark Herrmann: I thank you for your continued support of SNW seeds, and I look forward to taking your questions.

Yes.

I'm sorry go ahead some of the some of it I would just say some of the geopolitical.

Operator: Operator? Thank you.

Issues I mean, we'll continue to be a bit of a minefield that we'll try to address.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two.

As they arise but.

Anything we can control we want to make sure we have the most efficient process as possible.

Yeah, I would imagine the comment you made about about expenses holding expenses at $32 million or whatever that is I mean.

Operator: At this time, we will pause momentarily to assemble our roster.

He might be able to do better if you're able to rationalize certain aspects such as logistics correct Vanessa.

Speaker 1: That would be accurate and what Mark is describing is the order to cash process, right? And every step in between, as an example, from the moment, particularly in that Middle East, North Africa area of the world.

That that would be accurate and and what Marc is describing is the order to cash process right and every step in between as an example from the moment, particularly in that mid.

Benjamin Klieve: Today's first question comes from Ben Klieve, with Lake Street Capital Market. Please go ahead. All right. Thanks for taking my questions. A few for me this morning, first of all, on double teams. I'm wondering if you can talk about kind of expectations versus reality in 23 from this product. It's going to have million dollars. It's a great year over a year, but relative to the kind of $12 million target that was laid out a few quarters ago, you know, certainly fell short.

Benjamin Klieve: So I'm wondering if you can talk about what, what right, what, what, what early with double team this year, and then kind of how the reality is of 23, you know, give you confidence in your expectations for 24.

Italy, North Africa area of the World. The lead time required between order and delivery is up to four months right and that's optimizing the delivery from whether it comes from the U S and door Australia directly.

Speaker 1: The lead time required between order and delivery is up to four months, right? And that's optimizing the delivery from whether it comes from the US and or Australia directly.

Speaker 1: So as Mark mentioned, we've masked those processes and aligned when orders come in and the pace of orders to when demand is expected in that four month period and including any logistical obstacles in that evaluation and removing them to the best of our ability.

So as Mark mentioned, we've mapped those processes.

And aligned when orders come in and the pace of orders to when demand is expected in that four month period, and including any logistical obstacles.

Obstacles in that evaluation and removing them to the best of our ability.

Mark Herrmann: Hey, Ben. Thank you very much for joining this morning, but also for the question. I think it's an excellent place to discuss, because I don't see it at all as a step back for a concern around double team itself. As we look at the launch of double team in 2021, it was on very small volumes with, I believe, 23 different distribution points and or customers. And as we looked at the growth going from 21 to 22, it grew to 2.4 million.

Speaker 1: Post COVID at least, you know, throughout 2022 and 2023, we were experiencing post COVID obstacles with regard to getting product in that Middle East and North Africa area of the world.

Post Covid at least you know throughout 2022 and 2023 we were experiencing post COVID-19.

Obstacles with regard to getting product in that middle East and North Africa.

Mark Herrmann: And then this last year to your point, double team grew from 2.4 to 6.5 million dollars. I mean, it's a tremendous growth curve as far as demand. And what we've seen from the 23 distribution points that that trialed and sold a very small amount in 2021 is their success rate and positive experience, right, with a solid growth curve from every one of those 23 distribution points, except for one that actually changed their distribution makeup, which was no longer part of SNW under the same name.

Area of the World. So you heard through our guidance that we've minimized the sales targets for that region to what we feel is achievable for 2024 as an example, we talked about obviously the logistic constraints, but the geopolitical environment.

Speaker 1: You heard through our guidance that we've minimized the sales target for that region to what we feel is achievable for 2024. As an example, we talked about obviously the logistic constraints, but the geopolitical environment in Sudan has not subsided to what we initially thought when we had this call one quarter ago.

Dan has not subsided to what we initially thought when we had this call one quarter ago.

Speaker 1: So we've adjusted our guidance to include zero sales in the Sudan region as an example. We continue to monitor it and to your point that there is an opportunity for upside and or getting product into the country for demand then we will absolutely capitalize on it. But at this moment in time for 2024 we peered back.

We've adjusted our guidance to include zero sales in the Sudan region. As an example, we continue to monitor it and to your point, if there is an opportunity for upside and or getting product into the country.

For demand then we will absolutely capitalize on it but at this moment in time for 'twenty 'twenty four we pared back the expectation in Sudan to zero and pared back a bit from Saudi Arabia, as well and so I think you know all in.

