Q3 2024 S&W Seed Co Earnings Call

Operator: Good day, and welcome to the S&W Seed Company 3rd Quarter Fiscal Year 2024 Financial Results Conference Call. All participants will be in a 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. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Robert Blum with System Partners. Please go ahead.

Good day and welcome to B S. N W. Keep company third quarter fiscal year, 'twenty 'twenty four financial results conference call.

Speaker Change: All participants will be in a listen only mode.

Conference Specialist: Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After todays presentation, there will be an opportunity to ask questions.

Conference Specialist: To ask a question you May press Star then one on a touchtone phone.

Conference Specialist: To withdraw your question. Please press Star then two.

Conference Specialist: Please note this event is being recorded.

Conference Specialist: I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.

Robert Blum: All right. Thank you very much. And thank you all for joining us today to discuss S&W Seed Company's third quarter fiscal year 2024 financial results. So the quarter ended March 31, 2024. With us on the call representing the company today are Mark Herrmann, Chief Executive Officer, and Vanessa Baughman, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question and answer session. If you dialed into the call through the traditional teleconference line, as the operator indicated, please press star, then 1 to ask a question.

Conference Specialist: Alright, Thank you very much and thank you all for joining us today to discuss the company's third quarter fiscal year 2020 for financial results for the quarter ended March 31, 2024, what was on the call representing the company today are Mark Harmon, Chief Executive Officer, but that's the Bowman.

Speaker Change: Company's Chief Financial Officer.

Mark Herrmann: At the conclusion of today's prepared remarks, we will open the call for a question and answer session. If you're dialed into the call through the traditional teleconference line as the operator indicated. Please press Star then one to ask a question. If you are listening through the webcast portal and would like to ask a question you can submit your questions through the ask the question feature in the web.

Robert Blum: If you are listening through the webcast portal and would like to ask a question, you can submit your question through the ask a question feature in the webcast player, and we'll do our best to get to as many questions as possible.

Conference Specialist: <unk> player and we'll do our best to get to as many questions as possible.

Robert Blum: Before we begin with the 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 harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results, or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipate, draft, eventually, or project.

Management team: Before we begin with our prepared remarks. Please note that statements made by the management team about W. Seed company. During the course of this conference call may contain forward looking statements within the meaning of section 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act 1934 as amended.

Robert Blum: 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 in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the company's 10-K for the fiscal year ended June 30, 2023, and other filings subsequently made by the company In addition, to supplement S&W's financial results report in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, S&W will discuss adjusted EBITDA on this call.

Management team: And such forward looking statements are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Management team: Forward looking statements describe future expectations plans results or strategies and are generally preceded by words, such as may future plan or planned will or should expected anticipates draft eventually or projected listeners are cautioned that such statements are subject to a multitude of risks and uncertainty.

Speaker Change: Geez that could cause future circumstances events or results to differ materially from those projected in the forward looking statements, including the risks that actual results may differ materially from those projected in the forward looking statements as a result of various factors and other risks identified in the company's 10-K for the fiscal year ended June 30th 2023.

Management team: Three and other filings subsequently made by the company with the Securities Exchange Commission.

Management team: In addition to supplement that W. Financial results reported in accordance with U S generally accepted accounting principles or GAAP.

Robert Blum: This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for the comparable GAAP measure and is not prepared under any comprehensive set of accounting principles or rules. A description of adjusted EBITDA and reconciliations 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. 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, I will turn the call over to Mark Herrmann, Chief Executive Officer of S&W Seed Company. Mark, please proceed.

Speaker Change: S and W will discuss adjusted EBITDA on this call.

Speaker Change: non-GAAP financial measure is not meant to be considered in isolation or as a substitute for the comparable GAAP measure and is not prepared under any comprehensive set of accounting principles or worlds a description of adjusted EBITDA and reconciliations of historical adjusted EBITDA net loss are included at the end about w's, earning.

Absent: Release issued earlier today, which has been posted on the Investor relations page of absent that means websites.

Absent: Oh recording and webcast replay for today's conference call will also be available online on the company's Investor Relations page.

Absent: With that said, let me turn the call over to Mark Hermann Chief Executive Officer for W. Seed Company Mark. Please proceed.

Mark Herrmann: Thank you, Robert. And good morning to all of you. I'm excited to be speaking to you today. To set the agenda for this call this morning, let me first provide a high-level overview of the progress we have made during the past quarter, including the commercialization of Double Team, which has gone exceedingly well to date, with the technology expected to be on more than 10% of all grain sorghum acres in the United States this year.

Mark Herrmann: Thank you Robert and good morning to all of you I'm excited to be speaking to you today.

Mark Herrmann: I will also talk about our technology pipeline, with the new traits that are being launched over the next year to drive incremental growth. I will expand on the disruptions we've talked about in the Middle East, which are impacting our operations there, and how we have largely mitigated the impact of these disruptions as it relates to our adjusted EVADOT guidance for the year. Finally, I will provide an update on our Vision Biofuels Oilseeds BBO joint venture and some of the activities taking place there. Vanessa will then run through the financial results in detail, including our guidance for the rest of the year. We will then close the session with any questions that you might have. So let's start with Doubleteam.

Mark Herrmann: To set the agenda for this call this morning.

Mark Herrmann: <unk> provide a high level overview of the progress we have made during the past quarter, including the commercialization of double team, which has gone exceedingly well to date with the technology I expect it to be on more than 10% of all grain sorghum acres in the United States. This year I will also talk about our technology pipeline.

Speaker Change: With the new traits that are being launched over the next year to drive incremental growth.

Speaker Change: I will expand on the disruptions we've talked about in the middle East, which are impacting our operations there and how we have largely mitigated the impact of these disruptions as it relates to our adjusted EBITDA guidance for the year.

Vanessa: Finally, I will provide an update on our vision Biofuels oilseeds B B O joint venture and some of the activities taking place there Vanessa will then run through the financial results in detail, including our guidance for the rest of the year. We will then close the session with any questions that you might.

Mark Herrmann: So let's start with double team.

Mark Herrmann: You know, as mentioned moments ago, the commercial launch of Doubleteam has gone exceedingly well, with expectations for the proprietary high-value sorghum trade technology to be planted on more than 10% of all acres in the United States in 2024. This is approximately double of what was planted just last year. As mentioned in the press release, we are maintaining our guidance for double-digit growth for fiscal 2024, with revenue expected to be at $11.5 to $14 million, representing an increase of 77% to 115% compared to fiscal 2023 for the product line. We expect incremental stair-step adoption over the coming years with a goal of 25% market share by 2027. We will look to provide more formal go-forward guidance on our year-end call.

Vanessa Baughman: As mentioned moments ago, the commercial launch of double team has gone exceedingly well with expectations for the proprietary high value sorghum trade technology to be planted by more than 10% of all acres in United States. In 2024. This is approximately double of what was planned it just last year.

Mark Herrmann: As mentioned in the press release, we are maintaining our guidance for double team growth for fiscal 2024 with revenue expected to be at 11, 5% to $14 million.

Mark Herrmann: Presenting an increase of 77% to 115% compared to fiscal 2023 for the product line.

Mark Herrmann: We expect.

Mark Herrmann: Incremental stairstep adoption over the coming years with a goal of 25% market share by 2027, we will look to provide more formal go forward guidance on our year end call Oliver It's fair to assume that this growth, which double team is one of the fastest growing trade technologies.

Mark Herrmann: However, it's fair to assume that this growth puts Doubleteen as one of the fastest-growing trade technologies on the market today. The reason for this rapid growth today and why we are so confident in the future market share gains is that until S&W's development and sorghum technology, sorghum has been without significant research investments to successfully support step-change developments to improve the crop's productivity. As farmers are increasingly recognizing the value of new management tools, corresponding risk reduction, and yield enhancement through controlling grasses and more robust crop grazing safety technologies, these superior traits are expected to drive greater numbers of sorghum acres planted in the future.

Mark Herrmann: On the market today.

Mark Herrmann: The reason for this rapid growth to date.

Mark Herrmann: Why we are so confident in the future market share gains is that until Ssw's development in sorghum technology sorghum has been without significant research investments to successfully support step change.

Ssw: <unk> to improve the crops productivity.

Mark Herrmann: As farmers are increasingly recognizing the value of new management tools corresponding risk reduction and yield enhancement through controlling grasses and more robust crop grades and safety technologies E. Superior trades are expected to drive greater numbers of sorghum acres planted in the future.

Mark Herrmann: As I touched in detail during our last call, in numerous field trials, Double Team has proved to deliver increased yields with reduced risk of crop failure to growers, providing them with high levels of satisfaction. Sorghum is a great crop to meet current worldwide trends in that it is uniquely equipped to handle higher temperatures and drier climates better than many other crops, contributing to sustainability and food security. To date, Doubleteen has only been available on grain sorghum crops.

I: As I touched in detail during our last call in numerous field trials double team has proved to deliver increase yields with reduced risk of crop failure to grow with providing them with high levels of satisfaction.

I: Sorghum is a great crowd to meet current worldwide trends and that it is uniquely equipped to handle higher temperatures drier climates better than many other crops contributing to sustainability and food security.

Speaker Change: Date double team has only been available on grain sorghum crops as you hopefully saw from our press release last week, we have now launched double team into the forage sorghum market as well we are expecting about $500000 in D. T forage sorghum sales in its introductory year.

Mark Herrmann: As you hopefully saw from our press release last week, we have now launched Doubleteen into the forage sorghum market as well. We are expecting about $500,000 in DT forage sorghum sales in its introductory year this year, with expectations for similar step-change growth in the coming years, much as we have seen and experienced in the grain sorghum market with DT. Beyond Double Team, which gives grain sorghum growers an over-the-top non-GMO grassy weed control option, we are expanding our focus on sorghum through the pilot launch of our Prussic Acid-Free trait this year. Prussic Acid-Free sorghum is designed to remove naturally toxic Metabolite stressed sorghum for safe worry-free grazing and hay.

Mark Herrmann: This year with expectations for similar step change growth in the coming years.

Mark Herrmann: As we have seen and experienced in the grain sorghum market with D T.

unknown: Beyond double team, which gives grain sorghum growers and over the top non GMO grassy weed control option, we are expanding our focus on assortment through the pilot launch of our pressing acid free trade this year.

unknown: Like asset free sorghum is designed to remove naturally toxic met up.

Speaker Change: [laughter] metabolite stress sorghum for safe worry free grazing and Hey, we expect a commercial launch in 2025.

Mark Herrmann: We expect a commercial launch in 2025. We will then look to stack double-team and prussic acid-free traits, which are expected to be commercially available in 2028. I am sure it goes without saying, but beyond the strong return on investment these traits provide growers, they also provide a significant return for S&W and its shareholders as well. Double-team gross margins are currently around 60%, which we expect will increase in the future due to efficiencies and the ability to

Speaker Change: We will then looked at stack double team impressive acid free trades, which is expected to be commercially available in 2028.

Speaker Change: I am sure it goes without saying.

WNS shareholders: I'm a strong return on investment these trades provide growers. They also provide a significant return for us in WNS shareholders as well.

WNS CEO: Double team gross margins are currently around 60%, which we expect will increase in the future due to efficiencies and the ability to stack.

Mark Herrmann: We are beginning to recognize the benefits this year with year-to-date margins of 29.2% compared to 23.2% in the previous year. As total revenue in the future continues to shift more towards our robust Sorghum Technology portfolio, including product line extensions and new technology offers over our next year, we expect to see continued margin expansion and profitability. High-value technology solutions will be a key driver of S&W's long-term success, and it is clear that we are becoming the key technology provider at Sorghum. As I mentioned a moment ago, Double Team continues to be on track for the expectations that we provided at the beginning of the year.

WNS CEO: We are beginning to recognize the benefits this year with year to date margins of 29, 2% compared to 23, 2% in the previous year.

WNS CEO: Total revenue in the future continues to shift more towards a robust sorghum technology portfolio, including product line extensions and new technology offers.

Speaker Change: Our over our next year, we expect to see continued margin expansion and profitability.

SW: High value technology solutions will be the key driver to SW long term success and it is clear that we are becoming the key technology provider in sorghum.

Speaker Change: As I mentioned, a moment ago double team continues to be on track for it.

Speaker Change: Expectations to provide that we provided at the beginning of the year. The same can be said for our broader Americas business as well, which of course includes double team, but also our conventional sorghum products as well as alfalfa.

Mark Herrmann: The same can be said for our broader American business as well, which of course includes Double Team and also our conventional sorghum product, as well as alfalfa. As a whole, for fiscal 2024, we are reaffirming our combined revenue expectations for North America to be in the range of $32 to $33 million. Beyond the fact that we are hitting revenue expectations in America, we have enacted a number of initiatives to improve efficiencies, including improved life cycle management, increasing inventory utilization, reducing product SKUs, and obsolescence costs.

Speaker Change: As a whole for fiscal 'twenty 'twenty four we are reaffirming our Americas combined revenue expectations to be in range of $32 million to $33 million.

Speaker Change: Beyond the fact that we are hitting the revenue expectations in the Americas, we have enacted a number of initiatives to improve efficiencies, including.

Speaker Change: True lifecycle management, increasing inventory utilization, reducing product skus and obsolescence costs.

Mark Herrmann: We are also implementing the rationalization of certain low-margin forage product lines and seed treatments, suspension of our stevia development program costs, and an overall seed manufacturing cost reduction. I am pleased with the progress the team is making in the Americas and look forward to the continued positive momentum in the years to come.

Speaker Change: We're also implementing the rationalization of certain low margin product lines and seed treatments.

Speaker Change: Suspension of our Stevia development program costs, and an overall seed manufacturing cost reduction plan.

Speaker Change: I am pleased with the progress the team is making in the Americas and look forward to the continued positive momentum in the years to come.

Mark Herrmann: Let's now transition to our international operation. As we talked about last quarter on the conference call, there are a number of headwinds in the markets that we operate in, particularly in the Middle East, Northern Africa, MENA region, that are impacting us directly. And unfortunately, they've gotten worse since our call in February.

Speaker Change: Let's now transition to our international operations.

Speaker Change: As we talked about last quarter on the conference call. There are a number of headwinds in the markets that we operate with them, particularly in the Middle East Northern Africa Mena region.

Speaker Change: That are impacting us directly and unfortunately, they've gotten worse since our call in February the key disruptions that are centered around expanding conflicts in the Mena region in particular the war in Ukraine, The Sudan Civil War.

Mark Herrmann: The key disruptions that have centered around expanding conflicts in the MENA region, in particular the war in Ukraine and the Sudan Civil War, two key results have occurred. The first has been the transition of many alfalfa growers in the MENA region to plant wheat this upcoming season, which has caused disruptions to normal farming operations and seed distribution channels. The second is that the Department of Ministry in the Saudi Arabian market has recently discontinued their approval of import permits for all forages, which includes alfalfa and all grasses, as a means of water conservation.

Speaker Change: Key results have occurred the first has been the transition of many alfalfa growers in the Mena region to plant wheat, that's upcoming season, which has caused disruption to normal farming operations and seed distribution channels. The second is that the department of Ministry and the Saudi Arabia market has recently discontinued their approval.

Speaker Change: Import permits for all four of Jews, which includes alfalfa and all grasses as a means of water conservation.

Mark Herrmann: Combined, we expect to see an impact of approximately $6 to $7 million in revenue from our previous stated guidance. This decrease is within our mid-margin alfalfa products and will affect both volume and pricing expectations on a go-forward basis globally for the remainder of fiscal 2024. Also, as we have signaled in our previous earnings call, we have seen a shortage of supply within our Australia pasture products, which has limited our ability to meet demand in Australia.

Speaker Change: Combined we expect to see an impact of approximately $6 million to $7 million in revenue from our previous stated guidance. This decrease is within our mid margin alfalfa products and will affect both volume and pricing expectations on a.

Speaker Change: On a go forward basis globally for the remainder of fiscal 2024.

Speaker Change: Also as we have signaled in our our previous earnings call. We have seen a shortage in supply within our Australia pasture products, which has limited our ability to meet demand in Australia.

Mark Herrmann: This will result in a three to four million revenue reduction in the third and fourth quarters of fiscal 2024 for our low margin pasture product. So all told, we see a 9 to 11 million revenue impact on our international operation. That said, and as Vanessa will discuss in detail, the supply-to-revenue impact, we are only making slight adjustments to our overall adjusted EBIDTA guidance. In fact, the midpoint of our new adjusted EBITDA guidance is still within the range of guidance we provided at the beginning of the fiscal year.

Speaker Change: This will result in a three to 4 million revenue reduction in the third and fourth quarters of fiscal 2024 within our low margin pasture products.

Speaker Change: So all told we see a nine to 11 million revenue impact to our.

Speaker Change: International operations.

Vanessa: That said and as Vanessa will discuss in detail dissipate the revenue.

Vanessa: Impact.

Vanessa: We are only making slight adjustments to our overall adjusted EBITDA guidance in fact, the midpoint of our new adjusted EBITDA guidance is still within range of guidance, we provided at the beginning of the fiscal year.

Mark Herrmann: As we have mentioned in previous calls, we have identified and pursued several actions in Australia to improve the market, terminating business projects that have development costs or OPEX costs with a low prospect of contributing solid margins at EBITDA in the near future, as well as numerous efficiency measures with facility streamlining, such as the closure of the Wingfield facility, consolidating activities into alternative S&W facilities. So while we're frustrated with the disruptions, I am pleased we have operated at a high level across the rest of the organization, having implemented a number of initiatives that have helped to largely mitigate the shortfall.

Vanessa: As we have introduced in previous calls we have identified and pursued several actions in Australia to prove it to improve margins terminating business projects that have development cost or opex cost with low prospect to contribute solid margins and EBITDA in the near future as well as numerous efficiency measures.

Speaker Change: With facility streamlining such as the closure of the wound field facility consolidating activities into alternative F. N W facilities.

Speaker Change: So while we're frustrated with the disruptions I am pleased we have operated at a high level across the rest of the organization having implemented a number of initiatives that have helped to largely mitigate the shortfall.

Mark Herrmann: Transitioning to a couple of quick updates since our last call regarding our Vision Bioenergy Oil Seeds business, VBO, and the partnership with Shell for biofuel. BBO recently signed an exclusive license for a glufosinate-resistant amelina trait, which its research team is moving all efforts to integrate into high-value germplasm and hybrids for commercial use. Glufosinate is a broad-spectrum herbicide that, when utilized with resistant crops, provides an effective weed control system.

Speaker Change: Now transitioning to a couple of quick updates since our last call regards to our vision bio energy Oilseeds business P. B O the partnership with shell for Biofuels.

Speaker Change: <unk> recently signed an exclusive license for Boston eight resistant Camelina trade, which its research team is moving all efforts to integrate into high value germplasm and hybrids for commercial use.

Speaker Change: <unk> is a broad spectrum herbicide that when utilized with resistant crops provides an effective over the top weed control system.

Vanessa Baughman: All VBO development efforts will now pivot to fast-tracking this high-value trade into leading products to offer growers. Concurrently, BBO will be putting out pre-commercial demonstration blocks to highlight the technology value with growers in 2024 and 2025, moved to commercial launch for limited trials in the fall of 2025 and then wide-scale plantings in 2026. With this significant technological advancement, BBO has decided not to expand commercial or conventional camelina to focus on launching this breakthrough luposinate-resistant camelina technology trend.

Speaker Change: All BDO development efforts will now pivot to fast tracking this high value training into leading products to offer growers.

Speaker Change: Currently D B O, we'll be putting out pre commercial demonstration blocks to highlight the technology value with growers in 2024 and 25 move.