Speaker 1: the expectation in Sudan to zero and paired back a bit from Saudi Arabia as well. So I think, you know, all in when you look at cross containment, outlining practice.

Mark Herrmann: So as far as growers utilizing and trialing it and then expanding their use, I mean, it was just a tremendous success. I do believe potentially there was a little bit of over exuberance looking for farmers to make a significant growth or significant introductory experience without that opportunity to do a trial, experience it on their farm and then grow from there. But as I look at other traits that I've been involved with in the launches, if I look at double team and the growth curve that it's had from introduction to what we're expecting this coming year of double team being on more than 10% of the US sort of makers.

And when you look at cost containment outlining processes and optimizing the supply chain effort into the areas of the country. It's a high focus for that Australia team as they not only monitor sales growth, but also the cost of doing business in that country.

Speaker 1: and optimizing the supply chain effort into these areas of the country. It's a high focus for that Australia team as they not only monitor sales growth, but also the cost of doing business in those countries.

Speaker 6: great so this reduction in LCM is very welcome from 6.4 to 2.8 we've had some really nasty surprises towards the end of prior fiscal years with inventory right down do you think 2.8 is kind of the cost of doing business or do you think that could be reduced further

Great. So that this reduction in LCM is very welcome from 64 to 2.8, we've had some really nasty.

Surprised it towards the end of the prior fiscal years with inventory write down do you think to point out is just kind of the cost of doing business or do you think that can be reduced further.

Mark Herrmann: It's definitely demonstrating a positive impact in the market. And I really have very little to no concern about the performance of the product itself being on 6% of the US acres this year. And we're pretty well through the application of First Act over those acres for grass control and the number of service calls that we've received. I'd say are very limited versus what I would have expected for a new technology in the market. But feedback from the field and others has been very, very positive on performance.

Speaker 1: Yeah, we're not the same business as we were before. Yeah, I mean we Yep, yep, it's a great question and and mark and I experience 8% of sales is sort of what is the industry norm when you when you think about row crops

So we are not the same business as we were before.

Yep Yep Yep, it's a great question, and then and Mark Nice experience, 8% of sales that's sort of what is the industry norm. When you when you think about.

Row crop.

Speaker 1: I think we can be better than that. There's been a lot of work done in that life cycle management space, just even starting early fiscal year 2023 in the crop planning cycle. And that continues to be refined as we plan for our crop plan for 2024.

I think we can be better than that there's been a lot of work done in that life lifecycle management space, just even starting in fiscal early fiscal year 2023, and the crop planning cycle and that continues to be refined as we plan for our crop plants.

For 2020 for sale.

Speaker 1: So I think we can be better than 8%. We are working towards a better metric as we lead into crop planning for 2025, but 2.9 seems well within the norm and manageable for the size of our sales and our crop plans for this year.

Mark Herrmann: Great. That's a helpful color. Thanks, Mark. And in your prepared comments, Vanessa touched on the kind of movement of legacy non-double-team sorghum farmers to double-team variety. Can you guys talk about on a high level what your expectation is for sorghum that does not have either double-team or the profit-free trade introduced over the next few years? Is that a business that you just think is going to just kind of naturally go away or do you think there's going to be some material level of revenue from, you know, non-technology sorghum for the foreseeable future?

So I think we can be better than 8%.

We are working towards a.

A better metric as we lead into crop are planning for 2025 by 2.9 seems well within the norm and manageable for for the size of our sales and our crop planning for this year.

Speaker 6: I realize Sorghum customers can return. Let's hope they like what they get the first time. My last comment, which is probably the most important one.

I realised sorghum and sorghum customers can return, let's hope they like what they get the first time my last comment which is probably the most important one.

Speaker 6: You know, shareholders have really not been served well by

You know shareholders have really not been served well by.

Speaker 6: the share dilution that's taken place over the last five years uh... shares doubled uh... you know without that doubling of the shares we probably wouldn't be here now we'd be in uh... somebody else's hands but uh... listening to what you had to say that when i found very encouraging uh... that the six million dollars that will uh... slow from shell into the company should be enough to keep us uh...

The share dilution that's taken place over the last five years.

Mark Herrmann: Yeah, that's a great question, Ben. And I do think it's part of the life cycle management that both Vanessa and I talk to as well. Because I do believe as we look at double-team and it's continued growth on overall sorghum acres, I do believe it'll obviously be replacing one of its growth factors are replacing current sorghum acres that really have a traditional termplasm in place, right, which we also have our entire sorghum business started out as that at 2021 introduction.

The shares doubled.