Speaker Change: Move to commercial launch for limited trials fall of 2025, and then Widescale Plannings in 2026 with this significant technology advancement E. B O S decided not to expand commercial or conventional camelina to focus on launching this breakthrough phosphonate with.

Speaker Change: Listing Camelina technology train.

Vanessa Baughman: In addition, BBO has a technology pipeline in development to continue to advance high-value products which will contribute to biofuels for the future. Beyond the development progress made within VBO, we successfully achieved all stated objectives required of S&W for our part of the partnership and received a $6 million payment from Shell in February 2024, helping to bolster our balance sheet. Speaking of partnerships and balance sheets, as I introduced earlier, streamlining efforts in Australia, we have made the decision to sell off the remaining portion of our Australian partnership with Trigol Genetics, a wheat development partnership.

Speaker Change: Further b B O has a technology pipeline and development to continue to advance high value products, which will contribute to biofuels for the future.

Speaker Change: Beyond the development progress made within D. B O. We successfully achieved all stated objectives required a person W. For our part of the partnership and received a 6 million dollar payment from shell in February 2020 for helping to bolster our balance sheet.

Speaker Change: Speaking of partnerships and balance sheets as I introduced earlier streamlining efforts in Australia. We have made the decision to sell off the remaining portion of our Australia partnership with triangle genetics, a wheat development partnership.

Vanessa Baughman: Since the beginning of January, we have received a total of $1.4 million in consideration, as well as a significant reduction in research and op-ed expenses that will start being recognized immediately. With that, let me turn the call over to Vanessa to review the primary, and I will then look to quickly update things and take your questions.

Speaker Change: Since the beginning of January we have received a total of $1 4 million in consideration as well as a significant reduction in research and Opex expense that will start being recognized immediately.

Vanessa: With that let me turn the call to Vanessa to review the financials.

Vanessa: I will then look to quickly update things.

Vanessa: And take your questions Vanessa.

Vanessa Baughman: Thanks, Mark. Good morning to everyone on the call today. Let me run through the details of the quarter, starting with revenue. Total revenue for Q3 2024 was $18.3 million compared to $17.7 million in Q3 of last year. Breaking it down further.

Vanessa: Thanks Mark.

Vanessa: To everyone on the call.

Vanessa Baughman: Sorghum sales were $8.3 million versus $7.7 million last year, an improvement of $600,000. Of this, Double Team was $3.4 million versus $3.8 million in Q3 of a year ago, a decrease of 10% or $400,000. International forage sales were $6.9 million compared to $7.7 million in Q3 of last year, a decrease of $800,000. And in the Americas, forage sales were $2.8 million compared to $2 million in Q3 of last year, an increase of $800,000. Looking at it geographically,

Vanessa: Let me run through the details of the quarter starting with revenue.

Mark: Total revenue for Q3 2024.

Mark: $18 3 million compared to 17.7 million.

Mark: Q3 of last year.

Mark: Breaking it down further.

Oregon: Oregon's sales were $8 3 million versus 7.7 million last year, an improvement of 600000.

Beth: I'm Beth double team like $3 4 million versus $3 8 million in Q3, a year ago, a decrease of 10% or 400000.

Beth: International <unk> sales were $6 9 million compared to $7 7 million in Q3 of last year a decrease of 800000.

Beth: The Americas Borage sales were $2 8 million compared to 2 million in Q3 of last year, an increase of eight 800000.

Beth: Looking at it geographically, we saw 400000 increase in total U S. Oregon failed.

Vanessa Baughman: We saw a $400,000 increase in total U.S. sorghum sales in Q3 year-over-year, with double-team down approximately $400,000. This downside of $400,000 was offset by an increase in non-DT sorghum products of approximately $800,000. This is due to the timing of the mix of products shipped in Q3 with double-team products shipped in earlier quarters in fiscal 2024 versus fiscal year 2023. The Americas also had a one million increase in non-dormant alfalfa in Q3 year over year.

Beth: Q3 year over year with Gallo came down approximately 400000, yes.

Gallo: The downside of 400000 was offset by an increase in non D. T tourism products of approximately 800000.

Gallo: This is due to the timing of the mix of products shipped in Q3 with double team product shipped in earlier quarters in fiscal 2024 versus fiscal year 2023.

Speaker Change: The Americas also had a 1 million increase in non dormant alfalfa and Q3 year over year.

Vanessa Baughman: This was primarily due to the timing of shipments in the later quarters of fiscal 2024 versus fiscal year 2023. Also, we saw a 400,000 decrease in MENA for the reasons Mark discussed earlier. We had a $600,000 decrease in Australia forage cereals and pasture products due to the shortage in supply.

Speaker Change: This was primarily due to the timing of shipments in the later quarters, that's called 2024 versus fiscal year 2023.

Mark: Also we saw 400000 decrease in Mena for the reasons Mark discussed earlier.

Mark: We had a 600000 decrease in Australia for its theory Olson pasture products due to the shortage in supply.

Vanessa Baughman: And finally, we had a $200,000 increase in Asia. Again, the key point here is that margin growth is attributable to double-team sorghum revenue being up year-to-date, which is offset by the macro drivers impacting MENA and our Australia operation. Due to the dynamics in the MENA region that Mark discussed, potentially impacting international alfalfa operations.

Mark: Finally, we had a $200000 increase.

Mark: Sure.

Mark: Again, the key point here is that margin growth is attributable to double team, Oregon revenue being up year to date.

Mark: Which is offset by the macro drivers impacting Mena and our Australia operations.

Mark: Due to the dynamics in the Mena region that Mark discussed potentially impacting international Alfalfa operation. We currently expect fiscal year 2020 for revenue to be in the range of 67 to 70 million.

Vanessa Baughman: We currently expect fiscal year 2024 revenue to be in the range of $67 to $70 million. This is a change from our previous guidance, which was 76 to 82 million. As Mark discussed, we remain on track in our America's business, which includes our double-teamed sorority. The change in guidance is entirely on the international side of our operation, where we expect to see an impact of approximately $6 to $7 million in revenue from our previously stated guidance as a result of the geopolitical activities worsening in the MENA region and a $3 to $4 million impact within our Australia pasture project.

Mark: The change from our previous guidance, which was 76 to 82 million.

Mark: As Mark discussed we remain on track in our Americas business, which includes our double changed Oregon.

Mark: The change in guidance is entirely on the international side of our operation, where we expect to see an impact of approximately six to 7 million in revenue from our previously stated guidance as a result of the geopolitical activities worsening in the Mena region.

Mark: And that could read a 4 million dollar impact within our Australia pasture products.

Vanessa Baughman: Breaking the guidance down further, we expect sorghum-related revenue to continue to be between $22 and $23 million in total, compared to $18.5 million in fiscal 2023. Within sorghum, we anticipate Doubleteen to still be within $11.5 to $14 million, which is an increase of 77% to 115% compared to fiscal 2023.

Speaker Change: Breaking the guidance down further we expect sorghum related revenue to continue to be between 22, and 23 million in total compared to 18 and a half million dollars.

Speaker Change: It's called 2023.

Speaker Change: With him so Oregon, we anticipate double team this still be within 11, and a half to 14 million, which is an increase of 77% to 115% compared to fiscal 'twenty two 'twenty three.

Vanessa Baughman: On the U.S. forage operation side, we continue to see revenue of about $9 million compared to $10.8 million from last year, and adjusting for the aforementioned change within our international operations, we are expecting revenue to be between $35 and $37 million, compared to $43.6 million in fiscal 2023. Now turning the margin.

Speaker Change: On the U S storage operation side, we continue to see revenue of about $9 million compared to $10 8 million from last year.

Speaker Change: And adjusting for the aforementioned.

Speaker Change: Within our international operations, we are expecting revenue to be between 35 and $37 million compared to 43 6 million in fiscal 'twenty to 'twenty three.

Speaker Change: Now turning to margins.

Vanessa Baughman: Gap gross margins for the third quarter of fiscal 2024 were 27.4%, compared to 25.1% in the third quarter of fiscal 2023. The improvement in growth profit margin was primarily driven by an improvement related to Australian receivables for contracts denominated in U.S. dollars, coupled with cost savings in production that improved sorghum margins. This was offset by inventory write-offs of dormant alfalfa as well as a slight decrease in sorghum margins due to a double-team decrease in volume sold. And finally, a decrease in non-dormant alfalfa margins in Australia's domestic markets.

Speaker Change: GAAP gross margins for the third quarter of fiscal 'twenty, 'twenty, four or 27, 4%.

Speaker Change: Pair to 25, 1% in the third quarter of fiscal 2023.

Speaker Change: The improvement in gross profit margin was primarily driven by an improvement related to Australian receiver both for contracts denominated in U S dollars couple.

Speaker Change: Coupled with cost savings and production that improves the Oregon market.

Speaker Change: This was offset by inventory write off of dormant alfalfa.

Speaker Change: As well as a slight decrease in Oregon margins due to a double teens decrease in volumes sold.

Speaker Change: And finally, a decrease in non dormant alfalfa margins in Australia domestic market.

Vanessa Baughman: Year-to-date, gross margins are 29.2% compared to 23.2% in fiscal 2023. Looking to fiscal 2024 as a whole, we continue to expect gross margins to be between 24% and 26%. Recall, this compares to 19.8% in fiscal 2023.

Speaker Change: Year to date gross margins are 29, 2% compared to 23.22% from fiscal 2023.

Speaker Change: Looking to fiscal 2024 as a whole we continue to expect gross margins to be between 24 and 26%.

Speaker Change: Recall that compares to 19, 8% from fiscal 'twenty to 'twenty three.