Without that doubling of the shares we probably wouldn't be here that we'd be in somebody else's hands, but lifting what you had to say what I found very encouraging that.

The $6 million that will flow.

Well from shell into the company.

Would be enough to keep us out of there.

Speaker 6: cash flow break even in fiscal 24 as we look to 25.

Cash flow break even in fiscal 'twenty, four and as we look to 'twenty five we may even get to being cash flow positive. So the.

Speaker 6: We may even get to being cash flow positive. So I'm assuming...

Mark Herrmann: Now that product or product line is much lower margin, but I do anticipate that it will shrink. I believe our share within those non-double-team acres will and should remain the same. If not increasing our share amongst those acres because of a stronger brand position and distribution with farmers due to the double-team trade. But I do anticipate non-double-team acres in sorghum to be a smaller portion of the sorghum market. And I believe as Vanessa went through, you know, our guidance going forward.

I am assuming that we may not see any more dilution in that that would be a important goal of the current management at my is.

Speaker 6: that we may not see any more dilution in that that would be an important goal of the current management and my thinking correct.

Is my thinking correct.

Speaker 3: Yeah, thanks for the question, Nelson. And I don't know if we'd be prepared to talk to it right now, and it's probably heavily future looking.

Yeah. Thanks for the question Nelson N and I, Oh, I don't know if we'd be prepared to talk to it right now and it's probably heavily future looking.

Speaker 3: But I do believe from what Vanessa and I have rolled out of looking at cash neutral this next year I do believe in the continued growth

But I do believe from what.

Vanessa I have rolled out of looking at cash neutral. This next year I do believe in the continued growth of the D T and precious acid free.

Speaker 3: of the DT and Precic acid-free platforms that are already launched as of this year, as we look to the future.

Platforms that are already launched as of this year as we look to the future and I do think our leadership in technology and sorghum with a full pipeline along with the second generation of.

Speaker 3: And I do think our leadership in technology and Sorgon with the full pipeline along with the second generation of post-planning grass control. I do believe there's a very positive future for continued growth. And in...

Mark Herrmann: She did touch on, we do expect a small decrease in non-double-team, non-prethic acid grain and forward sorghum as these products show superior performance going forward. The positive to us is on the DT sorghum position. It puts the product margin in the, you know, above 60 to 70 percent margin in the conventional sorghum market. We're looking at margins closer to that 20 to 25, right. So it's a great impact for us as it's moving the product line up to higher value, but we need to be very smart about how we manage the non-double-team market to ensure we don't build supplies based on historical experiences in a market that is likely to be a decreasing size market.

Post planting grass control I do believe there is a very positive future for for continued growth and in the results of those will likely.

Speaker 3: The results of those will likely lead into to your point heavy decisions on the go forward as well.

Read into to your point heavy decisions on the go forward as well.

Speaker 6: Well, you're right not to be pinned down, but I, you know, I've talked to a number of shareholders and that really has been a sticking point. The extraordinary increase in share count and it just want you to be aware of that. Thank you. Good call. Absolutely. Thank you.

Well youre right not to be pinned down, but did you know I've talked to a number of shareholders and that really hasn't been a sticking point the extraordinary increase in share count.

I just want you to be aware of that thank you yeah. Good call absolutely. Thank you.

Yeah.

Speaker 4: Being no further questions in the queue, I would now like to hand the call back to management for closing remarks.

Seeing no further questions in the queue I would now like to hand, the call back to management for closing remarks.

Speaker 3: Well, thank you very much, MJ, as the operator of the call and in helping us initiate this. I also wanna thank the entire group for joining and receiving the information that has been put together as far as SNW's results last year and how we see moving forward. I look forward to our ongoing discussions and appreciate you all joining the call. Thank you.

Well. Thank you very much M J as the operator of the colon and helping US initiative. This I also want to thank the entire group for joining and.

Mark Herrmann: So I think the key thing you call out there is we need to maintain our margin on that non-DT market in our presence, but recognize it needs to be with tighter excess inventories of planning on a shrinking market.

Receiving the information that has been put together as far as <unk> results last year and how.

Mark Herrmann: Got it. We got it very helpful. Last one for me and then I'll get back into you. You talked about exiting some kind of lower margin, forward props and, you know, seed treating applications. I'm wondering if you can talk about the level of revenue contribution from these exited business, exited businesses in 23 and, you know, What if any revenue contribution from these businesses that you're leaving is included in your 24-gowns? Yeah, that's a great question as well.