Vanessa Baughman: Now we'll transition to operating expenses. Gap operating expenses for the third quarter were $7.7 million, which is consistent with the first and second quarters of this year and an improvement compared to $8.3 million in last year's third quarter. Breaking it down a bit, we saw a $300,000 improvement in research and development expenses and a $300,000 improvement in selling general and administrative expenses. Consistent with our expectations provided last quarter, we continue to believe total operating expenses for the fiscal year will be at $32.5 million, which is inclusive of depreciation and amortization. Now to EBITDA. Adjusted EBITDA for Q3 2024 was a negative $1.2 million, compared to adjusted EBITDA of negative $0.4 million in Q3 fiscal 2023. A full reconciliation is available in the press.

Speaker Change: Now I will transition to operating expenses.

Speaker Change: GAAP operating expenses for the third quarter were $7 7 million, which is consistent with the first and second quarters of this year, and then improvement compared to $8 3 million in last year's third quarter.

Speaker Change: Breaking it down a bit we saw a 300000 improvement from research and development expenses and a 300000 dollar improvement in selling general and administrative expenses.

Speaker Change: Consistent with our expectations provided last quarter, we continue to believe total operating expenses for the fiscal year to be.

Speaker Change: At $32.5 million, which is inclusive of depreciation and amortization.

Speaker Change: Now to EBITDA.

Speaker Change: Adjusted EBITDA for Q3, 2024, with a negative $1 2 million compared to adjusted EBITDA of negative 0.4 million in Q3 fiscal 2023.

Speaker Change: A full reconciliation is available in the press release.

Vanessa Baughman: Again, as Mark mentioned, despite the change to our revenue guidance for this year, we are making modest changes to our adjusted EBITDA guidance, as much of the revenue impact was within our lower to mid-margin product. With the improvements in operations in both the U.S. and Australia and OPEX costs, this has allowed us to mitigate much of the impact towards our expectations. So to reiterate, our adjusted EBITDA values. We are now expecting fiscal 2024 to be in the range of negative $6 million to negative $8.5 million, this compared to our earlier range of negative 4 million to negative 7 and a half.

Mark: Again as Mark mentioned, despite the change to our revenue guidance for this year, we are making modest changes to our adjusted EBITDA guidance.

Mark: As much of the revenue impact was within our lower to mid margin product.

Mark: With the improvements in operations in both the U S and Australia and Opex cost. This has allowed us to mitigate much of the impact towards.

Mark: That patient.

Mark: So to reiterate our adjusted EBITDA guidance.

Speaker Change: We are now expecting fiscal 2024 to be in the range of negative <unk> 6 million and negative 8 million.

Speaker Change: This compared to our earlier range of negative 4 million to negative seven and a half a million.

Vanessa Baughman: All told, even at the low end of our current range, this would still be an improvement compared to last year's adjusted EBITDA of negative $9.3 million as we continue to drive organizational efficiency. Finally, on the net income line, our GAP net loss for Q3 fiscal 2024 was negative $5.5 million, or negative $0.13 per basic and diluted share compared to GAP net income of $32.1 million, or $0.74 per basic and diluted share, in Q3 of last fiscal year.

Speaker Change: All told even at the low end of our current range. This would still be an improvement compared to last year's adjusted EBITDA of negative $9 3 million as we continue to drive.

Speaker Change: Organizational efficiency.

Speaker Change: Finally on the net income line.

Speaker Change: Our GAAP net loss for Q3 fiscal 'twenty 'twenty, four with negative five and a half million.

Speaker Change: Or negative 13 cents per basic and diluted share compared to GAAP net income of $32 1 million or 74 cents per basic and diluted share in Q3 of last fiscal year. Please.

Vanessa Baughman: Please recall that we generated $38.3 million in income from last year's third quarter due to the sale of our business interest as part of the VBO transact. And, as discussed in previous calls, we will incur losses on the equity method due to our interest in BBO. In Q3, that amounted to $1.8 million year-to-date. This is a non-cash expense for S&W. We have provided a reconciliation in our press release, not only for adjusted EBITDA but also for non-GAAP-adjusted net loss because, as discussed last quarter, and mentioned in the press release, we received a $6 million payment from Shell in February of 2024.

Speaker Change: Please recall that we generated $38 3 million in income from last year's third quarter due to the sale of our business interests as part of the BPL transaction.

Speaker Change: And as discussed in previous calls, we will incur a loss equity method due to our interest in B B L.

Speaker Change: Q3 that amounted to 1.8 million year to date.

Speaker Change: This is a noncash expense for S and W. We have provided a reconciliation in our press release not only for adjusted EBITDA, but also for non-GAAP adjusted net loss.

Speaker Change: As we've discussed last quarter.

Speaker Change: I've mentioned in the press release, we received a 6 million payment from shell in February of 'twenty 'twenty. Four we also received a combined payment from our triangle JV of one.

Vanessa Baughman: We also received a combined payment from our Trigel JV of $1.4 million. Despite our negative adjusted EBITDA expectation, which translates rather closely to our cash utilization, the payment from Shell and Trigel is expected to cover any operating cash needs for 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 cost containment initiatives across the remaining parts of the organization, it is our thought that we will be near a positive cash flow position in the near future. Again, I'm happy to follow up with any of the details we went through if you should have additional questions. With that, let me turn the call back over to Mark.

Speaker Change: And Fortunately it.

Speaker Change: Despite our negative adjusted EBITDA expectation, which translates rather close weight to our cash utilization.

Speaker Change: Payment from shell and triangle are expected to cover any operating cash needs for this year.

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

Speaker Change: In the near future.

Speaker Change: Again, I'm happy to follow up with any of the details. We went through if you should have additional questions.

Mark: With that let me turn the call back over to Mark.

Mark: Okay.

Mark: Thank you Vanessa.

Mark Herrmann: A couple of quick recaps before we turn it over to your questions. First, our high-value, high-margin, double-team sorghum trade technology solution remains on track to achieve the rapid growth and adoption we expected at the beginning of the year. Since its introduction just about three years ago, it is expected to be on 10% of grain sorghum acres this year. Second, with the launch of our double-team forage solution this year, coupled with the introduction of our second key sorghum trait next year, prussic acid-free, we are becoming the leader in sorghum technology.

Mark: A quick recap before we turn it over to your questions.

Mark: First our high value high margin double team.

Vanessa: Sorghum trade technology solution remains on track to achieve the rapid growth and adoption we expected at the beginning of the year since its introduction just about three years ago. It is a hit it is expected to be on 10% of grain sorghum acres. This year.

Speaker Change: Second with the launch of our double team Forge solution. This year, coupled with the introduction of our second key sorghum trade next year press. It gets it free we are becoming the leader on sorghum technologies.

Mark Herrmann: Gross margins have improved substantially during the fiscal year, and we have built on the progress made last year to reduce operating expenses. As DT continues to grow, we believe the margin profile of S&W will continue to improve. While Double Team and our broader American operations continue to meet and exceed many of the operational metrics we have set forth for them, we are experiencing the impact of the disruptions in the MENA region from various geopolitical issues.

Speaker Change: Gross margins have improved substantially during the fiscal year and we have built on the progress made last year to reduce operating expenses as D. T continues to grow we believe the margin profile of S and W continue to improve.

American's operations: Well double team and our broader American's operations continue to meet and exceed many of the operational metrics, we have set forth for them we.

American's operations: We are experienced the impact of the disruptions in the Mena region from the various geopolitical issues. Despite the impact to our revenue we have largely mitigated the impact to our adjusted EBITDA expectations for the year that said, we understand the need to get to profitability in the near term and will ensure the.

Mark Herrmann: Despite the impact to our revenue, we have largely mitigated the impact to our adjusted EBITDA expectations for the year. That said, we understand the need to get to profitability in the near term and will ensure the organization is appropriately positioned to achieve that goal. As always, I am appreciative of the continued interest in S&W, and with that said, I look forward to taking your questions. Operator.

Speaker Change: <unk> is appropriately positioned to achieve that goal.

Speaker Change: As always I appreciate I am appreciative of the continued interest in S. A W and with that said I look forward to taking your questions.

Speaker Change: Operator.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Ben Klieve with Lake Street Capital Markets.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

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

Speaker Change: Yeah.

Benjamin David Klieve: The first question today comes from Ben <unk> with Lake Street Capital markets. Please go ahead.

Benjamin David Klieve: Alright, Thanks for taking my questions first a couple on the double team.

Benjamin David Klieve: All right. Thanks for taking my questions. First, a couple on Double Team. You know, you talked a lot about kind of the immediate and kind of midterm initiatives throughout this platform between 25 percent market share in grain sorghum plus a couple of novel products coming in behind it in the forage market and product free. I'm wondering if you can talk about the degree to which you think you will need to invest in OPEX in support of growth coming out of this portfolio over the next few years.

Benjamin David Klieve: You've talked a lot about kind of the immediate.

Speaker Change: Midterm initiatives.

Benjamin David Klieve: Throughout this platform between 25% market share in grain sorghum, plus a couple of novel novel products coming in behind it in the Florida market and project free I'm wondering if you can talk about the degree to which you think you will need to invest in opex in support of growth.

Speaker Change: Coming out of this portfolio over the next few years.

Mark Herrmann: Hey, good morning, Ben. I appreciate you joining us this morning and your question. I think that's a great point to look at, and the ability for us to expand without a significant OPEX increase is really driven by our combined brand as well as the licensed approach. So right now, in the U.S., we've got 10% market share. We've also now signed on 15 independent seed companies that are also offering a private label offering of DT through their brands. And as you know, I ran the licensing business for Monsanto, the Cornstakes business. And it's a very efficient process, particularly when you have a breakthrough technology where really high benefits come from fast penetration, right?

Speaker Change: Hey, Good morning, Dan appreciate you joining this morning and into your question Oh, I think that's a great point to look at and the ability for us to expand without significant opex increase is really driven by our combined brand as well.

Speaker Change: As a licensed approach so right now in the U S. We've got 10% market share. We've also now signed on 15.

Dan: 15 independent seed companies that are also offering our private label offering of D T through their brands.

Speaker Change: And as you know I ran the licensing business for Monsanto, the corn states business and it's a very efficient process, particularly when you have a breakthrough technology.

Speaker Change: That really high benefits come from fast penetration right. So these 15 brands are really managed and serviced by our our current Oh commercial leadership with about three people with direct involvement and then just support in the field to the current sales.

Mark Herrmann: So these 15 brands are really managed and serviced by our current commercial leadership, with about three people with direct involvement and then just support in the field through the current sales organization that we have. But between Sorghum Partner's brand in the market, positioning aggressively, Sorghum Partner hybrids as well as DT, the other 15 brands in the marketplace can help us accelerate this very quickly. And I'd add, as well as we look at global markets, our main approach is working with market leaders, preferably global companies that already have a high presence, a high share, and a strong germplasm pool in those markets of Mexico, Brazil, Argentina, and Australia.

D. T.: Station that are that we have but between sorghum partners brand in the market positioning aggressively shogun partner hybrids as well as D. T. The other 15 brands in the marketplace can help us accelerate this very quickly and I did as well as we look at global Mark.

Sorghum Partners: That's our main approach is working with market leaders preferably global companies.

Mark Herrmann: That already have a high presence high share strong germplasm pool in those markets of Mexico, Brazil, Argentina, and Australia, and then through license agreements with those those companies. They carry our technology to the marketplace report sales and pay us a.

Mark Herrmann: And then through license agreements with those companies, they carry our technology to the marketplace, report sales, and pay us a royalty based on acre or hectare based on our evaluations of the trade brings. And really, the ones that we'll be working with in the near future are DT. Then DT2 comes, which will allow for earlier spraying of grass weeds in the sorghum's growth cycle. Then it is PAFs, and then we'll have DT and PAF stacked, which will bring additive value and won't force farmers to choose between two very valuable options of being able to apply herbicides to control grass as well as the option to use PAF where they can harvest and quickly put livestock into So we really believe that as a result of our advantage being focused on a technology platform, we'll be able to expand across all key sorghum markets with very limited OPEX and CAPEX as we go forward.

Speaker Change: Royalty based on the acre or Hector are based on our evaluations of that the trade brains and in really the ones that will be working with in the near future or D. T D.

Speaker Change: And then D. T. Two comes which is will allow for earlier spring of grass weeds in the sore gums growth cycle than it is a P. A S. A and then we'll have D. T N P. A stacked which will bring added value and won't force farmers to choose between two very valuable options.

Speaker Change: Oh being able to apply our herbicides to control grass as well as the.

Speaker Change: Option to use P a up to where they can harvest.

Speaker Change: And quickly put a lifestyle into the field with without the concern of breadstick acid and livestock safety. So we really believe part of our advantage being focused on our technology platform will be able to expand across all key surgical markets with very limited opex in cap.

Speaker Change: As we go forward.

Benjamin David Klieve: Great, great. It's great to hear the scalability you think is coming for this brand. Another double-team question for the very immediate term, but by my account, you guys are roughly $7 and a half million in double-team revenue year to date through the third quarter, you know, well on your way to your guide. I'm wondering if you can talk about kind of the big variables that would drive the low-end versus the high-end of your revenue guidance for this product in fiscal 2014.

Speaker Change: Right, Greg Oh, that's great to hear the scalability you think is coming.

Speaker Change: It's kind of on this brand.

Speaker Change: [noise] another double team question in the very immediate term, but by my Count you guys are roughly seven and a half million of double team revenue year to date through the third quarter, you know well on your way to your die and I'm wondering if you can talk about kind of the big variables that would drive the more one versus the high end of your <unk>.

Speaker Change: Revenue guidance for this product in fiscal 'twenty four.

Mark Herrmann: Yeah, I'd say the biggest risk we have, particularly since we're just in the U.S. market, will be as the year unfolds, commodity markets change, will the six and a half million acres of sorghum go up or down based on market conditions and cropping conditions? We believe that DT helps increase the interest in sorghum as it gives farmers tools to control grassy weeds, which rob yield, that they But I would say that's our biggest risk factor, and unfortunately, as we're just entering the planting season, and the planting season to be very active really right through our year end, the end of June and into early July, you know, it's a hard call with our year end being the end of June; we'll be right at the tail end of the season as we're trying to assess and accrue for things such as returns and actual planting.

I: Yeah, I'd say the biggest risk we have particularly since we're just in the U S market will be as the year unfolds commodity markets change will the six and a half million acres of sorghum go up or down based on market conditions and cropping conditions.

Speaker Change: Actions are we.

Speaker Change: We believe that our D. T helps increase the interest in sorghum as it gives farmers tools to control, a grassy weeds, which rob yield that they didn't have before but I would say that's our that's our biggest that's probably the biggest risk factor and unfortunately as were just entering the.

Speaker Change: Planting season.

Speaker Change: The planting season to be very active really right through our year end at the end of June and into early July.

Speaker Change: It's a hard call with or are your year end being the end of June will be right at the tail end of the season as we're trying to assess and accrue for things such as returns and actual planting piece, but that would be the number one risk to the to the business.

Benjamin David Klieve: Pivoting to the international dynamics, which, you know, all of these issues that you outlined are very much understandable, I'm wondering if you can help us kind of frame kind of full-year contributions, you know, maybe in fiscal 23 that came from these markets that you're seeing significant pressure on. I'm just trying to understand, kind of looking forward, kind of how big of a revenue bucket all of these, you know, all of these I appreciated your updates to the guidance, but I'm wondering, kind of on a full year basis going forward, the magnitude of all these issues.

Speaker Change: Got it got it very helpful.

Speaker Change:

Speaker Change: The pivoting to the.

Speaker Change: International dining.

Speaker Change: Dynamics, which you know all of these issues that you outlined are you know are very much understandable I'm wondering if you can help us kind of frame kind of the full year of contributions.

Speaker Change: Maybe in fiscal 'twenty three that came from these markets that you're seeing significant.

Speaker Change: Pressure I'm, just trying to understand kind of looking looking forward kind of how how big of a.

Speaker Change: Revenue bucket all of these are you know all of these these issues represent I appreciated your updates to the guidance, but I'm wondering kind of on a full year basis going forward kind of the magnitude of of all these issues.

Benjamin David Klieve: And are you asking about the magnitude for 2024, Ben, or looking forward to 25 and beyond? Yeah.

Speaker Change: And in or are you asking is the magnitude for 2020 for Ben or looking no word 25 and beyond yeah, I'm more looking 25 and beyond when you guys were very helpful guidance. This year, which are you know, which helps kind of frame the immediate term, but I'm wondering more on kind of a full year basis.

Benjamin David Klieve: Yeah, I'm more looking for 25 and beyond. I mean, you guys gave very helpful guidance this year, which, you know, which helps kind of frame, you know, the immediate terms. I'm wondering more on kind of a full year basis going forward, because your updated guidance now is only going to be for less than a fraction of a full year. So I'm just wondering if you can give me some kind of general framework for the magnitude at a full year level that all of these international challenges represent.

Speaker Change: Yes.

Speaker Change: Going forward.

Speaker Change: Your updated guidance is only going to be for you know lesson.

Speaker Change #105: For a fraction of a full year. So I'm just wondering kind of if you can give me some kind of general framework for the.

Speaker Change #100: The magnitude on a full year level that all of these international challenges represent.

Mark Herrmann: Seed

Speaker Change: In some way.

Mark Herrmann: Yeah, so I would say, and I hate to say it as a worst case scenario, but I would almost say this year is a picture of either a worst case or a steady state, right? So if we don't see the Middle East MENA market return, which has been really a very consistent marketplace for non-dormant alfalfa for probably the last five years, if we see it stay with the current conditions in really all three, Saudi Arabia, Sudan, as well as Egypt and the Middle East, I mean they're pretty key customers, but I would say that this year captures the majority of all ongoing risk, right

Speaker Change #113: Yeah, So I would say and I hate to say it is a worst case, but I I would almost say this year is a picture of either a worst case or a steady state right. So if we don't see the middle East Mena market return, which has been really a very consistent.

Speaker Change: Marketplace for non dormant alfalfa for probably the last five years.

Speaker Change: If we are if we see it stay with the current conditions in really all three Saudi Arabia.

Speaker Change: Sudan, as well as Egypt, and the Middle East I mean, they're they're pretty key customers, but I would say.

Vanessa: But this year captures the majority of all ongoing risk right and as we're building out our plans for next year, we're trying to be very very realistic last year. If you remember that the budgets were pretty well finished by Oh by the time I am Vanessa were involved but as we're working with the teams to assess where not true.

Mark Herrmann: And as we're building our plans for next year, we're trying to be very, very realistic. Last year, if you remember, the budgets were pretty well finished by the time I and Vanessa were involved, but as we're working with the teams to assess, we're not trying to build in any wild optimism that there will be no challenges in the MENA market going into next year. Now, we felt like we had built some of the downside, particularly Sudan, into this year's number, but unfortunately, it expanded.

Speaker Change #102: To build in any any wild optimism that.

Speaker Change #101: There are no challenges in the Mena market going into.

Vanessa: Into two next year now we felt like we had built some of the downside, particularly sedan.

Vanessa: Into this year's number but unfortunately, it expanded and then the latest position of eating blocking import options.

Mark Herrmann: And then the latest position of even blocking import options, orders we had on the books to be delivered to Saudi Arabia, we've basically, we communicated now taken those completely out. So I believe we've tried to build a realistic delivery. Hopefully, there aren't any other surprises as we look at that market.

Speaker Change #106: Orders, we had on the books to be delivered to to Saudi Arabia, we basically in our numbers, we communicated now taking those taking those completely out.

Speaker Change #104: So I believe we've tried to build the realistic deliverable, but.

Speaker Change #117: Hopefully there aren't any other expanding surprises as we looked at that marketplace.

Speaker Change #104: Okay very good that's helpful.