How we see moving moving forward.

Look forward to our ongoing discussions and.

Appreciate you all joining the call. Thank you.

Speaker 4: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your line.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Speaker 7: The.

[music].

Okay.

Mark Herrmann: And I would say as general practice, a healthy company will look at everything that's lower than our overall average margin and really question, look are there things that either one we can address within our own system that's driving costs that can improve its margin position or to is it deluding the overall business and deluding focus to product lines that maybe resources could be moved from those applied to other areas where clearly the growth in the product line would deliver more results to the company and the shareholders. So I would say this is a standard practice that I've really been involved with most of my career so I don't think the focus itself is highly unusual but we will be evaluating all these product lines and you're asking the right question which I don't have direct answers for you as we evaluate these and we're fairly early in stage with really drilling down on some and asking the questions. Do we change our focus and redirect resources? But it is a process we're going to go heavily through as we move forward in the business.

[music].

Speaker 7: The C pro. So lo we pro.

Benjamin Klieve: Okay, very good direction. Very helpful. Very good. We'll talk a lot with all these initiatives and I think we're taking my questions and I'll get back in line.

Operator: Okay, thank you, Ben. As a reminder to ask a question, you may press star then one.

Nelson Obis: The next question comes from Nelson Obis with Winfield Capital. Please go ahead. Yeah, hi there.

Mark Herrmann: General, this call has been more informative and granular than past calls so I find that very helpful. Just a quick question about R&D for fiscal 24. Do you expect it to hold even to where it was in fiscal 23? Thanks, Nelson. We are looking at relatively flat spending in research. Now, some of what we talked about in the call is the exiting of some of either the product line or focus areas that we don't see a clear future of driving revenues and margins.

Mark Herrmann: We're exiting and I'll use the example of stevia, right? So we've we've halted research activities with that product and that's enabled moving those to our Sorghum pipeline where with our Sorghum pipeline, we've got much more demands as far as the amount of testing requirements due to the depth of the product line as well as efforts with during plasm transformation processes to intergress trade. So there's been a reduction in some areas, Nelson.

Mark Herrmann: And then moving those to what we see is really our high margin drivers both for the short and for the long term. But for this year, our discussion is to keep spend very tight, be highly efficient. And as we're generating cash to Vanessa's point, we'll keep re-evaluating those on the and how we invest resources going forward. So, when you look at the EBITDA projections you've given us, does that imply discontinued operation in severe, or there might be some write down set, in other words, getting out of categories which could trigger a write down, is that anticipated in the EBITDA projections or is that a separate issue to be dealt with when they come up?

Mark Herrmann: Yeah, I'll let Vanessa refer to it. Yeah, there are no anticipated write downs, Nelson, from any of the product lines that we're pausing at the moment. The bearing on the income statement is pretty much all driven in OPEX, right? And so, as Mark mentioned, just to put some dollars around it, pausing the Stevia R&D program is about $300,000 per fiscal year, that we're refocusing our efforts in that R&D space, again, towards our high valued options for farmers going into the near future and longer term.

Mark Herrmann: So, that's about 300,000, but in our OPEX projections, there are no known write downs of any of the product lines that we're pausing at this moment. Okay, got it. And with that, Nelson, we're also moving the material itself, right? Because we do have a platform of germplism that has been developed. We're moving it into cold storage as we look at the next step of where we go with the Stevia Dermplism and Program.

Mark Herrmann: Fine. You know, you're doing a lot of your revenue in the international realm and you touch on logistical delays in international shipping. It's been my observation that that caused an enormous number of problems over the years. And I'm just wondering whether I'm right and whether you're attacking this cost area. Obviously, we went through a period of constrained capacity where you really had to be on the ball to avoid accelerated costs. I think that's trended down now, looking at dry cargo costs.

Mark Herrmann: But can you address that issue because it really has not been an area that we've excelled in the past? Yeah, and international movement of seed is complex in itself. And then I know of recent years with adding some of the geopolitical pressures on top of it. It's been exasperated even further. So one of the steps that the Australian team, which leads this started on, is breaking down every single step between an order and being received by the ordering entity.

Mark Herrmann: Every single step and looking at the timeline for each of the pieces between paperwork, testing, quality, shipping, and all the individual pieces. And looking at trying to build answers to remove complexity in different steps or make sure that there's concurrent activities wherever there can be. So it doesn't become the lengthy process that we've had in to date, I shouldn't say in the past, but really to date. So there's an effort going on with that right now, Nelson, to look at really streamlining process, streamlining steps to improve how we have fulfilled.