Benjamin David Klieve: Okay. Very good. That's helpful. You know, and then one more for me on Triegel genetics.

Speaker Change #104: And then one more for me on the Tringle genetics.

Benjamin David Klieve: I want to make sure I understand. You said you've received $1.4 million to date from exiting this plus a reduction in OPEX. I'm wondering if you can, one, comment on whether you have a sense that that $1.4 million of cash received is going to grow in the coming weeks and months, and then two, talk about the OPEX that was dedicated to this initiative that's being removed from the model.

Speaker Change #108: Want to make sure I understand you said you've received $1 4 million a.

Speaker Change #107: To date.

Speaker Change #116: From from exiting this this plus a reduction in Opex I'm wondering if you can one comment on if you have a sense of that that $1 4 million of cash received is going to grow here in the coming weeks and months.

Speaker Change #109: And then to talk about kind of the Opex.

Speaker Change #120: That was dedicated to this initiative that Oh, that's being removed from the model.

Mark Herrmann: Yes, so the 1.4 is the complete exit with the 20% so we're no longer a part of the JV at all within TRIGO and then the savings for the remainder of this year is $200,000 in OPEX and then there would have been ongoing annual costs to support losses through expenses in both research and other OPEX pieces at the TRIGO JV were accumulating right and there's been a change in strategy scope of the business and as we evaluate it for our continued involvement it it clearly was the best decision as we really work to focus in on some areas we see as very high margin very high demand. We've got a deep portfolio of high margin products to move into the marketplace and really focus on our growth and our profitable engine, right?

Speaker Change #121: Yeah. So the the 1.4 as the complete.

Speaker Change #110: Exit with the 20% so we're no longer a part of the JV at all within triangle and then the savings for the remainder of this year as is 200000 in Opex.

Speaker Change #114: And then there would have been ongoing annual cost to support our losses.

Speaker Change #125: Through expenses in both research and other opex pieces that the triangle JV, we're accumulating right and Theres been a change in strategy scope of the business and as we evaluate it.

Speaker Change #123: For our continued involvement.

Speaker Change #111: It clearly was the best decision as we really work to focus in on some areas, we see as very high margin very high demand.

Speaker Change #127: We've got a deep portfolio of high margin products to move into the marketplace and really focus on our growth and are profitable.

Speaker Change #111: Engine right. So it'll be another step up taken costs out in and I'd actually use the triangle example is.

Mark Herrmann: So it would be another step of taking costs out. And I'd actually use the Tri-Go example as just an example as we're evaluating the international Australia business. Anything that we're evaluating that isn't contributing positive margins that contribute to EBIT drivers, we're taking a hard look at what expenses are happening within those either product lines or business entities and deciding to move aggressively to streamline expenses. Another example would be we bought companies that had some manufacturing sites relatively close together, so we've completed the first step of several of the Wingfield facility, which was within 30 minutes of the Penfield facility, which we closed.

Speaker Change #103: Just an example, as we're evaluating the international Australia business.

Speaker Change #128: Anything that we're evaluating that isn't contributing positive margins that contribute to take EBIT drivers are we're taking a hard look at what our expenses are happening within those either product lines or business entities and.

Speaker Change #128: Deciding to move.

Speaker Change #131: Aggressively to streamline our.

Speaker Change #128: Expenses.

unknown: Got it got it makes upon another example would be weak we bought companies that had some manufacturing sites relatively close together. So we've completed the first step of of several of the wind field.

Speaker Change #119: Facility, which was within 30 minutes of the Penfield facility, which we closed the winkfield facility, we had exit expense with buying out a lease with the savings both in some personnel savings as we consolidated those activities into the Penfield facility.

Mark Herrmann: We had an exit expense with buying out a lease, but the savings both in some personnel savings as we consolidated those activities into the Penfield facility, which, like I say, is only 30 minutes away. So we've still got several initiatives such as this to really work to try to drive the Australia domestic business to a positive EBIT as well as cash-generating business, which, being the product lines are lower margin, is a key effort that we need to make.

Speaker Change #126: So like I say it is only 30 minutes away and moved forward. So we've still got several.

Speaker Change #126: Initiatives.

Speaker Change #126: Such as you have to really work to try to drive the Australia domestic business to a.

Speaker Change #129: Positive EBIT.

Speaker Change #119: As well as cash generating business, which.

Speaker Change #112: Being the product lines are lower margin.

Speaker Change #112: Ah is a key a key effort that we need to make.

Benjamin David Klieve: Very good. Well, I appreciate your effort there. Thanks for taking my questions. I'm going to go back and queue.

Speaker Change #130: Very good well I appreciate your efforts there.

Speaker Change #122: My questions I'll get back in queue.

Mark Herrmann: Thanks a lot, Ben. Thanks again.

Speaker Change #122: Hey, Thanks, a lot Ben Thanks again.

Operator: As a reminder, if you would like to ask a question, please press star then 1 to be joined into the question queue. The next question comes from Kurt Karamandis with Carl M. Heading, Inc. Please go ahead.

Speaker Change #122: As a reminder, if you would like to ask a question. Please press Star then one to be joined into the question queue.

Speaker Change #122: The next question comes from Kurt King of Amanda <unk> with Carl M. Hennig, Inc. Please go ahead.

Kurt James Caramanidis: Hi, thanks for taking my questions. Did you say you're going to have glyphosate-ready camelina by 26?

Kurt King: Hi, Thanks for taking my questions did you say youre going to have a glyphosate ready camelina for 'twenty six.

Mark Herrmann: Yeah, for 26, the research team with VBO has already acquired the exclusive license, and the research team is aggressively working to move it from germplasm that is currently into elite germplasm, elite hybrids. So this year, actually, there'll be demonstrations this coming fall to demonstrate to farmers in the market the value of a broad-spectrum post-weed control program on a resistant camelina crop. And then the development process for the inbreds to move into hybrids will be a total focus of the research and tech groups. So by 26, the belief is that they will have camelina with glyphosate resistance or glyphosate resistance ready to position for the planting season in 26 in the fall.

Kurt King: Yeah for 26.

Speaker Change #136: The research team with a V O has already acquired the exclusive license.

research team: And the research team is aggressively working to move it from germ Plasm Ah that is currently into elite germplasm elite hybrid. So this year actually there'll be demonstrations.

research team: This coming fall to demonstrate to our farmers into the market the value of our broad spectrum post weed control program on are resistant to <unk>.

enbridge: Camelina crop and then the development process for the Enbridge to move into hybrids will be a total focus of the research and tech groups. So by 'twenty six the belief is that they will have camelina with glyphosate resistance or glucosamate resistance are ready.

research team: To position for the planting season in 26 in the fall.

Kurt James Caramanidis: Would that be exclusive, or would other people have the same thing?

research team: Would that be exclusive or other people who have the same thing.

Mark Herrmann: This trade that is licensed is licensed exclusively.

Speaker Change #132: The this straight that as licenses license exclusively.

Kurt James Caramanidis: So nobody else has that type of product because I know other people I think are working on camelina.

Speaker Change #124: So nobody else has that type of product because I know other people I think are working on camelina.

Mark Herrmann: If they come forward, it would have to be a different event approach, but I do know that this is a key target for camelina to really be able to be a broadacre, very efficient biofuel feedstock, so it is a very important development as we go forward.

Speaker Change #141: If if they come forward it would have to be a different.

Speaker Change #124: Event approach.

Speaker Change #134: I'm, sorry, but I do know that this is a key target for camelina to really be able to be a broad acre a.

Speaker Change #134: Very efficient.

Speaker Change #135: Biofuel feet feedstocks. So it is a very important development as we go forward.

Kurt James Caramanidis: Great. Then the question is, what kind of levers do you have to pull for liquidity to get to, I don't know if 26 then you would start making money on VBO, if that's accurate, but in a fiscal 25 and to get maybe that gap filled, the market clearly sees challenges there. What do you have for levers to pull to maybe get us to, there's quite a bit going on on the positive side, obviously some near-term negatives with the around the world stuff, but what do you have for levers to pull to kind of get us to where you're in a better position?

Speaker Change #135: Then the question is what kind of levers do you have to poll for liquidity to get to them I don't know if 26, then you would start making money on V. Bill that's after it but you know fiscal 'twenty five.

Speaker Change #135: To get maybe that gap filled the market clearly.

Vanessa Baughman: These challenges there what what do you have for levers to pull to maybe get us to Ah theres quite a bit going on on the positive side, obviously, some near term negatives with the around the world stuff, but what do you have for levers to pull to kind of get us to where you were in a better position.

Mark Herrmann: Yeah, I would say near-term is going to continue to have OPEX and research expenses that revenue won't cover, but we'll have more updates on that as we go forward. Mid-term and long-term, I think it has a fantastic opportunity and outlook.

Speaker Change #134: Yeah, I would say near term, it's going to continue to have a opex and research expense.

Speaker Change #142: And that revenue wont cover, but we'll have more update to that as we are as we go forward midterm and long term I think it has a fantastic.

Speaker Change #142: Opportunity and outlook.

Kurt James Caramanidis: And I guess I'm saying, maybe just as a company in general, how is your liquidity position looking the next 12 to 18 months, and what levers do you have to pull to kind of... How did that work out?

Speaker Change #137: And I guess I'm, saying, maybe just as a company in general how is your liquidity position looking the next 12 to 18 months and what levers do you have to pull to kind of.

Speaker Change #134: Hope that out.

Kurt James Caramanidis: And are you talking about VBO specifically? No.

Speaker Change #143: And you're talking B B O specifically no not the whole company.

Kurt James Caramanidis: No, not the whole company.

Mark Herrmann: S&W Yeah, and as you know, we're a 34% shareholder of the VBO. The 66% shareholder would be Shell. We've got two members on the VBO board as part of our investment. As they're working through the business direction, the liquidity piece, Shell would be responsible for 66%, and S&W would be responsible for 34% as operations move forward. And if you remember in the JV development, that Shell contributed to the cash flow needs of the organization early in its time period.