Mark Herrmann: I'm sorry, go ahead. Some of the geopolitical issues will continue to be a bit of a minefield that we'll try to address as they arise, but anything we can control, we want to make sure we have the most efficient process as possible. I would imagine the comment you made about holding expenses at 32 million or whatever. I mean, you might be able to do better if you're able to rationalize certain aspects, which is logistics, correct?

Mark Herrmann: That would be accurate, and what Mark is describing is the order to cash process, right? And every step in between, as an example, from the moment, particularly in that Middle East North Africa area of the world, the lead time required between order and delivery is up to four months, right? And that's optimizing the delivery from whether it comes from the U.S, and or Australia directly. So as Mark mentioned, we've masked those processes and aligned when orders come in and the pace of orders to when demand is expected in that four month period and including any logistical obstacles in that evaluation and removing them to the best of our ability.

Mark Herrmann: Post-COVID, at least, you know, throughout 2022 and 2023, we were experiencing post-COVID obstacles with regard to getting product in that Middle East and North Africa area of the world. So you heard through our guidance that we've minimized the sales targets for that region to what we feel is achievable for 2024. As an example, we talked about obviously the logistic constraints, but the geopolitical environment in Sudan has not subsided to what we initially thought when we had this call one quarter ago.

Mark Herrmann: So we've adjusted our guidance to include zero sales in the Sudan region as an example. We continue to monitor it and to your point if there is an opportunity for upside and or getting product into the country for demand, then we will absolutely capitalize on it. But at this moment in time for 2024, we've peered back the expectation in Sudan to zero and peered back a bit from Saudi Arabia as well.

Mark Herrmann: So I think, you know, all in when you look at cost containment, outlining processes, and optimizing the supply chain effort into these areas of the country. It's a high focus for that Australia team as they not only monitor sales growth, but also the cost of doing business in those countries. Great. So this reduction in LCM is very welcome from 6.4 to 2.8. We've had some really nasty surprises towards the end of prior fiscal years with inventory right down.

Mark Herrmann: Do you think 2.8 is kind of the cost of doing business or do you think that could be reduced further? Yes, we're not the same business as we were before, you know, I mean, we've seen it. Yes, it's a great question. And Mark and I experience 8% of sales is sort of what is the industry norm when you think about row crop. I think we can be better than that. There's been a lot of work done in that life cycle management space, just even starting early fiscal year 2023 in the crop planning cycle.

Mark Herrmann: And that continues to be refined as we plan for our crop plan for 2024 sales. So I think we can be better than 8%. We are working towards a better metric as we lead into crop planning for 2025, but 2.9 seems well within the norm and manageable for the size of our sales and our crop plans for this year. I realize Sorghum customers can return. Let's hope they like what they get the first time.

Mark Herrmann: My last comment, which is probably the most important one. You know, shareholders have really not been served well by the share dilution this second place over the last five years. The shares doubled. You know, without that doubling of the shares, we probably wouldn't be here now. We'd be in somebody else's hands, but listening to what you had to say when I found very encouraging that the $6 million that will slow some shell into the company should be enough to keep us cash flow break even in fiscal 24.

Mark Herrmann: And as we look to 25, we may even get to being cash flow positive. So I'm assuming that we may not see any more dilution in that that would be a important goal of the current management. Am I am is my thinking correct? Yeah, thanks for the question, Nelson. And I don't know if we'd be prepared to talk to it right now. And it's probably heavily future looking. But I do believe from what Vanessa and I have rolled out of looking at cash neutral this next year.

Mark Herrmann: I do believe in the continued growth of the DT and pressing acid free platforms that are already launched as of this year as we look to the future. And I do think our leadership in technology and sorghum with the full pipeline along with the second generation of post-planning grass control. I do believe there's a very positive future for continued growth. And in the results of those will likely lead into to your point heavy decisions on the go forward as well. Well, you're right not to be pinned down, but I did, you know, I've talked to a number of shareholders and that really has been a good call. Absolutely. Thank you.

Operator: Being no further questions in the queue, I would now like to hand the call back to management for closing remarks. Well, thank you very much, MJ, as the operator of the call in helping us initiate this. I also want to thank the entire group for joining and receiving the information that has been put together as far as S&W's results last year and how we see moving, moving forward. I look forward to our ongoing discussions and appreciate you all joining the call. Thank you. The conference has now concluded.

Operator: Thank you for attending today's presentation.

Operator: You may now disconnect your lines.