Speaker Change #134: Hum.

Speaker Change #138: Yeah, and as you know we are a we were at 34% shareholder of the B B O. The 66% shareholder would be show. We've got two members on the V. B O board as part of our as part of our investment as they're working through.

Speaker Change #140: The business direction, the liquidity piece show would be responsible for 66% and a S. N W would be responsible for a 34% as operations move forward and if you remember in the AR in the JV.

Speaker Change #140: JV development that show contributed to the cash flow needs of the organization early in its time period, I can't speak exactly to where they're at or what the what the exact deliverable is a post it in the near term.

Mark Herrmann: I can't speak exactly to where they're at or what the exact deliverable is in the near term as far as liquidity contributions are concerned. They're having their board meeting, I believe the week after the S&W board meeting. So in two weeks, which I'm sure they will, they'll be sharing more information.

Speaker Change #140: As far as.

Speaker Change #146: Liquidity contributions, they're having their board meeting.

Speaker Change #147: I believe the week after the S. N W Board meeting so in two weeks, which I'm sure they'll be sharing more information there.

Kurt James Caramanidis: Okay, I'm sorry. I was saying for S&W, for our liquidity separate from VBO, how are you looking for the next 12 to 18 months? If it gets tight, what kind of levers do you have to pull outside of VBO, just the regular company?

Speaker Change #140: Okay, I'm, sorry, I was saying for Hudson W. For our our liquidity are separate from the Bill how are you looking at the next 12 to 18 months. If it gets tight what kind of levers do you have to pull outside of you'd be able to just the regular company.

Mark Herrmann: Yeah, for S&W this year, and Vanessa touched on it as she went through it, and Vanessa, please, if I don't cover it accurately, jump in when I'm done. But with the contribution, the $6 million contribution from Shell this February, as S&W, you know, hit all its milestones to drive that payment, as well as the Trigo 1.4, we believe our results and our forecast should cover our cash flow needs for this year.

Speaker Change #140: Yeah for S and W. For this year and Vanessa touched on it as he went through it and Vanessa. Please if I don't cover it accurately a jump in when I'm done, but with the contribution of $6 million contribution from show. This February.

Speaker Change #140: Cause that's above you you know it hit all of its milestones to drive that that payment as well as the trial go 1.4, we believe our results on our forecast should cover our cash flow needs for this year as we look to next year and we look at the continued growth, particularly of the high margin.

Mark Herrmann: As we look to next year, and we look at the continued growth, particularly of the high-margin sorghum portfolio driven by DT, grain sorghum, and DT forage sorghum and PAF for next year, we believe right now that we should be able to cover cash needs for next year. And as we go forward, growth from the sorghum trade portfolio should cover cash needs.

Speaker Change #140: Silicon portfolio, driven by D. T grain sorghum N V T forage sorghum and P. A F for next year.

Speaker Change #140: We believe right now that we should be able.

Speaker Change #140: Able to cover cash Ah.

Vanessa: Needs for next year and as we go forward growth from the sorghum pretty portfolio should cover cash needs. So Vanessa that'll be my shot.

Vanessa Baughman: So, Vanessa, that'll be my shot. If I missed anything or misrepresent anything, please jump in. No.

Vanessa: If I Miss anything or misrepresent anything please jump in no no thats accurate and and I would add it's working capital management, So our capital as well as Opex.

Vanessa Baughman: No, no, that's accurate. And I would add it's working capital management, so capital as well as OPEX. We continue to streamline and build efficiencies both in our cost of manufacturing in OPEX as well as capital investments. So as we streamline and bring those down continuously into 2025, we believe we'd be in a net neutral position for cash for next year, and that's what we've been working towards all through 2024, getting our cost structure as lean and streamlined as we can and continuing those improvements into 2025.

Vanessa: We continue to streamline and build efficiencies.

Vanessa: Our cost of manufacturing.

Vanessa: Opex as well as capital investment so as we streamline and bringing those down continuously into 2025, we believe we'd be at a net net neutral.

Vanessa: Neutral position for cash for next year.

Vanessa: And that and that's what we've been working towards all through 2024 and get our cost structure.

Vanessa: And streamlined as we can continue those improvements into 2025.

Kurt James Caramanidis: No, we didn't. Thank you so much.

Vanessa: No we didnt give so much it's called.

Mark Herrmann: But we started the year really heavily talking about S&W needs to address costs and cost sides and be a best-in-class seed company as you look at cost of goods and others. I do believe with the changes that have been made in operations with our production plan that we're building with the sales trend and sales plan we've got, next year we'll be at the lowest level of inventory carryover for several years and pretty close to a seed industry optimal with approximately 70% seed utilization within a sales year.

Speaker Change #150: But we started the year really heavily talking about S and W needs to address costs and cost sides and be a best in class seed company as you look at cost of goods and others.

Speaker Change #148: I do believe with the changes that have been made in operations with our production plan that we're building with the sales trend in sales plan. We've got next year will be at the lowest level of inventory carryover for several years and in pretty close to a seed industry optimal with.

Speaker Change #144: Also at least 70% seed utilization within our sales year, but I do believe then as we moved 25 and beyond we should be at our best our best in class cost in the operation business as we've worked through some historical higher costs.

Mark Herrmann: But I do believe then, as we move 25 and beyond, we should be at a best-in-class cost in the operation business as we've worked through some historical higher cost inventories. As we do move forward, I think we'll see contributions both with the Sorghum portfolio increasing its percentage of total sales as well as efficiencies through, particularly the Sorghum production organization.

Speaker Change #144: Inventories so as we do move forward I think we'll see contribution.

Speaker Change #144: Both with the.

Sorghum portfolio: Sorghum portfolio, increasing its percentage of total sales as well as efficiencies through particularly the sorghum.

Sorghum portfolio: Production organization.

Kurt James Caramanidis: Thank you so much for taking my questions. I appreciate it.

Sorghum portfolio: Thank you so much for taking my questions I appreciate it.

Mark Herrmann: You bet, Kirk. Thanks for joining us this morning.

Kurt King: You bet Kurt Thanks for joining us this morning.

Operator: Once again, to ask a question, please press star then 1 to join the question queue.

Kurt King: Once again to ask a question. Please press Star then one to join into the question queue.

Sorghum portfolio: Yeah.

Robert Blum: Betsy, this is Robert here, and to Mark and Vanessa, we have just a couple of questions through the webcast portal that I'd like to make sure we get to, and if anyone else queues back up, we'll be sure to come back to them there. Just a couple of questions here on double team, and I'll try to summarize a few of them here. Maybe talk a little bit about some of the ways to earn royalties, some of the licensing agreements, and any progress that's being made on

Robert: Betsy This is Robert here and to market, but also we have just a couple of questions through the webcast portal that I'd like to make sure we get to and if anyone else cues back up we'll be sure to come back to them. There are just a couple of questions here on on double team and I'll try to summarize a few of them here.

Robert: Talk a little bit about some of the the ROI on the ways to turn royalty some of the licensing agreements.

Robert: Or any progress that's being made on that front as it pertains to double team.

Robert: Yes.

Mark Herrmann: No, thanks, Robert. And actually, that's a fantastic question. And it really launches as we've evaluated double team and look at what value double team brings farmers in the U.S., and we work with third-party organizations trying to fully assess the positioning. But as we look at yield loss due to grassy weeds in the U.S., the overall production loss across the six and a half million acres is between a quarter and a third of a million dollars in the U.S., based on our best assessments.

Betsy This: No. Thanks Robert.

Robert: That's a fantastic question and it really launches in as we've evaluated double team and look at what value does it bring farmers.

Robert: Farmers in the U S.

Speaker Change #153: And we've worked with third party organizations trying to fully assess the positioning but as we look at yield loss due to grassy weeds in the U S. The overall production loss through the six and a half million acres.

Speaker Change #151: Between a quarter and a third of $1 billion in the U S. A.

Speaker Change #151: Based on our best assessments.

Mark Herrmann: And then really that drives what value double team has in the marketplace because, clearly, from a lot of data, we know that farmers need to retain half to two-thirds of the value created to really justify and motivate their investment in the technology. And while we use averages, when it actually plays out on the farm, I mean, it goes from a slight yield decrease to total devastation of a crop. Right.

Speaker Change #152: And then really that drives what values are double team has in the marketplace because clearly from from a lot of data, we know that farmers need to retain.

Speaker Change #152: Half to two thirds of the value created to really justify and motivate.

Speaker Change #152: Their investment in the technology and while we use averages when it actually plays out on farm I mean, it does from slight yield decreased two total devastation of a crop right.

Mark Herrmann: But if you look at the average value across the U.S., annual yield losses or production losses are a third of a billion dollars. So that really drives our position to then assess what value really needs to be retained on the farm for the right message and improve farm profitability. And then, if it's S&W brand, how we price that to the farmer. And obviously, if it's S&W brand, we still have our channel being a dealer network and other expenses running a brand to operate.

Speaker Change #152: But if you look at the average value across the U S annual U yield losses or production losses is a third of $1 billion. So that really drives our position to then assess what value really needs to retain on farm for the right message improved farmer profitability and then if it's S. N W brand, how we price that.

Speaker Change #152: To the farmer and obviously, if its epson W brand, we still have our channel being a dealer network and the other expenses running a brand to operate if we go through licensee, which I talked about we've got 15 independent seed companies that had signed a license for D T and actually.

Mark Herrmann: If we go through the licensee, which I talked about, we've got 15 independent companies that have signed a license for DT and actually sell 40 to 50 percent of our total DT volume in the U.S. But it's an incredible way to multiply your connection points to farmers and allow them to keep working with their seed dealer and their seed brand that they've worked with for years and no one trusts. But through that group, we also know there needs to be a margin in it for them as well.

Speaker Change #160: So 40% to 50% of our total D tea volume in the U S. But it's an incredible way to multiply your connection points to farmers and allow them to keep working with there their seed dealer in their seed brand that they've worked with for years and know and trust.

Speaker Change #158: But through that group, we also know there needs to be a margin in it for them as well so through our licensees.

Mark Herrmann: So through our licensees, the price would be less than S&W, but it would be appropriate for covering their channels' cost to deliver and connect and sell and service farmers, as well as the company itself needs a level of profitability to really justify taking the risk in production, inventory, and management of the SKU to the farmer. And we end up somewhere in that 75 to 80 percent range of the S&W channel value to farmers. So it's very fairly sophisticated.

Speaker Change #158: The price would be less than S. N W.

Speaker Change #158: But it would be appropriate for their covering their channels cost to deliver and connect and sell and service farmers as well as the company itself needs a level of profitability to really justify their taking risk in production and inventory management.

Speaker Change #154: Management of the skew to the farmer.

Speaker Change #155: And we ended up somewhere in that 75% to 80% range of the S. M. W.

Speaker Change #161: Channel value to farmers, so it's a very fairly sophisticated but in my mind, it's a fairly simple thought process, but it's a fairly sophisticated process as far as really understanding the value delivered and how value of shared all the way between.

Mark Herrmann: But in my mind, it's a fairly simple thought process, but it's a fairly sophisticated process as far as really understanding the value delivered and how value is shared all the way between the farmer, S&W, and seed companies that are partnering with us to deliver that in the marketplace and then cover costs and really drive towards profitability. But we've got 15 licensees in the U.S. We have contact for addressing the particular Argentina and Brazil market of three to four key companies we would like to work with that would represent a significant portion of the soil makers there, as well as looking at two to three in Australia for the same approach.

N W: The farmer that's N W.

N W: Companies that are partnering with us to deliver that in the marketplace and then cover costs and really drive towards profitability, but Oh, we've got 15 licensees in the U S. We have contact for addressing the particularly Argentina and Brazil market.

N W: <unk> of our of our three.

Speaker Change #164: Three to four key companies, we would like to work with that would represent a significant portion of assortment makers there as well as looking at two to three in Australia for the same approach and then Mexico would be a blended between us and W brands.

Mark Herrmann: And then Mexico would be a blend between S&W brands working through Mexico as well as licensed markets. So we really believe we have a very effective process and also a process that's much safer to ensure we get collections efficiently with companies that are already operating in international markets that are very accustomed to moving payment as U.S. currency through the system.

W brands: Working through Mexico, as well as license market. So we really believe we have a very effective process and also a process that is much safer.

W brands: Sure we get collections efficiently.

Speaker Change #170: With companies that are already operating in in international markets that are very accustomed to moving payment as U S currency through.

Mark Herrmann: So I think the licensee combined with our branded size is a very important discussion. And I believe it also ties to what was discussed earlier as well as what the OPEX costs will be to see us continue to expand this trade. I talked about the value of DT alone being a quarter to a third of a billion dollars of lost yield annually in the U.S. But when we look at all global markets, I mean, it's a half a billion dollar trade across the 13 plus million acres we're targeting.

N W: Through the system so.

Speaker Change #163: I think the the license like combined with our branded size up very important Ah Ah discussion and I believe it also ties to what was discussed earlier as well as what the Opex cost will be to see us continue to expand this straight I talked about the value of D. T alone is a quarter or two.

Speaker Change #159: A third of $1 billion of loss of yield.

Speaker Change #159: We're really in the U S. When we look at all global markets I mean, it's a half a billion dollar trade across the 13 plus million acres, we're targeting.

Mark Herrmann: Alright, that's great. A lot of detail there. One thing I don't know if there's anything you can add to this, but there's a question relating to sort of energy savings, double team versus conventional. Is there anything that can be added to the comment that you just made there specific to energy savings?

Speaker Change #162: Alright, that's great a lot of detail there one thing I don't know if there's anything you can add onto this but there was a question relating to sort of energy savings.

Speaker Change #172: Team versus conventional is there anything that can be that you can add onto the comment that you. Just made there are specific to the energy savings.

Mark Herrmann: Yeah, I think that's great. And to me, the first step of sustainability, you know, since a farmer is losing this yield and this value per acre because of grassy weeds, being able to control those grassy weeds, all other input factors, land rent, fertilizer, irrigation, land control, every other expense stays the same. So you're able to add that as significant profitability to the farm, but you're also able to produce that much more productivity on fewer acres, right? So if I look at a sustainability trait, to me, DT falls right in it.

Speaker Change #173: Yeah, I think that's great and to me the first step of sustainability.

Speaker Change #166: Since a farmer is losing this yield and this value per acre because of grassy weeds being able to control those guys see weeds all other input factors.

Land Grant: Land Grant fertilizer.

Speaker Change #167: Irrigation land control every other expense stays the same so you're you're able to add that as significant profitability of farm, but you're also able to produce that much more productivity.

Speaker Change #162: You were acres right. So if I look at our sustainability trade to meet D. T falls right in it if I look at sustainability as a crop sorghum can produce a crop with significantly less water. So if you're dealing with a limited irrigation well or limited water or a little bit more marginal ground.

Mark Herrmann: If I look at sustainability as a crop, sorghum can produce a crop with significantly less water. So if you're dealing with a limited irrigation well or limited water or a little bit more marginal ground dealing with higher temperatures, sorghum is a much more adaptable crop than if you look at corn, soybeans, and other options. So if you look at the full sustainability picture and energy savings, there's a great opportunity for sorghum to expand.

Speaker Change #174: Dealing with higher temperatures sorghum is a much more adaptable crops and if you look at corn soybeans and in other options. So if you look at the full sustainability a picture in energy savings, there's a great opportunity with sorghum to expand and one of the reasons that.

Mark Herrmann: And one of the reasons it hasn't is because of grassy weeds, because there wasn't an option to come back and control grass in my sorghum, basically because sorghum and corn are grasses. So to be able to spray and kill grasses without killing the crop, you need some level of a tool that enables you to do that, and DT has been just a fantastic fit, which also explains why it's had such fast adoption.

Speaker Change #165: As it is because a grassy weeds, because there wasn't an option to come back and control grass and my sorghum, basically because sorghum and corn are grasses.

Speaker Change #165: So to be able to spray and kill grasses without killing the crop you need some level of a tool that enables you to do that in D. T. As it's been just a fantastic fit which also explains why it's had very fast adoption three years in the market is down 10%.

Mark Herrmann: Three years in the market, it's on 10% of the U.S. sorghum acres, and I'll just take us back to pre-DT, S&W seed only had 5-6% share of the total U.S. sorghum market at that time. So in just a three-year period, it's expanded to a significantly bigger footprint than what S&W had for sorghum in the U.S. prior to that, right? And I do believe we're just on the early test of market penetration, full market awareness of the value that it brings, but a key energy saver, and also, even if you already have grain sorghum on an irrigated field, sorghum is a crop that, if it's a deep well and you're pulling water from deep, obviously energy to pull that water up is very, very expensive, so if you're trying to irrigate for corn, you've got to pull significantly more water up to finish a solid crop than if you're using grain sorghum, so it definitely gives the opportunity to even pure energy of using less energy and less water to finish a crop and drive farm profitability.

Speaker Change #176: All of the U S sorghum acres and I'll, just take us back to pre D. T. S. N. W seed only had 5% to 6% share of the total U S. Sorghum market at that time, so in just a three year period.

Speaker Change #165: It has expanded to a significantly bigger footprint.

Speaker Change #165: That's M. W had four children in the U S. Prior to that right and I do believe we're just on the early tests of market penetration full market awareness of the value that it brings.

Speaker Change #165: But a key energy saver and also even if you're already have grain sorghum on irrigated field.

Sorghum speaker: Sorghum is a crop that if it's a deep well and you're pulling water from from deep obviously energy to pull that water up is very very expensive. So if you're trying to irrigate for corn, you've got a pull significantly more water up to finish a solid crop than if you're using grain store.

Speaker Change #178: So it definitely gives you opportunity to even pure energy of using less energy and less water.

Sorghum speaker: Finished the crop and drive a dry farm profitability. So this along with the next one P. A M is a very valuable tool as well and once we stop it and you're able to have D. T. M. P. F. On the same acre we believe there's a solid multiple as far as the the VAT.

Mark Herrmann: So this, along with the next one, PAF, is a very valuable tool as well, and once we stack them and you're able to have DT and PAF on the same acre, we believe there's a solid multiple as far as the value to the farmer with that technology, as well as the value that can be shared with S&W and the rest of the channel that are supporting this technology pipeline.

W brands: <unk> to the farmer with that technology as well as then the value that can be shared with us in W. And the rest of the channel that are supporting this technology pipeline.

Robert Blum: Fantastic. Well, we'll go ahead, and we'll leave it there. Mark, Vanessa, I'll turn it back over to you for any closing remarks.

W brands: Fantastic well, we'll go ahead and I will leave it there Mark Vanessa I'll turn it back over to you for any closing remarks here.

W brands: Yes.

W brands: Yeah.

Mark Herrmann: I just want to thank everybody for joining the call this morning, and I know we have some opportunities for follow-up discussions if you want to set those up through Latham Partners as well, but I look forward to visiting with all that are interested in a follow-up. But my thanks to everybody for the call this morning, and I look forward to hopefully speaking with you again soon.

Mark Herrmann: Well I just want to thank everybody for joining the call. This morning, and I know we have some opportunities for follow up discussions. If you wanted to set those up through Lytham partners as well, but I look forward to visiting with all of that are interested.

Speaker Change #179: In a follow up.

Lytham partners: My thanks to everybody for the call. This morning, and I look forward to hopefully speaking with you again.

Speaker Change #175: Again soon.

Speaker Change #175: Thank you.

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

Speaker Change #175: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change #175: Yeah.

Speaker Change #175: [music].